106. Strategic oversight is not the same as good governance

LOTS of experts will tell you that corporate governance is all about strategic oversight. I'm here to argue that there's a lot more to good governance than that.

Background music is Of the Stars by KC Roberts & the Live Revolution

 

SCRIPT:

Let’s get something important out of the way right off the bat: good corporate governance and board effectiveness aren’t the same thing. In fact, there are plenty of incorporated entities out there that don’t even have functional boards of directors, but that doesn’t mean they don’t have good governance if we stick with the definition of good governance from a few episodes back. Either way, if there is one challenge that’s generic to just about every BOARDroom I’ve been in, it’s the struggle to find the right balance between the board’s focus on operational matters vs it’s focus on strategy – or, how much do we reflect on the past vs. how much do we dream about the future? It’s *very* common for people who talk about corporate governance to emphasize that the board has little to no role in operations, and should spend as much time and energy as possible on future-oriented strategic matters. We’ve talked about this a bunch of times before on OMG so I won’t belabor it. Suffice it to say that I believe boards can and should focus on whatever they think is going to result in the best decisions for the organization and its stakeholders. But even in a case where a board chooses to focus on day to day minutiae, or even to run the organization entirely, that doesn’t relieve them of their obligation to make sure that the organization has a well-articulated purpose, strategy, strategic plan, and objectives. Either way, it’s pretty clear that strategic oversight is not the same as good governance.