128. Corporate Governance is Broken (but it’s not that bad...)

I really *do* think that corporate governance is fundamentally broken. But I'm not too worried about it. All we need to do is shift our focus a bit.

 

SCRIPT

When I launched Ground-Up Governance a couple of weeks back, I wrote an intro piece that began by stating, “Corporate governance is broken.” And I sincerely meant it – and still do! Funny thing is that despite being a dramatic thing to say, I don’t think it's a huge deal... because, honestly, it's not that hard to fix! I’ve really learned a lot in the process of writing this season of OMG in terms of refining what I really think corporate governance is, and what GOOD governance is, and what they’re not. So, the part that’s broken, in my opinion, is that a huge amount of what corporate leaders – executives and boards – actually DO has very little to do with corporate governance, but they don’t seem to be aware of it. Every minute spent on compliance, oversight, presentations, crafting and consuming pre-reads, and so on, only matters to the extent that it is in service of making effective decisions. In other words, unless we DELIBERATELY do compliance, oversight, presentations, and crafting and consuming pre-reads in a way that enhances our decision conditions, we’re basically not doing good governance at all. That’s what’s broken: we spend an unimaginable amount of time on stuff that barely matters to good governance. And very little time on the stuff that does matter. It’s not because we’re ineffective, or because we’re negligent, but because every resource, course, regulation, and recommendation seems to be pushing us AWAY from good governance. My single most important piece of governance advice? Consume all the traditional governance resources you want, understand them, take the salient bits, and then tune the rest of it out!