Author: Justine Chinoperekweyi, Ph.D.
The disruptive environmental influences casted a dark shadow on the reliance on n-step, pedantic rules-based corporate governance models. Indeed, the significance of sensemaking, influencing and legitimizing need to be appreciated in corporate governance discussions. In periods of epochal change, corporate leaders have no option but to design and implement a sophisticated corporate governance model. In an article published by the Organization Development Journal (ODJ), my colleagues and I highlighted the need for a corporate governance model that values social construction and postmodern premises of Organization Development. Our call for reframing the corporate governance orientation recognized the need for participatory action inquiry and engagement in corporate boards. Boards, C-suite leaders, managers and all other stakeholders need to view organizations as complex meaning making systems and leverage discursive studies in order to understand emerging trends and facilitate building ambidextrous organizations.
In proposing the cyclical model of Inquire, Appreciate, Act, Observe, and Act; we identified five components that should constitute the hybrid corporate governance model. These five components help corporate boards to be strategic and innovative. Considering the paradoxical challenges and tensional forces that contemporary organizations are exposed to, the future corporate governance model require constant adaptation, ambidexterity and creativity. These competencies help to minimize fragmentation and instability. Interesting questions that informed our work were taken from a publication by Coulson-Thomas (2018), who asked: “Is contemporary corporate governance in a rut? Has it become stale and outlived its original purpose? Is adaptation required, or is a redesign needed, for example to cope with the challenge of sustainability and for greater innovation?” In view of the events in the business and operating environment since the last quarter of 2019; its is an aphorism that contemporary corporate governance is in a deep rut and as such the need for new paradigms cannot be overemphasized. Adaptation, redesign and reframing should be top priority in our corporate governance discussions. From a sustainability and greater innovation perspective, the 2010 call by Robert Marshak to expand the concern of Organization Development beyond economic benefits need to be upheld; no doubt! In the same vein, Bob Johanson’s VUCA Prime model need to be integrated into every fabric of corporate governance.
What are the five components of the future corporate governance model? I will tackle these components in general and in the upcoming publications will refer to Case Studies and what we are doing at Centre for Organization Leadership and Development.
• Clearly defined corporate governance outcomes
There is no doubt that the corporate governance outcomes need to be expanded beyond shareholder wealth maximization. The maximization of shareholder wealth narrative encourages excessive risk taking at the expense of long-term shareholder value. Vision and purpose need to be embedded in the corporate governance structure. The role of the board needs to be strengthened to pursue a broad and long-term corporate purpose. Clarity of corporate governance outcomes should be upheld among the leadership alliance.
• Focus on embedded sustainability
Embedded sustainability is an expansion of shared-value. It encompasses the incorporation of environmental, health, and social value into the core business with no trade-off in price and quality. Boards should have a broader perspective of sustainability. In context of sustainability, boards should explicitly define corporate priorities and goals according to Environmental, Social and Governance principles.
• Incorporating a data value strategy
The knowledge economy demands that boards leverage the data value strategy in order to make informed decisions. This is supported by the exploration and exploitation competencies among all organizational members. In high-value organizations, business decisions are based on the available information and data. A data value strategy leverages deep learning, machine learning and other cognitive technologies that support business operations. Key elements of a data value strategy include risk management. Unfortunately, most boards seem to be swept by the tsunami of social media facilitation and pop-culture when making ‘’strategic’’ decisions.
• Fostering continuous environmental and organization diagnosis
The data value strategy should always be updated with new trends and opportunities in the business and operating environment. Fostering market orientation, entrepreneurial proclivity, and ambidexterity should be the focus of corporate governance discussions. Integrating the data value component with the environmental & organization analysis component enables the business to respond to complexity and chaos through a “sophisticated corporate governance model”. This component is premised on Contextual Intelligence, Appreciative Intelligence and Strategic Foresight.
• Driving flexibility in developing and implementing strategic plans and rising business alliances
Flexibility demands that the leadership alliance blends theory, experience and craft when making decisions. Corporate governance models should demonstrate wisdom, practical wisdom, and prudent restrain. This require putting on different lenses in decision making.
Change is continuous and self-organizing; hence corporate directors need to demonstrate understanding of the application of nascent instruments, initiatives, and interventions in sustaining corporate continuity and stability. Boards should focus on prudent restraint rather than excessive reliance on ideals. There is need for increased penchant for a continual process of Inquire, Appreciate, Act, Observe, and Act in corporate governance. Such an approach enhances the deliberating capacity of the leadership alliance thereby strengthening strategic thinking and strategic leadership roles of corporate directors. It is therefore important that boards leverage discursive studies and participatory action inquiry & engagement. There is urgent need to expand the concern of corporate governance.
To read more on this topic:
Chinoperekweyi, J., Makumbe, K. and Chundu, T. (2020). Reframing Corporate Governance Orientation in an Era of Epochal Change. Organization Development Journal. 38(4), pp.85-100.
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About the Author: Justine Chinoperekweyi, PhD serves as the Director: Academics & Programs at the Centre for Organization Leadership & Development (COLD) Harare, Zimbabwe. He is the Lead Instructor of OD modules such as, Fundamentals of OD, Appreciative Leadership in OD, Methods of Inquiry in OD Practice, OD Tools & Techniques, and Corporate Governance. Chinoperekweyi is also the President of OLD Network, Managing Editor of the Organization Leadership and Development Quarterly (OLDQ), Academic Director and Visiting Faculty in United Arab Emirates. Justine was awarded the ‘2020 Communicating OD Knowledge Award’ by the Organization Development Network, USA.