ON DIRECTORSHIP is by PETER TUNJIC.

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 a leading voice in the re-discovery of what corporations are and why they exist.

Who's Afraid of Competition

I've been ignored and threatened.  Called provocative and black banned.  I was even told by a well respected academic that my approach to directing made no sense and, if it did, it had already been done before and, if it hadn't, then what I proposed was impossible.

But, I'd never been censored. 

That is, until the following was recently removed from an online forum for Boards and their Advisors.  

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Believe it or not the current state of corporate governance looks a lot like the crisis in planetary astronomy that took place in 1543. 

In what may sound familiar to many of you confronting the challenges of corporate governance, in the time before Nicholas Copernicus: 

“Astronomy’s complexity was increasing far more rapidly than its accuracy and that a discrepancy corrected in one place was likely to show up in another.” 

As you all know, Copernicus proposed to increase the accuracy and simplicity of astronomy by positioning the sun at the centre of the known universe. 

According to Copernicus the science and practice of astronomy had become monstrous.  In the preface to his most famous book he (though there is some argument whether he said this or the publisher) comments of his contemporaries: 

“Nor have they been able thereby to discern or deduce the principal thing – namely the shape of the universe, and the unchangeable symmetry of its parts. Within them it is though an artist were to gather the hands and feet head and other members for his images from diverse models, each part excellently drawn, but not related to a single body, and since they in no way match each other, the result would be a monster and not a man” 

Again the same comment (with a bit of imagination) can be made of corporate governance codes and guidelines than share no common theoretical foundation. 

Copernicus thought that an honest appraisal of contemporary astronomy shows the earth centred approach to the problem of the planets is hopeless. Traditional techniques have and will not solve the problem; instead they have produced a monster. 

Corporate Governance bares the marks of the same monster – diffusiveness and inaccuracy.  A discipline afflicted by anomalies and disagreement at its core because it insists on postioning the shareholder at the centre of the boardroom.

Ironically, Copernicus' contemporaries papered over the flaws in their approaches with things called epicycles.  Patches (that look a lot like piecemeal reforms) that worked but were fundamentally wrong.

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Which side of history will you be on?

 

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