I’ve been accused of recklessly inventing words.
True, I use unfamiliar words. But that’s because I find the language of Corporate Governance (CG) is holding us back.
The language of CG is confusing. Pick up a book on CG and chances are the author will describe what boards do in a different way. Some use different words to describe the same concept. Others muddle together various duties, task, functions, processes, actions and behaviours and roles. Throw in the wish list approach to CG and I challenge anyone to make sense of it all.
The language of CG is loaded. Take the word monitor. In CG circles this is shorthand for the board monitoring management on behalf of shareholders. The word has an agenda. But what about monitoring without an agenda? Just watching to see when the board can strike to create the greatest value.
The language of CG causes blindness. There is no word in CG to describe all the people engaged in the process of directing a Corporation. It’s a huge conceptual blind spot.
It impossible to think clearly about the Boardroom, unless the Directorship Team is named and the relationship between its members analysed and understood.
Finally, the language of CG is the language of Corporate Governance. The vocabulary of CG can be useless to someone describing the boardroom from a commercial perspective.
Thomas Kuhn, famous for his work on paradigms, explained the problem:
“The proponents of competing paradigms practice their trades in different worlds. One contains constrained bodies that fall slowly, the other pendulums that repeat their motions again and again. In one, solutions are compounds, in the other mixtures. One is embedded in a flat, the other in a curved, matrix of space. Practicing in different worlds, the two groups of scientists see different things when they look from the same point in the same direction.”
The differences between CG and Directorship can be seen in the words “role” and “Mode”.
CG tends to organize knowledge around board roles - ie. control, service, access and strategy (CG Roles). Directorship uses the concept of Modes - Trade, Guide, Help and Build.
At first glance, CG roles and Modes might look different words describing the same thing. That’s a mistake:
- Modes are logically connected and commercially focused. The Board trades. Once it delegates the responsibility to trade it moves into Guides Mode. It helps. And the Board builds a team that can work in each Mode.
- Modes make Mechanics possible: the why, who, what, when and how of the boardroom becomes clear when seen through the lens of Modes. With Modes I can answer: what Mode best suits the situation? What tasks must be performed in that Mode? And, will that task create the greatest value? Who’s needed to perform the tasks (Board, Top Management etc) in that mode and what is their role? How should each of these individuals approach those tasks?
- Modes includes the broader Directorship Team. Roles is exclusive of everyone but the Board. The point is that Board can't do a lot without the support and assistance of the CEO, top managers, secretary etc.
Can you answer these questions with the concept of CG Roles? Try it. I couldn’t and that is why I now invent words.
To help you make the jump from CG to Directorship I recommend you check out the words and phrases section of this website. It’s a work in progress and if you need a better explanation contact me email@example.com.