The Green Shoot of a New Branch of Directing


In the Third Way, I argued that Corporate Governance should be elevated to a category of knowledge in the same way we see law or biology.

I was wrong.

Corporate Governance is not the tree of knowledge, it's just one twisted branch in the taxonomy of company directing.

Taxonomy from the Greek taxis, meaning arrangement or order, and namos, meaning law or science, traditionally categorizes and classifies things or concepts in a top down structure.  In a hierarchical taxonomy terms have a tree and branch structure.  Each term is connected to a broader term (unless it's at the top in which case it is the tree) and one or more narrower terms (the branches).

My mistake was that a term cannot be both the tree and a branch in a hierarchical taxonomy of directing.

I should have realized this when a noted professor exclaimed at the end of one of my Directorship presentations "THAT'S NOT CORPORATE GOVERNANCE".

She was right.

The professor belongs to a generation that typically divides Corporate Governance into one of two dominant theories.  Shareholder primacy and Stakeholder theory.  These in turn divide into their sub-branches and so on.  Though some would dispute it, Corporate Governance is seen by this generation as the top level term and all the knowledge of what directors do or ought do can be classified within its boundaries.

But, in declaring that Directorship was not Corporate Governance, the professor was conceding that Corporate Governance was no longer a synonym for all the knowledge of directing.

The green shoots of a new branch of directing had started to appear that requires a rethink of where Corporate Governance fits in the bigger picture of company directing.

But at what point does the tree divide?  After all, both Corporate Governance and the alternative study are concerned with the boardroom. 

The split occurs at the point of Corporate Objective - the irreducible purpose of the Corporation from which all policies, practices and processes flow.

I propose that:

  • Corporate Governance is concerned with external objectives - Directors direct for someone or something other than the Corporation; and
  • Directorship is concerned with an internal objective - Directors direct for the Corporation in its own right.

In this sense, external refers to any one of a number of "stakeholders".  Internal refers to the Corporation as a legal person separate from any other person.

Of course, there are those that argue that the "outsiders" are the"insiders".  To them, Corporate Governance concerns the "internal relationship between the participants to the corporation".  The Corporation and one or all Stakeholders are one and the same.  But all that does is re-enforce the fundamental separation between the branches of directing.  Through the eyes of Directorship, those "internal particpants" are "external trading partners".  The division between the two branches of directing could not bemore stark.

    Each branch of directing answers the question of objective of the corporation from an opposite direction.  One outside - "what should the board do for one or all trading partners?".  The other inside - "what should the board do for the Corporation?".  They are incommensurate branches of a common tree with very different solutions to how Corporations should be directed.

    [Extending the footballing metaphor, Directorship is largely about playing for the jersey (or jumper if you're Australian).  Corporate Governance is all about playing for (a) shareholders who bet on the team ( Shareholder primacy) or (b) the other team (stakeholder theory)].

    To be clear, the point of this discussion is not to argue against Corporate Governance.  It doesn't have to be broken for the alternative to be better.  My point is that each board must ask what the ultimate objective of their Corporation is.  Do we direct for the Corporation or do we direct for someone else?

    But choose wisely.  Each branch leads in a different direction and requires a fundamentally different approach to directing.    

    Here is a simple flow chart of what I'm proposing:








    The Third Way

    My latest essay published in the November edition of

    "Commercialism has been the victim of the governance wars.  What democrats and pirates share in common is a reckless indifference to the most basic law of capitalism - no trading partner can be elevated beyond their benefit to the corporation."

    Email or click here for a copy of the Third Way



    An Antidote to Governance

    Corporate governance is under siege.  But, no matter how damning the argument against best practice, the governance industry has had a rock steady defense.

    "Corporate Governance may not be perfect but it's better than no alternative."

    Despite mounting evidence that best practice won't deliver predicted value, the governance industry has just celebrated 20 years of the UK Code confident that, in the absence of a meaningful alternative, it will be safe for another 20 years.   

    But, whilst the industry cheers, Corporations swallow their real poison pills and the rest of us are left to wonder why capitalism is still so sick.  Consider Yahoo.  According to GMI, a corporate governance rating firm, Yahoo's board raised "no red flags".  But, has done little to shake the label of the "worst board in the country".

    There is an antidote.  And it works equally well for profit and nonprofit corporations.

    Consider the following steps and, at the end, ask yourself whether Directorship just might (with a bit of work and imagination) be the better belief system than the alternative:    

    Step 1: Get Clarity

    The Corporation is a separate legal person.  It has personal/individual sovereignty and owes nothing to any person that it has not promised.

    The Corporation's objective is to survive and grow in its own right.  Measure for:

    Strength (S)

    Strength is a measure of intrinsic value created by trading through the best possible business model.

    Resilience (R)

    Resilience is a measure of the corporation's ability to make and keep the best possible promises

    Endurance (E)

    Endurance is a measure of strength and resilience

    Directorship holds that the Board's purpose is to realize the Corporation's S.R.E by performing various Tasks.

    Step 1 is the threshold that divides Corporate Governance from Directorship.  If you believe that corporations are owned by its members or that maximizing anothers interests is paramount then Directorship is not the alternative but a competing belief system.  But if you believe in corporations and the power of people coming together to promise as one then Directorship may provide the better path for you.

    Step 2: Get Commercial 

    Whether for profit or not, Corporations rely on trade and their commercialism for S.R.E.  Get commercial by:  

    • calling "Stakeholders" what they really are TRADING PARTNERS
    • exchanging the best possible promises with TRADING PARTNERS
    • prioritizing TRADING PARTNERS based on their contribution to S.R.E
    • ending the practice of making gratuitous and unnecessary promises to analysts and governance advisers

    Step 3: Get Beyond the Numbers

    Get beyond the numbers by focusing on all assets and not just cash.  Accounting profit is pointless if it undermines S.R.E. 

    Step 4: Get Perspective

    No board can trade blind.  Boards must work from business models and trading frameworks then financial models. 

    Financial literacy is pointless if a director cannot read the business model from which it is derived.

    Step 5: Get Past Duties

    Aim much higher than duty.  Duty is just the minimum.

    Step 6: Get a Directorship Team

    Boards do not direct alone.  They rely on a team made up of the CEO, the executive and others to fulfill their purpose.  Everyone knows there is a line that divides the Board and Management.  What we don't realise is that for some of the time they are on the same side of the line and need a plan to work together.

    Step 7: Get on Board with Mechanics

    All teams needs need team rules.  Rules are the Mechanics that connect the Directorship Team to the Corporation's S.R.E.   

    Step 8: Get Strategic Mechanics

    Choose the Mode of directing and corresponding Tasks that will realize the Corporation's S.R.E based on the the Situation at the time.   

    Step 9: Get Tactical Mechanics

    Match team member Roles, Behaviors and Actions to the Board's choice of Mode and the Tasks at hand.

    Step 10: Get Fit

    Get fit by:

    • Testing for Broken Mechanics
    • Learning and practicing the right Mechanics

    Step 11: Get Competitive

      Get competitive by:

      Remember talent and diversity is not a strategy.  No amount of talent will save a Board with a bad "me too" plan and a vague objective.
      • Forgetting most practiced Corporate Governance. What is the competive advantage in following the crowd?
      • Focusing on S.R.E
      • Using Mechanics to develop a unique Board Plan
      • Building the talent, teamwork and leadership to execute on the Board Plan.

      It's your choice. 

      You can choose to stay with Corporate Governance or take the first steps to Directorship.  As James McRitchie of explains:

      "Unlike the natural sciences, where paradigms are used to explain and predict, corporate governance is socially constructed. Paradigms in our discipline are normative models, used to to discipline and guide. The major stumbling block to shifting paradigms is recognizing the element of choice. We aren’t stuck with what we have. We can choose to move to a whole new paradigm, if it offers a better foundation for building the kind of world we want."

      To be clear, Directorship is not a theory or a model.  It is not intended to be descriptive or predictive of failure.  It is a logical and systematic plan that connects the boardroom tocorporate prosperity.


      To learn more have a look at /tunjic/the-mechanics-of-boardrrom-performance


      The Corporation is Free (and No One's B$tch)

      The Corporation and its Board is no one's b$tch.  Neither is subordinate to the interests of any shareholder or other Trading Partner.  The Corporation is free.

      The Corporation is a separate legal person.  It is not owned.  It exists as an entity in its own right with its own primal objective.

      The Corporation is self owned in the same manner expressed by Cohen in respect of individual sovereignty or autonomy:  

      "Each person enjoys, over himself and his powers, full and exclusive rights of control and use, and therefore owes no service or product to anyone else that he has not contracted to supply."

      Commercial Capitalism, the original system of capitalism whereby Corporations are Traded into existence based on the benefits (Value) exchanged between the Corporation and its Trading Partners, is founded on Corporate Sovereignty and the right of the Corporation to ensure its own survival and growth within the law.

      Whether for profit or not, the primal objective and purpose of all Corporations is survival and growth expressed in three ways:

      • Strength

      The corporations strength is measured by its inherent value (not its share value) derived through its business model.

      • Resilience

      The corporations resilience is measured by its ability to make and keep the best possible promises with each of its Trading Partners.

      • Endurance

      The corporations endurance is measured its long term survival (not its short term return to Trading Partners). Strength and resilience leads to endurance.

      Corporate Sovereignty and the objective of strength endurance and resilience (SRE) are the foundations of Directorship.

      SRE provides a framework to prioritize Trading Partners based on the return to the Corporation.  It answers the question of how corporate directors make the best decisions.

      But, that doesn't equate to "director primacy" and unfettered control.  Directors, like all other Trading Partners are held accountable to their promises to the corporation and the state.  Nor, does it mean that any Trading Partner will be abandoned.  It just means that the Corporation will trades its way into SRE by exchanging the best possible promises with its directors, shareholders and every other Trading Partner.

      For example, should a public corporation provide profit forecasts to analysts?  Using SRE the Board would first consider these questions:

      • What benefit does the Corporation receive from the "promise" of a forecast?  Is a forecast a gratuitous promise?
      • Can the promise be kept and at what cost to the corporation?  Are short term decisions made to keep a gratuitous promise?
      • What is the effect of the promise on the long term survival of the corporation?  If the forecast was not promised would the survival of the corporation be prejudiced?

      But before any of these questions can be answered, the Board must choose what it believes in.  This is the most important decision a board must make.

      Does it believe in Corporate Sovereignty or that the purpose of the corporation is to serve one or all Stakeholders.  The boardroom pivots on that single belief.

      When Do We Start Talking About Promises?

      Directors don't just make decisions they exchange Promises.

      Directors create value when they ensure Corporations exchange the best possible Promises with Trading Partners (you might call them Stakeholders).   

      If creating value is the goal why not meet the challenge head on? 

      Instead, there is a tendency to argue the long way round.  Risk, diversity, gender, independence, which committees to form, which personalities make better directors etc are no where near the "money".  They're part of the mix but there is a more obvious question to ask - Can this Board trade the Corporation's Promises into greater strength, resilience and endurance?

      If you think we don't need to talk about Promises consider the current debate over excessive executive remuneration.  Surely it comes down to negotiating better promises for Corporations and encouraging directors to be commercial.

      Here are 10 questions that help boards make better promises, mitigate risk in the process and get a commercial culture:

      1. Why is the Corporation exchanging Promises?
      2. Can the Promises be made?
      3. What is promised by the Corporation and what is the value?
      4. What is promised to the Corporation and what is the value?
      5. How will the Corporation keep its Promises?
      6. What are the assumptions?
      7. What limits do the Promises place on the future?
      8. What is the risk/probability of bad or broken Promises?
      9. Is the risk/probability priced correctly or mitigated?
      10. What contingencies are in place for a bad or broken Promise?



      The Language of Directorship

      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





      Uncommercial Capitalism

      “When your enemies are making mistakes, don’t interrupt them”.

      Billy Beane (Brad Pitt) – Money Ball


      In capitalism, there is no "right" way to compete.  All there are is myths.  But some myths are more commercial, competitive and capitalist than others.   

      In "The Shareholder Value Myth" Lynn Stout systematically deconstructs the idea that corporations are required to maximize shareholder value.  Concluding that the philosophy is a "defunct economists idea".

      She's probably right.  But, is she asking the right question? 

      If there is no right way to compete, the better question is whether Shareholder Primacy and the Corporate Governance paradigm is commercial:

      • What benefit does a Corporation receive that justifies the level of Shareholder influence over the Boardroom?
      • Why prioritize the interests of Shareholders above more strategic Trading Partners?
      • How does monitoring management on behalf of shareholders create Value?
      • How does it help the Corporation if is required to explain how its practices differ from Best Practice?
      • Why are Directors encouraged to think critically within the Boardroom but required to accept Best Practice uncritically?
      • Why are Boards reduced to competing on talent alone?
      • How well do shareholders run their businesses?
      • Do Shareholders have the commercial acumen to have a say on pay?

      Just remember Billy Beane.  Keep the questions to yourself and try not to interupt anyone that argues that Corporate Governance is the only game in town.  That's old fashioned commercial capitalism.




      Directorship Vs Governance

      A summary of the differences between Directorship and the Anglo American version of Corporate Governance:    







      (Anglo/American Model)


      The ways that Boards create Value in Corporations

      A recent academic paper cited 22 different definitions of Corporate Governance.

      My definition of the Anglo/American model:

      The ways that shareholders pursue their agenda's and self interest in the Corporation through the Boardroom





      The Corporation in its own right

      Maximize the Corporation's strength, resilience and endurance through Trade


      Maximize Shareholder Value



      Commercial Capitalism

      Corporate Sovereignty 

      Business Model

      Democratic Capitalism 

      Shareholder sovereignty

      Financial Model



      Assets, Promises and Trade

      Commercialization of the Corporation

      Monitor without an agenda - for information/feedback to determine right strategic/tactical mechanics (see below)

      Risk, Accountability and Control

      Financialization of the Corporation

      Monitor with an agenda - agency costs




      Directorship Team (Directors + Managers + others)

      Trading Partners


      Board ( Directors)




      Individual Board Plan

      Algorithmic mechanics:

      Strategic Mechanics:

      Situation > Mode > Directorship Team

      Tactical Mechanics

      Mode > Directorship Team > Task > Action > Types of Behavior

      Best Practice

      Arithmetic inferential inputs:

      Board Structure + Board Composition + Board Process +/- Behavioral Types +/- Board Capital




      Based on Board Plan and Commercialization


      Talent, Teamwork and Leadership

      Based on Talent, Teamwork and Leadership





      Strength (S), Resilience (R) and Endurance (E)




      Shareholder Value (total return to shareholders dividends + share price appreciation)


      Note this is an updated version of an earlier summary.

      Commercial Capitalism

      There is a third way to direct public Corporations. 

      New "Mercantile" or "Commercial" Capitalism is the original system of capitalism whereby Corporations are traded into into indefinite existence based on the second law.

      Under the conditions of commercial capitalism, the basic function of a firm is to convert and exchange useful energy, stored in the capitals, more efficiently than the alternatives based on simple arithmetic:

      This arithmetic described the equivalent of process of internal combustion that drives a firm into a virtuous cycle of capitalization:


      Shares, financial and produced capital are the lowest value capital.  These must be converted into higher value and rarer capitals - human, intellectual, social.  All capitals are then combined to produce lower value capitals to produce a theoretically endless cycle.  The business model describes the logic of capital conversion.   

      Commercial capitalism is agnostic when it comes to the capitals and their sources.

      Shareholder or democratic capitalism works on a different set of principles.  Under the conditions of shareholder capitalism the function of the corporation is to create and transfer financial capital to shareholders. 

      The problem with this model of capitalism is that to create financial capital a corporation must exhaust other vital capitals.  Under the influence of shareholder primacy the corporation begins to convert it higher capitals into the lowest value capital - financial capital.  It's called efficiency and costing out.  The resulting dividend is then not converted out of self interest but transferred for little or no return out of duty.   Left to run its course, the process of decapitalization exhausts the company of the capitals needed to survive.   Some people call it short termism.  Drucker called it suicide.

      Nothing could offend Adam Smith's model of capitalism than the the principles of shareholder capitalism.   

      Under the principles of commercial capitalism corporations are not property but legal persons with the right to pursue their own self interest rightly understood.   Freed from the duty to serve stakeholder and shareholders, the corporation must focus on the process of sustainable capital conversion.

      * revised 14/03/17, 08/06/17



      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.  


      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.


      Which side of history will you be on?


      The Mechanics of Boardroom Performance



      “For every winner, there’s a loser.  And that person didn’t really need to lose. They just didn’t understand the game plan.”

      Buzz Aldrin

      Only seconds on the clock.  Brett Favre, in only his third game for the Minnesota Vikings, receives the snap, pumps, dodges then releases a 32-yard touchdown pass to wide receiver Greg Lewis to defeat the San Francisco 49ers .

      Now imagine the same game but with no huddle before any play.  No signal call. No idea if the Vikings are in offence or defence.  And all players thinking they’re the quarterback.  In short, no idea but to improvise, throw a bomb in the direction of the end zone and try not to break any of the rules.  This is not the National Football League.  It’s the playground.

      In the playground there’s no game plan.  In fact, no matter what code of football, without a plan everyone tends to scramble, chase and go long.

      The game plan connects the team to the objective.  It provides the invisible mechanics that makes success possible.  Who’s on the field, their role and approach to the game deliberately revolve around whether the team is in offence or defence and the state of the game.  Indeed, wherever there is shared endeavour to a common objective you tend to find natural and logical mechanics that describes who does what, when and how.

      Whether on the playing field or within the boardroom, a talented team will only be as good as their game plan.

      The Mechanics of Governance

      Today, the closest thing to a game plan in the boardroom is what I call the “Jensen Defence”.  Named after Michael Jensen and William Meckling, who started a revolution in the boardroom with their 1976 academic paper, the Jensen Defence is structured around the “democratic” objective of the corporation – the preservation and creation of shareholder value.

      It’s defensive because it’s based on the assumption that top managers are motivated to maximise their personal return and that directors, as the so called   agent  of the shareholders,  must ensure that top manager don’t exploit their position to the detriment of the true “owner”.

      The Jensen Defence, more commonly known as “agency theory”, argues the need to line up board structure, composition and process in the direction of the democratic objective:

      • Most directors should be independent
      • The CEO should not be the chair
      • Directors should be financially aligned with the shareholders through ownership and incentive compensation
      • Directors should be generalists
      • Directors should vigorously monitor management

        Though not the only boardroom plan, it’s the most popular having been adopted by boards, regulators and educators as best practice.  Indeed, it’s arguable that no management idea has as many devoted and one eyed fans.

        But as a plan, three flaws stand out.

        First, it’s simplistic.  The Jensen Defence relies on the assumption that if you get the right inputs of structure, composition and process you’ll get the right output of shareholder value.  But, these are only rudimentary mechanics.  Roles, actions and behaviours of directors are more or less fixed no matter what the situation and fixated on the one objective.  The only real variable is each director’s talent.  The rest is a black box that can only be held together by a heroic chair.

        Second, the goal posts keep moving and are becoming harder to see.  Value creation depends on which shareholder the board listens to.  A share trader’s idea of value is different and even opposed to that of a shareholder who plans to hold their shares indefinitely.  In addition, the practice of share lending is making it hard to know who the real shareholder is.

        Third, the Jensen Defence levels the playing field.  In football, the coach keeps their game plan a secret.  In the boardroom, publicly traded corporations are increasingly expected to comply with the Jensen Defence or explain why not.  Can you imagine a football coach explaining to the opposition how they plan to win?  The lesson here is that best practice has become most practice and is no longer a source of competitive advantage.

        The Break Down and Change Up

        Despite its flaws, the Jensen Defence has gone largely unquestioned in the boardroom.  It’s considered at best successful and at worst benign in delivering shareholder value.  Few think corporations fail because of best practice.  Experts are more likely to conclude there just wasn’t enough of it.   

        Then in 2008 holes started to appear.  Even best practice boards watched as their corporations faltered, failed or were bailed out.  In the minds of many, directors quickly fell to the bottom of the corporate ladder.  What few had realised was that corporations were changing and the Jensen Defence could no longer be seen as the best boardroom plan.

        The Jensen Defence can work when top management know what they’re doing.  How they’ll make the best possible promises, how they’ll keep them and get what was bargained for in return.  In other words, the corporation is profitable and sustainable and all that is needed are the checks and balances to prevent abuse by executives.

        The corporation is a product of the precursor to democratic capitalism; mercantile capitalism.  Related to the word merchant, mercantile capitalism invented the corporation to be the vehicle for collective human ambition and its internal combustion engine was trade.  Corporations are propelled by what they trade and the value of what they receive in return.  To this day, it is only through the wisdom and good fortune of this dynamic that a corporation can become strong, resilient and enduring.  After all, what is a corporation but the sum of its promises and the people who keep them.

        When our largest corporations were doing well, it might have made sense to leave the business of trade up to the “experts” and relegate the boardroom to defence and to emphasise defensive tactics like monitoring and questioning top management.

        But, fuelled by cheap money, a fetish for change and a 21st century work ethic – make the most money, in the shortest time with the least effort and with the greatest indifference to consequences – CEOs and top managers began to trade their corporation’s into weakness, vulnerability and ultimately insolvency.  In most cases the failure can be put down to a bad trade - either exchanging too much for worthless things like  securities, executives, ratings advice etc. or making gratuitous promises to analysts and the market.  Put simply, too many corporations made or relied on empty and unnecessary promises to try and keep the real ones – to pay bills, wages, loan repayments, taxes and dividends.

        No boardroom could defend the corporation once good judgement and commercial acumen had been systemically abandoned. 

        If top management have dropped the ball on trade, directors need to step up and change the way they direct.  It’s time to go from defence to a better plan and reconnect what happens in the boardroom with the mercantile objectives of the corporation.  What’s the point of continuing to defend a losing game?

        A better plan in the boardroom starts with a commitment to no more empty or gratuitous promises.  It means a focus on the real business of the corporation and the quality of the big promises exchanged between the board and those who participate in the corporation - shareholders, internal stakeholders like the CEO, external stakeholders like financiers, the state and directors.  But it doesn’t stop there, a better plan in the boardroom means guiding and positively encouraging those to whom the responsibility for trade is given to perform at their best, helping out by bringing opportunities to the table and finally training hard to do all these things.   

        To be clear, concentrating on the big promises doesn’t mean crossing the line that divides directing from managing.  It’s about rediscovering how to deliberately and pro-actively lead and direct the business of the corporation.

        The challenge is that no more can a board go from the Jensen Defence to a new game plan, focused on the mercantile objectives, without a change of strategy and tactics than a football team can go from defence to offence without a fundamental change of strategy and tactics.

        Make no mistake, the Jensen Defence was never designed to support trade.  When it comes to making the big promises, it’s arguable that there are no mechanics that connect the boardroom to the corporation’s mercantile objectives.  As a result, boardrooms can look more like the playground than the professional leagues.  You see, without the right mechanics when the whistle blows on the football field or the boardroom door closes, rudimentary structure and composition quickly disintegrates and the directors starts to scramble after the CEO like kids chasing a ball on a Saturday morning.

        That might have been tolerable when things were going well, but it’s no longer good enough.  It’s time for a new plan.  It’s time for “directorship, “mechanics” and what, for the purpose of this paper, I’ll call the “Tunjic Offence”.     

        The New Mechanics of Directorship

        When directors work toward the mercantile objectives of the corporation they’re practicing directorship and the Tunjic Offence describes the better strategy and tactics.

        The Tunjic Offence concentrates on the missing mechanics in the boardroom and connecting these to the goal of better promises and a stronger, more resilient and enduring corporation.   

        Who’s in the boardroom, their role, types of behaviour and tasks should all change depending on the mode of directing and the corporation’s circumstances.  The Tunjic Offence superimposes the kind of mechanics you see on the football field onto the boardroom to describe:

        •  Strategic direction based on matching the team to four ways or modes of directing based on the internal and external situation of the corporation;
        • Tactical direction based by matching team member roles, board and management actions and types of behaviour (or what I call “method”) to the right task according to the strategic choice of mode.

        These are the mechanics of directorship.  Though the language and model might be unfamiliar, anyone who has spent time in the boardroom has experienced good and bad directorship.  Mechanics exist whether a director is aware of them or not.  The point of the Tunjic Offence is to give them a name and to describe how they can be exploited to the advantage of the corporation. 

        But be aware, there are no silver bullets or checklists.  The Tunjic Offence is a comprehensive and practical system of directing and is designed with serious directors and top managers in mind.  Learning the mechanics of directorship takes more than a read through.

        Of course, if a board already follows so called “best practice”, why start again with a new plan? It’s a tough question but an easy answer if a corporation is struggling to stay in the game.  And, as every footballer knows, the pain associated with learning and practicing a new game plan is quickly forgotten but failure is not.

        The Game Changers

        Before going any further with the Tunjic Offence there are two “we’re not in Kansas anymore” ideas to grasp. 

        Boards Direct in Four Modes

        In football, who’s on the field, their position and role all depend on whether the team is in offensive or defensive mode, the score and the time on the clock.

        Modes and sophisticated team mechanics are not part of the Jensen Defence.  Directors are pretty much expected to defend all the time and their proper role, behaviours and tasks are fixed.

        The Tunjic Offence is dynamic and based on the idea of four strategic modes of directing:



        Example Task


        Making decision reserved to the board  

        Recruiting and selecting the CEO


        Guiding, motivating and encouraging those directed to make sure they trade well

        Nurturing and Encouraging the CEO to ensure they perform at their best


        Helping the corporation by providing access to resources and opportunity

        Providing the CEO access to personal contacts


        Building and managing the team that can perform effectively in each of the Trade, Guide and Help Modes

        Director recruitment


        An effective boardroom transitions between these four modes based on both the situation of the corporation and the circumstances within the boardroom.  Each mode signals a different “state of play” and calls on team members to change their role, their actions, types of behaviour and the tasks they perform to match the selected mode.

        There is a Board and the Directorship Team

        The second game changer is who’s counted on the team.  The Tunjic Offence is focused on everyone physically in the boardroom and not just the directors.  Think of the boardroom as a kind of playing field occupied by people in various positions.

        The Jensen Defence focuses almost exclusively on the position of director and what is happening within the board. That’s like developing a game plan for football but only focusing in on one group of players.  A game plan naturally includes everyone on the field.

        For example, the roles of top managers in the boardroom have gone largely un-noticed by scholars, educators and regulators who re-enforce that “Manager’s must [only] Manage”.  Despite the amount of time and effort that top managers put into the boardroom, few have been formally trained to work with boards. I don’t mean as executive directors, I mean as top managers working collaboratively with the directors. 

         The Tunjic Offence recognises that the board, top management, the company secretary and committee members must all work together as a single team in each of the modes to effectively perform various tasks.   

        To be clear, the board is not part of the management team.  But those in top management, and in particular the CEO, will hold positions on multiple teams.  For most of the time, the CEO leads the management team, the CEO may also be an executive and part of the board, but for some of the time the CEO and others join with the directors on what I call the “directorship team”.

        The Elements of Directorship

        Now you know who’s on the team, the way the game is played and the general direction of the goal it’s possible to drill down on the elements that make up the strategic and tactical mechanics.

        The strategic mechanics are made up of the four modes, the directorship team and the corporation’s internal and external situation.  At every point in the life cycle of a corporation there is a complimentary combination of modes.  At start up the emphasis is on the Help Mode, growth sees the emphasis shift to the Guide Mode and in crisis the emphasis moves to Trade Mode.  In addition, a board can choose how much time they need to spend in each mode during each board meeting.  I believe that corporations are more prosperous, more able to cope with the unexpected and last longer when the board gets the balance of modes right over the course of a board meeting and the year.   

        Next are the tactical mechanics.  Once the strategic selection of mode is made, each member of the directorship team should adapt their role, actions and types of behaviour when performing the tasks associated with that mode.  This means there is a different tactical plan for each mode that is designed to align what is happening in the boardroom with the characteristics of the mode.

        For example, in Trade Mode the board’s role is primarily to make those decisions which are reserved to the board by law or as a matter of discretion.  The actions associated with that mode are designing, deciding, delivering and delegating.  The types of behaviour that best compliment the Trade Mode are critical thinking, willingness to accept dissent and to take personal responsibility for the promises that make on behalf of the corporation.  The tasks in the Trade Mode revolve around the big promises ie. to appoint the CEO, major acquisitions and the like.

        Additionally, because the Tunjic Offence covers the broader directorship team, the tactics include not only how directors relate to each other in each mode as a board (intra board tactics) but how the board and the other team members relate in each mode (Inter Directorship Team tactics). 

        For example, in Trade Mode the CEO should have little discretion when requested to provide information required by the board to perform their tasks in that mode.  However, in Help Mode the CEO has absolute discretion whether they will act upon the help offered by a director and the director should have no expectation that the help will be acted upon.   


        The Board Plan

        The strategic and tactical mechanics form the building blocks of a new plan for the boardroom.

        The plan starts with a focus on the directorship team, made up of the board, top managers and other boardroom players.  At the other end is the overarching purpose to ensure the corporation trades its way to strength, resilience and endurance.

        Based on the corporation’s unique situation, the board must choose the best mix of the four different modes of directing; trading, guiding, helping and building. 

        Each mode signals a different set of tasks required and how each member of the directorship team approaches those tasks; their unique roles and their unique actions and types of behaviours. 

        By matching and aligning the directorship team, their types of behaviours and actions around the right mode based on the ever changing situation the boardroom can approach what in sports is called the “zone”.     

        Be aware, each board plan is unique.  There’s no one size fits all and there’s no one size fits all the time.  As individual circumstances change so does the time and energy needed to be put into each mode.  The change of mode is then the cue to the rest of the directorship team that they need to also change their approach or risk being out of alignment with the rest of the team.

        Learning to Win

        The whistle blows, the playground empties and the team has lost again.  The parents gather to explain the loss:

        The first says they’re not motivated to win.  “We need to incentivise them more”.

        The next blames the kids.  “Let’s face we need more talented players”.

        The third thinks some kids up to no good.  “We need to catch them out”.

        Without a plan it’s easy to think the most obvious explanations for failure are also true.  But not in the National Football league.  When a team fails consistently the knives are out for the coach and their game plan.

        Boards have a choice if they want to end their losing streak.  Work harder at the same “me too” plan as everyone else or find a different way to win.  To be clear, Directorship and the Tunjic Offence is not a repackaged version of Corporate Governance and the Jensen Defence.  It is a head to head contest between an unheralded contender and the undisputed world champion;






        Maximise the corporation’s strength, resilience and endurance

        Maximise shareholder wealth


        Promises and Trade

        Accountability and Control


        Mechanics (Modes and Method)

        Inputs(Structure, Composition and Process)


        Directorship Team



        The Tunjic Offence

        The Jensen Defence


        The Tunjic Offence provides a practical solution to the challenges that confront today’s boardroom.   It’s a better plan because:

        •  It includes everyone who contributes to the successful performance of tasks in the oardroom and not just the board.

        •  It revolves around the four ways in which the board can direct according to the mode that is best suited to the corporation’s situation.

        •  It calls on everyone on the directorship team to match their role, behaviour and actions to the right mode.

        •  It completes the trinity of an effective boardroom.  Without the right plan, individual talent and teamwork is just another “Hail Mary” strategy.

        •  It introduces competition back into the boardroom by providing a plausible alternative to the Jensen Defence and gives directors and top managers a shared model to differentiate how their corporation is directed.

        But perhaps the best thing about the Tunjic Offence is that if you grasp the basics you can start to recognise the broken mechanics in the boardroom.  Once you understand mechanics it’s possible to measure, diagnose and even prevent the less obvious but more profound problems that undermine performance in the boardroom.  Fix the mechanics and there may be no need to rush out and recruit “better” directors, form new committees or find that elusive super hero chair. The turnaround is closer than you think.

        For decades, the world has believed that the board’s role is to defend shareholders.  In better times that might have been enough.  But, if corporations and capitalism are to be renewed, boards must rediscover their mercantile roots and once again lead and direct.  Today, the best defence is the Tunjic Offence and a focus on strength, endurance and resilience through better promises and trade.