Governance is not advice

I spend a lot of time with boards. Mostly good ones. Mostly with people who have given years of their lives to organisations that matter, and who want to do the work well. I want to say something uncomfortable, carefully, about how I think the work is most often misunderstood, including by the people doing it.

A board, as commonly practised, behaves like a panel of senior advisors. Management brings items. The board listens, asks probing questions, offers views, endorses or pushes back. The minutes record what was discussed. Everyone leaves with a sense that governance has occurred.

Much of the time, it has not. What has occurred is a high-quality advisory conversation. That is not the same thing, and the difference matters most on the day nobody expected.

The test of a board is not its agenda. It is its response.

Organisations rarely fail because no one had opinions. They fail because, when something unexpected arrived, no one had the capability (or the authority, or the practised relationship between board and executive) to respond at the speed and depth the moment required.

Risk registers are not the answer to this. A risk register describes the things the organisation has already imagined. By definition, it cannot contain the thing nobody saw coming. And it is the thing nobody saw coming that is most likely to hurt you. I have yet to see a serious crisis, in any organisation I have worked with, that was already on the register in the form it actually took.

Your risk register maps what you have already imagined. Most crises do not come from it. The capability to respond to what you have not anticipated is what actually protects an organisation when things go wrong.

What a board can actually govern.

A board cannot govern the future. It cannot govern the specific emergencies that have not yet happened. What it can govern (what it must govern) is the organisation's capability to respond. That is a different object. It is not a list. It is not a document. It is the combined, practised ability of the organisation to sense a new situation, name it, decide, act, and adjust, under real conditions of uncertainty.

In our work with boards we break this into a small number of dimensions. I will not rehearse them all here, but in summary: can the organisation see what is happening, can it name it honestly, can it decide quickly enough, can it act with enough authority, can it learn from the result. Each of these is a capability. Each is practised or unpractised. A board's job is to know which, and to do something about it.

The dual rating.

A simple practice, which we now run with most of the boards we are close to. Once a year, the board and the executive rate the organisation, independently, on each of these capabilities. Then they compare the ratings, in the room, with the numbers on the wall.

It is almost always uncomfortable. In most organisations we have worked with, the board rates the organisation higher than management does on at least two dimensions. The board has been endorsing, from a distance, a level of capability that the people doing the work do not believe they have. That gap is governance information. It is the most useful governance information the board has seen all year.

The point is not to assign blame. It is to name the gap, own it, and commit (specifically, with owners) to closing it. Then to do it again, next year, and see whether the gap moved.

Why advice is not enough.

Advice is generous. A board that offers good advice is a gift to management. But advice does not build the capability to respond. Capability is built by practice: by the organisation actually sensing, naming, deciding, acting, and learning, over and over, with the board's eyes on it. The board's real work is to design the conditions in which that practice happens, and to notice, honestly, when it is not.

That is a more demanding role than offering views. It asks the board to be accountable for something it cannot fully control, which is uncomfortable. It asks the board to sit with ambiguity without reaching for the false comfort of a process. It asks the board, sometimes, to admit that the organisation is less able than the minutes imply.

But it is the actual work. The advice is nice to have. The capability is what will hold, or not hold, on the day it matters.

A quieter kind of governance.

Good governance, done this way, is quieter than the advisory version. Fewer strong opinions. More careful naming. Shorter agendas. Longer silences. The board meets fewer times, perhaps, but each meeting does more. The minutes look less impressive and mean more.

I have come to think this is what governing well feels like, from the inside. Not knowing more than everyone else. Not having the sharpest view. Being the group of people who have made sure, quietly, that this organisation will be able to respond (to what it can see, and to what it cannot) when the day comes.

Which is, in the end, the only thing a board is really for.

Paul Steele