We love all things Governance at Kuberno. Our mission is to help organisations navigate governance and become future fit through the latest thinking and technology.
For too long, Governance has been equated to admin and bureaucracy rather than taking its rightful place as a central tenet of how organisations run.
So, we wanted to take a moment to put governance in context and explain how it interacts with strategy and culture. Buckle up as we take you on a three-part series through Governance: how it started, how it has evolved and where its future lies.
And we start here.
What’s the difference between Governance, Management and Leadership?
Governance, management and leadership…. these can sometimes be terms that are intermingled. But they are different elements on how an organisation is run.
Governance refers to the actions, processes, traditions and institutions by which authority is exercised and decisions are taken and implemented. The two key words being “authority” and “decisions”.
Governance is the “top level” of the structure. It decides how authority is percolated through the organisation. This in turn decides how decisions are taken. It is also the root of accountability within the organisation – with ultimate accountability to the organisations’ stakeholders. Those who “govern” an organisation set the strategic vision and direction, formulate high level goals and set norms of behaviour. They also oversee the management of the organisation to ensure delivery against the strategic goals and meeting the needs of stakeholders.
If Governance is the “top level”, management is the operationalisation of the governance approach. It involves running the organisation, managing day to day decisions such as allocation of resources and implementing decisions in the context of the mission and strategic vision.
Leadership sits alongside both governance and management. In this context leadership is not about roles, but about how people are motivated and inspired to deliver against specific goals. Anyone within the organisation can show leadership – good or bad.
Culture has a symbiotic relationship with governance, management and leadership and underpins them all. The way all three are carried out are likely to drive the culture in an organisation. However, culture needs to be aligned with the desired outcomes or mission of the organisation. Otherwise, governance, management and leadership are likely to be ineffective – particularly when it comes to driving change.
What is governance and where does it come from?
Let’s take you right back to Ancient Greece.
The root of the word “governance” comes from the Greek verb Kubernao – meaning “to steer” (you may see the resemblance with our business name Kuberno and in our tag line, “Navigating Governance”).
Plato was the first to apply the verb in a metaphorical sense. He applied it to the way a state should be run, drawing an analogy between how a ship is run with how a state should be run. While Plato’s conclusions are sometimes controversial (being linked to totalitarian philosophies) he essentially pointed out that no single person could know everything about running a ship (state), but that equally having a group trying to steer the ship without structure or essential knowledge would be catastrophic.
Plato concludes that the best person to steer a ship is the person who understands navigation – i.e., the person who can decide where to go and plot the route to getting there – hence steering the ship of state.
The word governance has its roots in the concept of steering and not controlling.
Governance in the 20th century
The term governance does not become common place until the early 20th century. The concept of corporate governance does not become mainstream until 90 years later with the publication of the Cadbury Report in 1992. But the evolution of governance in the business context has been rapid in the last 30 years, spawning further sub-sets such as risk governance, project governance and so on.
The meaning of governance has become diluted over the years. It’s now often confused with bureaucracy or admin. Yet the purpose of governance within business has been expanded from its original role of ensuring agency between principal (owner) and agent (manager) to, according to the OECD – restoring faith in capitalism!
The UK Corporate Governance Code takes a more pragmatic approach, which is based on the premise that good governance should help efficient, effective and entrepreneurial management that can deliver the long-term success of the company.
In part 2 we are going to delve deeper to understand how this has come about and where we are today, *spoiler alert* potentially on the cusp of a governance revolution.