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The second post in our Integrative Governance™ blog series

The Dawn of Integrative Governance:
The Next Generation Standard


A good friend of mine was an engineer on a team responsible for building one of the latest model fighter jets for the U.S. military. He relayed a story to me that I believe has significant relevance and parallels to the governance (i.e., navigation) of today’s organizations and enterprises. He described the situation where a whole team of engineers was dedicated to figuring out how to effectively integrate the various major components of what would become the jet’s navigation system. Each of these components were from different manufacturers, were the best in class for that specific component, but in their current state did not talk to each other or integrate at all. The engineers knew that simply best in class components of a navigation system was not good enough. They had to integrate and communicate to provide the future pilots with the best possible navigation and decision-making tools and information, so that the mission could be achieved while ensuring a safe journey. In the end, the engineers did the difficult but important work of integrating these various components. The result was a world-class fighter jet, for which one pilot could do what would take nine pilots if the navigation system had not been integrated. I suspect that this also increased the chances of a safe and successful mission significantly.

This story supports the premise of the first in series companion article, “Governance – Your Organization’s Navigation System”. Because the challenges, risks and opportunities of navigating (i.e., governing) today’s organizations have become so complex, leaders need the speed, precision and agility of an integrative governance system to help them make sound decisions based on the best possible data, information and real-time feedback.

So what is Integrative Governance, and why should today’s leaders care about it and want to achieve it? To be “integrative” means to promote integration. “Governance” is something that enables navigation. So simply, “Integrative Governance” is a form of governance that promotes integration. What does such a governing approach look like? First, let’s look at the fundamental components of governance:

• ROLES – the governing roles through whom governance is carried out (the “who”)
• DUTIES – the governing duties for which governance is carried out (the “what”)
• SYSTEM – the governing system within which governance is carried out (the “how”)

"Because the challenges, risks and opportunities of navigating (i.e., governing) today’s organizations have become so complex, leaders need the speed, precision and agility of an integrative governance system to help them make sound decisions based on the best possible data, information and real-time feedback."

We have coined a term for how to look at the roles, duties, and system as an interconnected whole – a “Governance Ecosystem”. We believe that “ecosystem” is an appropriate concept for governance because when it is working well and as it should, it is truly an interconnected system made up of many dynamic and complex components that need to be kept in reasonable balance and alignment. Any governing (i.e., navigation) system needs to have three core dimensions: Oversight, Execution, and Verification. For most organizations, the Oversight dimension is carried out by a Board of Directors, the Execution dimension is carried out by a Management Team, and the Verification dimension is carried out by Monitoring Disciplines. How these three dimensions work together to govern the organization determines the success of its navigation:

• BOARD Oversight – providing strategic guidance to consistently achieve the mission and strategy.
• MANAGEMENT Execution – producing risk-informed decisions to deliver stronger performance and results.
• MONITORING Verification – delivering vital insights to better preserve assets and reputation.

One can quickly see how these dimensions, along with their respective roles, duties, and system quickly become a complex interconnected ecosystem, which by their nature demand an integrative approach to meet the challenges of today’s organizations. No longer can the lack of an integrative approach be ignored, nor can such an integrative system be achieved without purposeful effort and maintenance. In future articles in this series, we will explore in more depth the concept of integrative governance roles, integrative governance duties, and an integrative governance system as part of an Integrative Governance Ecosystem™ - an interconnected navigation system that promotes integration.

But for now, let’s briefly explore why achieving and sustaining an effective, integrative governing system is no longer an option or a “nice-to-have” – it is an increasingly urgent mandate that every organization and its leaders must respond to quickly and effectively. But why?

"No longer can the lack of an integrative approach be ignored, nor can such an integrative system be achieved without purposeful effort and maintenance."

All organizations, regardless of type, size or industry, exist within a dynamic and challenging economic and market environment, where trust is an invaluable, but often fragile and elusive “currency”. Many leaders who understand the importance of gaining, building and maintaining trust would say that this hard-earned and most valuable asset takes a very long time to create, but a very short time to destroy. If this is true, defending trust is one of our most important responsibilities as a leader, and the efforts for doing so have an exceedingly high ROI. Earning and defending trust is critical to achieving stakeholder expectations, meeting government requirements, and positively impacting influencer opinions – all of which drive success for the organizations that we lead. Connecting the dots here, does successful navigation (i.e., governance) of our organizations impact the trust others will have in our organization? Would you get on an airplane if you didn’t trust the navigational capabilities of either the aircraft or the pilot? Trust matters. Strong navigation builds trust. Integrative governance enables strong navigation.

"Achieving and sustaining an effective, integrative governing system is no longer an option or a “nice-to-have” – it is an increasingly urgent mandate that every organization and its leaders must respond to quickly and effectively."

But even if this doesn’t convince you of the importance and urgency of integrative governance for today’s organizations, consider this. It has become quite clear that financial statement certifications, which are a point in time, historical look-back perspective, are no longer by themselves an adequate predictor of future organizational health in the complex, fast-moving, often perilous environment we are all navigating within. Many believe the time is soon coming where along with a backward-looking financial certification, there will also be required a more forward-looking governance certification that assesses the navigation/governing system of the organization. If you think about it, these two things together provide a much better and accurate view of organizational health and vitality. The time is not far off when both a financial statement and governance system certification will be required by D&O (Directors and Officers) underwriters to qualify for a D&O insurance policy; by debt rating agencies as part of your organization’s debt rating and cost of debt; by institutional investors as part of your organization’s stock analysis; by regulators as part of assessing your organization’s safety and soundness; by…. you fill in the blank for your organization’s most important stakeholders.

The time is coming quickly. Will you and your organization be ready when it does?

Coming next in our Thought Leadership Series on Integrative Governance™ – we will explore the components of integrative governance roles, integrative governance duties, and integrative governance systems.

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