As we face converging crises, there is an increasing understanding that the role of business needs to change. We expect businesses to behave responsibly towards the communities they impact and the environment they operate in. But what about governance? As we start to expect more and more from the way we operate businesses, shouldn’t we also examine and evolve how we govern? The answer is yes.
Effective governance in the Next Economy must move beyond the typical approach of compliance and monitoring financials to include the wider (and longer-term perspective) of other stakeholder interests. What does this look like and where should the Directors who want to lead these changes start?
A Board’s responsibilities will always be bound by certain legal parameters, and we aren’t suggesting that these are not important to understand and navigate. However, effective Next Economy governance has three additional elements: Conscious leadership, clarity of purpose and the valuing of relationships that comes from the understanding that a Next Economy Board is a node in a relational web. No silos or islands here.
So what does this look like in practice? How do Directors begin to evolve their governance practice?
1. Conscious Directors
A Board practising Next Economy governance is made up of Directors who exercise conscious leadership. Conscious leaders are generally understood to be self-aware, humble and emotionally healthy. This plays out in the Boardroom in three distinct ways:
MINDSET
A Conscious Director takes responsibility for her leadership role. She develops self-awareness, awareness of strengths and blind spots and of emotional trigger points. This allows her to cultivate an open and curious mindset and to remain present no matter the context.
INTENTION
A Conscious Director intends to serve the purpose of the organisation and brings humility, strength and passion to the role.
ACTION
A Conscious Director is an excellent listener and knows when and how to ask questions that can open perspectives. A Conscious Director can argue constructively, injecting nuance into a discussion.
2. Clear on Purpose
The Board that practises Next Economy Governance is clear on purpose. Individual Directors understand why they are in the room and their specific role on the board. The wider Board understands the purpose of the Board in the governance system –the specific contribution it is to make.
By articulating the purpose of the Board and its alignment with the organisation's wider role and purpose, board members gain clarity on their roles and contributions. This clarity helps Boards to focus on activities that drive the organisation's mission and vision. It also enables them to evaluate the alignment of their decisions and actions with the organisation's purpose, ensuring that governance practices support the realisation of the organisation's broader goals. Purpose is both a compass and a road map.
3. Real Relationship
A Next Economy Board is aware of the web of relationships it exists within and develops genuine relationships with its stakeholders. Real relationship is built with two-way dialogue, involving active listening, deep understanding, and the ability to respond accordingly.
These principles equally apply when thinking about stakeholders. By building real relationships, Next Economy Boards gain valuable insights, identify emerging risks and opportunities, and build trust.
When these three components are fully embraced, Boards can begin to practise Next Economy Governance.
By Mele-Ane Havea
Curious about how to elevate your Board role? Sign up for our inaugural Next Economy Governance program.
