Corporate Governance vs Corporate Excellence
Is it enough to just be "Well Governed"? No. You can have a perfectly governed company (zero fraud) that goes out of business because it makes terrible products (Blackberry/Nokia).
- Corporate Governance: Conforming to rules. (Compliance / Safety).
- Corporate Excellence: Performing to potential. (Strategy / Growth).
The Balance
- Too much Governance: Bureaucracy. Analysis Paralysis. "The Board said NO to everything." -> Stagnation.
- Too much Excellence (Aggression): reckless risk-taking. "Growth at any cost." -> Enron/Uber.
The Goal: Sustainable Excellence.
How Governance Enables Excellence
- Lower Cost of Capital: Cheaper money allows more R&D investing.
- Better Decision Making: Diverse boards challenge the CEO's blind spots.
- Crisis Management: Good governance helps survive shocks (like Covid).
Note
Insight: Governance is the Brakes on a car. Excellence is the Engine. You need the engine to go fast. But you need the brakes to drive fast safely. If you have a Ferrari engine and bicycle brakes, you will crash.
Loading quiz…