Opportunity Lost: Hidden failure of governance

Lehman Brothers. Enron. Volkswagen.  These companies are often cited as the most egregious examples of governance failures. The lessons learned from these scandals have been closely studied and cascaded. There is generally a focus on boards and director education on the importance of establishing strong processes and controls to manage business risk. These improvements are essential. However, we are still inconsistent on how strategy is prioritized and evaluated.

Failures in strategy are too often explained (excused?) by uncontrollable factors. For example, market shifts such as new competitors, economic trends or consumer preferences are not always predictable.  I would argue that evaluating the success of an organization and its leadership simply by delivering strong returns despite market headwinds is shortsighted. Robust and transparent financials are table stakes for any high performing company.

We should be asking how we could have done better. What was missed? Did we deliver the expected value from our M&A activity? How did our competitors outperform us and why? Are we retaining our top performing team members?

We can all quote examples of good companies that could (should) be great if only we lifted the hood and examined strategy and culture more closely. Employees, shareholders and competitors don't hesitate to talk about our opportunities lost. Establishing thoughtful, consistent and transparent reviews of corporate strategy is difficult, but is essential to good governance.

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