The real impact of corporate governance isn't about compliance or structure or policies, it's about the conditions that impact decision-making. Sound-Up Governance features fresh perspectives to help boards and executives to be a bit better tomorrow than they were yesterday.
If it’s been a while, this is a good time to look back at how Ground-Up Governance defines corporate governance. It’s about making decisions. Lots of decisions are super simple (should I cash in my winning lottery ticket, or not?). Lots of decisions don’t really matter (should I relax at the park for 20 more minutes or 20 minutes and 0.5 seconds?). But lots and lots of decisions really matter. Boards of directors need to make big important decisions all the time.
A mistake that people usually make when they’re making decisions on their own is that they fail to imagine all of the possible options they can choose from (Could I stay at the park all day? Maybe I could invite a friend or five? Maybe we should play bocce or pickleball? I kinda want to grab some lunch after, too!). Making things even worse, even if we *did* imagine all of the possible options, we’d have a hard time imagining how the results of our decisions might impact other people, especially if those people are really different from us. Maybe they grew up in a different country, or have an unusually large or small head, or can’t stand tarantulas, for example.
And yes, there really are people out there who can’t stand tarantulas…weird, right?
Anyway, you can imagine how useful it might be to hear a tarantula-hater’s perspective on your tarantula handling operation. What if their perspective helped you to come up with a new tarantula-hater-friendly approach to tarantula handling? What if talking to a person with a huge head led to new hat technology that benefitted all Reallie Steilish hat-wearers?
Board diversity is basically a measure the extent to which board composition represents multiple different groups, perspectives, skills, personalities, abilities and more. One really tricky element of board diversity is that there are lots of groups of people who have basically never been allowed on boards even though they deserve to be there as much as anyone else. For example, there were basically no women on boards of directors for a long, long time. It’s pretty obvious why this was a dumb missed opportunity considering that women are just as good or better than non-women at everything, they have a better idea than anyone else about how corporations can best serve women, and also are easy to find because they’re basically everywhere.
That’s just one of countless examples of mistakes that boards make when it comes to board diversity. One of the many things that makes board diversity challenging is that there’s no such thing as “perfect” board diversity. Boards are relatively small compared to the population of the world, so no matter who’s on a board there will be lots of missing perspectives. But you should be *really* interested in considering as many perspectives as possible when you’re doing corporate governance. The more different-y those perspectives are, the better!