How Good Governance Supports Scalability

Good governance is a universally applicable principle.

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One of the key misconceptions that we come across frequently is that governance training in Africa is not applicable to Europe, Asia or the USA. The principles are in fact applicable everywhere, as can be seen from the development of ISO 37000 (Governance of Organizations) that is applicable in all of the 100+ countries that subscribe to what is set out by the International Organization for Standardization.

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At the same token, all businesses need to scale to become viable, profitable assets of value. The extent that they scale may be affected by all kinds of factors – including what country they are located in – but if something isn’t growing and improving, it is dying, as with everything in nature.

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Decision Making and Strategic Planning

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All too often, entrepreneurs respond to a “great opportunity” by leaping off the cliff into the unknown and building the plane on the way down.

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If a business has a strong leadership team that follows a good governance process, they are more likely to build a strategy, plan ahead and make better decisions, because they have thought things through, developed a strategic plan and talked through scenarios to reduce the risk of painful and expensive surprises.

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In addition, if there are non-executive directors in the boardroom who can help the business be better prepared before the opportunity arises, or help to spot some of the dangers before committing to jumping off the cliff, a painful fall or a fiery death in the valley below can be avoided.

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Attracting Investment

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Strongly linked to good governance, attracting investment is a foundation of scaling.

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Investors are more likely to fund companies with strong governance frameworks, as these companies are considered as having lower risk.

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Good governance can lead to better credit ratings and easier access to capital markets, providing the financial resources needed for expansion.

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Scaling with Certainty

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The Sirdar Governance Compass is a methodology that has been tested on and used by hundreds of businesses for more than 15 years. The robust model consists of eight segments which include all of the main areas that any organisation needs to be considering, building strategies for and monitoring each year.

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The “North” is Strategy and Direction, because scaling a business without a clear idea of where it is going is near impossible (or very lucky!). Furthermore, not being able to communicate this direction in a simple and easy-to-understand manner to all stakeholders – let alone then attracting the clients, staff and other resources to scale – makes things unnecessarily difficult.

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“Culture eats strategy for breakfast” is a famous quote from legendary management consultant and writer Peter Drucker. If the culture of the organisation is not aligned with the strategic direction, then this just adds further to the difficulty of taking the organisation to the next level because individuals, teams and even entire divisions can end up pulling in different directions.

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Once a clear strategy has been defined and an aligned culture developed, it becomes much easier to determine the roles, responsibilities and attributes of the team members needed to take the organisation forward as effectively and efficiently as possible (East in our compass).

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Less friction in the system equals more speed for less energy expended, and as a result, a better chance of successful scaling.