There are a tonne of books written about the theory of corporate governance, in fact there are a lot of books written about the theory of most aspects of business today, but the thing is, theory often does not transition into reality. So, while concepts about governance best practice are everywhere, Applied Governance, the reality of getting best practice into action, can often be hugely different.

So, if ideas and the practicalities are different, how can any business move forward and create governance best practices, ones that fit their own values and circumstances?

These are my three essential building blocks for establishing best practice governance, each plays an important part, and each must be implemented for success.

1.     Principles: Understand them and invest in your professional development

Whilst commercial and entrepreneurial savviness is a useful prerequisite for a successful business owner, or a Director, it will not be sufficient in the long run.

For any application of governance, those involved must first understand the basic Obligations of Directors as well as the legal and financial ramifications of the business and all its activities. That is, as a CEO or director, you will need to build up an understanding of the requirements for that specific business, as well as obligations to industry standards, working conditions and so forth. (I like the IoDNZ Four Pillars as a reference.)

Personal Development is not a cost, it’s an investment!

2.     Practices: Needed on a day-to-day basis

The leadership team must have the necessary skills to implement. A simple example of this might be the ability to run a good meeting, the practical knowledge to put ideas into practice and so on. Setting agendas, making useful minutes and notes, all must be managed competently. Even getting people to turn up on time to meetings is part of that competency skillset.

Just as important are strong communication and organizational skills, as is understanding how to make a good argument, based on critical thinking and clear planning. There are multiple strategy building tools, two of my favourites are The Balanced Score Card and a simple annual SWOT analysis.

Being competent with the tools is what makes the theory come to life, practice, practice and more practice.

3.     Hard Conversations: The ones that need to be had, joining the dots

While many governance and management guides will include the first two building blocks, it is this third that really makes Applied Governance come to life.

But what conversations need to be had? They require empathetic understanding of the whole organization, the ability to see the organization from a much broader scope, understand the subtle effects of power shifts and know where conversations, not always obvious and not always ones we would choose to have, must take place.

For example when you employ someone, in a sense you give up ‘power’ to that employee, (any business owner who has employed a new general manager, will get this). Empowering others through delegation, often leads to hard conversations that challenge assumptions and personal world views, but these are the life blood of progress and successful governance.

Having the courage to initiate the hard conversation is the final key to successful Applied Governance.

To be effective, all three building blocks must be implemented simultaneously, a business that excels at just one or two of these, often slips into stagnation and possibly even decline.

So get on to it and bring a team together in your business who; understand the principles, are equipped to implement best practices, and are prepared to have those hard old conversations!