(Excerpt) LAWS OF NATURE
Over billions of years nature has evolved sustainable systems of governance based on survival of the fittest. Living creatures cannot sustain their existence without self-regulation and self-governance. This was achieved before the existence of humans, their governments, laws, regulations, regulators, codes, auditors, independent directors, rating agencies, law courts and manifold layers of experts, advisors and even meetings like we are having today!
We must conclude that “good”, “best” and/or “sustainable” governance would follow the laws of nature. In other words good governance is self-governance.
Good governance must be sustainable governance. So self-governance offers most efficient and political desirable method for achieving the aims of this conference.
The role of government would change. It would reduce: (a) the need for regulators; (b) the size and costs of government while (c) enriching democracy at the grass roots level to sustain society and the environment. The role of government would become indirect. In the words of US Vice President Al Gore its role would be “to imprint the DNA” of institutions so they could become self-governing.
Space probes and robots must be self-governing. They could not be designed to be self-governing without the discovery of the science of governance. It is a new science identified years after the discovery of relativity or quantum mechanics. In 1948 a MIT mathematician described it as “cybernetics” and defined it as the “science of control and communications in the animal and the machine”. My PhD research showed how this definition could be extended to social organizations to become the “science of governance”, and specifically, “a science of corporate governance”.
DNA in social biota only survives if it hard wires its host to possess contrary behavior with manifold ying/yang characteristics such as approach/avoidance. Contrary behavior introduces a “requisite variety” of responses with checks and balances to permit the selection of the most appropriate reactions in uncertain, dynamic complex life threatening environments. While small-brained insects can survive in such environments, the 2008 crisis revealed that large brained highly intelligent so-called “masters of the universe” could not. The problem is that most large corporations are governed through top down command and control hierarchies rather that as an authority system resists contrary views, bottom up initiatives or checks and balances.
There are some firms who have adopted an ecological form of network governance with outstanding results. These firms have sustained their existence over business cycles and generations of CEOs. Examples include the John Lewis Partnership, Visa International and the Mondragón Corporacion Cooperativa (MCC)13. They are located respectively in the US, UK and Europe to prove that no changes in laws are required to re-invent corporate governance.
FAILURE OF TOP DOWN ONLY GOVERNANCE
The failure of current laws, regulations and regulators to protect stakeholders arises because each relies on a top down approach. The science of governance reveals that a bottom up approach is also essential to regulate complexity. Lawmakers and their regulators cannot control firms if firm directors and/or executives in turn rely on a top down control and communication system.
Network governance introduces bottom up control and communications from the very people governments and regulators are trying to protect. As illustrated by the John Lewis Partnership and the MCC, it is plain common sense for stakeholders to be included in the governance architecture of firms. Michael Porter recommended this approach in his report to the US government on competiveness. But his ideas were not adopted because stakeholders would introduce conflicts of interest. It is by including contrary views that network governance provides additional advantages than those seen by Porter.
Network governance separate conflicting interest and uses different viewpoints to create checks and balances to establish more mutually effective and resilient operations. Also, by separating the governance and management powers of directors, governance and management functions can be integrated throughout the firm. This in turn introduces self-regulation and self-governance as found in nature.
The speech by Dr. Shann Turnbull: http://bdti.mastertree.jp/f/eva1mz9y