When Governance Stops Creating Value
A conversation about how boards lost sight of their real work — and how to get it back.
Let me start with something I suspect many Directors already feel in their bones:
You’re doing more governance than ever before, yet it’s starting to feel like you’re governing less.
Your board packs are thicker (or take more time to swipe through the slide deck on your iPad). Your meetings are longer but strategy is still shoe-horned in at the end. Your regulatory obligations keep multiplying - quarterly. And somewhere between new ESG disclosure rules and the third update to the risk appetite statement, you can’t shake the sense that the board’s real purpose - sustaining maximized value creation - is getting lost (or has been lost).
I know you’re not imagining it. You are right.
The Drift No One Wanted but Everyone Feels
Over the last couple of decades, a quiet and insidious substitution has taken place.
Boards once designed to challenge, steer, and sustain enterprise value have become compliance hubs. They have been optimized for not being wrong (like I call it “playing not to lose), rather than making things right (or “playing to win”).
The intent of regulators and law makers was good. Each regulatory wave - such as Sarbanes-Oxley, GDPR, climate reporting, cyber oversight - were expected to add something valuable to the organization and thereby their investors. But together, they have created a gravitational pull toward procedural governance.
I believe the danger is subtle but real:
When compliance becomes the dominant operating system, value creation becomes a side effect instead of the main event.
I believe every Directors sees it in every agenda:
Time devoted to verifying adherence instead of shaping advantage.
Reports that quantify risk exposure but rarely connect it to opportunity.
Committees that monitor the past rather than imagine the future.
I know and Directors tells me that it’s not because boards have stopped caring about performance; it is that the machinery of governance has crowded out the mindset of stewardship.
What Boards Were Built to Do
At its core, a board exists to develop and sustain the conditions for maximized value creation. It does not exist to ensure compliance for its own sake, not to manage reputation as theater, but to steward the organization’s capacity to thrive.
That purpose has five anchor points, and most boards I work with are wrestling with at least two of them.
Strategic Stewardship
The board’s job is to make sure the enterprise remains directionally right, not just procedurally compliant. You’re there to test assumptions, probe blind spots, and ensure management’s plan still matches the world outside the window.Risk–Reward Calibration
Oversight means balancing courage with caution. Too much caution and you stagnate; too much courage and you implode. The skill lies in calibrating risk to reward — but too many boards have mistaken prudence for paralysis.Cultural Stewardship
Culture is not “soft stuff.” It’s the architecture of behavior — the invisible system that drives how decisions actually get made. Boards must read and shape culture as actively as they read and shape strategy.Capital and Resource Allocation
Governance without a capital lens is hollow. Every major decision is a resource bet. The board’s fingerprints should be visible not on the budget line items, but on the strategic logic that drives them.Legitimacy and Trust
Yes, ESG and stakeholder governance matter. But they matter because they protect the firm’s license to create value. When stakeholder engagement turns into virtue signaling, the legitimacy it was meant to preserve erodes.
When all five work together, the Directors and board sustain the only outcome that matters: durable value creation in a complex, volatile environment.
How It Went Sideways
If you’re feeling the stress of governance inflation, it’s not just you. The entire governance ecosystem has evolved faster than the board’s ability to adapt. The result is what I call “governance drift”, a structural shift away from performance toward protection.
Here’s how it usually happens:
Regulatory Creep
Every new law adds oversight layers. The board’s time fragments into risk subcommittees, disclosure reviews, and internal audits. Before long, management innovation has no oxygen (why are old laws not replaced - more is not better?)Audit Culture
Boards start confusing evidence of control with evidence of performance. You can have immaculate compliance and still be strategically irrelevant to your customers.Fear-Based Decision-Making
With legal liability rising, directors understandably err on the side of caution. But the board’s purpose isn’t to be safe; it’s to be effective.The Optics Trap
ESG reporting, stakeholder statements, and “tone at the top” narratives become performative when they exist to manage reputation rather than drive impact.
None of this is about being a bad director. It’s about good directors operating in a system that’s grown more complex than the governance frameworks that designed to guide it.
What High-Performing Boards Do Differently
When I look at boards that still create and sustain value, I see one consistent pattern: They’ve rebalanced their energy. They treat compliance as the floor (as table stakes if you will), not the ceiling. They reclaim time for curiosity, exploration, foresight, and meaningful dialogue. They’ve rebuilt their discipline around five meta-capabilities:
Strategic Curiosity: Directors constantly ask “what’s changing and why?” rather than “what’s the next report?”
Risk Calibration: The board treats risk as fuel for growth, not just exposure to minimize.
Cultural Literacy: Directors read the organization’s mood and meaning — they sense when fear, fatigue, or misalignment creep in.
Systems Thinking: They see how governance, strategy, and culture interlock; no one element dominates.
Adaptive Oversight: They update how they govern as the environment evolves — governance itself becomes a living system.
Boards that focus on these meta-capabilities behave less like compliance committees and more like intelligent ecosystems by balancing stability with exploration. They’re not reckless; they’re rebalanced and focused on maximizing sustainable value creation.
Reclaiming the Board’s Purpose
You’ve probably heard someone in a governance seminar say, “Boards set the tone at the top.” That’s true, but it is wholly incomplete. Great boards don’t just set tone; they set trajectory. They focus relentlessly on the conditions that make value creation sustainable: leadership depth, cultural integrity, strategic coherence, and adaptive capacity. Everything else, such as, policies, disclosures, frameworks, serves that singular goal. So if your board is feeling overloaded, here’s a simple test I give directors:
“Of the next ten hours of board time, how many will be spent on creating or sustaining value versus verifying compliance?”
If your answer is below five, you’re managing governance, not practicing it.
My Advice
I know this shift feels heavy. You, as a Director, are being asked to operate in new domains, technology, geopolitics, stakeholder activism, all while navigating scrutiny from regulators and investors. But the answer isn’t ever more and complicated structure.
You need clarity of purpose.
The board’s role is not to do everything; it’s to govern what matters most: the organization’s ongoing ability to create, protect, and renew value. Compliance, risk, and ESG are vital, but they have to be seen as supporting actors, not the main story. When boards forget that, they become guardians of process instead of stewards of prosperity. Boards and Directors can and must choose - be active participants in value creation or not.
The Hard Truth (and the Hope)
The governance crisis isn’t a failure of diligence. It’s a failure of orientation.
Boards have been taught how to comply, not necessarily how to create.
How to survive scrutiny, but not how to sustain and exploit success. I fervently believe its not your fault - there is a great deal of pressure to perform.
But here’s the hopeful part: Boards can evolve once they rediscover that governance is not about control, it’s about capacity. They possess the ability to pivot on a dime and when they do the transformation is measured in months, not quarters.
Every director I know who’s leaned back into value creation finds the work lighter, not heavier. They ask sharper questions. They listen differently. They govern with intent again.
That’s when governance stops being a burden and becomes what it was always meant to be:
The long game of leadership - played for the sake of enduring value.
Contact me here on LinkedIn if you’d like to transform your board practice.
#BoardEffectiveness #CorporateGovernance #ValueCreation #Leadership #Stewardship #AdaptiveGovernance #DirectorDevelopment
A fantastic read, eye-opening on behaviors we encounter far to often, thank you Haarnout.