I have just returned from the two day BoardSource Leadership Forum with 900 other people who are striving to improve their board’s governance. There were so many great ideas that it is difficult to know where to start but the main take-away is the evolution of board governance from the 40-year-old policy governance model to a model called “generative” governance.
Generative governance is the next step for a board after achieving robust fiduciary and strategic governance discussions. It is meant to be an additional type of conversation that boards have in addition to the other two. All three are equally important but generative discussions allow boards to have more thoughtful discussions about the “why” of their decisions. It gets deeper into the values of an organization and allows boards to get out of the weeds and into thinking about issues at a different level. Board members are finding this to be a more rewarding type of board governance since it taps into their expertise and experience in ways that fiduciary and strategic governance do not.
Generative governance does not need to add extra time to board meetings. Once boards are comfortable with the conversations they are having on fiduciary and strategic matters and have the proper documentation in place in their Board Policy Manual, they can spend less time at board meetings on these topics and more time on generative discussions.
An example of what a generative discussion would look like is in the case of a church being offered a large sum of money for their stained-glass windows. Fiduciary questions are what the amount of money is and what the restrictions are in selling an asset that was likely donated. Strategic questions would be how the removal of the windows would affect membership and how else the money could be used. Generative questions are why the windows are important to worship and why the church is considering selling them at this time. In short, fiduciary questions usually answer the “what”, strategic questions answer the “how” and generative questions answer the “why”. All three types of questions need to be asked to achieve good governance but the answers to the generative questions will often reduce the amount of time needed to discuss the fiduciary and strategic questions.
Another point about generative questions is that they do not necessarily need to result in immediate answers or decisions. Like the word “generative” suggests, it is meant to generate or create ideas and dig deeper into identifying and defining underlying values. Boards will need to be careful not to use generative discussions in inappropriate contexts and to end conversations when they are clearly not leading anywhere productive however those caveats should not prevent a board from having the discussion in the first place.
There are lots of new and “generative” ideas coming out of board governance discussions. The ideas will continue to evolve and improve as more and more boards push the envelope of great governance.