Governance

Future-proofing governance for start-ups, scale-ups and SMEs in transition: leveraging the diamond model

Business models, Business strategy, Change management, Governance /

Source: NEMACC, Erasmus University, and Utrecht University of Applied Sciences Governance, what is it, and why is it important for corporations, start-ups, and scale-ups? Governance is the structure of rules, practices, and processes used to direct and manage a company. For larger organizations, the focus is usually on corporate governance, which is more compliance focused. For start-ups and scale-ups, the key focus is on performance and value creation. There are various models, and the Diamond model is one of the most interesting and easy to use. The Diamond model is a dynamic and integrated approach designed to enhance the governance of small and medium-sized enterprises (SMEs). The goal is to steer organizations towards long-term success by focusing on performance and value creation. Significant research about the diamond model of SMEs governance was conducted by NEMACC, in collaboration with a team from Erasmus University led by Prof. Dr. Auke de Bos RA, and the Financial-Economic Advice Lectorate Innovation at Utrecht University of Applied Sciences. This study focused on exploring the aspects of good management and supervision within SMEs, with a particular emphasis on the role of the accountant. The model comprises four key governance processes: steering, controlling, justifying, and organizing feedback. These are further broken down into eight practical components to provide a structured yet flexible framework. This dual nature allows companies, start-ups and scale-ups to adopt formal or informal governance mechanisms based on their maturity, industry, and regulatory context. Steer Steering involves setting the strategy and operational plans. A well-articulated strategy is critical as it provides direction to all stakeholders involved (top-management, employees, shareholders, and customers) and helps translate long-term goals into short-term actions. Maintaining strategic agility is vital in the face of changing conditions. Therefore, sustained attention to strategy and its implementation is essential for business survival in a rapidly changing environment. Control Controlling is about being ‘in control’ and includes setting an organizational structure that matches the company’s scale and goals and ensuring that the information delivered to stakeholders is timely, relevant, and accurate. This foundation enables effective management and accountability. Justify Justifying focuses on accountability to internal and external stakeholders, aiming to increase their engagement which, in turn, can improve company performance. Organize feedback Organizing feedback is about embracing advisory and challenging roles. In SMEs, where formal oversight may be less pronounced, the need for critical advice and feedback is increasingly important. External advisors can play a crucial role in helping SMEs navigate complex and turbulent environments. Implementing the Diamond model means applying these principles in a practical, evidence-based manner. It offers companies a clear guide for discussing and instilling good governance, with the flexibility to adapt to their unique situations and contexts. This model has multiple benefits: it promotes clear communication, allows for strategic adaptability, and encourages stakeholder engagement—all of which are cornerstones of sustainable SME success. Enhancing Strategic Governance: The Scorecard Tool At The Value Department, we build on the Diamond Model by using a tool that enhances our strategic approach—the Diamond Model Scorecard. We use the scorecard to assess companies in transition, providing a comprehensive evaluation of their governance drivers based on the Diamond Model. This tool enables us to assess the current status of each driver using a simple yet effective traffic light system: red, amber, or green. The final column of our scorecard provides strategic recommendations based on the evaluation. Beyond identifying strengths and weaknesses, we offer actionable insights to enhance the organization’s governance structure. This valuable feature ensures that our clients not only understand their current standing but also receive guidance on the next steps toward strategic excellence. Incorporating the Diamond Model Scorecard into our work allows us to provide all relevant stakeholders with a holistic view of their governance landscape and empower them to make informed decisions for future success. It is a valuable tool to initiate conversations and inquire about the progress with employees on those topics, providing an effective means to gather feedback. Furthermore, the Diamond Model also helps to adjust the governance structure during strong growth and evolution, ensuring that the insights gleaned from the Scorecard facilitate strategic decision-making for sustained success and adaptability. As a final point for consideration, we ponder: Where does culture find its place? While this aspect is partly integrated into the organizational structure (control) and internal stakeholders (justify), it warrants explicit attention as a distinct subject in the evaluation of the Diamond Model and corresponding Scorecard. Stay tuned for more updates on how this easy-to-use tool shapes the way we approach strategic transitions.

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Navigating Transformation: Building a Foundation for Successful Change

Business strategy, Change management, Governance, Platforms /

Source https://georgecouros.ca/blog/archives/7393 Change is an inevitable part of life, and organizations must constantly adapt in order to thrive in today’s dynamic business landscape. However, even though we are inherently inclined to desire change, the act of undergoing transformation can prove to be exceptionally difficult – as not everyone wants to change. Navigating these challenges can be complex, requiring substantial energy and dedication. In this blog, we will explore the importance of embracing transformation together as a team and organization, establishing foundational building blocks, considering the human perspective, and ensuring alignment for successful change implementation. 1. Alignment: The Key to Synergy Successful transformation requires alignment at all levels within the organization. Leaders must set a clear direction, communicate expectations, and provide the necessary resources for all teams to work collectively towards the transformational goals.  It is crucial to establish the urgency, importance, and the “why” of the change, highlighting the need for immediate action. Without change, organizations may stagnate, become obsolete, or fail to keep up with evolving market demands. Therefore, it is imperative to consider the consequences of not changing and the potential risks involved. Alignment ensures that efforts are synergistic, avoiding fragmented initiatives that may hinder progress. By fostering an environment of clarity, collaboration, and shared purpose, organizations can maximize their chances of successfully navigating the challenges of change. 2. The Human Perspective Amidst the focus on organizational goals and objectives, it is vital not to overlook the human aspect of change. Change can be unsettling for employees, as it inevitably disrupts established routines and practices. People are at the heart of an organization, and their engagement and commitment are crucial for a successful transformation. Leaders must consider the potential impact of change on individuals and proactively listen and address their concerns, fears, and aspirations throughout the transformational journey. 3. Shaping Organizational Culture Organizational culture plays a pivotal role during times of change. Leaders should examine how the existing culture aligns with the desired transformational goals. Are the values, beliefs, and behaviors supportive of the change efforts? People are at the heart of an organization, and their engagement and commitment are crucial for a successful transformation. Additionally, aligning the reward system with the desired transformation reinforces the message that embracing change is valued and recognized. By actively involving employees in shaping the culture and recognizing their contributions, organizations can engage their workforce’s intrinsic motivations and drive long-lasting transformational outcomes. 4. Building Foundational Building Blocks It is insufficient to merely possess theoretical knowledge of the desired change; organizations must also lay down the necessary building blocks. These building blocks include a clear vision, actionable goals, a strong organizational structure, effective processes, and well-defined roles and responsibilities. By combining theory with an emphasis on practical implementation, organizations can bridge the gap between intentions and tangible outcomes. 5. Team effort: The Power of Collaboration Transformation cannot be achieved alone; it requires the collective effort of an entire team or organization. Establishing a shared vision and fostering a culture of collaboration is essential, thereby cultivating a sense of ownership and shared responsibility. Encouraging open communication, teamwork, inclusivity, and cross-functional cooperation paves the way for a successful transformation journey. 6. The Cost of Transformation Embarking on a transformational journey requires a significant amount of energy and effort, both from individuals and the organization as a whole. It disrupts established routines and requires individuals and teams to step out of their comfort zones. By acknowledging the energy cost associated with change, organizations can foster a supportive environment and provide resources to help manage the challenges faced during the transformation journey. This includes financial investment, time commitment, and emotional energy from all stakeholders involved. And the biggest investment of all is in the people. 7. Measuring Success Beyond Metrics and Company Health While metrics and company health indicators are essential for assessing progress, evaluating an organization’s ability to adapt and embrace transformation must go beyond these measurements.  Leaders should also evaluate whether individuals are empowered to take ownership of their development and understand how their efforts contribute to the overall transformational objectives. By fostering a growth mindset, and providing appropriate training and resources, organizations can ensure that all employees are equipped to drive the desired change and further the transformation journey. While change is a desired outcome for many, the process of transformation is no easy feat. Businesses must recognize the energy and effort required and approach it as a team effort. By focusing on building a strong foundation, considering the human impact, shaping the culture, empowering individuals, and ensuring alignment, organizations can pave the way for a successful transformation. Embracing change is a continuous learning journey that fosters resilience and drives sustainable growth and innovation in an ever-evolving business landscape.

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How to lay the foundation for resilient digital platforms and innovative ecosystems with great governance

Business models, Governance, Platforms /

Globally, we are witnessing the rise of platform-based business models that capture and use data to create value for all participants. From Airbnb, Uber and Lyft to WeChat in China and Amazon Web Services, platforms are reshaping industries by creating new relationships between companies, consumers or suppliers. However, many platforms fail because they do not consider the legal framework that governs them. In particular, a successful platform requires clear rules about how key stakeholders interact with each other — rules that must be put in place at the outset of any digital transformation effort. Leaders who want to create a platform that creates value for all participants. If you’re a leader who wants to create a platform that creates value for all participants, there are some things you should know about the dynamics of platforms and ecosystems. It’s true that platforms can be powerful instruments for creating value. But they don’t just happen; they require deliberate effort and management by the company at the center of them. Platforms are not passive systems that work themselves out; rather, they require active leadership to shape how they develop over time. And while this might seem like common sense on its face, many executives still think of their companies as “platforms” simply because they offer products or services through third parties (and sometimes even own those third parties). Organizations in industries facing digital disruption. Organizations in industries facing digital disruption will be challenged to re-imagine their business models and approach to innovation. These organizations need to be able to scale up and down quickly, adapt quickly to changing circumstances, and change their business model. A good starting point for managing the complexity of such an ecosystem is the design of a good governance framework. Platforms that operate through partner networks. Platforms that operate through partner networks are the most common type of platform. They’re characterized by a marketplace or network of partners providing goods, services or resources to consumers (or between other partners). Examples include: Airbnb (rental accommodations) Uber and Lyft (transportation) OpenTable (restaurant reservations) These platforms are complex because they require multiple parties—the platform, service providers and customers all need to interact with each other in order for the business model to work. Successful management is dependent upon establishing clear responsibilities for all parties involved in order to ensure transactions occur seamlessly. Companies looking to develop ecosystems of value-added services. As you consider how to lay the foundation for resilient digital platforms and innovative ecosystems with great governance, here are some questions to ask yourself: Are we creating value for all participants? Do we operate through partner networks? Are we looking to develop ecosystems of value-added services? Put the right rules in place to orchestrate a platform that creates value for all participants — and helps manage risk. The initial step in governance is to build the right rules. Governance is about how you make decisions, not what decisions you make. It’s about how you manage risk and uncertainty, not about eliminating them altogether. It’s also about ensuring that you have the right systems in place to orchestrate a platform that creates value for all participants — and helps manage risk. But what does “the right rules” mean? What are they? How do they work? We’ll explore these questions next week at BSCA’s Big impact – a recurring event with discussions on topics on everybody’s lips.  Conclusion The governance of platforms is a critical component of success. It’s easy to see how the lack of clear rules can lead to confusion and conflict, but it’s also important not to make things too rigid. Creating a platform where everyone is working together toward a common goal requires flexibility and good communication. In short, if you want your digital platform to be successful, then it needs great governance! Start something new. Grow your business or brand. A better way to do business. Work with us. We can show you the way. We’ll be your digital companion. Be part of tomorrow. #platform #ecosystem #governance #businessmodel #digitaltransformation #innovation #platformcooperation #platformcoopetition #collaboration #community

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