The complexity of governance: Towards a pragmatic systems model

Abstract

Background: Corporate governance is evolving and shifting, becoming more outcome-focused to address a more complex and uncertain world, rooted in ethics, accountability and integrated thinking. However, governance is complex, so there needs to be an approach to governance observation that manages this paradox. Objectives: This article proposed a pragmatic and innovative model that represents and makes the complex nature of governance accessible to boards, policymakers and regulators. Method: This exploratory and developmental article followed the stages of literature review, conceptual design, model development and visualisation. Results: Corporate governance is shifting as the modern world moves towards greater uncertainty and unpredictability, and along with this, corporate failure is not abating. The science of complexity has been proposed as an approach to observe and enhance understanding of complex systems, and some authors have connected the fields of governance and complexity. A new governance model (GOVIndicia®) was conceptually designed, constructed and visualised. The model proposed three core domains represented by a Venn diagram: culture, decision-making and implementation and oversight. The model inferred functional operation in both a cyclical and interconnected action. The three domains each had three categories, and each of those three indices made 27 indices overall. Conclusion: The critical importance of governance is clear, and yet corporate failures keep occurring. Modern governance is operating in an increasingly complex environment, and governance itself is a complex system and should be modelled as such. Contribution: The complexity governance model proposed supports boards and their organisations, as well as policymakers and regulators.