“When an organization fails because of executive malfeasance, it generates a lot of attention. But such situations are actually relatively rare. It’s much more common, though less talked about, for organizations to fail because of ungoverned incompetence. That is, someone does the wrong thing while trying to do the right thing, and organizational systems fail to catch it and contain it. This becomes more likely as the organization takes on strategic risk – through innovation, mergers and acquisitions or because its environment is becoming more volatile.
Boards that focus on problem-finding put their organizations on a safer footing. Problem-finding boards establish structures and processes that prevent many problems from arising and stifle nascent problems quickly and effectively. Problem-finding boards understand the three drivers of ungoverned incompetence – a collapse of competence, shortcomings in self-governance and inadequate corporate governance – and why they can be so hard to detect.”
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