A governance outreach to the sector

IN much the same way that a close, thorough look at the enterprise’s internal value chain would yield specific action items that must be addressed for core process improvement, the same look at the external value chain would immediately point to at least a few areas of concern that need to be addressed.

Doing so is not only an added burden that normally governance imposes; it is also vital for the efficiency and effectiveness of the enterprise’s own core process.

• Gap analysis would point out the vulnerable points in the supply or value chain; and these may need to be addressed in as straightforward a fashion as possible. In fact, such an exercise has become an indispensable component of the over-all risk management and oversight over the enterprise. It can point out very clearly therisk factors that it would need to insulate itself against. It therefore pays for the enterprise to reach out positively to those other enterprises within the same value chain that can have significant and critical bearing on the enterprise’s operations.

• Sector efficiency improvements would also be highlighted by the kinks that stand up against more seamless inter-connection between the different enterprises within a sector. These may not be so easy to remove; but over time, with cooperation from everyone in the sector, improvements in functional interdependence can be introduced, under a time-bound, realistic program. In fact, through this practical, outcome-oriented program, the few key sectoral players can initiate a longer-term collaboration program designed to make the sector more competitive, more effective, and more flawless in its seamlessness.

• Areas for new initiatives and investments would come as par for the course. Governance enterprises may not be in a position to undertake new investments or expand into new areas; but the critical gaps and important kinks they find in their external value chain would point to new players they can attract to make the necessary investments. In this way, a governance enterprise can serve as a leading advocate for sector development and competitiveness: it may not undertake all the new investments itself; but it can play a very significant role in getting the required investments undertaken.

If there is anything that the governance outreach to an enterprise’s sector or external value chain highlights, it is the fact of close interdependence: every enterprise depends to a very large extent for its own core process efficiency upon it securing the close cooperation and positive working relationship with others in its value chain.

This may sound rather “cerebral” for many who have been used to doing things their own way.In fact, it has some very clear, practical ramifications. First, it is always an important governance discipline to look at the immediate world around, because that world has a significant impact on internal core process. Second, the same governance discipline demands that an enterprise should go way beyond “talking” about sector inter-dependence. It has to forge alliances with at least a few in its value chain — particularly those that can play a very important role in sector seamlessness — so that outcomeoriented, time-bound outcomes can be targeted through the cooperation of all involved.

In forming these alliances, there should be one social objective: the raising of sector efficiency and effectiveness out of a deep sense of social responsibility for the common good of the broader community that the sector serves. This is to underscore social responsibility.