Gospel According to GaaS (1/25): In the Beginning

Equity, the funds invested by the shareholders, is the soul of a company, and as such, the shareholder is its god. — Nonso Okpala

Understanding Corporate Governance

I have always found explaining corporate governance challenging, even for educated audiences. It’s easier to experience than to explain, mainly because intellectuals have not developed a “street-level” understanding of corporate governance.

As a result, the concept has been confined to boardrooms and top-level government circles, depriving the average person, especially entrepreneurs, of its benefits. This, in turn, limits the kind of collaborative effort needed to build things at scale. The key word here is SCALE.

A lesson from youth helped me grasp the concept of governance. My mother used a broom to show me that while breaking a single broomstick is easy, a healthy bunch is unbreakable. This analogy forms the basis of my understanding of governance.

Governance as a Strategy (GaaS)

Taking this analogy forward, I describe “Governance as a Strategy” (GaaS) as the process of building a base of energized and committed shareholders. Governance as a Strategy (GaaS) is a framework where company leaders actively engage shareholders to make a committed base, aligning their efforts to boost resources and harmony within the company. GaaS involves actions by a company’s directors and management targeted at achieving the following:

1. Increasing the number of shareholders;
2. Significantly increasing resources (cash and otherwise) that shareholders are willing to commit;
3. Enhancing the company’s appeal to counterparties and business partners;
4. Minimising conflicts or misalignments with shareholders around decision-making and resource allocation and
5. Reducing potential conflicts between minority and majority shareholders.

The Shareholder as “God”

Let’s take a step back: the core objective of governance is to grow the company’s shareholder base and resource commitment. Shareholders’ investments are at the company’s core, making equity its “soul” and the shareholder its “god.” GaaS is the philosophy that exclusively sets the doctrine for serving shareholder interests.

The company would not exist without shareholders’ resources, and their investment remains at significant risk. While there are other stakeholders — employees, community, government — each exists to serve the shareholder.

Let’s test this concept:

• If employees are not well-paid and motivated, they may stop working, causing shareholder losses.
• If the community is dissatisfied or endangered by the company’s operations, they may disrupt its activities.
• If government rules are ignored, the consequences fall back on shareholders.

In summary, shareholders’ interests are met only when all other stakeholders’ needs are satisfied. Shareholders shoulder the ultimate business risk.

Balancing Multiple Interests

The first element of GaaS is recognising shareholders’ primal role and how this can be achieved through a structured approach — prescribed activities, policies, and procedures.

The second element of GaaS is the diversity of shareholders and their varying interests, which can sometimes conflict. Recalling the broom analogy, the goal is to build a broad base of shareholders for mutual benefit while maintaining harmony and reducing conflicts. Achieving this is central to GaaS.

Looking Ahead: The Gospel of GaaS Series

While this article offers an introduction, the details of GaaS will unfold in subsequent articles. As the title suggests, this is the first in a series of 25 articles on this concept aimed at bringing governance to the average person. I plan to publish every Monday, starting on 28 October 2024. I don’t claim to be a governance expert, but I bring nearly two decades of experience building successful businesses through collaboration and alignment. That’s how VFD was founded.

Happy reading!