31. Governance Structure (definition)

NOTE: if you’re new to Ground-Up Governance, or are finding anything a bit strange or confusing, you might want to START HERE.

The “who’s involved in making the decision?” part of corporate governance is often called a “governance structure”. Most of the time a corporation’s governance structure starts as just one person making all the decisions. And most of the time that structure works OK forever, or the corporation goes out of business before there’s a chance to try another structure. A lot of businesses are just bad ideas. It’s nothing to feel ashamed about, and it’s not a corporate governance problem. It was worth a shot! 

Once a corporation has more than one person in it, and especially as it affects more and more external stakeholders, there are just too many decisions for one person to make.  Not to mention some of the decisions are too complicated to be made by just one person, even if that person is really special and smart. Some corporations have simple and informal governance structures. Maybe you hire your best friend, a fellow Eyelash who’s an architect, to help you realize your dream of a lavish Reallie Steilish retail palace. The two of you work through all the decisions – big and small – together over ramen and champagne every Thursday. Look at that – you have a functioning governance structure!

We’ll soon have words to describe other common and complex governance structures. For now, if someone asks you “what’s a good governance structure?”  the answer is really just whatever gets the right people involved in the right way to make good decisions for the corporation and its stakeholders.