By Marcus Coetzee, 25 July 2025.

1. Introduction

Organisations need good governance to stay on track and fulfil their purpose. Good governance involves a group of people, such as a board of directors or trustees, providing strategic oversight and ensuring that an organisation makes sensible strategic decisions and operates ethically. Such governance structures function effectively when they consist of the right people having the right conversations. These are the two key ingredients for successful governance. 

In this context, the “right people” means capable individuals with a diversity of knowledge, experience, and mental models. When performance is the primary objective, diversity in thought matters more than demographic diversity – unless the goal is to ensure representativity. People of different demographics often bring unique knowledge, skills, and perspectives to the table, but this is not always the case.

The “right conversations” include a willingness to invest time and effort in thoroughly exploring the matter at hand with fellow directors. Other components, such as governance systems, standards and tools, are useful to the extent that they enable the right people and conversations to flourish. 

Organisations should therefore be mindful and intentional about the types of people they wish to recruit for their boards, the types of conversations they want to encourage, and the type of governance culture that would be a strategic asset.

This article pulls together some ideas that have been floating around my mind for a few decades. It was inspired by a chat with Changing the Chemistry – a Scottish charity that seeks to increase diversity of thought in boards, which it defines as “being identity, cognitive and experiential.” I have also written this article from the perspective of my work with third-sector organisations. The term ‘board’ or ‘board of directors’ therefore includes boards of trustees and other types of governance structures.

2. Good governance is a survival mechanism

Good governance, whether it be a board of directors or another type of governing body, is not just a compliance function – it is a strategic asset in our rapidly changing world. Governance provides strategic oversight and helps senior leaders make sound decisions, operate ethically and align with laws and policies. At its best, it helps organisations to survive and thrive, rather than flounder, in an increasingly complex environment. 

Consider the world we’re operating in – a highly complex and interconnected landscape due to globalisation and digital transformation. As Kevin Kelly, the founding editor of Wired Magazine, describes it in The Inevitable: Understanding the 12 Technological Forces that will Shape Our Future (2017): 

“The rate of change in recent times has been unprecedented, which caught us off guard. But now we know: We are, and will remain, perpetual newbies. We need to believe in improbable things more often. Everything is in flux, and the new forms will be an uncomfortable remix of the old. With effort and imagination, we can learn to discern what’s ahead more clearly, without blinders.”

In such an environment, organisations must learn to quickly make sense of changes and respond accordingly. Those that fail to adapt are increasingly at risk of downsizing or disappearing – a trend already visible in the UK and likely to accelerate. 

Michael Reeves and Mike Deimler of the Boston Consulting Group articulated this need for adaptability in Adaptability: The New Competitive Advantage (2011):

“Those [organisations] that thrive are quick to read and act on signals of change. They have worked out how to experiment rapidly, frequently, and economically – not only with productions and services, but also with business models, processes, and strategies…Perhaps most important, they have learned to unlock their greatest resources – the people who work for them.”

At the governance level, adaptability depends on diverse thinking. Boards with a diverse range of mental models, knowledge and experience are better equipped to interpret complexity, anticipate change and respond strategically. This idea also aligns with Ashby’s Law of Requisite Variety, a key principle in cybernetics – the study of systems and control mechanisms. As W. Ross Ashby put it in Introduction to Cybernetics (1956): 

“The greater the range of responses a control system can generate, the more disturbances it can successfully regulate or absorb.” 

Evolutionary theory also emphasises the importance of diversity – something we also observe in nature. On my morning walks in the park, I often see crows – a species known for its intelligence, problem-solving skills and ability to thrive in diverse environments. Their adaptability has enabled them to flourish in urban settlements. In fact, crow numbers in the UK have increased significantly since the 1970s, with over a million breeding territories recorded today, thanks in large part to their adaptability to urban life. I also see lots of house sparrows each day, one of 28 sparrow sub-species. The genetic diversity of the sparrow family boosts the resilience of this species, even as environmental pressures like habitat loss continue to pose challenges.

The lesson is simple. Diversity creates adaptability. Boards comprised of capable people with diverse perspectives and ways of thinking are more likely to steer organisations through uncertainty and change.

There’s one other model I’d like to bring into this conversation. I regularly use the OODA Loop to help me move forward in complex and uncertain environments. Colonel John Boyd developed this model in the 1960s to improve and teach aerial combat tactics at flight school. It has since been adopted by business and other domains. The OODA Loop consists of four iterative stages:

1. Observe what is going on, both inside and around the organisation. 
2. Orient oneself to gain perspective and make sense of these observations.
3. Decide the best course of action. 
4. Act accordingly to implement the decision, and then repeat the cycle.

Effective boards cycle through these stages continuously. They observe relevant events and trends that impact the organisation they govern. They can orient themselves by interpreting those signals accurately and understanding their implications. This sensemaking process is improved when there is a diverse set of knowledge and mental models available. This is because there will be less chance of an organisation being blindsided by something or failing to interpret an important meaning.

These foundations then enable better decisions, even in the face of uncertainty or incomplete data. Finally, the board must help act by overseeing the execution and adjusting the plan as needed. Good governance occurs when a board moves through its OODA Loop intelligently and consistently.

3. The first ingredient is the “right people”

An effective board requires the right people to be part of it. Let me unpack what I mean by this broad statement. I will focus on boards in the third sector since this is the perspective I’ve chosen for this article.

Directors should have one or both of these sets of skills:

• A relevant set of technical expertise, most likely related to their career. This will vary for each organisation, but it typically includes skills like general management, financial management, fundraising, monitoring and evaluation, HR, impact investment, law and working with volunteers.
• In-depth knowledge and insight into the sector, cause, beneficiaries or strategic context.

In addition, there are some compulsory traits of board members:

• Integrity and sound judgement.
• Willingness to commit the required time, energy and attention.
• Willingness to express their own views and articulate their reasoning, rather than simply voicing the majority or ‘fashionable’ opinion.
• Willingness to respect the members of the board and management team and give their views proper consideration. 

Selecting people with these characteristics is likely to result in a team with a diverse range of opinions and mental models. Consider the Belbin Team Role Theory, which Dr Meredith Belbin described in Management Teams: Why They Succeed or Fail (1981). He developed this theory after arranging competitive business games between teams with different combinations of people at Henley Management College (now Henley Business School). 

He found that balanced teams containing a diversity of personalities, who took naturally to different, yet complementary, team roles, consistently outperformed teams consisting of high-IQ or high-potential individuals where this diversity wasn’t present. In other words, when selecting board members, consider whether there is a good mix of personalities and strengths, as this is likely to be invaluable in the long run.

I’d also like to touch on a contentious issue with recruiting board members. There’s a view among some organisations that a board should appoint people with specific demographics for the sake of being inclusive. This makes sense if an organisation wants to deliberately signal to a group of stakeholders that it is being inclusive and that their demographic is represented. I also understand that people from different demographics often bring unique knowledge, skills and perspectives to the table. However, this is not always the case. Individuals must still demonstrate the essential traits above – without them, they may not be the right choice for an organisation seeking to build an effective board. 

In my experience working in South Africa, I’ve seen government demographic quotas enforced across the entire economy. While they helped promote racial and gender diversity on boards, they didn’t automatically lead to better governance outcomes. Performance still hinges on how effectively boards function as a whole.

In other words, selecting the right people is more than finding people who are willing and able to take on the responsibility. Neither is it about focusing on demographics, but rather about cultivating a team with the integrity, insight and interpersonal skills to govern wisely together.

4. The second ingredient is the “right conversations”

Having the right people on the team is only part of the equation. Effective boards also have the right conversations – ones which reveal risks and opportunities, test assumptions, and move organisations forward. 

There’s a lot of good information elsewhere on standard procedural and statutory conversations typical of boards, and the frequency and structure of meetings. Such information and training on board doctrine can be readily obtained from industry associations, business chambers and the Institute of Directors. I won’t attempt to duplicate this. Rather, I will adopt a meta-strategic approach in this article and consider the types of conversations that would have mitigated many of the strategic failures I’ve encountered over the past 25 years of consulting. 

4.1. Boards should operate at multiple levels

Boards should be discussing their organisation’s strategic context, strategic positioning and operational reality:

• Level 1 – Strategic Context. Boards should explore significant external dynamics that could present risks or reveal opportunities. They must consider their sector, geographical area, policy landscape, funding environment, technological trends, beneficiary dynamics, etc. 

• Level 2 – Strategic Positioning. Boards should discuss whether the organisation is properly positioned for its marketplace and heading in the right direction. For example, does it have the right strategy, brand, capabilities and organisation design? 
• Level 3 – Operational Reality. Boards should also discuss the issues and dynamics within the organisation – issues such as its finances, systems, culture, staff and any significant challenges. Boards tend to be more comfortable discussing this operational reality than Level 1 and Level 2 topics. 

Boards that focus on micro-managing the leadership team, second-guessing every management decision, and overly obsessing about compliance issues are doing a poor job. 

Conversations at these three levels need to consider different timeframes. While it’s always good to discuss urgent issues, effective boards can create a sense of urgency for challenges and opportunities that may only manifest in a year or two, or even further into the future. For example, some organisations need to act urgently to decrease their reliance on a single income stream.

A diverse team of directors is more likely to provide the necessary coverage to these three levels of analysis and varying timeframes. We all have preferences for where we naturally tend to focus and take conversations, hence the need for a skilled yet diverse board.

There are three further meta-strategic issues that I’d like to explore in this article – habits which I believe boards need to adopt in our ambiguous and rapidly changing world.

4.2. Conversations should interrogate assumptions

Directors should also consider the assumptions and beliefs that underpin or frame their conversations. This is the board paradigm. Interrogating these helps to reveal cognitive biases – errors in thinking that lead conversations in the wrong direction. Common biases include the normalcy bias, optimism bias, planning fallacy, groupthink, law of the instrument, and déformation professionelle. The latter is less known, though you will recognise the symptoms – it is when someone has a strong tendency to interpret everything and prescribe solutions based on their profession. For example, a financial expert may instinctively push for cost-cutting, while a marketing strategist might default to branding solutions. These biases can narrow a board’s thinking. That’s why cognitive diversity, not just demographic variety, is critical for balanced decision-making.

Part of interrogating assumptions is to identify and root out dogma wherever it’s detected. This is much like weeding a garden. Dogma is typically associated with religious zealots who refuse to budge in their beliefs and practices, but there’s plenty of outdated orthodoxy and untested assumptions to be found in our organisations. Just think of all the beliefs, behaviours and rituals that your organisation considers to be ‘incontrovertibly true’ and non-negotiable, and which it tends to revert to when stressed.

I remember how in the late 1990s, the very mention of applying business principles in the context of charities (as I was oft to do) was seen as sacrilegious. The concept of measuring outcomes as a measure of effectiveness was seen in the same light. I was reprimanded several times by my older colleagues for bringing up these topics. While there may be instances when these artefacts are useful assets, they mostly undermine a board’s ability to interpret and respond to new information.

4.3. Boards should have a bias to action.

I’m increasingly frustrated by boards that simply talk and get nothing done. I try hard to moderate my impatience with these situations. I’ve seen too many good organisations destroyed by this habit.

Boards need to be comfortable with making decisions with incomplete, ambiguous, biased and possibly inaccurate information. This is better than doing nothing at all. Otherwise, they will get swept along with the currents in their sector. At the very least, doing something produces more observations (remember the OODA loop) and helps with the sense-making process. 

I’ve seen too many organisations falter because they waited too long before making a decision. Consequently, they missed a once-in-a-lifetime opportunity or succumbed to a dreaded threat. I recall several large non-profit organisations that were given two or three years’ notice that a cornerstone donor or client was leaving them, or that an imminent government policy would devastate their income streams. These organisations had sufficient time to make some decisive decisions and develop a lean cost structure, reposition and rebrand themselves, and develop new capabilities. Sadly, they spent these years in denial and hoping that the status quo would continue. They tried to gather more information and appeal by sending delegations, instead of making hard decisions and taking action. These situations did not end well due to the negligence of these boards.

When acting with insufficient information, boards should nevertheless find ways to take action and help their organisations move forward. For example, they might choose to conduct experiments and see what happens, and be prepared to “fail fast rather than slowly” rather than dragging out an approach that isn’t working. Boards also need to become better at estimating the probabilities that a certain outcome is likely and that a resulting action will succeed or fail. It is much better to act boldly on probabilities than not taking any risks at all. 

Taking action may also involve helping an organisation to make some endings – i.e. when it needs to cut or close certain activities, fire a client, end a relationship, retrench an employee, change suppliers, replace an old technology or close down a business unit. My favourite book on this topic is Necessary Endings (2011) by Dr Henry Cloud. I even wrote a book review about necessary endings; it’s the book I’ve most recommended to leaders.

Necessary endings help organisations to survive and position them for future growth. However, because endings are often a painful process, even if they are objectively necessary, it’s tempting for organisations to postpone them and put them on the back burner. Boards, therefore, have an important role in helping to end things appropriately so they can free up resources and move forward in a stronger position than before. 

Finally, it’s always great to see these conversations taking place constructively with directors exploring and challenging each other’s views, and ultimately being able to reach agreement on what is going on and needs to be done. This cohesion is what enables the right people to have the right conversations.

4.4. Boards should maintain a disposition of hope, openness and agency.

There’s so much despair in our news and social media nowadays. Organisations are often inundated with challenges. This makes it easy for overwhelm and mental fatigue to set in. 

When there’s a crisis, people – staff, volunteers and other stakeholders – tend to look to management and their boards to interpret the meaning and explain how the organisation will respond. People get their cues from the board and senior leadership, both verbal and non-verbal. Therefore, boards should maintain a realistic yet positive disposition in how they discuss and communicate issues.

This requires boards to be hopeful, not optimistic and adopt the Stockdale Paradox whereby they confront the ‘brutal’ facts of the situation while never giving up hope that a path to a better future will be found. A diversity of personalities makes this dichotomy more possible.

Boards must also be mindful that organisations tend to become more rigid in their thinking when stressed and in crisis mode. This inhibits both their interpretation of events and their array of positive options. This is the basis of the Stress-Rigidity Thesis articulated in Threat-Rigidity Effects in Organisational Behaviour: A Multilevel Analysis (1981). The theory describes how stressed organisations tend to experience ‘systemic breakdowns’ whereby multiple things start to go wrong at the same time. What’s really interesting is how crisis amplifies both the risk of failure and the potential for transformation, depending on how the organisation responds – something we all know intuitively: 

“Although threat-rigidity effects are not always dysfunctional, many systemic breakdowns do appear to fit a threat-rigidity cycle. In this sense, threat-rigidity effects may be a two-edged mechanism in which both the survival and extinction potentials of organisations are amplified.”

The Threat-Rigidity Thesis also describes how stressed organisations tend to revert to their dogma when making sense of things and how power and influence tend to move upwards. These are other reasons boards need to “keep their heads” and steer wisely.

5. What can boards do to get the right people having the right conversations?

There are three key responsibilities that boards must embrace: to appoint the right people, create the conditions for the right conversations, and sustain these good practices over time.

This begins with defining the meaning of the “right people” in the context of your mission and strategy. This includes clarifying the kinds of knowledge, skills, values, mindsets and personality traits that will support effective governance. Boards should also establish clear role expectations and an appropriate induction process – prospective members are more likely to apply if they know what’s expected of them. I’m encouraged by the many professional-looking board packs I’ve seen in the UK.

During recruitment, it helps to explore how potential board members think. For example, you might ask them how they’d respond to current dilemmas or future scenarios, and what kinds of roles they naturally play in group settings. Pay attention to the level of strategic thinking and timeframes they naturally revert to. You want people who are proactive, thoughtful, and able to challenge constructively without being adversarial.

Two things have frustrated me personally about formal board recruitment processes — and I suspect other busy professionals may feel the same. First, many charities and social enterprises estimate a volunteer director’s time commitment at 1-2 days per month. That might suit skilled retirees, people between roles, or those unable to engage in traditional employment. Such people bring valuable perspectives. But if you’re hoping to attract professionals with active careers, a lighter workload, such as monthly virtual meetings and less frequent formal board meetings, may be more realistic and appealing.

Here’s the other habit I’ve found frustrating. I’ve occasionally encountered recruitment processes that focus on demographic representation while de-emphasising specific skills or experience. I recall one well-known foundation whose chair emphasised that no prior knowledge or skills were needed since they were primarily interested in people from certain demographic groups or circumstances. While this may attract some candidates, it may equally deter others who feel their professional capabilities won’t be valued. Boards seeking diversity for its own stake should ensure they don’t unintentionally signal that expertise is irrelevant or easily acquired.

Boards must also create the conditions for the right conversations to occur. When I’ve asked directors how their board time is distributed across the three levels of strategic conversation (strategic context, positioning, and operations), the answer is almost always the inverse of what they believe it should be. Most of their time is spent on operational and compliance matters.

It falls to the chair to set the tone for conversations and to cultivate the board culture. This culture becomes embedded over time, and new directors absorb it through interaction. It’s worth being intentional with meeting agendas to carve out space to explore the strategic context and direction. In my own experience, identifying the key issues and presenting a range of perspectives in advance has led to some highly insightful board discussions.

Finally, boards must ensure these good practices endure. The chair must create times for self-reflection and review. Boards can assess the quality of recent conversations and reflect on the impact of their decisions. Staggered term limits can help avoid stagnation while preserving institutional memory.

Where appropriate, boards should also encourage directors to engage directly with staff (while respecting management boundaries), meet service users or beneficiaries, and stay connected to the organisation’s front line. Many organisations also benefit from external perspectives, whether through sector briefings, guest speakers, or learning visits.

Ultimately, getting the right people around the table is just the beginning. What matters most is how they think, how they interact, how they challenge each other, and how they learn together. In a complex and rapidly changing world, boards must become more than guardians of compliance – they must become engines of insight, adaptation and wisdom.

6. Conclusion

Governance is often treated as a box-ticking exercise, but in today’s world, that approach is no longer sufficient. In a volatile, fast-moving and complex environment, the boards that will thrive are those with thoughtful people and meaningful conversations. Boards that transition from compliance guardians into thinking partners unlock a new level of value.

The foundation of good governance is the right people: individuals who bring not only relevant skills and experience but also integrity, curiosity and sound judgement. These people must also be willing to challenge, question, and learn together. Just as essential are the conversations that boards engage in. These conversations should tackle external trends, strategic positioning, and internal realities. They will interrogate assumptions and reveal insights that guide action and necessary endings. 

Of course, none of this happens by accident. Boards need to be intentional about how they recruit, orient, and retain the right individuals and how they structure their meetings. Chairs play a pivotal role in cultivating board culture and tone, and directing attention. Ultimately, if we want our organisations to thrive, we must invest in governance. A board can be a strategic asset or a limiting factor, and over my career, I have seen plenty of examples of both. Getting governance right isn’t easy but it’s entirely possible and worthwhile. It begins with asking: Do we have the right people, and are they having the right conversations?