Dr Danny Davis’s book focuses on how organisations can achieve enhanced performance in a complex and volatile world by upgrading their systems of governance. He explores what distinguishes the small percentage of high-performing companies from the majority and how their integrated approach to decision-making and value creation contributes to their success. The book aims to provide a new perspective on existing governance skills and how to apply them more effectively.

The book challenges the traditional, passive definition of governance as simply a system of rules and processes. Instead, it views governance as an active mechanism for exerting leadership in complex organisations. Dr Davis posits that governance can and should be upgraded to enable organisations to excel in a challenging environment. He also refers to governance as the “invisible plumbing” within an organisation – the underlying systems that enable visibility, control, and distributed decision-making, ultimately allowing the board to act as the consciousness and direction of the organisation.

Dr Davis’s research, which involved engaging with hundreds of directors and leaders, including chairmen of top companies, found that a small number of organisations were massively outperforming others. The key differentiator was not necessarily idiosyncratic leadership or being a “unicorn” company, but rather doing something different in their governance and decision-making processes. This difference led to significantly better financial and non-financial performance, demonstrating that enhanced governance directly correlates with improved outcomes.

The book explores the legal status of a company as a “legal person” and poses the philosophical question: “What kind of person are they?” It suggests that just as individuals can be fulfilled or self-actualised, organisations can also strive to be higher-functioning, self-aware entities that understand their purpose and actively work towards fulfilling it. This involves being proactive in making a positive impact on the world and interacting well with stakeholders, mirroring the behaviours seen in a fulfilled individual.

The research identified three key dimensions of mature governance practice found in high-performing organisations:

1. Integrated Foresight: Bringing together all aspects of the governance system and relevant information to create a shared, common view of the organisation’s direction and activities.
2. Integrated Practice: Ensuring that different organisational practices and systems are not working in isolation but are coordinated and work together seamlessly.
3. Integrated Planning: Planning for the improvement of the organisation’s overall “fitness” by ensuring systems are increasingly brought together, improving the accuracy of foresight, and aligning everyone towards functioning as a single value creation engine.

Dr Davis uses the analogy of financial governance and accounting (defined simply as “data quality management for money”) to explain the concept of “governance of value creation.” He argues that just as reliable financial data is crucial for informed financial decisions, organisations need “data quality management for value into the future.” High-performing organisations have better evidence available at all levels of decision-making, allowing them to make integrated, comprehensive decisions about future outcomes, not just financial performance.

The book introduces the concept of “future fiduciary responsibility” as the board’s obligation to not only engage with but also ensure the answer to the question: “Are we optimally invested in our own future?” This means the board, as the trustee responsible for the legal person of the organisation, needs visibility and control through its governance systems to understand the potential future outcomes of its current actions and to proactively steer the organisation towards a desired future state, becoming a “master of its own destiny.”

Professor Mervyn King strongly agrees with Dr Davis on the critical importance of enhanced governance for better performance and sustainable value creation. He highlights the historical shift from governance as mindless “tick-box” exercises to principles and practices that must be mindful and achieve outcomes beyond just financial profit, addressing societal and environmental impacts (ESG – Environmental, Social, and Governance, with an emphasis on G). Professor King advocates for integrated thinking and reporting, arguing that the board, as the most informed body, should narrate how financial and non-financial aspects interact, ensuring users are fully informed. He sees accountants, with their understanding of value, as key change-makers in driving this integrated approach and ultimately contributing to a more sustainable planet.