Effective governance is based on two essential mechanisms—compliance-based procedures and rules, and the sensitive stewardship of society.

This is an important principle to keep in mind at a time when organisations are facing global geopolitical tension on an unprecedented scale.

As company sustainability is increasingly disrupted, the fragmentation of organisations, and society itself, is the ever more likely outcome.

This means the governance of institutions needs reshaping, an approach which is the responsibility of the chair as leader of the oversight body—namely, the board.

Integrating compliance and stewardship, to meet the ever-growing challenges being faced, requires a well-informed board to facilitate sound and just governance.

This is especially true when normally favoured markets are no longer available for exploitation as governments restrict access to different parts of the world, and supply chains are fractured.

Five disciplines, championed by the chair of the board, are fundamental to effectively working through incompatible tensions:

Disciplines for chairs

1. Be informed. Today’s geopolitical dramas are dominated by the US’s hegemonic pursuit of world resources, which will likely result in a dollar-based global currency. The intention is that transactional, capital-based, shareholder value will supersede Chinese socialised capital in determining how we finance our societies and achieve a high quality of life.

The imposition of tariffs by President Trump and other governments is intended to force nation-states to renegotiate their trade relationships with the US. The twin objectives of ‘Make America Great Again’ and ‘bring jobs back to the US’ lie behind this disruptive strategy.

In parallel, there is also the exploitation of Eurasia’s resources to consider. Former US President Jimmy Carter’s adviser, Zbigniew Brzezinski, shaped President Joe Biden’s thinking. Namely: ‘destabilise President Putin of Russia through war in Ukraine, with the sole purpose of gaining control of Eurasia, which encapsulates 52% of the world’s total resources.’

Trump has so far pursued a similar objective through diplomacy, rather than military intervention.

Trump’s 100 days have gone much further than Biden’s tenure in office. He has declared his desire to take over Canadian and Greenlandic oil, because, together in ‘partnership’ with Putin, he can leverage some 62% of the world’s resources to establish a dollar-based global currency.

To date, Putin has offered full support of this agenda. He recognises that transactional capitalist Russia needs to partner with the US in order for its wealth structure to survive and prosper.

The May parade in Moscow has just changed this. China is back in favour, with President Xi taking centre stage. And yet, the same tensions remain.

Which form of liquidity will ultimately dominate the global financial scene attracts vested interests, each of whom face a great deal to gain, but also stand to lose equally. Disinformation, the kind particularly promoted by governments, has become the norm.

As a result, turning to genuinely independent and reliable sources of information is a challenge.

Before the board decides which direction to take in an inconsistent world, it is imperative that the chair is briefed and clear on the consequences of pursuing a particular course of strategic action in an ever-changing geopolitical world.

2. Purpose: Under circumstances of continual and stretching change, the very purpose of the organisation faces scrutiny. Again, the steps needed to fulfil the mission are led by the chair.

Even organisations driven by a cost imperative need boards to consider how to realise value through the disciplines that must be applied to pricing, costs, supplier relationships, and outsourced services.

Through clarity on purpose, the entity can be meaningfully repositioned by considering the competitive advantage to be pursued. Shared purpose unites the board and C-suite, enabling them to have open and candid discussions about how to reposition the firm.

The ongoing Kakabadse global studies identify that 18% of the world’s corporations adopt a purposive mindset. Not doing so means the board supports a short-term, CEO-focused vision which will allow the organisation to deteriorate, while blaming the unpredictable nature of external developments.

3. Board reach and fracture points: As far back as the 1970s, research has highlighted that strategy creation requires 20% of the board and C-suite’s time and effort, as 80% must focus on strategy delivery.

Failure does not necessarily occur because of a poorly thought-through strategy. Sound strategies are more likely to collapse owing to management’s inability to handle fracture points.

Such points of weakness in the organisation’s structure can derail corporate strategy, owing to the effect of forceful local conditions.

Contrasting notions of competitive advantage exist in every corporation. What makes sense to the C-suite regarding strategy may not be meaningful in the context of local market conditions. Being competitive locally needs to be considered in conjunction with the corporate centre-determined strategy.

Country heads or the managing directors of subsidiaries may find themselves unable to ‘meet their numbers’, because of the corporate centre’s insistence on a globally consistent approach for strategy to work.

The tension point between strategy in theory—the centre—and strategy in action—the local fracture point—requires the board’s intervention. Many organisations leave the matter of fracture points to the CEO, whose reaction is often punitive, labelling those general managers who question the viability of corporate strategy as ‘non-team players’.

Their dismissal is no solution as the same tension simply arises with the next appointees. It is up to the chair to reach into the organisation and question what are internal cultural issues based on addressing contrasting market differences?

4. Dynamic governance: A ceaseless complaint from boards is the overwhelming demand to meet compliance requirements. ‘What time is left for real board work?’ is an irritation that is all too often publicly expressed by board members.

Under what many already consider to be a ‘war footing,’ a continuous rebalancing between stewardship and compliance is a must if the board is to provide realistic oversight. Reconsideration of stakeholder relations is necessary if the entity is to survive and prosper.

Nurturing a dynamic governance mindset enables boards to embed a diversity of perspectives among management. Adapting to changing conditions, while ensuring clear accountability for actions is the result. This approach is the responsibility of the chair.

5. Evidence driven: Conjecture and sentiment often emerge too easily under geopolitical tensions. The media and press rarely help by continuing to reinforce a ‘good guy vs. bad guy’ narrative.

Drawing on tested evidence must be the basis for presenting a sound case in the boardroom. This evidence can range from appreciating trends, compiling relevant data, engaging in dialogue with key stakeholders, and even half-thought-through opinions.

It is up to the chair to ensure full scrutiny is applied to the sources of evidence used, and that different perspectives are worthy of consideration, as opposed to sentiments that are designed to solely support personal opinions.

The chair

It is the chair who crucially determines the quality of evidence required, which in turn enhances the value of the decisions reached, particularly in the case of geopolitical tensions, the outcome of which are all too often shaped by the interests of the few.

Counteracting mistruths demands a disciplined approach to governance oversight, particularly when accepted rules and knowledge no longer apply.

Under some of the most turbulent conditions, what competitive advantage and value creation mean can rapidly change. At these times, looking for guidance from others is not helpful. It is the chair who must take the lead.

Andrew Kakabadse is professor of governance and leadership, and Nada Kakabadse is professor of policy, governance and ethics, both at Henley Business School.