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Good governance is in the DNA of a well-run business.


24 Jan 2022



Dipanjan Basu

Good governance is in the <span>DNA</span> of a well-run business.

With India now the world’s third-largest startup ecosystem, and no less than 40 entrants to the unicorn club this year alone, perhaps the time is right to look at first principles, and how to build a good, sound, well-run startup. It isn’t only ESOPs and a great office that make employees believe they are truly part of a company. It’s about being heard, and being taken seriously. And this employee-first culture doesn’t happen without design.

A culture of transparency, accountability, ownership and appreciation is the foundation of good governance in every organisation. We believe that organisation-building is for all companies, and it is as much a founder’s task as is product-market fit. Our view is that founders should start building a robust organisation from the very start, and shape the DNA of a well-governed, well-run business. After all, your company can very quickly go from being just you and your co-founder to ten, twenty, even a hundred people.

If a founder seeks to win at the long game, then they need to build that robust DNA from the start. I believe the minute your idea crosses the boundary to become a business, you need to start thinking about what kind of business you want to build: what are its values, how do you want your employees to feel and act, what is the environment you wish to create…

Governance is not an initiative, or a task, or even a goal to achieve when a business reaches a certain size or scale. It’s the company’s DNA, and encompasses its culture and approach. You will find the difference quite apparent between an organisation run by professionals with a high share-of-voice from the team, and the ability to call a spade a spade vis-à-vis a top-heavy, opaque business run by “My way or the highway” promoters.

We live in a world where even shareholders – let alone employees and consumers – often care about more than just profits. They want companies to be transparent, authentic, and responsible. And they care about environmental, social, and governance (ESG) goals.

As a result, about half of the S&P firms currently correlate a degree of compensation to social and environmental outcomes – and this is helping move ESG goals forward. Similarly, with climate concerns intensifying, investors are demanding green investments just as much as consumers are crying out for green products.

So just how should a founder approach this? In my experience, there are several building blocks for good governance, and successful startup founders are quick to use some, or all of them:

1.Go professional

Identify your strengths and skills, and then seek out the expertise you need to fill the gaps you lack. Think of it in terms of building the best vehicle you can for your product. Delegation is sometimes the hardest virtue, but if, as a founder, you want to grow personally, you will need to trust the team you build – and delegate without losing control.

2.Get independent advisors.

Look for advisors and mentors who bring in experience and expertise that will take your business higher. Always have an “outside-in” voice.

3.Define your values in a way that belongs to your business.

Don’t settle for a list of vanilla “good-to-have” nouns. Take the time and effort to think about what matters most to you – and your co-founders, if you have them. Think about what you’d like to do differently from other organisations where you may have worked, but also see if there are values that you would like to emulate. For example, I spent many years at Wipro, and one of the things I most admired was the uncompromising focus on the values of integrity, customer-centricity, and respect for others. All of Wipro’s leaders walked the talk every single day when it came to these values.

4.Walk the talk.

You are the first practitioner of your company’s values. If transparency is a value, be prepared to give honest answers to questions your employees and colleagues pose. If sustainability is a value, consider how you will respect it across all aspects of your business – including, say, platform sales.

5.“Bake in” those values.

From values come behaviour, so take the time to think about how they will be practised. Some values will take the shape of processes or policies. Like diversity, for instance, will become something that will influence your hiring policy and partners. Similarly, gender equality may inform just how you articulate your POSH policy. Other values will become practices. Like one of our company values is intellectual honesty. The resultant practice is that every single team member has a right to opine, agree, or disagree on every investment we make.

6.Don’t fear regulation.

In the old days, people believed well-regulated companies had to be large and slow-moving. Processes and policies meant the company would be bureaucratic and old-fashioned. But we live in a new world, where intellectual honesty goes hand-in-hand with discipline and rigour. Agility co-exists with processes. Lean-and-hungry complements safe and well thought-through.

Governance isn’t something to be imposed on a company externally – it has to be built from within. Used correctly, it will give you all the outcomes a founder could seek — employee-friendly, investor-friendly, and most of all, built for the long game. It’s the difference between good and great.

Internationally, we’ve seen great examples of culture – Buffer has a value called “Default to transparency,” which they translate as salary transparency and a shared companywide compensation formula. Employee ownership is something I’ve read about as far back as in The Toyota Way, where every Toyota production floor has a suggestion box for employee suggestions for improvement. Interestingly, I see the same practice in a startup like The Sleep Company, where they are currently working on improving their vanguard product and processes based on a suggestion from one of their factory workers. And recently, we were talking about the new Vahdam office, which is designed so that anyone, from intern to CXO, can walk up to the other person’s desk to talk to them – “baking in” a culture of openness and transparency.

Building a company around your vision will align your people towards a common aim. Strategy can only show you a roadmap towards your business goals – it’s your vision and culture that will define how you get there. And like I said at the opening of this piece, the time to do this is now.

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