English can be a confusing language. The same word can have different meanings in different contexts (in using 'bear' do you mean the animal, taking up arms, or putting up with someone; and, is a 'ruler' a measuring instrument or the monarch?). Meaning and usage can change over time as well, whether by design or in response to an evolutionary development. The problem is not limited solely to discrete words—phrases are not immune either. Some changes improve our ability to communicate effectively, whereas others to defy logic, perhaps inspired by political undertones.
The understanding and usage of the terms 'governance' and 'corporate governance' are topical cases in point. The term 'governance' is derived from the Greek root kybernetes meaning to steer, to guide, to pilot (typically a ship)—an action-oriented noun. However, a plethora of usages and contexts have been suggested over time, especially in the business community. A range of different meanings and usages are now applied including the function of overseeing managers and what they do; the activities of the board itself; and, in a few cases, it is used to describe the board itself ("we'll need to get the governance to make that decision"). The word has also been applied in an even broader context, the business ecosystem (i.e., system of governance or whole-of-enterprise governance). The most extreme example I have heard to date was uttered last week: "Governance can mean almost anything, it is completely idiosyncratic; different for every organisation."
Things are made worse when two related but distinct concepts are conflated: the phenomenon of corporate governance and the practice of corporate governance. The former, which describes the function of the board is stable. Eells (1960) was the first to use the term, to describe the structure and functioning of the corporate polity (the board). Later, Sir Adrian Cadbury (1992) defined 'corporate governance' as being "the means by which companies are directed and controlled". The fundamental principle being that corporate governance refers to the activities of boards. The latter (the practice of corporate governance) refers to how corporate governance is enacted by the board when it is in session. This is quite contextual. The means by which boards consider information and make decisions can and must be fluid depending on the situation at the time.
The wider context merits a brief comment—the rules under which companies and their boards operate (statutes, codes and regulations), and the consequential impact of the board's decisions. I've heard some people include regulations and codes within their understanding of corporate governance. Is this reasonable? Similarly with the consequential impact of the board's decisions beyond the boardroom. Is this also corporate governance? To embrace these understandings would suggest that corporate governance per se is ubiquitous, the entirety of the company's operations and the functions of management, leadership and operations. Such understandings fail to distinguish between the rules of the game, the game itself and the score (if you'll allow the sporting analogy).
Let's not lose sight of these distinctions. The continued 'sloppy' use of language serves only one purpose: to obfuscate. Corporate governance rightly describes the functioning of the board when in session, and that's all.
Thoughts on corporate governance, strategy and effective board practice; our place in the world; and, other things that catch my attention.