In the Viable Systems Approach (VSA), business governance is understood as the set of mechanisms, processes, and structures that enable an organization to maintain its viability by balancing internal dynamics with the demands of the external environment. It plays a critical role in ensuring that the organization operates coherently, both internally and in its interactions with external stakeholders.

Business governance in the VSA emphasizes the importance of relational dynamics. It views the organization not as an isolated entity but as a system embedded in a larger network of relationships, including customers, suppliers, regulators, and society at large. Effective governance ensures that these relationships are managed in a way that fosters mutual understanding, trust, and value creation. This relational focus is essential for aligning the organization’s goals with the expectations of its broader system.

Adaptation is another key element of business governance in this framework. Organizations exist within complex and ever-changing environments, and governance mechanisms must enable them to respond dynamically to these changes. This involves continuous monitoring of the environment and recalibrating strategies and operations to remain aligned with external conditions while staying true to the organization’s purpose.

A unique feature of the VSA is its emphasis on recursiveness in governance. Every subsystem within an organization, such as departments or business units, has its governance structure that must align with the governance of the larger system. This alignment ensures that the organization operates cohesively across all levels, preventing conflicts and inefficiencies while maintaining overall coherence.

Decision-making is central to governance in the VSA. It is through governance structures that decisions are made to steer the organization toward its goals while taking into account the constraints and opportunities posed by its internal and external environments. Feedback loops are crucial in this process, as they provide the information needed to evaluate and adjust decisions to ensure continuous alignment with the organization’s objectives.

Governance also involves managing the tension between stability and change. While certain structures and rules are necessary to maintain stability, governance must also facilitate innovation and adaptability, enabling the organization to evolve and thrive in the face of new challenges or opportunities. This balance is vital for ensuring long-term sustainability and relevance.

Sustainability and ethical responsibility are integral to governance in the VSA. Organizations are expected to align their actions with societal expectations and environmental considerations, ensuring that they contribute positively to their ecosystems. This approach not only secures the organization’s legitimacy but also enhances its resilience and capacity for long-term success.

Finally, business governance in the VSA focuses on ensuring that the organization’s internal complexity is sufficient to address the complexity of its external environment. This concept, rooted in Ashby’s Law of Requisite Variety, underscores the importance of designing governance structures and processes that can effectively manage the diverse challenges posed by the environment.

In practice, business governance within the VSA ensures that all elements of an organization, from its strategy to its day-to-day operations, are aligned and coherent. It also fosters continuous learning and adaptation by integrating feedback mechanisms into the organization’s decision-making processes. Through this approach, governance becomes not just a mechanism for control but a dynamic process that enables the organization to navigate complexity and maintain its viability over time.