Chapter 17
Governance of the Forward Enterprise

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Power, when held accountable, can serve the common good. When left unchecked, it devours it.

— Mary Parker Follett, The New State (1918)

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Having explored a sustained thought experiment on the kinds of problems a forward economy can help solve, we arrive now at the question of governance. 

 

Any economic system—no matter how well intentioned—will ultimately be tested not by ideal participants, but by ambitious, self-interested, and occasionally unscrupulous ones. Governance must therefore be designed not for the best of us, but for the worst among us clever enough to rise.

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The challenge is real. How can a Forward Fund and the enterprises it stewards be structured so they fulfill their mission—without being captured for private gain or paralyzed by collectivism? If the rules are not crafted with care, the promise of a forward economy could end up in history’s dustbin—not because the idea was wrong, but because its framework was.

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Yet this task, daunting as it sounds, is hardly unprecedented. We already govern something more unwieldy and contradictory: the backward economy. For more than a century, economies optimized for extraction have reliably produced short-termism, corruption, crises, scandal, and nepotism. These are not behavioral aberrations; they are predictable outcomes of a system designed to maximize private gain.

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Managing such an economy has required layers of oversight—regulators, auditors, compliance departments, crisis responders, unwieldy legislation, and cleanup crews—an elaborate architecture built to contain the worst tendencies of self-interest. Think Enron, Worldcom, the S&L Crisis, Bear Stearns, Lehman Brothers, the Great Recession, and more. 

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Seen from this perspective, the true puzzle is not whether a forward enterprise can be governed. It is how much progress we have made while dragging the albatross of a backward economy behind us. 

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When a system is built primarily around self-interest, it must forever police itself, and it often fails to do so. However, when a system is built around reinvestment, shared gain, and transparency, the logic of governance can shift. Instead of suppressing the worst behavior, the focus can turn to preserving stakeholder alignment and preventing capture of the board by a party with a self-interested agenda.

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The question, then, is this: what does governance look like when an enterprise is designed around forward motion rather than backward pull? 

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And are there any models that illustrate the path forward? 

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The Architecture of Forward Governance

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Three institutions are proposed as central to a healthy forward economy:

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• The Forward Enterprise(s), where value is created day to day by operating businesses

• The Forward Fund, where capital is stewarded, aggregated, and redeployed

• An Independent Board, which governs compensation and incentive design across the system​

 

Each institution has real authority—and explicit limits. No single entity controls operations, capital allocation, and incentives simultaneously. This separation of powers is intentional and foundational.  To be celar, this architecture is not a single structure.  Each Forward Fund operates its own independent set of three institutions. As the forward economy scales, there will be hundreds --- eventually thousands --- of these triads, each fully independent, each governed by its own board, each prohibited by charter from extraction.is not one such set of institutions. 

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How It Begins

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In most cases, a Forward Fund will be the first entity established. It is capitalized by legacy-minded investors—or, in some cases, a single major benefactor. The fund acquires already successful enterprises and updates their operating agreements so they become forward enterprises governed under this model.

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Those establishing the fund bear responsibility for architecting governance documents intended for perpetuity. Like a constitution, these documents must be durable, difficult to subvert, and amendable only through a deliberate, high-consensus process among the stakeholders.

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At the operating level of individual companies, little needs to change. The people running each business—its leadership teams and workers—remain empowered to make day-to-day decisions and succeed as they always have. Forward governance does not micromanage. It structures incentives and allocates authority so that success compounds rather than extracts.

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Governance of the Forward Enterprise

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Each forward enterprise is governed by a Forward Enterprise Board (FEB).

A baseline structure consists of four members:

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• Two executives from enterprise leadership (typically the CEO and CFO)

• One representative appointed by the Forward Fund

• One representative elected by the workforce

 

This composition ensures representation of management, capital, and labor, while preventing dominance by any single constituency. Larger enterprises may add members for specific expertise, as is often the case in the modern economy, provided that balance on the board is preserved.

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Limits on Authority

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The Forward Enterprise Board:

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• Governs operations, strategy, hiring, and execution

• May not set senior compensation or worker-sharing unilaterally

• May not determine the final use of profits

• May not amend core governance documents

 

Any attempt to bypass these limits automatically triggers review by the Independent Board.

 

Use of Profits

 

The use of profits can be one of the more conflict-prone decisions in any enterprise. Leaders naturally prefer reinvestment under their control; capital stewards must think across the portfolio.

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Accordingly, the process is explicit:

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1. The Forward Enterprise Board prepares a formal recommendation on the use of profits that has been generated by the firm in any given year.  

2. The Forward Fund has final authority over whether profits are reinvested at the enterprise level or redeployed at the fund level.

 

This authority is absolute—but not without transparency.  The Forward Fund must publish an annual rationale explaining profit-routing decisions, expected returns, and alignment with long-term compounding goals. Failure to do so triggers automatic review.

 

Whether reinvested at the enterprise or fund level, profits are tracked for purposes of the seven-year profit-sharing plan. Employees creating the success will ultimately receive, in full, their 45 percent share of all returns attributable to the years in which they contributed.

 

(For more details, pls see the example provided at the end of the chapter.)

 

Existing Precedents of Success for Forward Principles

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While no existing capital institution embodies the full forward governance architecture described above, several of the most successful global enterprises of the past half-century have independently converged on key elements of it. A few of these are worth noting here as brief precedents, with one—Novo Nordisk —deserving deeper examination later in this chapter.

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Berkshire Hathaway has long emphasized disciplined reinvestment, decentralized operations, and an extreme long-term orientation—distributing profits only when shareholders could deploy them more effectively than management.

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Koch Industries, as a privately held enterprise, has also been spectacularly successful by reinvesting the majority of its profits for decades, using internal capital markets and long-horizon incentives to guide growth across generations.

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Novo Nordisk, a European pharmaceutical company now worth more than the entire GDP of Denmark, sets another long-term growth example. Novo Nordisk is governed by a perpetual foundation designed to insulate the enterprise from short-term extraction.  It offers perhaps the closest real-world parallel to the governance principles explored here. Its structure, tenure, growth, and performance provide a powerful case study—one we will return to in depth at the end of this chapter.

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Together, these examples demonstrate a simple point: patience, reinvestment, and long-term alignment confer formidable competitive advantages. 

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The Forward Fund Board

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Let’s return to the three key pillars of governance.  The Forward Fund Board (FFB) governs the Forward Fund itself. Its responsibility is capital stewardship across time, not quarterly performance.

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Key responsibilities include:

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• Portfolio-level capital allocation

• Acquisition and divestment decisions

• Risk management across enterprises

• Enforcement of forward principles

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Explicit prohibitions apply. The Forward Fund Board:

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• Cannot set or approve its own compensation

• Cannot alter profit-sharing formulas

• Cannot remove Independent Board members

• Cannot amend core governance documents

 

Any such attempt is void by default.

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Compensation and Incentive Design

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Compensation is where many governance systems quietly fail.  In a forward system:

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• Enterprise leadership compensation is proposed by the Forward Enterprise Board and approved by the Independent Board

• Forward Fund leadership compensation is proposed by the Forward Fund Board and approved by the Independent Board

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The Independent Board oversees:

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• Profit-sharing ratios between leadership and median workers

• Long-term incentive structures

• Deviations from market compensation norms

 

Short-term bonuses are capped and may not exceed a fixed percentage of long-term incentives.

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The Independent Board

 

The third pillar is the Independent Board, which acts as the keystone of the forward governance model. It does not manage operations or allocate capital. It governs the rules of reward.

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Its authority includes:

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• Approval of senior compensation across the system

• Oversight of profit-sharing mechanisms

• Governance audits and dispute arbitration

• Authority to freeze compensation pending review

• Changes to operating agreements

 

Importantly, the Independent Board’s authority is structural and reactive—not managerial. It does not direct operations, select investments, or substitute its judgment for that of professional leaders. Its role is narrower and more demanding: to preserve incentive integrity, enforce long-term alignment, and intervene only when governance rules are threatened or bypassed.

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Composition and Selection

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A typical Independent Board consists of:

• Five members

• Staggered seven-year terms

• A maximum of two consecutive terms

 

Members may not be employees or officers of any Forward Enterprise or the Forward Fund, nor hold concentrated financial interests beyond the long-term shared compensation described below.

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Selection occurs through multiple channels—forward fund nomination, worker nomination, enterprise board nomination, and external fiduciary search—with supermajority approval required for each member on the independent board. No constituency may control more than two seats.

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Compensation of the Independent Board

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Independent Board members receive:

• A competitive annual retainer, paid during service

• Participation in overall Forward Fund success, defined as a small, fixed percentage of aggregate long-term returns

• Deferred payouts extending well beyond board tenure, vesting over seven to ten years

 

The deferred compensation mechanism is especially important here.  It ensures that board members remain aligned with the long-term consequences of their decisions—even after leaving office. Independent Board members cannot increase their compensation by favoring any particular enterprise, executive, or short-term outcome. Their only path to higher compensation is preserving and enhancing the long-term health of the system as a whole.

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Modern Example: Novo Nordisk

 

​For evidence of the forward governance structure’s ability to succeed in the real world, consider now the example set by the enterprise that comes closest to the governance model proposed here: Denmark’s Novo Nordisk.

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Founded in the early 20th century in the aftermath of the discovery of insulin, the Novo Nordisk Foundation was established to solve a specific and enduring problem: how to ensure that a scientific breakthrough of enormous human value would be developed, scaled, and sustained over generations—without being derailed by short-term financial pressures or captured for private extraction. The founders understood that life-saving medical innovation requires patient capital, institutional continuity, and governance designed for decades, not quarters.

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In the early 1980s, to further their goals, the foundation acquired a controlling stake in a successful operating company manufacturing insulin, with a clear objective: to structure ownership for perpetuity rather than extraction. Control was deliberately anchored in an independent, mission-driven institution rather than dispersed among short-term claimants.

This distinction between the two is key. The Novo Nordisk foundation is not the same as the Novo Nordisk enterprise. It does not manufacture products, employ workers, or manage day-to-day operations. Instead, it serves as a long-term capital steward.  Importantly here, it holds a majority of voting rights in the enterprise (~77 percent), and therefore controls strategic direction and governance, insulating the operating company from hostile takeovers and short-term market pressures.

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Novo Nordisk itself remains a fully commercial enterprise. Minority shareholders working at the enterprise retain economic participation and are incented for success through dividends and market appreciation, but they do not control long-term direction or capital strategy. Voting power and economic benefit are intentionally separated: control is anchored in a perpetual institution based on a higher mission, while financial participation remains open to the market.  The following diagram illustrates the structure below. 

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This governance design has proven decisive over time. Freed from the constant demand for near-term extraction, Novo Nordisk has been able to reinvest aggressively and expand far beyond its original insulin focus. While diabetes care remains foundational, the company has steadily broadened its portfolio into therapeutic frontiers that require long development timelines, heavy upfront research investment, and tolerance for uncertainty.

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Most visibly, Novo Nordisk has grown into a global leader in obesity and metabolic health through GLP-1–based therapies such as Wegovy, Ozempic, and the oral formulation Rybelsus—products that have reshaped entire treatment categories and generated extraordinary global demand. At the same time, the company has sustained leading franchises in rare disease areas, including treatments for hemophilia and other bleeding disorders, as well as growth hormone therapies.

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Crucially, these breakthroughs were the result of research programs pursued over many years—often decades—before commercial payoff was visible. The ability to fund such long arcs of innovation stems from Novo Nordisk’s governance structure: insulation from short-term shareholder pressure allowed management to invest patiently in science that would have been difficult, if not impossible, to justify under quarterly earnings constraints or activist capital regimes. 

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Observe, now, the model that has overseen this success:  an independent board structure that emphasizes continuity through staggered terms, with professional management operating with substantial autonomy—complemented by guardrails that favor reinvestment. 

The results are striking. Over extended periods, Novo Nordisk has grown faster than Denmark’s economy, becoming one of its most powerful growth engines. At its peak valuation in 2024, Novo Nordisk’s market capitalization briefly exceeded approximately $570 billion, surpassing the entire annual GDP of Denmark—a symbolic indicator of scale that few global companies ever achieve.

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In some years, analysts attributed nearly half of Denmark’s GDP growth to the pharmaceutical sector, overwhelmingly dominated by Novo Nordisk’s performance.

This scale of influence—where a single firm’s performance materially shifts national growth statistics—underscores the potential for the forward to compound value over time under competitive pressure.    

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The following are the key elements:

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• Separation of control and economic benefit

• Perpetual, long-term orientation

• Professional management operating within structural constraints

• Reinvestment-first capital allocation

 

The forward governance model builds upon this foundation by adding formal worker representation, explicit seven-year profit sharing, an Independent Board with deferred compensation aligned to long-term system-wide success, and portfolio-level capital allocation across multiple enterprises.

 

Governance for the Long Term

 

Forward governance does not rely on hope, naiveté, or an invisible hand to lift people up. It relies on structure—on rules designed with human nature fully in view. As the late twentieth-century management thinker Stephen Covey taught, effective systems begin with the end clearly in mind.

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What kind of economy, and nation, do we want to have?

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Do we want a system that raises everyone up by design rather than leaving outcomes to chance?  Do we honestly believe an economy built purely on self-interest can reliably produce virtuous results?

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Or do we, like America’s Founders, need to pay careful attention to what is arguably now the most powerful institution on the planet (capitalism)—by anticipating human defects and defeating them in advance by separating decision-making powers within the entity itself?

By embedding long time horizons, automatic safeguards, and shared values directly into the center of our economic system, we can forge a path to a free-enterprise economy that resists capture without stifling initiative—one that compounds value not just for capital, but for workers, communities, and for generations to come.