IOWL Calibre Briefing - editorial working copy
Why regulation often follows the damage - and what that tells us about human judgement
After institutional failure, society investigates, regulates and strengthens governance. Those responses are essential. But they begin after something has already gone wrong. IOWL asks what might be developed before poor judgement becomes a compliance problem.
The architecture of modern regulation is built largely from hindsight. A failure occurs. Investigators reconstruct events. Regulators identify weaknesses. Boards strengthen controls. New rules, reporting duties and assurance mechanisms follow. This is not a criticism of regulation; it is one of the ways complex societies learn from harm.
But hindsight has a structural limitation. It starts with the visible consequence. The Institute of One World Leadership has spent more than a decade asking what sits beneath that consequence - not as a substitute for governance and compliance, but as an earlier point of intervention.
The 2008 financial crisis became an important lens for that thinking. The crisis had multiple causes involving macroeconomic conditions, incentives, risk, governance, regulation and institutional behaviour. IOWL does not claim that weak values caused the crisis or that Positive Values would have prevented it. Its narrower observation is harder to dismiss: highly educated, technically sophisticated people operated inside elaborate systems of professional ethics, governance and regulation, yet catastrophic decisions and failures still occurred.
That prompted a different question. When rules, governance and professional ethics are present, what governs the person who must interpret them? What happens when incentives point one way and responsibility another? What happens when a code is silent, supervision is weak or a technically legal opportunity conflicts with the wider purpose of the rule?
IOWL's Axiological Pyramid separates the layers that are often blended together. At the foundation sit personal values - internal and sometimes unexamined. Above them sit socially shaped morals, organisational values, professional ethics, governance and external compliance. Each layer performs a legitimate function, but the further up the pyramid we move, the more behaviour is guided or constrained from outside the individual.
The model therefore contrasts outside-in control with inside-out judgement. Compliance can define boundaries and impose sanctions. Governance can create systems of accountability. Ethics can establish professional expectations. None of them removes the need for a person to decide how to act when circumstances are ambiguous. IOWL's proposition is that stronger internal judgement can make the upper layers more effective because they are not being asked to compensate constantly for weakness beneath them.
That distinction has independent policy resonance. The OECD's Investing in Integrity for Productivity paper argues that the governance and integrity framework matters precisely because it shapes individual decisions and the allocation of resources. IOWL's contention is not to move attention away from governance, but to ask what sits beneath it. Rules, codes and controls still meet a human being who must interpret, apply, challenge or evade them.
This is where Hindsight, Insight and Foresight enter the model. Hindsight asks what happened and what can be learned. Insight asks what is happening now: which incentives, pressures, values and consequences are in play? Foresight asks what is likely to happen if a particular course is taken and what responsible action would look like before harm occurs.
The distinction changes the purpose of values education. A conventional ethics course may explain duties, rules and scenarios. Positive Value Leadership aims to develop a more portable form of judgement that can operate in circumstances no course designer has anticipated. That does not make regulation redundant. It changes the relationship between the individual and the rule.
IOWL expresses the idea in a deliberately provocative line: the aim is not fewer rules, but fewer occasions on which rules have to compensate for weak judgement. That proposition deserves scrutiny because modern compliance systems are expensive, complex and still incapable of guaranteeing internal commitment.
The deeper governance story may therefore be about timing. We are highly developed at learning after failure. The unanswered question is whether institutions can become equally deliberate about developing the human judgement that operates before the failure becomes visible.