Optimal Governance Density

Definition

The equilibrium point where coordination cost grows proportionately with institutional complexity, without generating redundant or compounding oversight. Beyond this point, additional governance reduces rather than increases institutional effectiveness.

Formula

Example

A mid-sized nonprofit reaches optimal governance density with three approval tiers. Adding a fourth tier increases decision latency by 40% but reduces risk by only 2%—the institution has passed the optimal point.

Source

GCC Section 8.2