Governance Transition and Second-Curve Entry

Firms attempting to enter a second growth curve frequently intensify managerial control rather than redesign governance. This paper argues that such efforts systematically fail because management operates within a given structural equilibrium, while second-curve entry requires a change in governance. We distinguish between operational growth within the first curve and structural growth leading toward a second curve. The former depends on managerial optimization; the latter depends on governance transition. Without upgrading governance—specifically decision rights, resource allocation logic, and risk distribution—innovation efforts are structurally suppressed, regardless of managerial competence. The paper introduces a critical distinction between governance for steady-state optimization and governance for structural transition, and demonstrates why firms often misdiagnose governance constraints as execution failures. We argue that governance upgrade within the first curve is a necessary precondition for second-curve entry, and that boundary-zone innovation (Ye-Jie innovation) provides a practical mechanism for this transition.