Governance on the edge of the future

“Organizations should tread near the edge of the future, making it up as they go along with as much sensitivity, awareness, knowledge, compassion, feeling, and beauty as they can muster” — James Ogilvy.

There is a fundamental tension between the intent of governance and its methods.

The intent of governance is being able to do the right things, for the right reasons, and assign and bear responsibility for doing so in organizations.
The ‘right reasons’ have much to do with an organizations raison d’ etre and the aims of its various stakeholders. These can be made explicit and used to fund decisions.
The ‘assigning and bearing responsibility’ aspect is a set of agreements about how all other agreements are made, kept and discharged. Not rocket science, but quite necessary given human nature’s incorrigibilities. Law (SOx), frameworks (COBITv5 in an IT context) and good practices (agree what to do, do as agreed, keep records) have codified this part quite nicely.

The methods of governance are varieties on Demming’s circle of plan, do, check and act. This presupposes that reality can be effectively modeled for a length of time, allowing for the effectuation of plans. Governance methods, frameworks and good practices are very good at the ‘right reasons’ and ‘assign/bear responsibility’ parts of governance. They really don’t provide a good way to do the right thing, but merely a good partial context for doing so.

Whatever is the ‘right thing’ to do at any given moment? This is contextual, depending on available means, (market) conditions and a host of variables which are hard to model or agree upon in advance. There is no way to predict or capture ‘rightness’ in advance. Therein lies the rub.

Effective governance implementations go beyond the codified practices and give anyone and everyone in the organization an actionable sense of what the organization is about. This is about intent, rather than a specific outcome. This takes the form of “when in doubt, choose the outcome that optimizes for X”. It does not proscribe targets as much as reinforce shared orientation. There is no framework, law or good practice telling you to cover this angle, yet it is indispensable.

Toyota famously optimizes for a shorter order-to-delivery cycle. Whenever faced with ambiguity, uncertainty and doubt, managers and employees can make a well-funded decision that does not rely upon last year’s strategic plan. Instead, they can step closer to the shared ideal that powers the organization’s efforts in making their decision. This approach enables decentralized decision making, internal alignment and sound adversarial decision making.

This is governance on the edge of the future, and is a required competence for organizations seeking to thrive in the highly ambiguous world we’ve made.

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