I spent a few minutes this evening reading through Tom Graves’ fascinating post Management as ‘just another service’ and it got me thinking of Governance in the organic enterprise.
As Tom describes, there are two paradigms of management at play: organization as machine, and organization as living organism. Tom is of the opinion that most organizations think that they are of the first type, while they actually behave like the second type. While I cannot quantify his assertion, I have noticed that my own organization behaves more like an “organization as living organism.”
So, this evening, as I contemplate the notion of enterprise governance, I consider the reality of improving governance in an organization that behaves more as an organism than as a structured automaton. In order to share my thoughts, I want to establish some basic terms to make sure we are all on the same page.
First off: Governance is a system of distributing decision rights to specific individuals or groups so that (a) desirable behavior is encouraged, (b) undesirable behavior is discouraged, and (c) business rules are aligned with enterprise principles and legislative constraints. Governance can be a simple as having the project sponsor review the project plan, and as complicated as having the United States Supreme Court review the specific clauses of President Obama’s healthcare reform law, before the administration compels the various states to implement it.
There are many things that can be governed: the scope of projects, the expected architectural outcomes, the assignment and activity of individuals, the assignment of responsibilities to teams and systems, the correct handling and security of information, and the measurable performance of processes, to name a few.
In addition, there are many different levels at which governance occurs. Governance can occur at the personal level (I choose to do the right thing). It can also occur at any “level” where a group of people with specific decision rights have a stake in the governable elements of an activity. To whit:
- A team may want to govern the efforts of its members.
- A business sponsor may want to govern the activities of a project team that is spending his or her money.
- A cross-business virtual team (v-team) may want to insure that dependencies between teams are carefully managed in order to insure the delivery of value.
- A senior business executive may want to govern the level of acceptable risk in a portfolio of projects to insure that there is a good balance between innovation and incremental improvement.
- A senior leadership team may want to insure that leaders have clear ownership and accountability (no gaps or overlaps) so that strategic changes can be implemented in cross-functional processes.
This may lead you to conclude that governance can be performed as part of a hierarchical escalation process, but that is not a foregone conclusion, as you will see below.
When designing a system of governance in an organic enterprise, we need to make sure that the “solution” matches both the “problem” and the organizational “network of influence” (instead of hierarchy) that the enterprise uses to make decisions and resolve disputes.
So let’s break down the problem a little. What is the array of problems that organizational governance (of which IT governance is a subset) is supposed to solve? Here are some elements of that array:
- Senior leaders are consulted when the cost of day to day operations overwhelms the organization’s ability to behave strategically
- Business Managers are consulted when investments by one business manager can interfere with the efforts of another
- Process owners are consulted as a process is being changed, leveraging organizational knowledge and experience
- Information facet owners are consulted as requirements emerge that impact master data management and data quality
- Platform owners are consulted for the improvement of business capabilities supported by enterprise platforms
- Architectural owners are consulted as system designs are considered for inclusion in the enterprise IT ecosystem
- Organizational standards are followed in order to minimize the cost of ownership of process, system, information, and infrastructure investments
The key thing to note from this list is that different “governors” are interested in governing different things. There is no simple “chain” of escalation. Rather, it is a network. This is one effect of organic governance. Another is that the number of levels of governance, for any one issue, should be fairly short. You deal with things at an individual level, at a project level, and then, fairly quickly, at the level of a “governance body” designed specifically to resolve that particular type of issue for a business and then the enterprise. Lastly, there is a senior management body that can settle all remaining disputes.
Unfortunately, when considering this kind of problem, the metaphor of “enterprise as organism” begins to fail. Actors in an enterprise do not behave like cells in an organism, nor do business units within an enterprise behave like organs. Cells are regulated by internal instructions, hard-coded in chemical DNA sequences, and respond to fairly simple stimuli with pre-programmed responses. Actors and business units do not.
Organizations do not have consistent and uniform instructions (like DNA) that guide each person and business unit. Governance is needed because of the variation of human beings and their desire to continuously look after their own interests. Quickly we can see that the “organism” metaphor is shaky at best. In small units, the metaphor of a sports team is a better metaphor, and at the larger end, the metaphor of a city is more appropriate.
I work in a fairly large company, so the metaphor of a city is better for me to consider. After all, I’ve lived in cities all my life. So in a city, how many times have I behaved in a beneficial way? I’d like to believe that I do that every single day, in a hundred small ways. How many times have I interacted with the police? Less than the fingers on one hand. Well… that’s interesting. That simple observation alone makes one thing starkly clear: the police do not govern my city life.
I believe that the most important governance element of city life is the system of property laws, commercial practices, licensing laws, and simple rules of civil behavior that allow the city to be a productive and useful environment for individual people. Governance itself is a tiny fraction of the overall efforts of the population of a city, and it is normal to live your life for years without involving a police officer, filing a law suit, or walking into a court. That said, courts and lawyers and legislative bodies are essential overhead. From an economic standpoint, governance is overhead and waste. People who govern contribute nothing. But from a social standpoint, the system of governance is critical to the success of the “organically” managed city.
Which leads me to a rather startling conclusion: In order for a large organization (of say 100,000 employees) to successfully becoming a mega organization (of say 1,000,000 employees), they must develop a simple and fair system of property laws, commercial practices, licensing laws, and rules of civil behavior, and a simple adjudication system to address conflicts. Hierarchy do
es not work as a model of governance in an organic enterprise.