The Key to Governance

 

When April began, I was thrilled that Cameron had given us the theme of Governance. There’s so much misinformation out there that, being the INTJ that I am, I was in the epistemological equivalent of a child in a candy store (or, perhaps more fittingly, a professional skeet shooter in an arcade duck-shoot game). But shooting down invalid or inchoate ideas on Governance is easy – what’s a bit tougher is articulating what proper Governance is, and why.

Not to be gobsmackingly obvious about things, but the true purpose of Governance is this:

Advanced Governance is realized when those in positions of authority make the best possible decisions on behalf of the macro organization.

Ahh, but that’s the rub, is it not? You touch the hot burner, and know instantly that that was a bad decision. You hire the wrong person to head up, say, your PMO, and you won’t know if that was the wrong decision for weeks, months… or ever. How in the world can the manager know if his business decisions are right or wrong before she makes them?

As I discuss in my recently-released, must-have book, Game Theory in Management, these decisions are actually model-able. But the model for these decisions’ evaluation must take into account the fact that there are three different types of management, with different tools and goals:

·         Asset Management deals with the organization’s resources. Its main information source is the general ledger.

·         Project Management addresses how the organization meets its customers’ needs. Its main information source is the Earned Value Management System.

·         Strategic Management deals with how the organization is performing when compared to its competitors. Its main information source is the data feed on market share.

What the manager thrust into the role of Governance must realize is that there are advocates from each of these three orientations on management who will insist that their take – and their take alone – is the most appropriate information feed for upper-level decision-makers, and will expend considerable energy to sell that narrative. Often these management “science” advocates are utterly unaware of where their pet theory exists in the overall scheme of management information streams, but the manager functioning in the role of Governance must know where they are coming from, and the limits to their advocacies.

The manager perfect in Governance will know how each and every decision impacting the macro organization will affect the organization’s standing with respect to its assets, customers, and competitors. However, the macro economy being the near chaotic environment that it is, this perfection can never be attained. So, how to advance?

By setting up the information streams that will allow the Governance decision-makers to know where they stand with respect to asset, project, and strategic management, and thereby know where their vulnerabilities are, and where their opportunities lie. The asset managers’ information feed already (and always) exists – all organizations need the general ledger, if, for no other purpose, than to pay taxes. But the idea that much, much more pertinent management information can be gleaned from the general ledger has been oversold, and to very bad ends. In addition to the general ledger, the Governance manager must have at his disposal an MIS that provides information on how the organization’s projects are performing, and the GL simply cannot provide this function. Nor can it provide the data feed on how the organization is doing in relation to its competitors. That information must be gleaned from sources that have nothing at all to do with the other feeds, but collected it must be. Once the information on how the organization is situated with respect to the three axes can be presented and evaluated can truly informed Governance decisions be made.

So, what does this model look like, and how do you set up the information streams that enable its functionality? Well, you can buy my book, or wait until Cameron asks us to re-visit the Governance theme.