Governance or How to Bring the Organization Together
An orchestra with no conductor 🧩 The Golden Circle and the importance of purpose 🧩 Governance vs. management; business vs. organization 🧩 Unlocking governance within the organization
Imagine you attend a classical music concert and notice the orchestra is playing without a conductor. You might wonder: How do they manage to perform as one cohesive unit? Isn’t it the conductor who keeps everyone in sync? Or is it because each musician understands how their part fits into the overall performance?
Read on 👇
🪄 Conductorless Orchestra
The Orpheus Chamber Orchestra from New York is unique in the world of classical music because they’ve been performing without a conductor since 1972. While some other groups also do this, Orpheus has developed a distinct identity and a special way of working together.
In Orpheus, musicians take turns being the leader, and everyone gets to help decide what music they’ll play and how they’ll perform it. This democratic approach is similar to how a team of researchers might operate, with shared responsibilities and collaborative decision-making. The method allows them to be very flexible and responsive, especially when playing with solo artists. Many guest musicians find the experience liberating because it allows for more creativity and interaction.
Violist Dov Scheindlin explains Orpheus’ concept and mission like this: “We screen our members carefully because they have to be more than just good players; they have to contribute ideas as well. The ability to receive ideas is also a big part of being in Orpheus, as we’re constantly developing our repertoire along three distinct lines. We try to freshen the standards, we do substantial archival work in order to bring interesting and neglected pieces and arrangements to the world’s attention, and then we commission completely new pieces. [1]”
For Graham Parker, who was the General Director and then Executive Director of Orpheus from 2002 to 2010, Orpheus is “a group that’s determined to make music in a radically different way from its contemporaries, doing it the hard way to produce a better result. [2]”
Note that in the 1700s, when composers like Vivaldi, Bach, Handel, Haydn, Mozart, and Beethoven were creating music, there wasn't a separate conductor. Instead, the person leading the music usually did so while playing an instrument, like the keyboard or first violin. The modern idea of a conductor standing in front of the orchestra with a baton started with Louis Spohr around 1820. Therefore, playing baroque and classical music without a conductor isn't a new or radical idea; it's simply a return to how these pieces were originally performed.
Orpheus has been very successful, winning a Grammy and two ASCAP awards, and they’ve produced over 70 recordings. Their unique model has made them one of the most well-known and respected chamber orchestras in the world.
🎯 The Golden Circle
The Golden Circle is a concept developed by Simon Sinek to explain why some organizations and leaders are more successful and influential than others. The idea is centered around three layers, visualized as a bullseye target with concentric circles:
WHY: At the core is the question “Why?” This represents the purpose, cause, or belief that drives an organization or individual. It’s the reason we exist and do what we do.
HOW: The middle circle answers the question “How?” This refers to the process or unique approach an organization or individual takes to realize their “Why.” It's the methods and values that set us apart from others.
WHAT: The outermost circle addresses the “What?” This is the most straightforward layer, encompassing the products or services a company offers. It's what we do or sell.
Most organizations work from the outside in, starting with “What” and moving to “How”, and then “Why.” This is easier to do and it sounds more logical and tangible. However, the most inspiring and successful organizations and leaders operate from the inside out, beginning with “Why,” then “How,” and finally “What.” This fosters a stronger connection with the audience on a deeper emotional level and creates a more trusting and loyal follower and customer base.
See Simon Sinek’s TEDx talk below or check out his book Start With Why, which is based on this talk:
Additional statistics on the importance of purpose:
💡 Underlying Principles
🎢 Governance vs. Management
There is a difference between governance and management. COBIT 5 Framework uses the following definition:
What this tells us is:
Governance encompasses management.
Governance sets the overall objectives, communicates and agrees on them (with management), and then hands them to management to execute.
Management plans, runs, and monitors the execution of the objectives, and then reports back to governance.
Both management and governance ensure alignment with the objectives on their respective level.
In other words, governance gives us the overall framework or generic direction, and management provides the step-by-step instructions.
Think of children playing in the sandbox. You tell them they can do whatever they want, as long as they a) don’t go out of the sandbox, and b) don’t hit each other or misbehave in any other way. That’s governance.
But if you also tell them, “Now, you take this red plastic bucket, and you take this green plastic shovel, and together you build a sand castle. You want to build a sand castle, right? Yeah, that’s going to be so much fun! And I will get you some water, and you can even make a moat around and we’ll fill it with water. And you can also decorate the castle with these confetti I have here. It’ll be so colorful and beautiful! Aren’t you excited?!” that’s management (with sprinkles of leadership 🎊).
And if you also stay next to them during the whole time to correct every move they make, that’s micromanagement.
Here’s what this looks like in an organization:
Governance provides the overall framework containing the “Why” (Vision, Mission) and on a high level the “How” (Values, Strategy). Management then takes this information and converts it into individual business processes (the task of Business Process Management 😉), which explain in detail the “What”: who does what, when, how, etc.
For more information, see my other post:
This brings us to our main point: If we only have business processes at hand (i.e. management, but no governance), then we have no clue why we do what we do, i.e. what the value-add of our activities is. And that means, if we have to deal with a use case that our process doesn’t cover, we don’t know what to do, i.e. which decision is best (because we’re missing the overall framework for decision-making). That leaves us with the only possible course of action: Switch thinking off and do exactly as the process tells us (and hope for the best! 🙄 or, at least, hope that the process has been kept up-to-date!). And if anything happens that requires thinking, we know we don’t have enough information, therefore, we always have to go and ask our manager.
I intentionally stressed on “if we have to deal with a use case that our process doesn’t cover” because it requires more explanation: Any process that we execute will have use cases that are NOT covered by the process definition. Why? Because, if a process is able to cover 100% of its use cases, it will be automated. The only reason why we put a person to execute it, and not a machine, is that we know our process does NOT cover 100% of its use cases (FYI, if the process covers 80% of its use cases, that’s already a pretty solid process!). And that means, we’ll always end up having to improvise at some point. Which is why we desperately need the information that governance provides.
Lastly, going back to COBIT’s definition: If we look at the company as a whole, governance is the responsibility of the BoD (under the leadership of the chairperson), whereas management is the responsibility of Top Leadership / CxO level (under the leadership of the CEO). However, we can have governance and management for any given scope and the logic remains the same. Let’s take a cross-departmental project, for example:
Governance is defined in and tracked via the Project Charter, Business Case, etc. (all the Project Sponsor’s documentation).
Management is defined in and tracked via the Project Plan, Schedule, Work Breakdown Structure (WBS), etc. (all the tasks that the Project Manager and the Project Team perform on a daily basis).
The same split of governance vs. management applies to any team, product, process, program, etc.
🪙 Business vs. Organization
In every company, there’s a split between externally facing and internally facing activities. The externally facing ones relate to the business (Marketing, Sales, Public Relations, Brand, etc.), whereas the internally facing ones relate to the organization (Human Resources, Communications, Business Process Management, Information Technologies, etc.). And each of these two sides of the same coin - business and organization - must have its individual purpose, supporting the other side.
In The Golden Circle above, Sinek talks about business purpose. This is what gets communicated to the customers. However, everyone inside the organization needs to know not only what the business aims to achieve, but also why we have the organization we have. And it’s especially important for everyone to see how our business and our organization support each other.
For example, Zappos’ business purpose is to WOW the customer (they just happen to sell shoes). And their organizational purpose is to have a happy organization. (Because how can you WOW the customer if you yourself are not happy?) The founder, Tony Hsieh, even wrote a book, called Delivering Happiness, where he shared the definition of happiness he used for this purpose. He also experimented a lot with different management systems to find the one that fits Zappos.
Similarly, Patagonia’s business purpose is to fight the environmental crisis (they just happen to produce hiking gear). As the founder, Yvon Chouinard, famously said, “Earth is now our only shareholder.” Therefore, Patagonia’s organizational purpose is to give back to the world as much as they take. (Because how can you fight the environmental crisis if you yourself are adding to it?) To achieve that, they too dropped standard management practices and embraced Self-Management for their organization.
In summary, for our company to be successful, our business and our organization must support each other. If they don’t, we’ll struggle to achieve what we want. For instance, implementing Agile methodologies will be quite difficult in an organization that is in no way self-organizing but, on the contrary, demands that the hierarchy be respected. And creating innovative products and services will be practically impossible in an organization that is not geared towards risk-taking, experimentation, and psychological safety but, on the contrary, rewards risk avoidance.
🔓 Unlocking Governance Within the Organization
Implementing any process always follows the logic of the Continuous Improvement cycle. In the case of governance, we need the following steps:
Define all the aspects of governance.
Communicate, communicate, communicate.
Execute as defined and communicated.
Analyze the current situation and look for instances of misalignment. Then go back to Step 1 to fix them.
1️⃣ Define
These are the aspects of governance that need to be defined to feed into the above cycle (the questions help us with the definition):
👉 WHY do we do what we do? & WHAT is it we do?
I’ve already written about Mission, Vision, Values, and Strategy and how to define them in this post. You’ll also read there how to break Strategy down into business processes. Still, I want to point out two things about defining our purpose:
✅ Where do we place purpose?
Since business purpose is the reason why the business exists, many companies make it part of their Mission statement, as explained here. However, others argue that it should be part of the Vision statement, as pointed out here.
In practice, it doesn’t really matter where it is. What matters is that a) we know we need to define purpose as well (because the definitions of Mission, Vision, Values, etc. don’t specifically mention purpose), and b) we ensure that purpose is part of our high-level company statements (regardless if it’s under Mission, Vision, Values, or separately as Purpose).
✅ Money is never the purpose.
Money is definitely important for staying alive. So is breathing. But if I ask you “What’s the purpose of life?” will you tell me “It’s to convert oxygen into carbon dioxide”? Most probably not.
Likewise, money is not our company purpose either, no matter what our shareholders and investors would like us to believe. Money is what enables us to achieve our purpose. Money is what we get when we do the right things the right way.
Imagine we could start ten different types of businesses that would be equally profitable. Why did we choose the one we have right now? And imagine we could achieve the exact same result with five different types of organizations. Why did we choose the one we have right now? There’s a reason for all these choices we make, and that reason is not money. Money is not a good basis for making such decisions. Our true purpose is.
Here’s how Sinek explains it:
👉 HOW is it we do it?
Organizational structure and operations make up the organizational system. I’ve already talked about systems in this other post:
The important thing to note here is the split between leadership and management (the latter being business processes). I will cover this in another post, but for now, it’s enough to say that operating a system (whether organizational, business, or any other type) happens via processes.
To dive deeper into creating the organizational system, check out Team Topologies to learn what to do, and Organization Design: The Practitioner’s Guide to understand how to do it.
If you want to experiment with non-traditional management systems (e.g. Self-Management), then Reinventing Organizations is a great place to start.
👉 How to measure the WHAT?
There are many ways to set goals and measure their execution, and I’m sure even more ways are developed as we speak. Here are some of the most popular ones:
OKRs (Objectives and Key Results): OKRs are a goal-setting methodology that involves setting ambitious, qualitative objectives and linking them to specific, quantitative key results. This approach helps ensure that everyone is aligned, focused, and working towards common goals with clear metrics to measure progress.
V2MOM (Vision, Values, Methods, Obstacles, and Measures): V2MOM is a goal-setting and planning process that helps ensure clarity and alignment within the organization. It starts with a clear vision and values, outlines the methods to achieve the vision, identifies obstacles, and establishes measures to track progress.
Balanced Scorecard: This strategic planning and management system is used to align business activities to the vision and strategy of the organization. It improves internal and external communications and monitors organizational performance against strategic goals.
MBO (Management by Objectives): MBO is a process where managers and employees agree on objectives and understand what they need to do in the organization to achieve them. It emphasizes setting clear, achievable goals and using those goals to guide performance.
Hoshin Kanri: Also known as Policy Deployment, Hoshin Kanri is a method for ensuring that the strategic goals drive progress and action at every level within the company. It involves setting goals, aligning the organization towards those goals, and ensuring that progress is reviewed regularly.
SMART (Specific, Measurable, Achievable, Relevant, and Time-bound): This methodology is used to set clear, attainable, and meaningful goals with a defined timeframe.
KPIs (Key Performance Indicators): KPIs are measurable values that demonstrate how effectively an organization is achieving its key business objectives. KPIs are typically used for processes that can be placed at any organizational level.
👉 How to measure the HOW?
This is where things become interesting, perhaps because they’re more intangible. As a result, I’ve never seen this aspect done properly. I’ve seen sporadic Pulse Surveys, 360° Feedback, or Exit Interviews, after which nothing changes. I’ve also seen zero responsible people for Corporate Culture and its measurement and improvement. And I’ve seen top-level leaders being confused about the split of business vs. organization and their role in each (incl. spending their time and focus on tackling low-level business process problems, while completely disregarding Corporate Culture).
That said, here’s what I think should happen:
Find the answers to these questions:
Are we delivering on our purpose?
What data and evidence are critical to understanding our organization and if we’re aligned with our purpose?
How much insight is our current reporting generating?
What is not currently being measured or reported?
When was the last time we took action in response to a metric about our organizational purpose?
What will our employees (and society as a whole) hold us accountable for in the future?
Etc.
The answers will tell us what metrics we need to put in place and how and how often to review them. Examples include surveys, questionnaires, 180° or 360° feedback, collecting improvement suggestions (anonymously), discussions and interviews, and others.
Change the incentives: Every system is built to operate in a certain way to achieve a given result. If we’re not achieving the results we want, that means there are forces within our system that drive it in an undesirable direction. These hidden drivers are called incentives, and we have to:
understand what they are,
understand what they connect to, and
change them in such a way that we achieve what we want without breaking everything else they connect to.
Assign the responsibility: Typically, the Human Resources department is accountable for setting and driving the corporate culture. However, there’s usually no responsibility or a responsible person for that. What we need to do is:
write down what the responsibilities are, i.e. the tasks that have to be done in relation to setting and steering the correct corporate culture,
distribute them among all managers/leaders inside the organization, and
allocate the task of measuring and checking the results of management/leadership to a Culture Committee, Head of Culture, or similar.
This pt.3 also answers the questions I started the post with: Do we need an orchestra conductor for everything we do? No. What we need is clarity of what should be done and the way to ensure it is indeed done. But whether we assign it to a specific person or we take turns in this role is not that important. Having always the same assignee is easier, but it also has its negatives (i.e. the other people in the group stop feeling responsible and stop contributing).
2️⃣ Communicate
We absolutely cannot overcommunicate our purpose. We also cannot overcommunicate our mission, vision, values, strategy, strategic goals, priorities, changes, no changes, and so on. We must constantly relay the essence of our company - we’re literally and figuratively its walking poster. Here’s why:
✅ The average human can only hold a few items in their short-term memory.
George Miller's paper “The Magical Number Seven, Plus or Minus Two: Some Limits on Our Capacity for Processing Information”, published in 1956, examines the limits of human cognitive processing and identifies that the average number of objects an individual can hold in their working memory is about 7±2.
However, Nelson Cowan’s paper “The Magical Number 4 in Short-Term Memory: A Reconsideration of Mental Storage Capacity”, published in 2001, eliminates the “chunking” of information from Miller’s research and establishes the new cognitive limit at 4±1.
Put shortly, we forget. A lot. Or, to be even more precise, we don’t even remember in order to forget. If our buffer is already overloaded, the message just passes us by.
✅ A prospective client has to be exposed to our product/service at least 7 times to buy.
This is called the Marketing Rule of 7 and it was developed by the movie industry in the 1930s. Studio bosses discovered that a certain amount of advertising and promotion was required to compel someone to see one of their movies - 7 times, to be precise. And each of these 7 times the message had to be in 3 different formats. So in reality, potential viewers/buyers have to be exposed a minimum of 21 times (3 x 7 = 21) to convert.
✅ To create a new habit, we have to commit to doing it every day for 3 weeks, i.e. 21 days.
This was probably a misinterpretation of Dr. Maxwell Maltz’s work on self-image, namely Psycho-Cybernetics, published in 1960. More recent research shows that the 21-day rule is a myth. The study “How are habits formed: Modelling habit formation in the real world”, published in 2009, found that it takes an average of 66 days for a new behavior to become a habit, ranging from 18 to 254 days.
✅ Advertising professionals use a minimum of 20 ads to convert a potential buyer.
Thomas Smith, a London businessman, wrote a book called Successful Advertising in 1885. His guide, still relevant today, forms the foundation for the theory of frequency in advertising and marketing:
"The first time people look at any given ad, they don’t even see it. The second time, they don’t notice it. The third time, they are aware that it is there. The fourth time, they have a fleeting sense that they’ve seen it somewhere before. The fifth time, they actually read the ad. The sixth time they thumb their nose at it. The seventh time, they start to get a little irritated with it. The eighth time, they start to think, 'Here’s that confounded ad again.' The ninth time, they start to wonder if they’re missing out on something. The tenth time, they ask their friends and neighbors if they’ve tried it. The eleventh time, they wonder how the company is paying for all these ads. The twelfth time, they start to think that it must be a good product. The thirteenth time, they start to feel the product has value. The fourteenth time, they start to remember wanting a product exactly like this for a long time. The fifteenth time, they start to yearn for it because they can’t afford to buy it. The sixteenth time, they accept the fact that they will buy it sometime in the future. The seventeenth time, they make a note to buy the product. The eighteenth time, they curse their poverty for not allowing them to buy this terrific product. The nineteenth time, they count their money very carefully. The twentieth time prospects see the ad, they buy what is offering."
In her book Rise, Patty Azzarello gives the following example: “We chose quality over features as our Ruthless Priority over a six-month period. This was a very simple message: ‘Improve quality. For six months we will only fix bugs. No new features will be added.’ Every Friday afternoon we had an all-hands meeting. And in each and every one we would reiterate this message. And for 17 weeks in a row, someone always asked the question, ‘But shouldn’t we be putting new features in?’”
3️⃣ Execute
There’s nothing special about this step: we simply do the things we defined and communicated before.
4️⃣ Analyze
The main point is to act with integrity, authenticity, and transparency. Anything else will be gaslighting (i.e. saying one thing but doing another, and demanding that everyone believes what we say, not what we do).
When we analyze our measures and metrics at regular intervals, what we’re looking for is instances of misalignment between what we say we want to have and do and reality. For example, we say Quality is one of our main commitments to the customers, however, when faced with tight project deadlines we skip reviews and tests in order to deliver the products faster. Or we say we believe in free speech and want honest feedback, however, we fire anyone who disagrees with us and the way we run things in our organization.
Therefore, when performing our audits, we have to check not only if the right thing happened, but if it happened in the right way. For instance, we must check not only if product reviews and tests happened, but what they actually showed, and especially what happened if a review/test failed. This deep dive ensures that the purpose is indeed achieved.
That’s the way to also distinguish a good audit from a bad audit: If the auditor only check the WHAT, and not the HOW, or even more importantly the WHY, then they only scratch the surface. Yes, we’ll get a perfect audit result (i.e. zero non-conformances), however, that adds no value. A perfect audit result must not exist because a perfect process doesn’t exist. There’s always room for improvement, and we audit in order to learn what those Opportunities for Improvement (OFIs) are. If we don’t end up with a list of OFIs, then the audit was a waste of time.
And that’s how we create a purpose-driven organization. And by staying true to our purpose, we ensure that our employees, customers, shareholders, and all others continuously trust what we say, are excited about what we do, and actively contribute to our success.
Next, see here how to install purpose inside processes:
Thank you for reading 💝
Till next time,
Irina
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