Mention enterprise governance to executives and they typically respond with blank stares or indignant looks. One common response is to hand people the organization (“org”) chart, a set of boxes showing who reports to whom. Another response is to state that governance is a board level or senior management concern and we have no business broaching the topic. Org charts, sloganeering and political posturing are tangential to real enterprise governance because they have little to do with the intricate complexities, relationships, redundancies and cross-functional workings of an enterprise.
Enterprise governance, one of several key disciplines within the realm of business architecture, provides a way to visualize and transform organizational dynamics that define the essence of the enterprise. The scope of enterprise governance includes internal organizational components (“inside the firewall”) and external entities (“outside the firewall”). Collectively, internal and external components, comprised of shared purpose, principles, roles and relationships, define the scope of “virtual” enterprise governance.
A given enterprise component, such as a credit verification team, should be able to quickly understand and collaborate with internal or external entities that it either relies on or that performs similar functions. For example, credit verification teams should have knowledge of and access to the collective entirety of in-house support functions, other verification teams, credit agencies, collection agencies and other relevant entities.
This degree of collaboration is only achievable through formalization of enterprise governance. Enterprise governance is not theoretical or academic. Organizations that embrace enterprise governance increase the odds of success while organizations that do not embrace enterprise governance risk major failures.
Consider the success of TELUS Communications, the second largest phone company in Canada1. TELUS created a governance structure that allowed its Quick Win (rapid response) Teams to effectively collaborate and deliver significant business solutions across every aspect of the enterprise. TELUS has documented a 5-to-1 ROI on these projects year after year, by breaking down barriers to collaboration that stymie enterprise success.
Now contrast the success of TELUS with an organization that apparently did not embrace enterprise governance. A recent story on Airbus explained how engineers from France and engineers from Germany failed to coordinate efforts to wire the world’s largest plane and experienced a supersonic project blunder2. The Germans employed a 2D wiring schematic while French counterparts used a 3D schematic. This blunder resulted in a 26% drop in stock value and turned into a $4.5 billion order with competitor Boeing.
The Airbus situation should never have occurred. Consider an enterprise governance structure that would have allowed Airbus engineers to collaborate through shared purpose, principles, role definitions and visualization of organizational dynamics. Under such a model, collaboration would occur naturally, sidestepping politics, organizational boundaries and even cultural barriers. Under such a governance model, naturally occurring collaboration across common teams would have exposed differences in wiring philosophies and likely delivered even more benefits to the overall project.
The road to formalizing enterprise governance relies on a mix of disciplines based on work by the Chaordic Alliance3 and by Mintzberg and Van der Heyden on the development of Organigraphs4. Combining these disciplines delivers the foundation needed to visualize and dynamically transform enterprise governance. It also provides the requisite infrastructure needed to manage the alignment of business process, business data and information systems.
In addition to impeding essential collaborative efforts, as cited in the Airbus example, an inability to visualize governance structures in conjunction with process improvement and IT modernization initiatives will limit the success of these efforts as well. After all, the typical complaint of many managers is that they cannot do what is required because of organizational constraints.
Organizations that lack enterprise governance disciplines will continue to suffer the fate of project delays and failures while undercutting the efficiencies and effectiveness of day-to-day operations. Management can continue to focus on political posturing or seek to find ways to allow their people to openly collaborate with people across the virtual enterprise. Enterprise governance can pave the way for successful collaboration on a scale that organizations have yet to even imagine.
1 “The Quick Win Team: Interview with Juanita Lohmeyer, TELUS Communications”, BPM Strategies, Nov. 2006
2 “In Tangles of Airbus Project, a Reflection of Europe’s Struggles”, John Ward Anderson, Washington Post Foreign Service, April 27, 2007
3 “Chaordic Alliance: www.chaordicinitiatives.org
4 “Organigraph depicts the company: its processes, critical interactions and relationships.”, Harvard Business Review, Sept.–Oct. 1999, Mintzberg, H. & Van der Heyden, L
