Sunday, March 17, 2013

Governance by EA Design

After being through economical turmoil and financial crackdown, more and more organizations and industries intend to enforce their business governance and risk management. Understandably, with the significantly increased focus on boards and governance quality, much of the focus in the board room has been colored by the last decade of backward looking risk management and compliance. 

There is risk in adhering to old models of governance, because they tend to promote or retain a separation of key processes. But the world is changing too fast for the entire old model to remain relevant. More specifically, what are key governance issues today? Is it lack of right talent or lack of effective governing process? How to improve board room maturity? What are the next practices for governance, and what’s the better model of governance by design?

1.   Strategy Review in Board Room 

Strategy review is a crucial element of any effective strategy framework.
As the Board has the role of approving strategy (and possibility developing it in conjunction with management, depending on the organization),  so the Board should also monitor progress towards strategy implementation and achievement, via management reporting. To set strategy and then not monitor it seems a bit dumb :) 
  • EA Refines Corporate Strategy: Enterprise architecture is more about cohesive, structural business design (capabilities, value streams, change processes etc) than it is about 'operational detail' (which it should help to guide) and particularly overall design that is efficient, possibly innovative, and copes well with change. Most importantly, EA is about high level design that is a refinement of corporate strategy, so it is effectively more detailed strategy. Consequently it needs articulation of high level strategy that is specifically crafted with the intention of being refined.
  • Advocate of EA being a useful tool in a corporate governance context is about giving greater confidence in the excitability of the business strategy. This takes nothing away from board decision making. Rather, the analytic models produced should greatly assist boards to obtain a complete picture of a business' current capabilities and potential to realize board strategy. 
  • Governance Practice: Part of the value of the board concept is that it is relatively independent of the 'how'. The boards of directors of more enlightened organizations have a director's committee with responsibility for all aspects of strategy. This committee delegates some responsibility to a strategy review function. It is the strategy review function which exercise day-to-day governance authority.

2.    Resistance to Using EA in Board Room 

[Directorship] is a logical and systematic plan that connects the boardroom to corporate prosperity. It's deliberate, intentional and presumably flexible. Directors direct through the EA to ensure organizational strength, resilience and endurance. However, there’s resistance to using EA in board room:

  • The challenge: Though it's been a huge challenge to gain acceptance for the idea that directors direct through EA and must understand it if their actions are to be effective in realizing the organizations objective/purposeThere are a great deal of resistance from conservative directors and institutions when convince them that EA is essential to directing. There are also resistances from senior executives who are reluctant to reveal the EA to the board.  
  • The potential: In an organization governed and led by design. The board would be structured (designed) to employ directors with a strategy-matching set of competencies based on the enterprise architecture governance structures, corporate structure and enterprise support structures (IT, finance, Marketing, HR, and Operations etc) by deliberate, mindful design. 
  • EA is effective to Governance by Design: Architecture is holistic, not ‘either’ ‘or’. An architect works with the strategic end result in mind, in the given environment and with the resources available to achieve results. While it is comprehensive and integrative from a strategic governance view point, like good architecture, outstanding new design is often flexible (nimble), holistic, environmentally aware and relevant to the technology saturated environment of global business. It is relevant to the enterprise and the industry and has at least a modicum of future-proofing incorporated into the design

3. EA as Navigator in Board Room 

What the difference would be between an 'old model' versus 'new model' board? The new model is a rationalization of boards, and EA is being used by progressive directors in the boardroom. Further: A board is of course part of enterprise structure and is a type of control mechanism, so in that sense, it is a component of the architecture of the enterprise. It’s strange how often this is missed or misunderstood. Perhaps it's the right time to view governance and governing body in EA view. And it’s also the right time to use EA as navigator in board room:
1)   Stategize & consider (together with management) what needs to be added, subtracted, amplified, dampened from the EA. Directors also infer the direction the organization is heading/ought to be heading and to develop scenarios.
2)   To synthesize & visualize the "strategy" before being approved by the board. EA compliments the other ways the strategy can be presented to the board. 

3)    To bridging “What” & “How”: There are situations where the Board / governing body / governance system defines or prescribes a "what" which makes assumptions that a realistic and viable "how" can be established. There is an interplay between the what and the how to ensure that the what is realizable and realizable within acceptable constraints, EA plays such bridging role.

4)    To verify & test their decisions to understand how they are likely to flow through the EA. Effective boards update their EA as a way of keeping track of their decisions. EA verify the fact when executive management is presenting a proposed business strategy that seems a bit loose and with insufficient clarity as to whether it is viable and implement-able.

5) To identify un-priced, unmitigated or plain old dumb risks. It is common for unidentified risks to pop right off the page. Also, risk management has strategic dots need be connected. Risk should be seen in a much more positive light as it creates many opportunities for those that wish to see beyond a defensive response.

6)   To design board reports. The board would be designed to employ directors with a strategy-matching set of competencies based on the EA governance structures

7)  To help visualize acquisitions. Some boards require that the EA of target be modeled up so the board understands what they are buying on behalf of the organization. 

8)  To shoot the tangles of “wicked” problems: High performers iterate frequently between problem definition and solution definition. In addition, there is an increasing involvement in wicked problems where the ‘what’ is not well understood without attention to the how.

Thus, Governance by design is to explore the potential value that EA is in fulfilling director’s responsibilities in governance aspect. And EA is also being used to leverage broader view than just governing through the financial model or assessing economical value. Will EA be an effective navigator in board room?


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