Sunday, February 3, 2013

Five Practices in Digitizing Corporate Governance

Governance controlling and enforcement take a new meaning in the dynamic era of digitalization.

Theoretically, almost everything in an organization should have both management and governance components, as governance needs to focus on effectiveness-to ensure business doing the right things, and many times, management is about doing things right.

However, in today’s business dynamic, does governance always need to add a heavy layer of control and enforcement which causes discomfort or even bureaucracy? Shall you think the more innovative way to do governance? What are Agile practices in corporate governance? 

1. Fresh Eyes

There are multiple governance bodies in the enterprise, from the corporate board, to architecture review board or IT steering committee, effective governance disciplines are decided by:  

·       Who are the members sitting in the governance board, and who are the voices need be heard, how do those governance bodies communicate and interact with each other, do organizations even need a governance process to oversee such governance management practices? The fresh eyes are needed to observe, the different voice are needed to question; the innovators are needed to connect dots; and the visionaries are needed to bridge the gaps.

·       HOW: Economic turmoil and business struggles continue to remind global organizations of how effective today's business governance is, what are top issues existing or old hassles hauling around, Agile is no longer just methodology to develop software, it’s a mindset shift to adapt to the fast pace of changes, to expand the context, is Agile also the better practice in governance discipline -such as iterative communication, and continuous improvement, do all those governances bodies take advantage of the latest technology trends such as social collaboration platform to embrace more agile governance processes., etc. 

·       What is the "spirit" in today's governance body? And what are the perspectives for the future of governance? Management is certainly responsible for the execution to achieve the goal of an engaged, motivated, and innovative enterprise. However, effective governance is accountable for directing an enterprise that requires intellect and creativity

2. Dynamic Nature 

The agile practice is timely for the dynamic nature of business today: The word ‘dynamics’ appears frequently in discussions and writing about strategy, and is used in two distinct, though equally important senses.

  • The dynamics of strategy and performance concerns the ‘content’ of strategy – initiatives, choices, policies, and decisions adopted in an attempt to improve performance, and the results that arise from these managerial behaviors. 
  • The dynamic model of the strategy process is a way of understanding how strategic actions occur. It recognizes that strategic planning is dynamic, that is, strategy-making involves a complex pattern of actions and reactions. It is partially planned and partially unplanned. In this model, strategy is both planned and emergent, dynamic, and interactive. The five processes interact with each other, they are strategic intention, the organization's response to emergent environmental issues, the dynamics of the actions of individuals within the organization, the alignment of action with strategic intent, and strategic learning. 
  • Corporate governance is about “steering” business strategy and execution: Agile governance practices can enforce communication in such strategic dynamic, embed governance mechanism into key business processes. That all being said, even governance is not one size fitting all, it takes agility, flexibility, creativity and continuous improvement. 

3. Connect Dots 

Many enterprises today involve intellect and creativity which requires engagement and motivation of people. Both governance and management cannot afford to ignore this. Control and enforcement take on new meaning in this context.

  • Governance needs to include engagement and motivation because a focus on control and enforcement has the tendency to damage an enterprise's capacity to motivate and engage staff. Likewise for innovation. Organizations should be identifying patterns for good governance that sponsors and promote engagement, motivation, and innovation as these are vital aspects of top-performing enterprises in our modern economy. 
  • Consider engagement, motivation, and the demands for innovation: The board of directors must, just as in setting the level of risk appetite, need to describe the desired environment and culture they see necessary to achieve the agreed goals. The optimizing role of directors in setting goals, level of risk, and access to the required resources must consider engagement and motivation and the demands for innovation because of the critical role of these aspects of business today play in determining who succeeds and who fails. 
  • Effective governance to enable dots connection is both art and science. Engagement and motivation aren't intrinsically difficult for management (when management provides good leadership) because for any employee, "management" is about the person, and engagement and motivation are relationship-based. Governance is another matter. It's intrinsically committee-driven, the interactions between an individual and a committed are anything but relationship-based.

4. Finger Out 

Besides “fresh eyes,” the corporate board usually needs to “finger out,” but to “spirit up,” be accountable for sustaining the proper culture for the organization to prosper. As it's worth keeping in mind that engaging, motivating, or innovating' are cultural issues, which is embedded in the processes, policies, procedures, and practices of the organization. Another major variable is -'Leadership Style’ which is expressed in executive behavior, attitudes, and in the processes, policies, etc.

  • Good corporate governance highlighting that the board of directors is ultimately responsible and accountable for developing and then sustaining the environment and culture for an enterprise to prosper (meet its agreed goals with the available resources) whilst making the most of its opportunities. 
  • The Board's involvement in "need to describe the desired environment and culture they see necessary to achieve the agreed goals" as sometimes many organizations are unable to articulate 'what their culture is' let alone 'what they want their culture to be.' 
  • Enterprise Business Culture is "Learned, Knowable, Measurable, Modifiable, and Manageable." Fundamental to being able to "direct, assess, approve, monitor, control" culture is the ability to measure. Board needs to evolve in " describing the desired culture to achieve the well-defined goals," because, talent management is also one of the top priorities at the Board's agenda. 

5.  Wired Up 

Organizations get wired up through their IT capabilities today. IT investments are becoming seen as business change investments, and IT governance is part of mainstream governance structures.

  • The essence of the change in thinking and language from IT governance to corporate governance of key resources, one of which is IT - and increasingly so, given the significance of the market disruption occurring as a result of the effective use of IT by others! Does this mean that technology exploration might encounter management structure barriers to effective corporate governance attention to IT?
  • Business leaders need to spend some time on understanding IT, just as IT leaders should understand business as well: There is an issue with many business leaders not having a clue about how to factor technology into their planning – but businesses won’t solve that issue by just expecting the CIO to fill the gap. It’s also critical on increasing the skill of the business leaders so that they know how to listen to and think about the information they should be getting on the potential of IT from the CIO and the market in general.
  • What is the ideal IT governance to embrace agile practice-continuous improvement, adapt to changes? As CIOs may not govern IT, Governance and management structures only come together at the Board level; building up an IT roadmap can be important. The roadmap is a program of IT-enabled business changes; it is a program of aligned business and systems transformation. , "IT project overload" is caused by inappropriately-defined strategy or roadmap, when facing many rapidly changes, how to adapt to digital speed, also keep strategy on track, is challenging. 
  • The IT strategy development logic is the following:
    Business strategy -> business architecture TO-BE -> application + information architectures TO-BE -> technical architecture TO-BE -> IT (or EA) AS-IS -> IT roadmap. Realistically, IT strategy cannot be developed before IT architecture, as the IT strategy is a 'ways & means the road map' for realizing the IT architecture. Consequently, IT strategy is indirectly linked to business strategy via the EA produced, business and IT architectures.
All being said, governance controlling and enforcement takes a new meaning in the dynamic era of digitalization, it takes agility, intelligence, and creativity: It needs fresh eyes to see through; it takes “finger-out” to engage in; it enables dot-connecting for innovation, and it also takes an agile mindset and governance practices to wire up your enterprise.


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