The tripwire of ‘Best Practice’ in a rapidly changing environment.

Well governed organisations imply that they operate within an appropriate framework of structured controls, policies and processes.

Published governance frameworks exist for almost every aspect of the organisation to ensure that they operate as intended (and presumably in support of its overall mission).  These cover areas such as  financial control, risk, security, day to day operations, legislative compliance, information technology, sales, procurement and operations human resources, to name but a few.

Entire industries thrive on the evolution, implementation  and maintenance of these governance  frameworks, which underpin the development of published standards. Mature governance frameworks embody so called ‘best practice’, which imply that the adoption of these frameworks will help the organisation achieve its goals with a higher degree of reliability than would otherwise be the case.

Selecting, adapting, designing and integrating the various governance frameworks across the organisation is no trivial task, and is especially important for organisations with an enterprise-wide dependency on IT.

Much of the good governance of the organisation relies on demonstrated ‘best practice’.

The Oxford dictionary defines ‘best practice’ as:
“Commercial or professional procedures that are accepted or prescribed as being correct or most effective.”

In an environment that is not changing very rapidly, accepted ‘best practice’ generally makes sense. ‘Best practice’, if followed, maximises the likelihood of the intended results being achieved. After all, the ‘recipe’ has been shown to work, and is often backed by evidence that reinforced adherence to the relevant standard. Reinventing the wheel is a potentially risky and expensive process.

‘Best practice’ or worst outcome?

Accepted ‘best practice’, however, may no longer be up to the task in the face of fast moving, technologically induced disruption.  If your organisation is dealing with a rapidly changing, innovative and disruptive competitor, the rote adherence to  ‘best practice’ may be anything other than ‘best’ for your organisation.

On the flip-side, if your organisation is the one doing the disrupting through innovative technologies, processes or business models, it is more likely than not that it has broken ranks with those organisations still constrained by the prevailing governance models based on demonstrated ‘best practice’.

In terms of how you structure and operate your enterprise (including IT) governance frameworks, the assumption that by merely following in the footsteps of those that have gone ahead of you and succeeded (ie: observed ‘best practice’) that you will also succeed may need to be tested.

In the face of the volatility and disruption, if your organisation is rusted onto an industry standard, how can it adapt to the change if the industry standard does not change?

Context is king

An important step that should be taken when assessing the appropriate ‘best practice’ for any specific governance model, is to ensure that the context from which the ‘best practice’ is developed is analogous to the current context in which it is being considered.

IEDs, Enterprise IT, disruption and governance.

For many organisations, IT underpins the operation of most (if not all) aspects of the organisation. In such instances, any assumptions about the interplay between IT and enterprise governance need to be carefully considered.

Any assumption that the organisation does what it does, and that the CIO is left to take care of IT governance as well as delivering on the value from investments made in IT-enabled change  should be seriously questioned

The case study of the the £1.5 billion capital shortfall announced by the U.K.’s Co-operative Bank in June 2013 makes for interesting reading on the role of governance, disruption, the expectations of IT and in particular the role of the CIO.

For CEOs, CFOs and Boards of companies whose viability depends on IT that do not bring enterprise IT in from the cold, should read the Kelly review entitled Failings in management and governance. This may be an opinion-changer on the importance of getting the Technology / organisational governance frameworks right.

Moving beyond ‘IT-business alignment’

The bottom line for the leadership cadre in organisations with a critical dependency on enterprise  information technologies is that fostering a integrative governance model between IT and the business will deliver benefits on all fronts.

Shifting the perception that IT should be subservient to the demand of the business to one of being able to deliver transformational value with known risk and known cost will act as an effective countermeasure to the risks of a fragmented governance model in a rapidly changing environment.