The warmth of the summer is gone. It has been swept away by the fresh, crisp evening air, cups of hot chocolate, and the electrified buzz of high school football games! As I watched one such game from my perch on the cold, hard, aluminum benches last weekend, I jumped to my feet clapping and cheering! Surprisingly I was not roused by the athleticism of the players, but by the execution of the half-time show — two hundred amateur musicians following the mark of the drum majors. They played their instruments and marched in unison to create an ever-changing array of geometric patterns, accompanied by a beautiful wall of sound.
The band’s successful performance was clearly the result of a series of orchestrated choices executed, reviewed, and refined with discipline. “Wouldn’t it be equally amazing if business leaders could get their organizations to execute with similar commitment and precision?” I thought.
Making decisions is a personal challenge for many leaders, but it takes a set of clear choices to unify their teams and marshal their resources. The task only increases in complexity and difficulty when leaders must include and align the expectations and priorities of an entire organization. But, that IS the role of senior leaders — to consciously create focus by eliminating other possibilities.
To decide literally means “to cut off from.” And for many leaders, the very act of deciding is painful. But without clearly communicated definitive choices, leaders set in motion too many, often competing initiatives that create confusion and conflict. Everyone involved becomes overwhelmed and exhausted and receives little payback.
It’s not just individual leaders who struggle to decide, but entire leadership groups are also victims to indecision. Many organizations believe they have effective governance but have never defined how it should work or assessed how it actually works. However, a clearly established system of governance and decision-making is foundational to every well-run and successful organization. Small- and mid-sized organizations often think that governance is not applicable to them, and pride themselves as operating more “organically” or as an “informal company.” We disagree. The need for governance exists whenever individuals come together to achieve a common purpose.
Like a drum major’s baton, governance is a relatively small but powerful tool to set priorities and mark time in directing and coordinating resources across the business. To elevate the impact of their leadership, senior executives and their teams should establish and work within a governance system suited to their business.
Well defined governance:
– Explains and reinforces a minimum critical set of governing bodies, their relationship to each other, and how they should work together for the benefit of the whole
– Defines the charter for each body including expected deliverables, minimum critical membership, parameters of their autonomy and authority, expected standards of performance, and their relationship to key stakeholders
– Outlines decision rights and how other key stakeholders can access the group to provide input and influence choices, and ultimately determine which tradeoffs are necessary for the greater good
– Establishes the rhythm of the organization by laying out the annual schedule for and the input/output relationship among the governing bodies
– States how business-level and broader enterprise performance is evaluated and regulated
– Embodies and reinforces the values and desired behaviors of the organization, and works to eliminate counter-productive influences and distractions
Sample Charter
Ultimately, disciplined governance facilitates unity for leaders and key influencers to work together toward a virtuous cycle of organizational choice and accountability. This is achieved through interconnected and mutually reinforcing discussions and decisions.
Admittedly, a degree of dysfunction and imperfection is always a factor because of the inherent complexities of people and organizations; but, when governance is properly designed and implemented, the synchronization and performance results are impressive.
Recently one of our new CEO clients, mired in substandard governance and inherited bureaucracy, insisted on an overhaul. He reformulated and streamlined the executive team and established a separate operating team with representatives from all four business units which he co-owned with the COO. He defined a common scorecard and mandated a singular strategic planning and resource allocation process. Charters were established, and decision rights with clearly defined expectations of information flow were allocated to the resulting six governing bodies. He further insisted on making resource tradeoffs at the enterprise — not the business — level. Importantly, dueling fact bases of individual BU’s agendas was replaced by an open forum to debate strategic priorities from the new integrated data set. The change enabled the enterprise portfolio to be managed as one business rather than a loose confederation.
Moreover, the CEO could leverage the Supply Chain, HR, and IT functions that the old governance design prevented. The result was decreased costs and increased visibility of previously obscured emerging talent. Within the first year, the business launched a major product in one of the emerging BUs, integrated an acquisition into the largest BU, and increased their talent retention by nearly 40%. The transformation wasn’t easy, but the alignment behind decisions and the potential for winning far outweighed the temporary disruptions of managing change.
Like the drum major’s baton, orchestrated decision-making is a mighty force for achieving higher performance within your business. Establishing the discipline for how and when decisions are made, who makes them, how they are communicated, and how they are reinforced creates greater clarity and cohesion among your leadership team and enables your employees to execute with greater timeliness and precision. In turn, you too will have your customers and shareholders standing and cheering!