It has been widely recognised that good governance decisions involve identification of the ‘sweet spot’ where cost, risk, and benefit trade-offs can be achieved. A ‘mirror’ set of balancing factors is involved however when management is charged with implementation of those decisions – as illustrated above.
Best practice strategy execution requires management to identify the most efficient and effective systems and methods of achieving the desired outcomes, whilst also ensuring that security and compliance requirements are addressed. The ideal combination of people, processes and technology will be a product of the trade-offs between productivity, security and system control measures.
The ‘iron triangle’ is a familiar concept when engaging consulting or other third party solution providers, where cost, scope, and time are the major factors determining the quality of the project outcomes. In that case, it is understood that each side of the triangle impacts on the others. Allowing less time is likely to increase project costs if you want to maintain high quality outcomes (assuming these are realistic in the time remaining). Scope creep can increase costs and cause delays. Lower budgets are also likely to reduce the time allocated, and the quality of the project outcomes.
The ‘ideal decision triangle’ (illustrated on the left side of the header image) used to guide board deliberations recognises that to undertake new ventures, some level of ‘acceptable risk’ will need to be agreed, along with the allocation of sufficient resources. Under-funding a project may sabotage the outcome, while allowing insufficient time also puts the potential benefits and outcomes at risk. ‘Bending rules’ or breaching compliance obligations may achieve a short term advantage, but will be likely to lead to fallout with stakeholders, and possibly with regulators as well.
In the same way, management needs to use the ideal system/process triangle (illustrated on the right of the header image), recognising that achievement of the board’s goal/s involves a trade-off between productivity and use of required security and compliance protocols. Such protocols may be instituted to ensure compliance with internal policies, procedures and other controls, and/or to ensure adherence to regulatory obligations. Another consideration when executing board decisions relates to the level of supervision required (potentially reducing the productivity of the supervisor) depending on the risks, complexity or sensitivity of the activities.
Using these triangles helps to ensure that ideal governance decisions and management systems/processes mirror each other, and so enables alignment of these two key parts of your organisational structure in achieving your shared purpose.