Innovation versus Governance trade-off?

An entrepreneurial organisation must find a trade-off between governance and innovation, agility and risk-taking, right?  Absolutely not.

Good governance goes hand-in-hand with the entrepreneurial traits of high collaboration, willingness to experiment and learning from failure.

It starts with total clarity on purpose – the organisation’s raison d’être.  As Profit with Purpose says, “now more than ever business cannot exist for the sole purpose of profit.”  Entrepreneurial endeavour must always be in service of that purpose together with an overarching vision and core values.  By being clear about what should not change, organisations can feel liberated to experiment with everything else.

We know that an innovative culture is good for the bottom line and is valued by those working with and for the organisation.  For the culture to be successful, however, innovative behaviours must be accompanied by rigorous discipline.

For example, highly collaborative behaviour requires a readiness to seek diverse perspectives and to be genuinely open to ‘disagreeable’ input and challenge.   Being collaborative does not mean seeking consensus.  It is important to delegate authority for decisions to individuals.  After gathering input, someone must make the call and be accountable for the consequences.

“Nothing is what happens when everyone has to agree.” Seth Godin

Being willing to experiment with a tolerance for failure means having highly competent people and rigorous process to only design experiments that maximise learning and minimise costs.  They seek to expose weaknesses early, with potential downside that is aligned with the organisation’s risk appetite and financial framework.  If projects are not regularly being stopped, the process is not effective.

“The only real mistake is the one from which we learn nothing.” Henry Ford

In summary, good governance seeks the best outcomes for stakeholders and is never content with merely staying out of trouble.  Of course, the elements of governance will evolve as organisations grow and mature, but when positioned as value-add rather than a compliance burden, it enables organisations to build a sustainable, better future for all of us.

Governance is not a trade-off against entrepreneurship.  As Jim Collins said in Built to Last, don’t fall for the tyranny of ‘OR’; find the genius of ‘AND’.