Who makes the rules?

Governance identifies who can make decisions, who has the authority to act on behalf of the organization and who is accountable. But where does it actually lie? It’s not just with the law-makers. It is a combination of departments such as Commercial, Finance, HR, R&D, Operations, Sales and Marketing, Logistics and IT. Each of these is managed by professionals who are qualified, often members of trade associations and are responsible for developing the practices and procedures and ensuring that their staff are trained and following them. Thus, these professional functions are in reality disciplines. All involve following policy and compliance with national and international legal requirements and form integral parts of the organization’s overall governance framework.

 So, when it comes to managing strategically important collaborative relationships it would seem obvious that there should be a coherent governance structure that spans the partner organizations and pulls it all together. For example, an alliance relaxed their financial governance to reduce bureaucracy in order to encourage collaborative working. The project ended up with a huge bill of several million over-budget with much wrangling about who was to blame.

 Because managers don’t recognize that they must do something different to manage relationships they assume that what has always worked will continue to do so. It quickly becomes clear that governance as they know is not working because the people at the ‘coal face’ are lacking clear direction and nobody knows how to fix it.

 “Our managers told us about the new alliance but they didn’t explain what we would have to do. Instead, we are working harder and the problems are getting bigger!” Team Leader, Global Oil and Gas Company

 Often rivalry between departments across an alliance makes things worse. A different attitude is needed which involves the various disciplines working together. Additionally, they must realize that it is impossible to have a high performing strategic alliance without strong relationship management and this function must therefore be recognized as a professional governance discipline in its own right. Do you agree?