The Hierarchy

Most companies and formal organizations are hierarchical in nature, not necessarily in internal structure of course, but nonetheless. Here's the hierarchy I speak of:

• Governance: Why we do and don't do
• Architecture: How we do it
• Management: Who does what when
• Controls: Operational decision frameworks
• Execution: What actually gets done

And then there are the horizontal functions and the feedback...

Governance

Governance is usually expressed in the form of high level mission statements and things like that. But of course it's a lot more. Ultimately, governance leads definitions of duties, policies, and rules about who does what under what circumstances and what the limits are (must, should, may, should not, and must not).

Architecture

From governance, some structuring of the arrangement of people and things, resources, assets, and relationships is created to reflect and structure how the mission is accomplished within the constraints of governance. This is the architecture of the entity, and within that architecture, everything fits together. Architectural decisions have long-term and overarching consequences, and end up reflected in control mechanisms to limit what happens and standard operating procedures that implement the architecture as it executes over time.

Management

People who are in charge of assuring that the governance is followed and architecture operated do so by managing people and developing and operating processes. These processes ultimately implement standard operating procedures that use resources to produce results, measure those results and uses, and adapt within the requirements of governance and architecture to assure success at meeting goals within acceptable limits.

Controls

Controls are structured to define decision-making at the execution level with clarity adequate to generate and enforce operational models. In essence, they are used to clarify how decisions should be made at the execution level so that in execution, by following the controls, there is a reasonable level of assurance that the entity meets its goals and remains within identified limits. And of course it should provide for the situations in which exceptions must be made by management.

Execution

This is where the entity performs is operational tasks. It is supposed to operate within the constraints identified by the controls applying those decision frameworks and providing feedback to management, applying standard operating procedures and processes to get useful work done. That useful work produces the value of the entity, for example, by providing utility to customers who pay for that utility.

Horizontal functions and feedback

Across the hierarchy, there are usually common service components that keep things on track. For example, legal requirements apply at all levels, thus the legal department fits in here, and human resources (HR) are required at all levels whee there are people involved in order to help make certain that the people issues are properly handled. Similarly, technology is often an area that crosses these boundaries, and of course without the financial system and controls, keeping track of money and inventory and other things of value ends up problematic.

None of these operate open loop in the sense that they merely dictate things to other level or components and ignore what happens. Feedback is required within and between levels and verticals in order for the entity to adapt to changes and differences between expectations and realities.

A call to action

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In summary

There is method to the madness that sometimes seems like how companies work. The madness is managed by the hierarchy.