In recent years, Governance, Risk, and Compliance (GRC) frameworks have become essential tools for integrating diverse capabilities and facilitating decision-making and alignment between the board and the CEO and to some degree between the CEO and operations.
While GRC is helpful, mostly in IT, it still lacks what is necessary to drive organizational alignment and performance across enterprise functions. The challenge lies in applying GRC effectively in the midst of existing cultures, management systems and structures, and organizational dynamics.
GRC needs to be more than an integration layer that sits on top of what is already there. It needs to be an integrative force. This is where LEAN principles and practices can add significant advantage.
Understanding the Gap
One of GRC's core purposes is to bridge the gap between organizational obligations and operational realities in the presence of uncertainty. However, applying GRC as an “integration layer” on top of a reactive and siloed organization can and usually makes matters worse not better. The saying, "paving the cowpath" comes to mind.
The large number of management frameworks adds further complexity with many overlapping and competing with each other. Introducing frameworks such as the OCEG model may inadvertently burden management teams resulting in more work making alignment even more difficult to obtain.
Rather than attempting to glue (i.e. integrate) together a multitude of disparate pieces, organizations should strive for a holistic "integrative" approach. This approach comprises leveraging what is already present within the organization and making it work cohesively as a system. The goal being to align all functions towards a common purpose, transcending mere integration and fostering a lean, aligned, and effective organization.
LEAN: The Integrative Force
LEAN, a management philosophy with roots in the manufacturing sector, holds the key to achieving an integrative force for GRC.
Let's explore how LEAN principles can address the challenges and improve organizational performance:
1. Customer-Centric Focus
The foundation of LEAN lies in directing the organization's efforts towards a single point of focus: the customer. When applied to GRC, this principle ensures that all governance, risk management, and compliance practices are geared towards meeting organizational outcomes. By prioritizing stakeholder needs, organizations can make operational decisions that align with their goals and objectives and improve the probability of mission success.
2. Reduction of Waste
LEAN's emphasis on reducing waste aligns with the challenges faced by GRC. Many inefficiencies in organizational processes stem from uncertainties and variability. By tackling waste head-on, organizations free up valuable resources, time, and effort; creating the capacity for proactive and integrative initiatives.
3. Prioritizing Value-Add Work
LEAN encourages organizations to differentiate between value-add and non-value-add activities. Applying this principle to GRC directs attention to activities that directly contribute to mission success. By prioritizing value-add work, GRC becomes a transformative force that adds strategic value, enabling organizations to focus on what truly matters.
4. Fostering Continuous Improvement
Continuous improvement is the backbone of LEAN. Similarly, for GRC to thrive, organizations must embrace a culture of constant assessment and enhancement. This iterative approach fosters adaptability and resilience, enabling organizations to stay ahead of risk that threatens mission success.
Towards an Integrative Future
GRC's true potential lies in embracing an integrative approach that transcends mere integration. Rather than adding complexity to existing structures and practices, organizations should leverage integrative principles and practices as found in approaches such as LEAN.
By directing their efforts towards stakeholder obligations, waste reduction, value-add work, and continuous improvement, organizations can unleash the true potential of GRC across and within the entire organization.
Aligning enterprise capabilities becomes a seamless and strategic process when GRC is used as an integrative force to improve the probability of mission success.
