One can distinguish self-governance and external governance which can arise from different levels in the outer and inner environment of the system. These form governance loops.
All systems are influenced by or have to comply with governance of systems in their outer and inner environment. For example, an employee translates organisational strategy into function specific ones, as well as having to comply with organisational rules. A person wants to express his / her inherent talent and potential, besides having to obey the body’s needs (e.g. to sleep, eat, exercise). Although the self-governance of a system can override external governance, this will have consequences for the system.
Some external governance is set up to only kick in when self-governance breaks down. For example, a person or organisation can be placed under enforced supervision. Parents act if the child’s behaviour exceeds boundaries.Sleep can overtake a person’s desire to stay awake.
External governance can form a series of governance loops which influence or limit the system’s self-governance. These loops form a governance hierarchy. For example, the laws of society influence the laws of an industry, which in turn governs an organisation, which governs its various functions and the people occupying them. Likewise, the talent and experience of an employee governs his / her behaviour which can govern the specific functional contribution to the organisation.
Ideally, external governance allows maximum room for self-governance, because a system has most knowledge about its specific situation and can react appropriately and rapidly if change is required.
Self-governance arises from and refers back to the self and its ethos. It entrenches self-reference into the governance structures, procedures, frameworks and criteria of the entity system.
Unless a system assumes responsibility for self-governance, it will be governed by others. “Plan or be planned for.” (Ackhoff)
relevance for the change manager
An organisation’s performance management system governs its activity systems. It needs to incorporate compliance with external governance, as well as self-reflective learning in order to enhance self-governance.