The Illusion Was Rational

Chapter 3: The Board Narrative and the System

The board pack presents parallel descriptions of different aspects of the organisation using different measures, none of which connect investment to system behaviour. Each section is internally consistent and globally incoherent; the gap is bridged socially by translation roles whose existence is the cost of structural incoherence.

The CEO of a mid-sized European insurer funded a three-year technology modernisation programme at € 40 million, hired a respected CTO, and approved a new organisational structure. Two years in, the core measures she cares about have not moved. She commissions an external review. The consultants produce 120 slides and recommend another reorganisation, a new operating model, a governance framework. She approves the recommendations, because the structure provides nothing else to approve. The CEO is not incompetent; she is governing through representations that cannot be reconciled. This was the rational outcome of a governance model designed before software mediated value creation. The representations she receives were not designed to be tested against the system. They were designed to be approved.

Every board of a software-dependent corporate receives a narrative. It arrives as a board pack, a set of management reports, a quarterly business review. It contains financial performance, programme status, risk registers, and strategic progress. Each section is produced by a different function. Each section is internally consistent. Each section describes the organisation from its own perspective.

The board reads these sections as a composite picture of the organisation. They are not. They are parallel descriptions of different organisations, each using its own language, its own measures, and its own definition of success.

The CFO's section reports financial performance against budget: cost, revenue, margin, capital expenditure. While it is accurate and complete within its own frame, what it completely fails to do is connect expenditure to system behaviour. For example, a € 40 million technology programme merely appears as a cost line, leaving entirely unmeasured whether it has changed anything in the system that creates value.

The CTO's section reports technology progress: deployment frequency up, a new application launched, the recruitment brand stronger. What the section does not do is connect them to strategic priorities. Deployment frequency measures engineering activity, not whether the organisation can bring a new product to market faster.

The COO's section reports operational performance, such as claims processing times, customer satisfaction, and incident frequency. However, what the section consistently fails to explain is whether this performance is constrained by the system itself or by the people running it; a claims processing time of 14 days might reflect a genuinely complex process, or it might simply reflect a system that forces claims through five services with no common data model.

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