I have seen an increasing and unchallenged pattern of ‘speedboat’ auditing. This draws its inspiration from its counterpart ‘speedboat management’, that is when senior managers believe they are leading a speedboat sized organisation. Unfortunately any organisation of any size, above only the very smallest owner-managed business, in fact more likely resembles a cruise liner.
So what does this look like? Well for management it is the quick chopping and changing of direction with the belief that the organisation behind it is following at the same pace. For auditors is the production of ‘strategic’ reports. These are reports covering vast complex swathes of process, organisation or resources, that are focused on only the ‘strategic’ points. By this the auditor means the most significant ones affecting the top decision making elements of the process, activity or operation (and no I am not persuaded that they have covered the area reviewed with sufficient work).
It is worth pausing here to consider what definition of strategic is being used here. The one being used here is one I call the ‘strategic by nature’ argument, in other words, it’s strategic because it affects the senior decision makers or higher echelons of the organisation. In his book Good strategy, Bad strategy Richard Rumelt defines not only what bad strategy is, and being strategic by nature is one of them. others include strategy as ‘broad goals’, ambition rather than actions, meaningless ‘fluff’, to do lists and template strategies, but he also defines good strategy.
For him good strategy, and it is model I subscribe too because it feels intuitively right, is ‘coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure’ (P77). For him a strategy should contain a ‘kernel’ with a diagnosis explaining the nature of the challenge; a guiding policy for dealing with the challenge; and a set of coherent actions that are designed to carry out the guiding policy.
Now here’s the link back to the type of boat most organisations are. They are cruise liners. Let’s literally take a cruise liner. A simple strategic decision to skip docking at port X due to bad weather and press onto the next port is a strategic response to say an environmental challenge. To effect this the engine room needs to keep shovelling coal, this requires different staff shifts, different housekeeping for their rooms, different food schedules, review of their HR terms and conditions. Passengers need to be informed. Entertainments need to be changed, food and housekeeping schedules need to change. Procurement need to look at stocks and change orders at the next port. Finance need to re-budget for lost income and increased costs. You can quickly see that no modern, sizeable, organisation is much like a speedboat.
For me, therefore, it is depressing when auditors perform, intentionally or not, only ‘strategic’ audits or report only ‘strategic’ issues. This is not helping unless those issues are genuinely top sliced from a much larger, much more meaningful piece of work that addresses the systematic organised delivery that is required to effect the strategy and that the ‘non strategic’ points are reported to the management team and their juniors. A strategy not grounded in a ‘coherent set of actions’ is nothing of the sort. Similarly a strategic audit that has not looked at how the steering wheel at the bridge is connected to the systems and processes of delivery below it, is nothing of the sort.
Organisations are complex systems of people and process covering many ‘decks’ and operations. We as internal auditors, having seen the breakdown of these chains of activity often enough should be more than well aware of this and should reflect them more meaningfully in our work.