What growth-phase research suggests
Larry E. Greiner’s research on organisational growth, conducted at Harvard Business School and continued at USC, frames governance failure as a recurring and largely predictable cost of scaling rather than an occasional accident. Greiner’s account of growth phases each ending in a crisis implies that the cost of governance failure is heaviest precisely at transition points — moments when a structure that worked well is being relied upon past the scale it was built for. The practical cost here is less about any single failure and more about the drag of continuing to operate a structure that has quietly stopped matching the organisation it now governs, for longer than necessary before the mismatch is addressed. Greiner’s framing also implies something specific about timing: the cost is not evenly distributed across an organisation’s life but concentrated around transitions, which suggests a mid-sized business approaching a scale change — a new site, a larger headcount band, a new layer of management — is approaching a point of elevated governance-failure risk regardless of how well the organisation has performed up to that point.
What decision-rights research suggests
Bain & Company’s research on decision rights, led by Paul Rogers and Marcia Blenko, offers a more direct figure. Surveying executives at more than 350 global companies, the research found that only around 15% felt their organisation’s decision-making structure genuinely helped it outperform competitors. The implication for cost is that unclear decision rights are not a rare failure mode but close to the default condition — the large majority of organisations surveyed were operating with decision-making structures they did not consider a genuine performance advantage, which suggests the drag of unclear ownership is a widespread, ongoing cost rather than an occasional event. The same research’s description of recurring bottleneck points — global versus local, centre versus business unit, function versus function — gives some texture to where that cost concentrates: not evenly across an organisation, but specifically at the seams between parts of the business that have grown at different rates or in different directions.
What incentive research suggests
Steven Kerr’s research on organisations rewarding one behaviour while hoping for another adds a different kind of cost: governance systems that appear to be functioning — rules are followed, boxes are checked — while the actual behaviour they produce diverges from what leadership intends. This cost is particularly difficult to detect, because the visible indicators of governance health, such as compliance rates, can remain stable even as the underlying judgement the governance system was meant to support quietly degrades. Kerr’s own examples — interviewers rewarded for volume conducting fast, low-quality interviews; investigators rewarded for case counts choosing easy cases — illustrate a cost structure that is easy to generalise to governance: a mid-sized business that measures and rewards visible compliance activity, without any comparable measure for the quality of judgement in situations rules do not cover, should expect the same divergence Kerr documented, simply applied to a different function.
Where these threads agree
All three bodies of research point toward the same broad conclusion from different angles: governance failure in a growing or mid-sized organisation is rarely a single, dramatic event. It is closer to an ongoing structural drag — a mismatch between formal governance and operating reality (Greiner), a decision-making structure that does not deliver a genuine advantage for the large majority of organisations (Rogers and Blenko), and a gap between measured compliance and actual judgement quality (Kerr) — that compounds quietly rather than announcing itself.
Where they diverge
The three threads diverge on where the cost is concentrated. Greiner’s research points to transition moments — the cost spikes specifically around scale changes. Rogers and Blenko’s research suggests the cost is closer to a steady-state condition, present in the large majority of organisations regardless of whether they are currently mid-transition. Kerr’s research suggests the cost is most concentrated wherever a measurement or reward system exists, since that is where the gap between rewarded behaviour and intended behaviour actually opens.
What remains unresolved
None of these three bodies of research offers a direct financial estimate of governance failure’s cost to a mid-sized business, and Zoom Riddle is not aware of a single study that credibly does. What the convergence of these three threads supports is a qualitative conclusion rather than a number: that governance failure functions less like a discrete cost event and more like a persistent tax on organisational performance, whose size is genuinely difficult to estimate precisely because it rarely appears as a single identifiable loss.
This is itself a useful, if unsatisfying, finding. A leadership team looking for a return-on-investment figure to justify governance work against other priorities will not find one in this body of research, and should be cautious of any figure presented elsewhere with more confidence than the underlying evidence supports. What the research does support is a case built on mechanism rather than magnitude: three independent bodies of work, studying different aspects of organisational functioning, each identify a real and ongoing cost, even though none of them can currently say how large it is in absolute terms for any particular organisation.
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Questions worth considering
- Where in the organisation do slow decisions, duplicated effort and delayed resolution tend to appear, and are they ever traced back to how decisions are made?
- Is the business approaching a change in scale — a new site, a new layer of management — that raises the likelihood of strain?
- What is measured and rewarded in governance: visible compliance activity, or the quality of judgement where the rules say nothing?
This perspective is part of Governance.
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