12. Institutional Myths

“An organisation becomes dangerous when yesterday’s assumptions become today’s unquestioned truths.”

Every organisation develops stories about itself. Some are explicitly documented in strategies, operating models and governance frameworks, but many exist only through repetition. People learn them from colleagues, absorb them during meetings, and eventually stop recognising them as assumptions at all. They become accepted explanations for why decisions are made in particular ways, why certain structures exist, why some approvals cannot be challenged, or why certain risks are considered unavoidable. Over time these narratives acquire an authority that no individual consciously grants them. They simply become “the way things are.”

This process is neither unusual nor inherently harmful. Organisations require shared mental models to coordinate thousands of decisions between people who possess different knowledge and responsibilities. The difficulty arises when those models cease to reflect organisational reality. Markets change, technology evolves, regulation develops, customers behave differently and organisational structures shift, yet the assumptions guiding governance often remain remarkably stable. Governance then begins optimising for conditions that no longer exist.

Many of the dysfunctions examined throughout this philosophy—Approval Inflation, Committee Creep, Governance Theatre and Dashboard Archaeology—are sustained not because anyone deliberately chooses inefficiency, but because the organisation continues to believe ideas that were once reasonable but have gradually become detached from evidence. These inherited assumptions become what might be called Institutional Myths: beliefs that continue to shape organisational behaviour despite no longer accurately describing the environment in which decisions are made.

Understanding Institutional Myths is therefore less about exposing organisational irrationality than understanding why intelligent organisations continue defending systems whose original purpose has quietly disappeared.

Every Governance System Begins as a Rational Response

It is tempting to dismiss bureaucracy as the product of poor management or excessive caution. Reality is considerably more interesting. Almost every governance practice that later becomes burdensome usually begins as an entirely rational response to a genuine organisational problem.

An approval may be introduced following a significant financial loss. A committee may emerge after repeated coordination failures between departments. A mandatory review might follow a regulatory investigation. A dashboard may be created because executives genuinely lacked visibility. Each intervention solves an identifiable problem, often successfully. Because the intervention works, it becomes institutionalised. Documentation is written, responsibilities assigned and procedures embedded within organisational life.

The passage of time alters the environment more rapidly than it alters governance. Staff change. Systems improve. Technology automates previously manual activities. Risks evolve. Markets become more competitive. Entire business models transform. Yet governance structures exhibit remarkable persistence because removing controls feels riskier than adding them. The organisation retains yesterday’s safeguards while adapting to today’s operating environment.

Eventually the original problem disappears, but the solution remains. New employees inherit the process without knowing why it exists. The justification becomes increasingly vague until nobody can identify the event that originally created it. What survives is not institutional memory but institutional habit.

The governance system therefore ceases to be a response to present conditions and instead becomes a monument to historical circumstances.

When Assumptions Become Untouchable

The most powerful Institutional Myths are rarely documented as formal policy. Instead, they appear as unquestioned statements repeated so frequently that challenging them feels almost inappropriate.

“We’ve always needed executive approval.”

“Our auditors require this.”

“The regulator expects it.”

“Our industry is too complex.”

“Senior management wants visibility.”

“Our risks are unique.”

Each statement may once have been accurate. Some may still contain partial truth. The difficulty is that they increasingly function as conversation stoppers rather than explanations. Instead of inviting investigation, they discourage it. Decisions become justified by reference to inherited beliefs rather than current evidence.

This changes the nature of governance itself. Instead of continually adapting to organisational reality, governance begins protecting its own assumptions. Reviews examine compliance with existing procedures rather than asking whether the procedures remain useful. Committees debate whether policies have been followed rather than whether the policies still improve decisions. Audit verifies consistency with established practice rather than questioning whether the practice continues creating organisational value.

The organisation gradually becomes better at preserving governance than improving governance.

The irony is that nobody consciously chooses this outcome. Individuals often recognise inefficiencies privately but assume the underlying rationale must exist somewhere else within the organisation. Each person therefore perpetuates assumptions that nobody actively believes but everyone assumes somebody else has already validated.

Institutional Myths survive precisely because they become socially distributed rather than individually owned.

Governance Begins Protecting Itself

Once myths become embedded, governance acquires an unexpected characteristic. It starts measuring success according to its own preservation rather than organisational performance.

Policies are retained because removing them introduces uncertainty. Committees continue meeting because disbanding them feels irresponsible. Reports continue being produced because discontinuing them creates uncomfortable questions about oversight. Controls accumulate because eliminating one appears more visible than creating ten additional ones.

This creates a subtle but important inversion. Governance no longer exists primarily to improve decisions. Decisions increasingly exist to preserve governance.

The organisation becomes hesitant to simplify processes because simplification appears risky. Every proposal to remove an approval prompts questions about what could go wrong, while very few people ask what currently goes wrong because the approval exists. Every new committee has an obvious justification. Every retired committee demands substantial evidence. Every new report appears prudent. Every discontinued report feels reckless.

These asymmetries explain why governance naturally expands over time. Growth requires little justification beyond caution, whereas reduction demands confidence that inherited assumptions are no longer valid. Since absolute certainty rarely exists, governance almost always grows faster than it contracts.

Institutional Myths therefore become a form of organisational gravity. They steadily pull decision-making towards greater complexity without requiring anyone to advocate explicitly for bureaucracy.

Myths Distort Decision Architecture

Institutional Myths do more than preserve unnecessary processes. They fundamentally reshape how organisations make decisions.

When assumptions remain unquestioned, decision-makers begin optimising for fictional constraints rather than actual ones. Managers escalate decisions because they believe senior approval is expected. Analysts produce extensive reports because they assume executives require exhaustive detail. Risk teams request additional evidence because they believe regulators demand complete documentation. Technology teams delay implementation because they assume architecture committees need involvement.

None of these actions necessarily arise from explicit instruction. They emerge because people anticipate governance based upon inherited narratives.

Decision Architecture gradually becomes designed around perceived expectations instead of genuine organisational needs. Information grows because people believe more information reduces criticism. Meetings expand because broader consultation appears safer. Documentation increases because greater documentation feels defensible.

Ironically, each additional safeguard often weakens decision quality. Important information becomes buried beneath administrative evidence. Accountability diffuses across larger groups. Decisions slow sufficiently that opportunities disappear before action occurs.

The organisation rarely notices this deterioration because every individual activity appears reasonable when viewed independently. Only when observing the system as a whole does the cumulative effect become visible. Governance intended to reduce uncertainty begins producing it. Structures created to improve confidence instead create hesitation.

Institutional Myths therefore influence organisations not merely through what they require, but through what people imagine they require.

Replacing Belief with Organisational Evidence

Healthy governance periodically subjects its own assumptions to the same scrutiny it applies elsewhere. This does not imply constant reinvention or fashionable restructuring. Stability possesses genuine organisational value. The objective is not perpetual change but continual validation.

One of the simplest governance questions is also among the least frequently asked: If we were designing this organisation today, knowing what we now know, would we deliberately create this process?

The question shifts attention away from historical justification towards present value. It distinguishes between governance that survives because it continues improving decisions and governance that survives merely because it has existed for a long time.

Evidence-based governance therefore treats every policy, committee, report and approval as a hypothesis rather than an inheritance. Does it reduce uncertainty before decisions are made? Does it improve decision quality? Does it increase confidence in execution? Does it enable faster organisational throughput? If these outcomes cannot be demonstrated, the organisation has every reason to reconsider the mechanism regardless of how long it has existed.

This approach also changes the role of governance professionals. Rather than acting as custodians of inherited structures, they become custodians of organisational learning. Their responsibility shifts from preserving procedures towards ensuring that governance continues reflecting organisational reality.

The most adaptive organisations are therefore not those with the fewest controls, nor those with the most sophisticated frameworks. They are the organisations willing to examine their own assumptions with the same intellectual discipline they apply to financial forecasts, strategic plans and operational risks.

Conclusion

Institutional Myths are inevitable because organisations remember selectively. They preserve successful responses long after the circumstances that created them have disappeared. What begins as experience gradually becomes tradition, tradition becomes assumption, and assumption eventually becomes unquestioned truth.

The danger lies not in possessing institutional memory but in confusing memory with evidence. Governance built upon obsolete assumptions slowly loses its ability to improve decisions because it no longer reflects the environment in which those decisions are made. Complexity accumulates, accountability diffuses and organisational throughput declines, all while the organisation believes it is simply following established good practice.

If governance exists to improve decision-making, then it cannot treat its own assumptions as exempt from review. Every policy, committee, control and approval represents a hypothesis about how organisations create value. Some hypotheses endure because they continue to improve decisions. Others survive only because nobody has asked whether they still deserve to exist.

An organisation begins renewing its governance not when it discovers new frameworks, but when it develops the discipline to distinguish between accumulated wisdom and accumulated mythology. That distinction determines whether governance remains a living architecture for better decisions or becomes an increasingly elaborate defence of yesterday’s world.