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initiative? Organizations spend 98 percent of their time and enforcement resources on the 2 percent of their employees responsible for compliance failures, and still have not substantially reduced those failures. Herein lies the essential flaw in informed acquiescence cultures: the gap between people and what’s expected of them, people and the rules, and people and what their boss wants. Gaps are the inevitable end result of external governance. “It’s like an arms race,” said Lankler. “You can keep tightening the controls, but businesses will get more aggressive and try to figure out a way around them; then you tighten the controls more and hire more people to enforce them, and they get even more aggressive, and it never ends.”

Self-governance closes the gap. It puts 100 percent of your resources into 98 percent of your organization, giving them the inspiration, trust, and opportunity to achieve at their highest level. Why will employees do the right thing? They will do the right thing because in self-governing cultures, not to do the right thing no longer betrays just the company; it betrays the individual’s own values. Rules control and limit how we do what we do; only values-based self-governance can simultaneously control behavior and inspire us to do more. When companies and workers align on values, workers then act on their own beliefs. Nothing is more powerful than that. Betraying oneself brings distraction, those pesky little voices in your head that cause friction and diminish your productivity and effectiveness. (We’ll discuss the non-compliance percent in a few pages.) Values-based self-governance creates a culture of consonance.

Imagine how much can be gained by eliminating dissonance at the very core of corporate governance and creating a culture of consonance. The time, energy, and expense formerly dedicated to closing the gap between the individual and the corporation disappears. “To me,” said Lankler, “what I want to be saying to our sales force is, ‘I’m not interested in rules and policies and procedures and restrictions anymore. I’m not interested in bounds, what you can do, what you can’t do. You people get it, you are big boys and girls, you have integrity, you understand that we expect you to do the right thing. We don’t have to have these artificial restrictions; we can trust you.’ If we can get the culture right so this is what we reward every day at Pfizer and this is what we look most highly upon, we can operate with even more freedom and be even more aggressive. That, to me, is the holy grail.”

When you introduce more self-governance into a culture, you diminish the need for rules and procedures and policies. You also diminish the need for carrots and sticks to motivate compliance (another efficiency; carrots and sticks are expensive). In their place, you get alignment to values, more inspiration, and less time and effort lost down the rabbit hole gap between people and rules. Self-governance is the most efficient way to get everyone on the same page, aligned to organizational values and goals, and doing the right thing to achieve them. Compliance is about surviving; self-governance is about thriving.

Michael Monts is vice president, business practices, at United Technologies Corporation (UTC) and a thoughtful and respected leader within the defense industry. UTC was an early leader in trying to create a values-based governance culture, and Michael helped the company see the limits of compliance-based solutions to corporate behavior. He brought this point home to me forcefully. “Creating a compliance program—the external structure, rules, and what have you—will definitely improve your overall compliance results, but ultimately you reach a plateau. Values-based programs take things to the next level. First, they help people get away from loophole hunting. More importantly, if you look at it from the vantage point of leadership, values-based approaches inspire people to accomplish great things. It’s not fear that moves people; it’s the aspiration toward accomplishing something wonderful. When