I read about principles vs. rules based corporate governance (page 42 in this PDF) at breakfast today, and it reminded me:
Principles are riverbeds, rules are pipelines.
Riverbeds leaves room for ups and downs, sideways movement, leaving and entering, adaptation to reality - and you can see, follow and understand the flow.
Pipelines are limiting, you cannot see nor understand the flow. The flow remains laminar until the speed and volume passes a point and turbulence and resistance explodes. Changes to reality as it happens does not always have room in a pipe.
Politicians and regulators love to draft rules (and revoke gravity if possible), then declare all is well. And we trust that rules are adhered to until some find ways around them.
One Enron and the regulators makes rules to follow the rules. Then rules to follow the rules to follow the rules.
Where did the P as in Principles in the GAAP go? It's more like it should be GAAR.
Since forever humans have developed principles to follow, then making the on-the-spot decisions accordingly. And we're still alive. QED.
Why do we now underestimate the human being saying he needs strict rules? Why do we even believe we need specific rules ourselves?
Measure and control of course. Those blasted command-and-control structures raising its head again. That unholy human need to control his fellow man and our meek submission to such nonsense.
Without strict rules, then control is hard.
Principles and transparency, creativity, efficiency, energy and happiness - tricky stuff to control.
Creativity, good decisions and effective operations are better off following good and universal principles instead of strict and specific rules. Anybody disagree?
Is not the commander in the field best off with a good strategy (principles) leaving the tactical matters to be decided during the battle?
Principles are better, stronger, more efficient - but principles requires transparency:
Leaving me alone with a set of principles is no good. It would not take long before my principles get bent, reappraised, reinvented, reconverted.
Let the world see my principles and how I apply them, and let the world correct me when I go astray.
Principles and transparency instead of rules and regulations please.
Flow as a riverbed instead of pipeline please.
Flow and principles based organisations instead of command and control structures please.
There, I said it again. Avast, ye scurvy rules, regulations and hierarchies!