This study investigates the practices of governance in Bhutan and how they shape the agency of diverse actors involved in implementing development policies related to the country’s Gross National Happiness (GNH) strategy. It examines whether Bhutan’s GNH governance framework is able to shape the politics of policy implementation in a manner that generates multidimensional development outcomes that are consistent with GNH policy intentions. Using an analytical lens rooted in the state-in-society approach, the study comparatively analyzes four GNH policies – media, tourism, farm roads and human/wildlife conflict – and the GNH governance tools that seek to shape their implementation. Semi-structured individual and focus group interviews were undertaken with 157 state and non-state governance actors supplemented by site visits, participant observation and document analysis. The findings demonstrate several interconnected themes. First, GNH policy implementation is a complex process of conflictive, cooperative and isolating practices characterized by fractured expressions of power. Governance actors have different degrees of influence in different policy fields, geographic regions or constellations of governance actors. These fractured expressions of power are not shaped in any meaningful way by GNH governance instruments. Nor are they rooted in a common understanding of GNH itself. Nonetheless, the development outcomes that emerge often reflect original GNH policy intentions. A common commitment to a set of cultural values – the same values that underlie the official construction of GNH – harmonize fractured expressions of power in a way that is largely consistent with GNH. These values and their outcomes, however, are often not recognized as being connected to GNH. The result is the frequent achievement of GNH policy outcomes yet the fraying of the image of the Bhutanese state as a coherent GNH state. Two broader insights emerge from these findings. They further an understanding of agency in the operationalization of multidimensional development approaches such as the human development paradigm. First, the expression of power understood as fragmented and complex needs to infuse the foundation of an understanding of agency. Second, the potential role of cultural values as a harmonizing, yet evolving, constraint on fragmented expressions of power must be recognized in the pursuit of multidimensional development policies.