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June 28, 2005

Productivity versus Competency

Which comes first, productivity or competency?

If the question is hard to answer, it's because the two things are easy to confuse when we're under the gun. That's a problem because when we don't know the difference between them, our activity can amount to less than the needed achievement, and missed objectives can trigger remedial efforts that actually "solve" the wrong problem.

Productivity, as our pals at McKinsey state it, is a ratio of inputs to outputs. Without having to say more, that points us directly at whatever the process is between the inputs and outputs. Naturally, improving processes would be the right step towards improving productivity. And for most organizations, getting process religion is virtually indistinguishable from their promises to become more "competent". By equating process and competency, this view proposes that competency underlies productivity. Its point of view is about "competently conducting high-quality processes."

But meanwhile, is that all there is to the role and measure of competency? Not really; the scope of its significance is far greater.

The simple, generic difference between process and competency is that a process is a prescribed pattern of activity, whereas a competency is a confirmed ability to act appropriately to the circumstances. This is a case of lurking synecdoche, where it's important to note that a square is a rectangle but a rectangle is not necessarily a square. A process is a way to demonstrate a competency, but competency is not always necessarily demonstrated in the form of a process. In fact, competency can be demonstrated simply by "judgement" -- that is, by decisions that put (and maintain) you in the right place at the right time.

Granted, the intuitive (or at least conventional) ideas of competency are usually about demonstrating that one is "up to the task". But the idea of "effective" is a better way to go to that point. Effectiveness is a determination that must be able to express the value of the result regardless of the mechanism that produced it; thus effectiveness allows a wide range of sources not restricted to competency. "Winning ugly" (a fact of life) tells us that we only assume effectiveness requires competency...

When you get down to it, competency is something that should be understood on its own terms, and only thereafter related to other circumstances such as a particular task or the pursuit of a given objective.

So, let's remove productivity, process and effectiveness from the foreground, and get a good direct look at competency.

One of the most persistent aspects of the meaning of "competency" is "fitness to the occasion", or alignment. This still makes us think about the ability to appropriately execute in the occasion.

But it turns out that the fitness in competency is much more about the kind of solution that fits the problem solver, rather than the kind of problem that is challenging the solver. It's the difference between "being great at using hammers to solve problems" versus "being great at solving problem type X"... There's more than one way to skin a cat, but not all solutions to a problem are equal, and not all solvers are capable of the same kinds of solutions. The key issue is whether the organization is capable of bringing the solution that we believe is most appropriate to the problem.

Considering "capability" as opposed to "task", fitness is a great word because it involves addressing the variables that together describe the nature of a circumstance. Below, the diagram shows the variables that need to be addressed by business competency. The actual competency of a given organization will be the blended capabilities it can bring via innovation, productivity, standards and expertise. The particular blend it brings will be more suited to certain situations than to others, and the challenge is to identify which situations actually "net out" in alignment with the organization given its actual competency. The situations that do align might be visible and interesting to the organization, but they might not -- and organizations can also mis-direct their competency.

The level of abstraction of this framework allows it to be ported across disciplines and to be very scalable to circumstances. The abstraction emphasizes that competency is inherently (internally) established on unchanging fundamentals, while ideally applied (externally) as a matter of reasoned choice.

In the picture, the sides of the square are the characteristics against which the organization positions itself in its target circumstance (e.g., in a market or relationship), while the corners are where (and how) requirements are met. In effect, the corners link the sides together in issues that the organization should address to assure relevance or fit, and thus set up to drive value.

Failure at the corners is risky -- it leaves the relationships of the sides arbitrary or irrational, and it makes the organization's offerings to the sides unpredictable and/or unproductive. Accordingly, in the organization's current circumstances, such difficulties should be examined as if they are symptoms of failure at the corners.

The sides must be developed as well: poor determination of the sides will result in a mis-fit or disoriented organization.

Techniques for improvement at the corners and sides are varied, including learning, collaborating, partnering, and others... Those capability-enhancement techniques may themselves be executed through processes that are developed, measured and matured through improvement initiatives.

Consequently, for most organizations, a combination of a capability maturity model and a scorecard is great instrumentation (yet not exhaustive) for managing competency. Typically these are employed in "performance management" efforts. But in light of the above, it is clear that the overall goal is to be able to pre-emptively gauge risks to effectiveness.

Thus we understand that the competency issue is not fundamentally about productivity, but instead is about risk management. And in turn, the riddle is solved: productivity and competency are complementary but they are not causally related; instead, they are correlated.

Posted by Malcolm Ryder at June 28, 2005 8:08 PM

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