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September 20, 2005

Maturing Performance Improvement

Organizations exist in order to enable value to be created from investments.

In this sense, the most general acknowledgement of their improvement sees an increase in the organization's ability to enable value-creation, and/or an increase in the benefits actually obtained through the organization.

Naturally, an executive of the organization has the responsibility to see that the purpose is actually fulfilled by using the organization. But the management of the organization must be primarily about ensuring that the organization is fit for the task of pursuing the purpose -- so this is the focus of management's idea of improvement.

I.

Although "fit-to-purpose" seems like a straightforward, uncomplicated idea, the practical lexicon of "enterprise improvement" consists of many overlapping concepts, and managing improvement likewise consists of many overlapping perspectives such as value, performance and risk. Applying and blending these effectively, without having complexity become counter-productive, is the big challenge to making their influence into improvement as opposed to just change.

In sorting out the overlaps, the conceptual or semantic distinctions allow different roles in the organization to identify the particular issues to adopt as their respective responsibilities -- thereby generating a basis for designing both the infrastructure and processes to actually improve.

Commonly, however, responsibilities for an issue will still overlap after the sorting out has been done. Where more than one role is actively responsible for something, the need is for clarity on how the collaboration is effective for the responsibility.

Similar to the executive and managerial bents, these responsibilities can be readily seen from two points of view: one on requirements, and one on dependencies.

Improvement Requirements:
- Goal (motive) for improvement: such as growth, security, recovery
- Quality (degree) of improvement: maturity, scope, effectiveness

Improvement Dependencies:
- Models (means) for improvement: strategy, governance, architecture
- Deliverables (features) of improvement: agility, competency, continuity, efficiency

II.

In that setup, goals assume that deliverables will enable them, and models prescribe how quality of enablement will be achieved.

However, the listing leaves us with explaining how the two hottest terms in management today fit in -- alignment and performance.

What's universally agreed on is that both things must be managed and both things must be improved. If alignment leads to better performance, and better performance delivers better value, then the emphasis is a no-brainer. But...it's just that the implementation drives everyone nuts.

Relief begins when the situation is thought of slightly differently: better coordination leads to better execution, and better execution delivers intended impact more reliably. In this description, it is more readily apparent at each step that accountability works with planning to influence improvement.

But meanwhile, there are decisions to be made such as whether alignment is to be chased through strategy or through governance or architecture. The different modes affect the organization's potential fit-to-purpose in different ways -- or they should.

For example, coordination (the structural fit) should benefit in different ways.
- Strategy should identify and communicate the target values and why they are targets, thus defining objectives.
- Governance should define policies and programs for linking actions to opportunities as risk-managed capabilities.
- Architecture should methodically specify the integrating and configuring of resources into infrastructure.

Likewise, execution (the practical fit) should benefit in different ways:
- Strategized objectives should influence workload optimization
- Governed capability should influence availability and approval of response
- Architected infrastructure should influence economy versus scope and consistency versus flexibility

Finally, intended impact (the logical fit) should benefit in different ways:
- Strategy should maximize operational focus
- Governance should maximize manageability of compliance to requirements
- Architecture should maximize capacity for repeatability and effectiveness.

When a plan articulates the intended impact and can prescribe (or predict) underlying support (or success) factors at the execution and coordination stages, alignment is being drawn up. But once the alignment drawing is done and everyone sees "what" alignment is, actually making it happen is the daily problem of "how".

III.

This is where "performance" wades into the picture, because the success of making alignment happen is seen as a harbinger of greater things to come. The alignment effort -- especially if conducted as a program -- is executed against certain desirable outcomes, and the degree to which it reaches those outcomes will be looked at as "performance" to be managed. But in the bigger scheme of things, final business outcomes (such as transactions, product launches or contract signings) are being rated against targets and this is "performance" too. The question for both executives and managers is how the performance of the alignment effort is affecting the performance of the business in terms of final outcomes...
Is more alignment closely preceding stronger outcomes?

IV.

The strongest history of argument in favor of alignment driving increased final benefits is usually found in two locations: the Continuous Improvement literature, and the Maturity Model literature. In both instances, the thesis is not just that alignment is a performance "good-to-have", but instead a performance "must-have".

Competition and economics drive the argument in the continuous improvement (CI) camps; the expense of providing a competitively advantageous product is mitigated through proactive quality measures. Meanwhile, complexity and competency stoke the maturity modelers (MM); meeting the multiple obligations of a contracted role is tackled through systematically calibrating defined levels of expectation versus defined levels of effectiveness. Both CI and MM have the perspective of "engineering" improved business outcomes.

With maturity models, however, the problem has developed that there are so many different ones which are seemingly interlinked that it is difficult to understand which ones to use or where to start amongst them.

For example: using a web search engine, one can easily trace consultative literature in IT performance from analysts, researchers, service providers and vendors, to organize a collection such as this:

- Howe School of Technology Management: Luftman and Dell, the Strategic Alignment Maturity Model
- Pink Elephant: J. Duffy, the Strategic Alignment Maturity Model
- Forrester Research: the Strategy Alignment Maturity Model (April 2005)
- InfoTech Research Group (IT BusinessEdge): the IT Governance Maturity Model
- Gartner Group RAS Services: the IT Management (ITSM) Process Maturity Model

With this collection, one finds that:
- the top maturity level of IT service management calls for business alignment
- the top maturity level of business alignment calls for governance
- the top maturity level of governance calls for strategy alignment
- the top maturity level for strategy alignment calls for ...

These interdependencies pose a difficult question. Does maturity in one area depend on maturity in another area (and if so, how much is enough?) -- or does "maturity" in one area simply require a program in another area to be implemented?

Practical experience says that different roles take on different areas of maturation, and the ad-hoc recipe of the interdependencies calls for them to leverage each other's progress. Ideally, synergy develops amongst the different roles, and if so then the most interesting observation will be that the "culture" of the working environment will be intentionally evolving -- whereas the typical approach to this interconnection has usually been to develop a "process".

What management likely needs, to fully exploit the kind of clarity that maturity models can offer, is a communications mechanism that is able to express and correlate the cultural issues and events of the role-collaborations. These cultural phenomena may be the most truthful "performance indicators" -- ones that can be used as inputs into the efforts to optimize the organizational design for its purpose.

Posted by Malcolm Ryder at September 20, 2005 6:27 AM

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