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December 19, 2005

Research, Identity, and the Authority of Desire

"I'm not perfect, but I'm perfect for you." -- Grace Jones

Fulfilling need is the core of a business, and defining need is the key to identifying the customer. But understanding need requires understanding desire, and the role of desire behind the need.

I.

In Truffaut's 1960's film of Ray Bradbury's novel "Farenheit 451", the vision of the future doesn't include a cell phone or a PC. There isn't anything in the future home that looks like it has a Delete key on it -- and even less something with a Find key. Meanwhile, the government perfects "information" by tracking down, confiscating and burning every text that it thinks would make people restless and unhappy. Information programming is pervasive. Of course, the ban on books is because independent reading leads to independent thinking. The "Thought Police" are everywhere. People who read are criminal outcasts.

But at the end of the film, everyone does the same thing -- they adopt identities as expert carriers of the information they chose. And whether they chose to identify with the propaganda or with the banned literature, either way they do what they do, and they know what they know, because they want what they want.

Fast forward to 2005 and increasingly, if you have a PC, you choose your own diet of information. (Is it true that we are what we eat?) Find and Delete are as routine for the individual as it was for the government in Bradbury's nightmare future. This leads to a lot more free thinking and free spirits, but it doesn't necessarily lead to great thinking or communities. Confusion might be the main reward of the escape from power politics. Not to worry, though: herding the cats, we still have Academia and we have Marketing.

What do academia and marketing have in common? Tremendous emphasis on "why you should think what you think." Put that way, we can see them both, like politics, as not mere information management but as instances of practical "knowledge management" in the commerce of ideas.

II.

Given the Web's explosive abundance of circulated intellectual material, shifting our scrutiny from "what" we should choose to "why" would seem to be more necessary than ever. Luckily we also have an unprecedented opportunity to analyze or "understand" the options available within the supply; but in the end, why do we care about what we choose?

Marketing, we know, makes product abundance manageable -- guiding our hand as we sort and select. It has always been interesting particularly because it answers the question of "why" with a picture of our appetites. But when it comes to ideas, Academia has always represented the view point that something more impersonal than appetite -- namely, science -- should provide the filters and orders that do the choosing, and the filters are paradigms. Yet why would a science make any more "important" choices than would a personality?

Bradbury's outcast literate society grew its membership with an unquestioned acceptance that all great texts were equally important, and with a requirement (or at least an explicit expectation) that each member select a great book (text) to commit memory for faithful recitation. Once "in", the member needed to show unflagging commitment to the literary identity that was assumed. But despite a virtually unlimited choice of texts, the society showed no overt selection process for what was "great" other than the discretion of the individual member. The apparently utopian feature of that alternative society -- that everyone had the same benefits of membership -- is an implied incentive or reward for making a good choice, but it's also a great leap of faith. At the end of Truffaut's film, all members have started out "equal" because all of them are impersonating ideas given equal merit. But where do they go from there? Why wouldn't this group disintegrate?

We get past this skepticism only through certain presumptions.
- For starters, the individual's selection of text must not have been problematic. Either the individual demonstrated sufficient critical skills, or the individual was willing to be guided by the reliable decisions of other "wiser" persons.
- Thereafter, the motivation behind commiting to the text was the key adhesive ingredient.
- But fueling the motivation, individual hunger for knowledge was the group's common cohesive principle. Thus, appetite itself is transformed into a paradigm of authority, called desire.

III.

To some extent that recalls Thomas Kuhn, who in his book "The Structure of Scientific Revolutions", digs deeply into how subjectivity drives the rise, influence and fall of paradigms. In doing that, he basically exposes the marketing that takes place within a presumably objective academia. "Community" issues, particularly politics, organize and promote subjectivity, mainly by turning certain ideas into products while rejecting others. These "information products" are cultivated by both providers (supply) and consumers (demand).

On the providers' side, through a diligent rigor, the discipline of the research practice breeds product credibility, and that is the normal focus of observers' attention. But as Kuhn reveals, it turns out that research is essentially dominated by motivation , not discipline. The credibility (pertaining to what it produced) is actually a completely separate issue from the relevance of the research (pertaining to why it produced it).

In the resulting supermarket of ideas, the consumers' side has a reflection of that same separation: the difference between what we should be able to choose from (or what counts) and why we should buy (or what matters).

IV.

Having choices to make comes with an accompanying tension involving who gets the last word and why, or where the authority lies.

Since a consumer's reason for wanting something may not be the same as the reason why the provider produced it, if the two parties are to help each other they must find an agreeable coincidence of their interests. Working out that coincidence, negotiationis what ultimately decides which options survive. But underlying that negotiation, research is the effort to resolve the great contest between what we want to decide and what we ought to decide. That's where the real issue of authority comes in.

The moment when we accept both an idea and its authority is summed up neatly in the phrase, "OK, I'll buy that." If you're a provider, getting the consumer to that moment is the goal. But which authority will win out -- desire or propriety? They are not mutually exclusive: rather, the issue is all about which one is primary, commanding the other to support it.

Propriety typically comes with a fairly explicit formality, making it seem easier to use for engineering the result. But what about desire? The formaility of desire has various models as well, dynamics mainly theorized by psychology; but it is typically and mistakenly assumed to be more subconscious than conscious. Instead, the case is really that it's dynamics are more implicit than explicit; it is not subconscious but rather just unrecognized as an organized whole.

Thanks to internet technology, pertinent information about desire's dynamics surfaces more readily and more regularly. The more intelligent we are about our desire, the more effective is its authority -- and consumers quickly gain huge amounts of this intelligence. Now it is more likely than ever that the consumer's own research competitively intervenes in the process of being influenced by the provider. The consumer gets to define what matters. And increasingly, the consumer's authority is by nature indifferent to the provider. Without the kind of value that matters, the provider's product may not count regardless of its quality.

Because that intervention can have an evolutionary or revolutionary effect on the perception of the provider's product, it becomes a strategically critical planning consideration for the provider.

Meanwhile, on the consumer side, it's increasingly evident that while we usually buy what we need to, with internet technology in hand we usually try to buy what we want to. If you're the consumer, how is it that you are actually intervening?

More importantly, how do you come to want what you want?

V.

Historically, at about the third level up in Maslow's hierarchy, "Marketing" has spent its time helping you to want what you want, mainly by offering you a vendors' choices about what you could be like. Thereafter, "Selling" has spent its time offering you choices about what you want a product to be like in order to please the version of "yourself" that marketing had helped you pick. Together, a vendor's Marketing and Selling has had to be sure that you are agreeing with the vendor's ideas and that you are preferring them.

That makes it look like the vendor is doing all the work; but the consumer is not inactive; the key ingredients in the above issues are selection criteria that qualify any items presented, using :
- information about what's possible (i.e., effectively available),
- information about what works (i.e. effectively correct), and
- information about trade-offs (i.e., effectively compatible).

In each case, there are claims made that must be found relevant. But working down the list from "availability" to "compatibility" -- from what counts, towards what matters -- the issue of credibility is increasingly important. For the consumer, the work here is in gaining confidence that the information being processed is good info. But that's not all.

Against that challenge, the vendor has typically worked hard to be able to ultimately say "Trust me!" The vendor gets some help, because from the buyer's viewpoint, the more we want something, the more likely we are to find reasons to buy it. But crossing the line between attraction and commitment is still hard. To make things happen, the vendor focuses on our desire. For the consumer, the work here is in accurately expressing the desire.

Now, thanks to the internet, the information we as consumers need for deciding whether we "agree and prefer" -- or "trust and desire" -- is much more readily acquired from providers other than the vendor, which has quite significant consequences. With online information, the process of discovery and validation has morphed into consumer-driven processes of search and research; so to get "buy-in" the vendor increasingly has to agree with the consumer's ideas. The age of reasonable alternatives has fully arrived. Thus, the first major strategic concern in managing it all is now about who defines the value of a product.

VI.

We can distinguish the idea of "product" by saying that something is a product when its characteristics are both targeted and promoted for a known set of needs. Having a need, we can even simply find something attractive, and in essence then promote it to ourselves. Thus, a "product" comes about through either invention or discovery. Online Search helps a consumer find, at minimum, anecdotal evidence of more different ways to skin a cat. This expanded perspective allows more of those ways (including competing, unprecedented or unconventional ones) to be recognizable (credible) as legitimate "products". It's not hard to see why this competes with Marketing. In effect, "products" are being "made" online through Search.

Meanwhile, with online Research , highly available critiques make it more likely that a product's true probable kinds of impact can be objectively well-determined on one's own. A provider should see that from that greater certainty it's easier for a potential buyer to commit to the item being considered. Why? Because a product that is explicitly appropriate (relevant) can more easily find its "right" buyer. Here we can see research competing with Sales. In effect, "customers" are being "made" online through Research.

But the parallels are not just that simple. It's not just search replacing marketing and research replacing sales.

The important true difference between search and research is, respectively, the difference between discovery and investigation. Discovery is concerned with "what I should find" (i.e., what counts ) while investigation is concerned with "why I should find it" (i.e., what matters). Both concerns are found within marketing, and both are found within sales.

In wanting what we want and getting what we want, desire is made of both discovery and investigation - of both what counts and what matters.

VII.

As seen below, desire is multifaceted and is managed concurrently by the provider (vertically) and by the consumer (horizontally).


For example, in this picture:
- Marketing's promotional aim is to propose a "correct" option for the consumer's target concern.
- But to buy in, the consumer must also find the option to be "compatible". To get there...
- ... the option must be highly "available". Otherwise it is unlikely to survive as an option.
- Finally, a compatible option must be "convenient": that is, it's accessability, usability, comfort, and so forth must make the option fit the consumer's need, not just the consumer's occasion.

VIII.

As consumers, we use search and research to collect and examine information. We use a marketing search and a sales search to take in both marketing and sales information and find options that have value (i.e., what counts). But in order to sort through the variety of valuable options and get to our preference, we use research, examining search results for their compatibility and convenience, to find worth (i.e., what matters).

This processing is the authority of the consumer. It presents the consumer's desire as a paradigm targeting "preference"... or more specificaly, an unobstructed ability to get what is wanted. Authority represents the consumer's ability to make a decision (namely, to accept or reject the product) independently of the provider's promotion of value. Additionally, because we can understand it as a standard set of interrelated factors (as shown) that can be repeatably exercised, we can see the authority acting the same way whether the consumer's preference exists wholly from self-imagining or, at the other extreme, from the militant influence of other non-provider parties such as peers, supervisors or dependents.

IX.

As just described, authority describes the consumer's ability to act independently in pursuit of preference. Preference will reflect the consumer's goal of having the right thing in hand for the occasion of highest priority.

But the priority of the occasion is not always set by the consumer. Importantly, the consumer commits to the priority because of the priority's associated rewards and risks. This commitment effectively places preference as a proxy for need . Making that circumstantial commitment also means that the consumer actually presents an assumed identity to the provider.

In effect, the consumer's need supercedes the consumer's authority.
Because of that, the consumer's autonomy is an actively critical issue at a level even higher than the consumer's potentially revolutionary authority. That is, does the consumer have the right to set and change the highest priorities as the processes of discovery and investigation carry on?

And regardless of the autonomy, can the provider persuade the consumer to assume an identity that is advantageous for the provider?

For the provider, persuasion must succeed across a spectrum of strategic concerns having at least three major segments.
- It starts with who defines the value of the product (who decides why it counts).
- From there it goes to who defines the worth (who decides why it matters).
- And finally, it reaches the point of who sets the priority of the occasion in which the product is anticipated (who decides the need).

Control of these factors cannot be taken for granted. Consumers' online search and research often finds them actually engaged in an experience of self-discovery as they encounter vastly more information of uncertain quality or importance to any progress towards their goal. They wrestle the information to the ground over a series of refinements and iterations, but during the effort they are making decisions about the identity they will assume as often as about the product they will accept.

To take advantage of that, providers should focus on framing the information and its delivery to assist the consumer's development of their final operative identity. This is, actually, what has always been done in marketing and sales. But now the odds are also much greater that the provider will encounter a consumer that has a far more aggressive capability for self-determination, and/or a more powerful capability to suddenly bring alternative providers into the considerations at any point.

The combination of those consumer capabilities means that "the market" is now more virtual than ever -- having boundaries that rapidly appear and disappear along with the identities that consumers derive and assume for themselves each time they are out and about.

The question is, with online search and research, are consumers also "making themselves into customers" more efficiently than does conventional sales -- and are consumers "discovering products" more efficiently and innovatively than does marketing?

If the answers are "yes", then both marketing and sales as we have known them should change -- and while they will still pursue consumer trust and desire, more evolution of their underlying practice models for knowledge management seems imminent.

X.

As suggested above, the consumer recognition and experience of practical KM has typically gone by another name -- such as "marketing" or "sales". One key point to take from all the preceding discussion is that as more consumers do search and research, the underpinnings of sales and marketing change, so it's logical to expect that the KM practice behind sales and marketing will also change.

But now, beyond mere "customer-centricity" developed at modern providers, the source of the new practice models may be the consumers themselves.

The implications of that are most specially interesting when:
- information or knowledge itself is the product sought by the consumer, and...
- the consumer is busy defining both the product and himself.

The challenge to the consumer is considerable. The internet still has a frontier character because it does not inherently guide the choices it might support or reward. But, that offers unprecedented latitude in exploring and finally deriving the predisposition for agreement and preference that will characterize the consumer's activity. Through trial and error, consumers find out what forms and usage of information and knowledge that they perpetrate are usually underlying what feels like progress in aligning and linking the identity they want with the need that they respect. This frontier represents the R&D environment from which consumers may derive the models of practice that will suit them best. Today, because it is now so much easier to discover and self-serve the uniqueness of one's identity, any given consumer seemingly has a chance of deriving a personal model that is as good as any from elsewhere. The consumer is, in effect, a knowledge worker.

XI.

For providers, the message in that is really important: the future standard benchmark of provider success is consumer productivity -- that is, the ability of the self-defined consumer to use the provider to generate solutions to the consumer's need.

This modus operandi is far from an unusual concept: for example, some IT organizations in corporate enterprises have existed in provider roles under this demand for at least a decade, making technologies into products for enabling prior-defined business tasks.

Paralleling that, some providers are all about making information into products for enabling user tasks. For them, the problem of assessing the worthiness of knowledge management (KM) in the enterprise highlights a similar challenge: "knowledge workers" -- i.e., employees whose primary responsibility is production output from a work toolset of information products -- must generate more enterprise benefits when supported with managed knowledge provision than they do with mainly ad hoc knowledge access. In the enterprise, the knowledge worker is the consumer.

XII.

The uncertainty of dealing with differences (heterogeneity) amongst knowledge consumers is a tremendous problem for the corporate setting, in which standards and economy of scale are functional gateways. For the providers in the enterprise, the necessity is now to standardize and scale individual production instead of mass production.

Whether in IT or KM, the primary tension for operations still exists in the difference between the consumer's preference and the provider's promotion. Specifically, the consumer may want to do things one way while the provider offers a different way. Bilaterally resolving the tension will be the key to productivity, and this is possible only through addressing the issue of why the consumer wants what they want.

On the provider's side: understanding how the knowledgeworker's need and desire are established and defined by the knowledgeworker is crucial to designing knowledge management -- which must remain a vehicle for the development and commerce of information products. It is logical that, just as with IT and information management services, the first baseline of widespread KM success will come with the creation of KM "services" and service level agreements that are incorporated into consumer-recognized operations like marketing, scholarship, resourcing, support, planning, or whatever... (Thus, the Googles, Yahoos, eBays and Amazons are not in the least mysterious as to how they are maturing. In the enterprise, we at least can anticipate corporate versions of those providers.)

On the other side of the coin: in light of the consumer's new capabilities in an online environment, a knowledgeworker is clearly a consumer with a heightened, "open" opportunity to become a source of product (i.e., a provider) as well. "Grass roots", "social networks" and "open source" efforts are examples of increasingly coordinated activity that integrates and elevates self-service, peer-service and collaboration to the status of a complete but alternative channel or environment of intellectual commerce -- not outcast, but exotic... albeit perhaps for only a little while longer.

Posted by Malcolm Ryder at 7:27 AM | Comments (0) | TrackBack

December 13, 2005

The Value of Being In the Know

Imagine trying to create value without being knowledgeable. Not good. But how do we know what value the knowledge creates?

I.

FIrst let's go to a working definition of "value", to tell us how to consistently recognize when value, instead of something else, has been created.

- value: the significant difference that is made by a distinction.

This generic definition is important because it is portable and unchanging across different kinds of situations. However...

In any particular situation, value might be created in a variety of ways. Its two key parts -- significance, and distinction -- can exist independently of, and prior to, each other. This allows some complexity:

- a single distinction can be significant in multiple ways, but not all of those ways are necessarily relevant to a given stakeholder. And...

- there can be more than one way to get to the given significant difference; not all ways are necessarily tolerable or practical at a given time and place.

Thus, the two parts can have a many-to-many relationship with each other, which means their combinations can vary and thus generate value in many diferent ways.

We'll have to sort through that variety when assessments roll around. We should objectively identify different kinds of values. Then, based on relevance and practicality, we can determine what kind of value might be most within our grasp, but finally we also have to decide how much that kind of value means to us and why. This separation of "value" from "worth" is the precision awareness provided by an assessment. The assessment helps us think through potential values in terms of worth, and ultimately we'll commit to the most worthy values.

As an example of concern about "what value is meaningful", companies considering taking on knowledge management (KM) are commonly concerned about the economic impact of KM's value. If KM is valuable, they want to know how and why, with regard to that specific impact.

In figuring it out, we have to start with "how" the value of knowledge can be recognized.

II.

One approach to identifying what value knowledge creates is to first state the desired type of value and then apply knowledge in situations that logically should drive that type of value creation. If applying knowledge produces a measurable change towards the desired value then we attribute that value to that knowledge. An example situation would be "problem-solving". Here, we know that we want a solution and that getting to a solution is a multi-faceted issue. Measuring the effects of applying knowledge might yield findings such as:
- solution obtained much sooner than otherwise has been the case
- solution obtained with greater efficiency of required resource consumption
- solution obtained where previously there hadn't been one obtainable

In fact, "faster, cheaper, and prettier" are very reasonable terms by which to measure the effects of applying knowledge. They typify agreed notions of value (i.e., significant difference) that people already know what to do with.

This is an approach that is compatible with "accounting" -- at least in the sense that it describes tangible results correlated with the level of effort invested and consumed in the situation.

An approach wholly different from that, however, is from the other direction -- where applying knowledge appears to predictably, and even reliably, cause changes, but the significance of the changes is undetermined. Here, the problem lies in not understanding what to (literally) "make of the change"...

When applying knowledge has effects of indeterminate usefulness, the accounting perspective does not help to identify and manage a recognizable value. Accordingly, we need another view -- one that perhaps introduces previously unseen useful effects to accounting, but at minimum discovers the usefulness of previously unobserved effects.

III.

In the latter case above of knowledge-driven changes, management has a special problem: we need to determine whether applied knowledge has re-organized conditions in a way that provides a different set of opportunities and risks than what had previously been established -- not just a different level of preconceived value. The more important the new opportunities and risks are, the more valuable we can say was the knowledge involved. But as with any change management, we need to determine whether the knowledge-driven changes are the "right" ones -- and whether the value is a kind that we really want.

One practical way to recognize this issue of reorganization is through the idea of "technique". Technique organizes the way things are used in action. In practice, acquiring good technique is the same issue as being "trained" (reorganized) to a point of better functional capability. The two most important aspects of technique, making it a target for adoption and improvement, are that (1) it provides an operational advantage against stress, and (2) the means of that provision are sustainable. These are compelling differences to attribute as value.

Technique organizes the way things are used in action -- but so does a "process". So what's the distinction there?

Technique is to "process" as Policy is to "approvals". Approvals define the selection of permissions, but policy defines the logic of permissions according to prevailing conditions. Likewise, where process defines the selection of connecting actions, technique defines the logic of actions according to prevailing conditions. A process that amounts to bad technique is no more tolerable than approvals that amount to bad policy.

Most oganizations today can think about technique by thinking about "best practices", contrasting that against what might be considered the "best procedures" world of processes and rules.

But if we take the example of best practices and investigate it for its contribution to value, much of what immediately comes to mind is the view from the opposite direction -- that is, practices which are not "best" are inhibitors or liabilities that we want to remove. This helps to focus our attention more on the aspect of protecting "opportunity" and on how opportunity is maximized or minimized under the pressure of demand.

Now, we see that Opportunity can be set alongside Operation as a second critical perspective in assessment. Where assessment of operations deals with progress, assessment of opportunity deals with potential.

- Potential represents the degree of protection provided for an opportunity to obtain the desired impact.
- Progress represents the degree of achievement in realizing the potential.

Accounting typically examines Operations for progress; but value assessment also needs a mechanism that examines Opportunity for potential.

IV.

Before beginning that opportunity examination, we must be careful to furthermore separate "opportunity" from "objective"...

In practice, objectives are usually identified and promoted specifically to represent the perceived or desired endpoints of paths -- paths seen as "opportunities" that describe the potential for reaching a goal. The paths have been conceived for the purpose of meeting the objectives.

Managing operations focuses on moving things along those paths; but covering the known paths is more about performance than it is about value. Meanwhile, accounting is heavily performance-oriented. It wants to discover and explain "progress." It expects knowledge to stage and promote progress by changing operations to realize the potential.

In contrast, managing opportunity means path-finding and path-determination, which comes from strategy. Strategy is heavily value-oriented. It is mainly about finding and validating the paths where potential is first created. It expects knowledge to stage and promote potential by changing opportunities to realize the desired impacts.

Thus, in the defined opportunity produced by the strategy, we see the definition itself as the "significant difference" and therefore attach value to it (separately from any pursuit). Then, we have to weigh the opportunity's significance to the objective, independently of weighing the importance of the objective itself.

For example, we may see the strategy as the map to success. Following the map will still be a critical constraint on achieving the goal, but the requirements for following it (i.e., progress) should not be mistaken as the criteria for weighing the importance of the strategy's value (i.e., potential).
- Instead, the strategic opportunity must be relevant and viable, and considered against alternatives.
- Meanwhile, regardless of the importance of the objective itself, if the opportunity is critical to the objective then by definition the opportunity has great weight.

V.

The map that strategy creates is a highly valuable asset even before we start to actually follow it. We want knowledge to do two things: to make us better map-makers; and, to help us make better maps.

Those differences indicate yet another key to assessing the value of knowledge -- namely, to distinguish "intellectual assets" from intellectual behavior. Knowledge changes both things, so they each are dimensions of knowledge influence, affecting both operaions and opportunity. Additionally, they affect each other.

Managing assets and managing behavior are not the same activity, but with valuable assets such as distinctive ideas (like strategy or procedure), we naturally also want behavior that improves and leverages their value.

For example, we want high performance in compliance to a valuable procedure -- which makes that behavior itself valuable. But that sense of behavior should be understood as "skill".

Intellectual behaviors such as analysis, decision-making, and invention are also coveted skills -- but they make their distinction, and ultimately their value, in their ability to create and modify important circumstances and intellectual assets.

If we say that we can apply intellectual behaviors and intellectual assets to a situation, have we covered the bases for saying that we have applied "knowledge"? Not quite.

Under the pressures of demand, an organization's assets primarily represent its capacity while its behaviors represent its competency. But in our overview of knowledge, a third and final dimension, joining intellectual assets and intellectual behaviors, is what we might call "intellectual predispositions" -- which brings preferences to join capacity and competency.


Now, with those three dimensions of knowledge influence, we can begin to catalog the types of differences that we want assets, behaviors and predispositions to make, and in that way list key terms of assessment. We can cover opportunity comprehensively, and we can also "backfill" issues frequently ignored about operations.

Amongst our catalog of differences, we must also have clarity and confidence about what final impacts we really need, and then about whether the contributions of the assets and behaviors (capacity and competency) are actually supporting both the progress and potential towards the target impact.

If our key objective is maximum positive economic impact, the challenge will be to distinguish how knowledge drives economically significant progress, and how it drives economically significant potentials, related to the desired ultimate impact.

We'll especially want to understand how knowledge helps our progress, potential and desired impact to align with each other. Or else!

The fact is, we could do a bang-up job of executing on differences that don't really matter amongst our goals and priorities, yet still affects our economies -- for example, perfecting compliance to standards that don't solve our problems.

And highly potent value can be created that doesn't have much economic impact -- for example, a well-executed product perfect for only a very tiny market.

What will emerge, though, is that the interrelationship of these issues is not strictly linear but instead is interwoven -- more of a network of influences than of a chain. Managing assets, managing behaviors and managing predispositions each have their own way of affecting progress, potential and desired impacts. But the way that knowledge affects one dimension also affects the others, which changes their alignment. In that way, managing knowledge value is a lot like managing a network.

VI.

To envision the scope of interrelationships in the alignment, consider the following.

This matrix is one way to describe how knowledge influences alignment. Here we see the representations of numerous familiar business instruments that are directly related to knowledge and that in turn are distributed to shape operations, opportunity and objectives. Our familiarity with the items in this view also lets us see more readily that changes in one place can alter the support, status or direction of another place in the picture.

Managing knowledge will include managing the making, certification and purposeful utilization of it at each point in the matrix. But through our familiarity with these instruments, we already recognize that the point-to-point connections are vital to the health of the business effort. Given that, managing knowledge value comes in when we know what difference we want the knowledge to make at each point, and how those differences relate to each other.

With things put that way, it's easy to say that at all points we just want knowledge to make things "better".

But better should mean that they become more reflective of the target impact while improving the way they interrelate. For example, a faster, cheaper or prettier way to do something is better if it keeps or increases the level of support it offers to other factors that depend on it. Otherwise, diminished support can easily make the other factors riskier and likely more costly. The sensitivity to this is typical of taking a portfolio management approach rather than an accounting approach. What we're working with is the "knowledge portfolio"...

VII.
From here we can begin to sum up how knowledge is valuable.

Our matrix has a left-to-right connection of three perspectives: operations, opportunity and objectives. As management modes, what forwards knowledge influences from operations through to objectives and beyond is technique, strategy and purpose. We readily recognize this in certain management artifacts:

- Earlier, Best Practices (through technique) was an example in which the influence of knowledge on operations was directed in support of opportunity.

- In like manner, Planning represents strategy's bringing knowledge influence on opportunity, with which we would likely support objectives.

- To that, we can add that an organization's Positioning represents the knowledge influence that purpose has on objectives, which we use for supporting stakeholders.

Together, the three things illustrate the organization's competency, capacity and preferences systemically establishing themselves -- three characteristics that we already know are criteria in economic justifications. These characteristics are also recognizable thematically as in the examples within the picture below:

Meanwhile, vertical linkage in the matrix connects the three knowledge dimensions. Looking back at the cycle of leveraging knowledge value under demand, we saw a picture that corresponds to these dimensional links: predispositions should direct appropriate behaviors; and in turn, behaviors should produce relevant assets that communicate and transport capacity from one time and place to another in the organization's experience.

In that picture:
- intent is a source of conditions;
- form is a source of content; and
- function is a source of capability.

Knowledge affects the measurable conditions, content and capability of the organization -- characteristics that we already know are monitored for the economic impact of their use. Overall, the cycle addresses the question, "of the things that we want to do, how do we get them done?" This explains why improvement initiatives focus on investment, refinement, and redeployment in those three areas. While those initiatives typically look to business "intelligence" as a primary means of gauging the importance and progress of the efforts, we saw that "knowledge" is more instrumental to shaping the actual changes that the efforts make. In other words, that is why knowledge is valuable.

VIII.

One of the key challenges to working on improving the value of knowledge is to assure visibility of why certain kinds of knowledge is appropriate in given situations. In general this is thought about as "expertise", but in an important way that misses the point. Along with information overload, an organization also has a degree of complexity that often obscures the reasons why knowledge is available or not in given circumstances. Automation certainly tries to address this problem by minimizing it risks. But behind that automation should be a visible logic of knowledge management that corresponds with the assessment matrix and alignment cycle we have now seen.

As a closing explanation, but one that is a work in progress, the following picture identifies that knowledge is more likely manageable when its form and function aspects are more visible. This visibility helps to begin the process of optimizing the current knowledge deployments into a configuration that, as outlined by the discussion above, will more systematically support programs for increasing their value.

Posted by Malcolm Ryder at 12:18 PM | Comments (0) | TrackBack

December 9, 2005

Complication versus Complexity: getting Business Value from ITIL

Architecture is what you bring to the party when: (a.) what you want to build requires moving parts but (b.) the diversity of parts resists effective interaction.

Some may say that this is what engineering is for. But engineering determines how the parts should work together, whereas architecture determines what kind of parts should work together.

In that light, we can see that engineering and processes spend a lot of time with each other, organizing functions; meanwhile, architecture and assets spend a lot of time together, organizing resources. Both must make strong contributions to the whole. But it's not just the intensity of their contribution that counts. A special characteristic of architecture and engineering is that they are not about reducing complexity; instead, they are about reducing complication in order to exploit complexity.

Complication features lots of parts whose relationships inhibit the coherence of the whole. Complexity features lots of parts whose relationships enable the coherence of the whole.

I.

Within "operations", co-operation of parts is necessary for the same reason that it is in buildings: a structure is asked to enable functionality that requires its parts to support each other under the varying pressure of "customer" usage and environmental conditions. In operations, it's typical to see processes and systems as component parts.

In business terms, the support-problem that architecture addresses is a balancing act: there are constraints (or restrictions) on what parts are available, yet the blend of available parts must offer a way to provide persistent support of the expected business requirements. From the business perspective, this support is the operation's functional integrity, which depends on whether the quality of its parts supports the functionality demanded from the structure. The basic idea is not hard to grasp: in general, the components of an "automobile" are well known, but you can't make a good jeep from the parts that are best for a family sedan... When you need a jeep, even a perfectly good sedan won't do.

Operations view their underlying individual processes as structural components. Bringing together the aspects of availability, persistence and effectiveness, architecture's selection criteria define and drive utilization of components that are suitable in business terms as resources for operations.

Thanks to architecture, operations assume that the underlying processes can successfully co-operate under presure. This success fosters opportunity for the business. But the mandate for cooperative processes lies not in the opportunity but rather in the needs of the business.

In IT operations, management must coordinate the provision of IT resources against business need, through measurably meeting requirements for availability, persistence and effectiveness. The provision is structured with management processes, so it is logical that an architecture would organize the processes to be used.

II.

IT's management has an architectural reference for this.

ITIL (the IT Infrastructure Library) is generally describable as:
- a framework of
- processes that are
- combined to operate
- the management of IT
- as a business.

The framework directs the identification of types of processes appropriate to the business performance of IT management.

The concept of "business performance" revolves around the complex goal of:
- maximizing benefits and minimizing risks, from...
- an optimized balance of services and costs used to...
- efficiently respond to business requirements and business demand.

The output of that effort is a virtual "product" (provision).

When business needs are prioritized, decisions to act on the priorities creates demand. Response to the demand is allowed within certain tolerances which are identified as requirements. To ensure that provision is appropriate, operations must understand and work in terms of both the requirements and the demand. But what it produces from that must furthermore align with the needs of the business.

The complexity of that performance reflects a three-dimensional view of value that the business wants to receive from the IT management effort.
- benefit/risk ratios (quality) pertain to the choices that the business has for its supporting enablement
- service/cost ratios (economy) pertain to the effective supply-level of support
- response efficiency (availability) pertains to the reliability offered to the business.

The key corresponding challenges are:
- Change (versus quality)
- Expense (versus economy)
- Speed (versus availability)

The business looks for competitive advantage in those same three challenges. Its ability to exploit them repeatedly is what sustains the business in advantageous positions. But most businesses have to consciously make all three factors work together, as experience shows that they will otherwise mutually interfere.

III.

The proactive outlook on this need is most often now described as a business pursuit of agility, productivity and regulation based on operational support. These "business success factors" become objectives for operations.

Agility balances change and speed.
Productivity balances change and expense.
Regulation balances expense and speed.

On the flip side of the coin, the protective or pre-emptive outlook can be described as the following business pursuits: resilience, capacity, and continuity. Likewise, these become objectives for operations.

Resilience is a balance of change and speed.
Capacity is a balance of change and expense.
Continuity is a balance of expense and speed.

Using these as objectives, and keeping in mind that these are descriptions of the business itself, operations drive towards "performance" that creates those significant differences to the on-demand conditions experienced by business. Those differences are the "business value."


For operations, the question is, which processes should be used to support the effort to meet those objectives?

IV.

In ITIL, a set of key management processes for the business use of IT functionality (a.k.a. "services") are identified and labelled in a very consistent way, using a standardized vocabulary that is applied across all descriptions. The vocabulary is extremely important for distinguishing the processes relative to each other, showing clearly where the various processes share and don't share specific responsibilities.

But the vocabulary is not the framework. At a higher level of distinction, ITIL separates operational provision into categories such as "delivery" of product and "support" of product. Those general responsibilities are then articulated with up to five pertinent management processes, each -- according to objectives that represent the business demand and business requirements for delivery and support.

What we want to understand is how the ITIL-identified processes address the six objectives we have outlined above:
- agility, productivity and regulation; and...
- resilience, capacity, and continuity.

The reason for this mapping is to describe the generation of business value from the ITIL-designated processes.

Our value mapping requires that we take the background concepts given for the six objectives as our main perspective. Those concepts pertained to the business challenges that indicate "success factors" to be managed in the business. Value is perceived in terms of those success factors. Management processes support the performance of operations that generate the business value.

Among those factors, agility, productivity and regulation together tell a story of the business capability to exploit circumstances.
Meanwhile, resilience, capacity, and continuity together tell a story of the business capability to bring resources to the occasion.

Both stories are about business effectiveness in the path the business chooses to execute and meet the requirements of its mission. The success factors do not pick the path, but they provide terms by which to plan and assess it. Management processes should be contributing, accordingly, to the planning and assessment.

Giving a general assessment by "stories", we have the following setup of ITIL-named processes.

Now we can reiterate a related earlier observation in more detail. The business support-problem that this architecture addresses is a balancing act: there are constraints (or restrictions) on what processes are available, yet the blend of available processes must offer a way to provide persistent support of the expected requirements.

Blended support suggests process integration, but the more essential move is to orientate the processes to the same objective. Integration is one approach, but negotiation and collaboration are also useful and might initially be more practical.

On the left side of our grid we have processes that address the aspect of agreements and permissions that effectively predefine the usual responses to demand. This impact is what is in common across agility, productivity and regulation; it answers the question, "what are my optimal response options?"

On the right side we have processes that, largely through policies and risks, define the effective characteristics and sources of the resource supply. Running in common across resilience, capacity, and continuity (as we defined them in the discussion), the key question is "what can I count on using?"

Those questions make it even more evident that the management processes must "account to the business" -- by addressing the questions in both planning and assessment.

V.

Business needs come with constraints.

Everyone always wants to satisfy needs with something that has the legendary features of being fast, cheap and pretty -- but the solution most likely obtainable by the business may fall short, while its acceptability -- its value -- is no less described in terms of demand. Managing IT for business enablement can be a "high-performance" activity only when it addresses that demand.

Returning to the discussion's initial description of value, performance reflects a three-dimensional view of value that the business wants to experience from the IT management effort.
- benefit/risk ratios (quality) pertain to the choices that the business has for its supporting enablement
- service/cost ratios (economy) pertain to the effective supply-level of support
- response efficiency (availability) pertains to the reliability offered to the business.

Every business can relate to choice, supply-level, and reliability as the dimensions for evaluating anything from assets to resources, opportunities, and partners. The business always essentially tries to determine whether it has the preferred relationship with these things, and makes changes according to its findings. Detecting and metering the dynamics of value-delivery can be exhausting and esoteric at worst, but managing things towards business value begins with understanding groupings of efforts whose interactions logically produce impacts on desired conditions.

Within the ITIL framework, management processes improve important attributes of IT services themselves, such as service availability, service configuration, or service continuity. But it is the difference made through the service utilization by the business that then counts as improved business attributes -- including business availability, business continuity, etc.

VI.

Aside from details on the internal design of management processes, ITIL provides a perspective that identifies the IT organization as a managed producer/provider with a known customer. This responsibility sets up the compelling logic of the process groupings that ITIL presents. Yet most organizations still find it difficult to prioritize and maintain their ITIL adoption strategically. The substantial difficulties of developing the individual processes to an effective state are superceded by an even bigger challenge -- lack of a model of direct systemic impact on the character of the business, which is what drives the top line instead of the bottom line.

Top-line benefit is the strongest rationale for taking on the profound risks of organizational change associated with management process reorganizations, such as ITIL. Accordingly, the most important framework for the effort is a business value framework, which should then be the basis of managing the adoption initiative as well.

Posted by Malcolm Ryder at 10:37 PM | Comments (0) | TrackBack

December 7, 2005

Just what's so manageable about Knowledge Management?

Knowledge Management (KM) is an idea that has been stretched into a gigantic umbrella term, under which a vast range of items are crowded together by a common theme: getting the right knowledge to the right person at the right time.

The attention to personal use of knowledge (instead of data) is a great development in the way managers attend to work being done within the organization -- especially when the work is either required (where the pressure is to drive high performance) or exploratory (where the pressure is to create new value). Recognizing the distinctive role of knowledge is easier now, because we have enough experiences of competitive advantage being attributed to a superior organization's "knowing something that the competitor did not".

The motivation to reach "knowledge parity" is more than sufficient to drive adoption of a KM goal and capability, but it often confuses the issue of what to know and how to know. Worse, the issue of "how to know" is even further confused with how to get what is 'known'...

Consequently, the idea of managing knowledge is often implemented in incomplete, misdirected, or over-complicated ways.

Despite usually seeking integration of knowledge resources, KM implementations make changes in the organization that risk dis-organizing established objectives and tasks relating to:
- developing concepts,
- processing information, and
- delivering content.

Linking incompatible systems, or using a system on the wrong thing, can quickly misplace, bottleneck or misroute the supply of concepts, information or content versus requests. Production, maintenance and delivery of these things may all be subject to different cycles, attendants, costs and maturity levels -- so blending them presents a lot of reconciliation to be discovered and executed beforehand.

The first step in preventing or repairing the confusion is to identify how the differences between concepts, information and content are important, which is what generates demand for them.

- Concepts represent developed knowledge. However, because concepts can be hypothetical, it's important to realize that they are not necessarily "facts" -- but instead are ideas.

- Information represents facts that are available. Because facts are the result of agreements about observations, it's important to realize that context and perspective have a lot to do with whether facts are useful beyond the time and place of their initial creation.

- Content represents the result of packaging ideas. Because packaging is driven by utilization requirements, content makes ideas suitable for specified types of occasions, leaving the same ideas less suitable for other occasions except in different packaging.

Because of those three conditions, it is unsatisfactory and unwise to simply respond to the blanket demand for "knowledge" by distributing all information through every potential delivery channel. Each of the three issues above is a different facet of providing for the quality and availability of knowledge.

I.

Instead, the first move is to start organizing the recognition of how knowledge is created, so that its sources and arrivals in the organization can be logically anticipated from different activities, systems and contributors.

To begin with, there are always events occurring around us, whether intentional or not. Knowledge development begins with observation of an event; then the observation is progressively transformed for relevance to our known purposes. The progression begins with confirming and classifying the observation, to create "data".

This immediately points out that, contrary to popular belief, data is not actually "neutral" -- instead it is simply vulnerable to being handled indifferently. However, when the data is deliberately served to a given occasion (such as a task), it is next used to describe and diagnose the occasion's subject, which creates information. (For example, the "subject" could be an expense authorization, or it could be a sales transaction, even though they could be two different views of the same thing.)

This points out that different occasions can produce different kinds of information from the same data. (In most organizations, an "occasion" is most often identifiable as a particular moment blending people, process and technology.) So, occasions are not neutral either. In most organizations, management directsoccasions more than anything else -- creating and manipulating them in order to focus the activity within them on any number of requirements. This level of supervision later typically treats the activity as "behavior" and diligently reports on the behavior. Similarly, the activity seen elsewhere, in other external settings, is also thought of as behavior -- whether it is systematic or not, and whether programmed or ad hoc. In that sense, reports on behaviors make up a huge proportion of the "information" recognized in an organization.

But management needs to take a further step-- of determining the significance of the report (i.e., the characterization of the behavior). Ordinarily, formally established operational requirements provide the perspective or context within which the significance of the information is evaluated. That context drives selection and prioritization of the available information, looking for relevance. When the relationship of the information to the requirements is understood (or agreed), "knowledge" has been produced.

II.

It's exactly at the stage where information must be processed that organizations are pulled into different directions -- by lack of planning (including opportunism), or by apparent competition between different ways to proceed. However, most organizations have chosen to tackle the urgencies of competing accountably, by emphasizing better awareness of cause-and-effect. This effort has evolved into "business intelligence", which greatly improves the feasibility of competition. But the other problem of equal strategic importance is the need for effective responses to sudden and ongoing change. Changing effectively is the capability that offers the organization continued viability as a competitor. This is what drives the evolution of information management into knowledge management.

But what drives the goal of doing knowledge management into practice? Individual members of the organization must also shift from "accountable competing" to "effective change" -- and they must identify the opportunity and appropriateness of being agents of change when it can matter the most.

To have that happen, the minimum implementation requirement is that the members have great visibility on the organization's resources for developing and leveraging knowledge -- and the organization's managers must configure those resources for efficient access and maximum relevance to the members' functional requirements.

III.

Getting an implementation to that point will mean transforming a challenging amount of legacy resources and dependencies -- not just installing new things in a "greenfield" environment. In the organization, persons already significantly "self-service" their knowledge needs through a combination of automation technology and intuition. Configuring the technology is a major issue, but even bigger is the challenge of changing personal behaviors.

The picture below illustrates how knowledge-availability is organized behaviorally within the organization's operations...

The key observation is that from the individual's personal perspective, relevant functional "knowledge" tends to fall within three general categories: expectations, experience, and expertise. Most individuals, in most instances, will call on some blend of those things, from whatever reserves or sources they are conscious of being able to access. What is less apparent is that the different types of knowledge have a distinctive bearing on different types of organizational requirements. The availability of various "information systems" tends to make people think in terms of the kinds of information delivered by dedicated tools, instead of thinking about the kinds of knowledge most appropriate to requirements. Putting the cart in front of the horse that way leads to disorganization and waste.

The other typical point of reference for individuals is the collection of explicit instructions that make up what is often considered to be the "official" knowledge of the company -- namely, its practices, rules and skills.

But over time, a major counterpoint to the reliance on instructions becomes apparent -- already indicated in the above picture.

The organization's formal codifications of practices, rules and skills do not simply "overlay" the three types of knowledge, but instead are products of the way knowledge is combined. For example, experience and expertise together generate rules.

In fact, the three types of knowledge (expectations, experience, expertise) align more to the contexts (operational, cultural, environmental) of the company's requirements than they do to the practices, rules and skills.

In effect, this leaves the practices, rules and skills -- as "products" -- more variable than the underlying knowledge factory. This variability is a reality that we already recognize, based on such normal "managed" situations like: personnel changes; practice additions or alterations to accomodate customer or partner segments; and of course, new rules from new bosses or processes. In turn, it shows that overreliance on those shifting sands is risky. Instructions are really just a form of content.

IV.

Because of that difference between the knowledge and the instructions, it is more obvious that "knowledge management" per se has to do with the way knowledge users leverage their knowledge reserves and resources -- not about how familiar they become with the definition and implementation of practices, rules and skills.

We can map out how this leverage already naturally occurs. Knowledge users satisfy their needs for knowledge by reaching out to preferred suppliers. In this dynamic, each of the key contexts -- operational, cultural and environmental -- features a knowledge "persona" that the knowledge user consults and/or becomes. The dynamic is about why the user prefers one persona or the other.
- Operational persona: the "Master"
- Cultural persona: the "Hero"
- Environmental persona: the "Wizard"

The personae have practical roles that show off their respective strengths.

Operational Masters combine skills and practices. Highly sensitive to the perspective of the corporate owners, they exert tremendous influence on quality issues, in alignment with setting and meeting expectations. Masters can address the question, "Is this really going to work?"

Cultural Heros combine practices and rules. Highly sensitive to the perspective of corporate customers, they have outstanding impact on how advantage is derived by negotiating demand, drawing insight from their broad experience. Heros can tackle the question, "What do they really want?"

Environmental Wizards combine rules and skills. Highly sensitive to the perspective of competitors and/or the nature of adverse conditions, they have the driver's seat when it comes to managing change, reflecting capability drawn mainly from expertise about how things can work. Wizards prove their mettle answering the question, "how can we beat those guys?"

Those are practical assignments, which historically have been opportunties for the personae to generate success stories. But those circumstantial distinctions are less important than is the general availability of these personae as resources for multiple modes of knowledge. The three personae are not mutually exclusive but rather represent three fundamental points of view on any given situation.

This stages a wide variety in knowledge availability within the organization, which challenges manageability.
- In practice, a given individual may consult, and/or perform as, one or more of the personae.
- Performers in one persona may consult a different persona.
- Meanwhile, at the given time, the availability of support offered, and/or the level of accomplishment achieved, may be different from one persona to other.

Because of all these possible variations in knowledge types and knowledge levels, it is not always evident that the knowledge source chosen and used by an individual (to give or get knowledge) is the best one for the occasion at hand -- and this particularly includes occasions where the person's knowledge source is himself.

But while each persona is significant independently, what is finally most interesting about them is their collaboration.


In the above diagram, the strategic importance of their cooperation shows up as the company's issues regarding position, innovation, and agility. For example, when a Master and a Wizard combine their respective strengths in "quality" and "change", they can develop solutions that produce safe, effective agility. The corporate owners particularly enjoy this agility as a competitive capability. In like manner, Masters and Heroes combine strengths to fortify the company's (market) position through advantages derived from quality. And, Wizards and Heroes together support or even drive effective innovation.

V.

KM implementation can proceed based on objectives and priorities supported by the considerations above. The key is to identify organizational roles that can or should take advantage of knowledge-provisionroles to exert influence on corporate goals. For example:

Then, those organizational roles should be enabled with an infrastructure of tools, policy and incentives to mature and exploit the knowledge roles.

Another critical part of that infrastructure is content. Here, the function of content is to make knowledge more accessible, portable, and certifiable. Knowledge-users should be able to rely on content to help them see, develop and utilize the balanced, integrated range of key knowledge providers. Content also has the responsibility to indicate the strategic options available from the influence of various roles. As shown in the following table, content typically offers documentation of the model we have examined above. We can usually find three major categories of documentation, that add up to effective support of the worker and organization:


All together, this content offers a corporate knowledgebase -- strictly meaning a repository of current explicit guidance based on knowledge.

Using the knowledgebase is not simply a matter of exploring the table of contents and making "deposits or withdrawals"... To get value from the knowledgebase, the company must invest what is in it against some purpose.

The most important general use of knowledge is to create or fortify an opportunity.
Above, we looked at three flavors of opportunity -- position, innovation and agility -- as generated by attention to quality, advantage, and change. In adapting the organization to pursue the opportunities, what we find is a need to attend to a set of related performance success factors or constraints.

This points to a crucial revision of what we think makes "knowledgeable" organizations competitively superior: it's not that they "know something that the other company doesn't", but more fundamentally, that they are more capable of effectively using the knowledge that they have. Their success factors for utilization are seen in:

- Communications (providing ideas);
- Collaboration (providing structure); and
- Compliance (providing permission); adding up in support of...
- Competency (providing ability).

KM keeps an eye on those success factors by mobilizing tools, policy and incentives to "configure" the use of knowledge in terms of those factors. A planning chart like the following helps to identify existing and potential requirements and components for this configuration.

This should amount to support of a highly visible and available virtual knowledgebase. (The "knowledgebase" exists because of strategically managed uninterrupted on-demand access to relevant knowledge.)

Then we want to assure that the knowledgebase content, in the way that it was developed, also incorporates the success factors of knowledge use. As we'd said in the beginning, content makes ideas suitable for specified types of occasions, leaving the same ideas less suitable for other occasions except in different packaging. What we finally want from content (whether the content is solutions, standards, or priorities) is to have those success factors incorporated in the knowledge-user's work -- through the handling and purpose of the content.

[To be continued.]

Posted by Malcolm Ryder at 8:35 AM | Comments (0) | TrackBack

December 6, 2005

The Value of Performance Pt. 2

One of the general ideas that help to focus management properly on the business effectiveness of operations is the principle that the overall "throughput" of operations goes through different planes of impact, and that "performance" on one plane generates "value" on the next level up.

In that case, optimizing operational throughput calls for visibility based on an architecture that consistently represents the most significant planes.

I.

Here, "significant" refers to having a structural role in organizing the business's capability, regardless of the current frequency of events and interactions in that role. For proper managerial visibility on throughput, we need to know that any plane on which a critical impact is measurable is "in the picture" whether it happens to be eventful at the moment or not.

Making a key structural difference means that the plane is literally "critical". In creating the big picture of all planes, the challenge is always to take the overall construction of the organization that is hosting the activity, and to identify where within it the meaningful logical separations exist.

To do that, we must see that each separation is really a "boundary" -- on either side of which events may occur independently of those on the other side, yet also influence the conditions and/or events on the other.

Those facts, and how they mix, are what makes it so difficult to determinea proper segmentation of planes. Add to the challenge that the strength of influence across segments may be variable, and the influence may be direct or indirect.

However, against those complexities, a hypothesis can be tested through monitoring for correlations of events and conditions. These correlations will represent performance and value.

- In general, performance is a measure of how closely execution met a target achievement level under demand. So for each plane in the hypothetical architecture a signature achievement must be defined.

- Meanwhile, received value generally refers to the significance of the difference made by the impact of a supporting event. Thus, for each plane, a characteristic significant impact must be named.

Here is one top-down hypothesis of the main planes of throughput (and hereafter let's call the planes "layers"), :


Linking the target achievement of one layer to a "significant difference" on the next higher layer will decribe how performance on one layer generates value on the next higher. To do this linking, the first layer's achievement level must be associated with an impact registered on the higher layer.

Typically, the association is defined as follows: achievement on one level must be an important event on another level.

II.

Interdependencies define the prospective relationship of performance and value across the layers. The question is, how important is the achievement on one layer to the impact needed on another?

That analysis of throughput must address that question, thus leading to design of throughput that proposes and timely implementations and their adjustments. Measurement systems should focus on monitoring and validating the specific conditions, changes and consequences related to the throughput design.

In general, however:

- managing the stack of layers bottom-up is about " access" -- such as the availability of an asset as a resource, the availability of a resource for a function, etc.

- moving top-down the stack is generally an issue of "quality" -- such as the suitability of the business process to the business function, or of the business service to the business process.

This suitability is not the same as "compatibility". Instead, suitability refers to whether a given layer generates the type of impact needed by the higher layer's characteristic distinction.

III.

But again, influences across layers may be direct or indirect.

For example, M. V. Sarma of the consulting firm CSC gave the following definition:
Business Service Management - – Defines the performance of IT services in terms of business value, such as revenue, cost, risk management, market share.

If we parse this a bit, we can restate it in saying that the "values" for the business (i.e., the needed distinctions) are
- increased or sustained revenue
- lowered or controlled costs
- minimized or contained risk
- increased or protected market share

The related "performance" of IT services is not equal to the business value. Rather, we remember that value is always "a distinction with a significant difference". IT service performance contributes to a business value by supporting the significance, and the exact nature of how it is supportive is not a unique "given" but most often a result of management. For example, high-speed IT data processing can deliver timely information; this is a good achievement but that achievement does not itself lower cost. Instead, a manager's interpretation of the data leads to decisions and actions that lower cost. But the manager does rely on the visibility offered (i.e., the performance) by the data processing.

Another key note is that, to drive the desired business value, the amount of impact required may itself be achievable at various different amounts of underlying IT service achievement. This is analogous to being able to find the same given product ("impact") at different prices or financing ("achievement levels") depending on the time and place of purchase. In an IT example, an increased degree of website responsiveness is a contribution that is associated with triggering an increase in revenue, because more site visitors complete discretionary transactions. But this contribution may change from time to time or place to place, according to the business focus and location. For generating business value, it needs to be constantly visible against a target impact or threshhold set for the time and location of interest. The contribution needed for triggering inreased revenue is not always the same at every time and place.

Thus, accounting for the linkage of IT performance and business value takes several steps of drilling-down, and includes intermediary phenomena such as threshholds and interpretation. Meanwhile, describing the performance-value connection highlights impacts that are attributable to the IT-based activities and that are supporting the desired difference representing the business value. .

IV.

The important relationship to track between performance and value is how consistently the business demand for the service impact is satisfied at a given amount of service output. This principle is the same regardless of whether the service is an IT service, a Financial service, or some other kind of service.

The main issue is that if the layers are properly identified, then they are independent, although interactive. But this is exactly what we want. As illustrated in this discussion, this independence logically corresponds with two key known facts:
- changes can occur in any given layer without changing the overall business needs, and
- different implementations of the overall architecture will occur from one time to another and/or from one company to another; but the management practice itself can be consistent across these changes.

For any given organization, optimizing the overall operational throughput means focusing on the relationships between the layers, with investment and improvement directed mainly at those relationships.

But any given layer must also be managed. Once we separate a layer's output achievement from its upstream impact significance, it is possible for subsequent analysis to more precisely identify what is really necessary and sufficient performance to drive value all the way through to the business function's arena.

Posted by Malcolm Ryder at 10:07 AM | Comments (0) | TrackBack

December 5, 2005

Stats don't lie; but can they forget?

Our colleague Steven M. Kemp, at the department of psychology at UNC, reports:

I thought of a quick summary statement about the slogan, "You can't manage what you can't measure."

"You can't manage what you can't measure" is a terrific slogan for exhorting business folk to consider measuring what they are not currently measuring, or not even considering measuring.

Taken as a claim, it may be harmful if it encourages folks not to manage what they are not measuring. Measuring constrains the degree to which we can manage, but managing to the degree that we can is an imperative."

Co-authored with his brother Sid Kemp, Steve's book, Business Statistics Demystified at http://tinyurl.com/2lxyr, explores the measurement issue deeply, with an eye towards getting it right instead of just getting it done.

Posted by Malcolm Ryder at 5:49 PM | Comments (0) | TrackBack

Managing versus Measuring

We always say that we can't manage what we can't measure.

But what are you doing? Are you just measuring the management? Managing the measurement? Or, actually managing the item on which you're using the measurement and management processes?

I.

Management is essentially about determining whether the state of things needs adjusting and then intervening with adjustment actions that are appropriate. On their own, both environmental conditions and activities can be hugely indifferent to the particular desires of an organization, and to be routinely leveraged they must be perceived in consistent, non-random ways. Therefore, one can't manage what can't be described. Measurement is just one aspect of the fundamental management need for description, and it must be complemented by other forms. (See the illustration here and again near the end of this discussion.)

To understand this, it's important to immediately broaden our sensitivity about measurement -- away from "metrics", up to to the general functional problem of "description", and back down much closer to "definition".

Defining current states is a mandatory part of the management equation, but that doesn't amount to management. Instead, if the adjustments are the whole point of having management, then actually it's more critical that we define the adjustments. It's what kind of an adjustment, and how much of an adjustment, that drives the only difference we expect from what we'll later on still call "management"...

And just as all rectangles are not squares, not all definitions are measurements. Definitions are descriptions, and "measurements" are just a form of expression that descriptions can take.

But because measurements are so prolific, complicated and frequently debatable, we're concerned enough to ask the question, "can management be done without that form of description?"

II.

Let's say that you have a task to put a stone in a box, but the stone is initially too big -- which we determine simply from trial. How are you going to "manage to" get the stone into the box? Do you need measurement to get the stone certifiably "in the box"?

You could chip away at the stone to make it smaller, and keep trying after chipping it to put it in the box. Your action makes the stone different. Eventually you'll get the stone into the box.
- On the other hand, if you don't care how long it takes, how small the stone winds up, and other such things, you don't need measurement -- you just need the stone to finally fit into the box. But each attempt to fit the stone in the box is actually a measurement.
- And on the other hand, if it matters how long it takes, how big the stone finally is, etc., then of course you need even more measurement.

We tend to think of the latter case as being managed and the former not; but strictly speaking they are both managed. That is, in both cases, proactive adjustments are determined and made deliberately towards the target state until the target state is true. We see that measurement figures in differently but both times. Most importantly, the target state is true only when we agree that it is true, and we use the measurement to gauge the distance from the agreement.

So far, to act towards the target we still haven't necessarily invoked measurement, but to know that we're reaching the target we must have it.

Practically speaking, the key element is actually the agreement beforehand, which means that the terms of agreement are the key to describing the target state. These terms may be non-metrical, while still being highly differentiating. For example, objectives are often stated to represent the terms of agreement by which most comparisons will be made. Compatibility, not compliance, is usually the subject of this perspective on things.

But let's get back to measurement. Measurement provides a kind of additional certainty to definitions, by sharpening the definition's ability to express distinction -- typically in terms of "amounts". For example, even a qualitative binary distinction - true vs. false - can be considered almost purely measurement if the real question posed is "how much 'false' is there?" and the answer is "None."

Yet in that example, it's obvious that we must still know beforehand which conditions actually mean "True". Can we identify (define) the conditions without measurement?

Sure, if we can distinguish them in other ways.

First we should look at why we can do that, and then at why we should do that.

III.

In the example above, it can be argued that management didn't require measurement to make "stone in the box" become true. But measurement is required to confirm that it actually is finally true. So the point is that the success of the management is what we need measurement to expose.

Let's make that thought more concrete with another example. If a test case is looking for exactly a 3-foot length, any length tested will need to have been measured before we can say that it complies. Compliance is determined purely by comparison to some standard (in this case, something that we already know is 3 feet long). What makes the comparison work is that the standard has already been selected. Actually doing the comparison -- that is, simply applying the standard to the test item -- is an action that might be "managed" or accidental, but we can confirm the outcome only through measurement, and the confirmation is what tells us whether or not we need to try againto hit our target.

This is all adding up in a certain way:
- definition is aimed at identifying the distinction of the target conditions
- the difference is described and recognizable by terms of agreement
- compliance to those terms is largely detectible or provable through testing
- the testing would rely on a standard to help establish the degree of compliance to the terms
- more than one condition might be part of the standard

But there is another way to work in terms of a standard: procedure.

Procedure prescribes steps that are expected to produce compliance. The assumption built into a procedure is that during execution each step of the procedure should become true. Largely without measurement, we can simply follow the procedure. In this case, most measurement used is dedicated to determining how much execution complies with the procedure (supervision), and to confirming the effects of making adjustments (intervention) -- but the choice to use the procedure is far more significant: it means that given the responsibility to direct the course of events, we have agreed to the procedure's logic. Exercizing the logic, with whatever level of competence, is the most differentiating characteristic of what we are calling "management"...

IV.

So, as it turns out, the urgency about measurements is not really about manageability but instead is about predicting the effectiveness of the management, and about increasing the accountability of the management. In short, they are about making management scientific.

However, management need not be scientific in order to be management. What management really depends on even more than measurement is logic. Measurement should be a means of testing and tracking the logic, but logic must be derived even in the absence of desired measurements. This takes place in the form of assumptions and objectives. Management logic can form a closed loop or system when its assumptions and objectives are followed with ratings. (Current ratings influence future assumptions.)


In completing that loop we also get the broad outline of the framework for management description:
- Assumptions represent the key initial distinctions acknowledged in the management effort; this includes discovery of identities and definitions
- Objectives represent the point of view that finds comparative significance in what is done and monitored; this includes test criteria and terms of agreement
- Ratings represent the actual visibility on the value of conditions, achievable from foresight to hindsight; this includes standards and priorities.

With those anchoring observations, we can see the universe of description that management needs.


This framework intends to position the many modes and artifacts of description in a way that highlights where they make the key difference to management's overview of conditions. Against that, it sorts out and addresses the basic management concerns that drive decisions to intervene:
- preferred states;
- adjustment progress; and,
- the impact of changes.

In the illustration it is easy to see the range of formats for describing conditions, along with the fact that they are not necesarily metrical in nature. However, it is also evident that measurement plays some role in every area of description -- such as, by establishing trending ("track"), marking off milestones ("score"), or detailing cost/time limitations on requirements ("specify")...

V.

Our key management challenge is to conceptually arrive at definitions identifying one thing versus another, so that we can properly identify their relationships and leverage the relationships.

These definitions, when treated *as if* they are 'facts', are the normal basis of managerial logic. Communities of practice may develop and even enforce 'standards' of definition, but this ultimately does not prevent management from being practiced based on other standards or knowledges and in non-scientific yet still logical modes.

As for measurement, it has the task of identifying and comparing differences in an accounting mode. Three other issues ensue:
- to actually do the measuring;
- to measure the things that matter; and,
- to match the right measures with the right management.

Otherwise, measures simply become an unreliable tool being used for "solving the wrong problem."

Posted by Malcolm Ryder at 7:46 AM | Comments (0) | TrackBack

December 4, 2005

Making Advantage Sustainable

In competition, we might spend a lot of time operating without knowing if we have an advantage. We organize our activity around the idea that we need one, and so we look both for how to get it and keep it.

But it's the nature of competition that the opponent constantly tries to eliminate the apparent advantage that we have; so it's an unfortunate fact is that the advantage we have might not be the one that we need.

The true challenge of "sustainable advantage" is that what we really want is "recurring" advantage, crafted from the limits of our own versatility.

Competition exaggerates our sensitivity to the cause-and-effect relationships of actions and events. When we perform well, it comes from finding reliable ways to make the right things happen on time.

Following that thinking:
- Behavior patterns become the focus of attention for generating the desired difference again in the future.
- Management is expected to drive and institutionalize successful patterns.

We keep score of management's effectiveness by tracking the accumulated moments of advantage, and organizational behavior is generally managed towards constantly getting another such moment by doing something that worked before.

This makes advantage appear to be primarily the result of discretion and discipline -- what most people recognize as "execution".

It also leans on management's pattern identification to forecast the way to what we think of as "repeat successes".

But really, management's ability to repeatedly succeed is structural in a different way. Management might steer behaviors, shaping their intent; but the behaviors take their form from their underlying enablers or "support" mechanisms: culture, infrastructure, and demand.

Despite the current emphasis on standards and best practices, there isn't a unique set of ideal enablers for having an advantage over another organization. In action, organizations blend different kinds of enablement into a structure, to support the ability to affect conditions as desired. The issue is always whether the blend is functional or dysfunctional.

The overall functional structure is composed of layers of enablers. Versatility is the result of being able to successfully blend them for meeting the necessities of the particular moment and place at hand.

For advantage, the coherence of the structure must support an operation that has suitable impact.
For sustained advantage, what must be maintained is effectiveness in blending the structure.

The key enablers are in two large groups: Business, and Organization.

Business enablers:
- Market position
- Performance logic

Organization enablers:
- Competency
- Infrastructure
- Ownership

Naturally, the organization is subscribed to host or empower the actions of the business. But as described in the following details, the underlying architecture of each party makes their co-operation rational. Building from the bottom first to the the top, we see the meaning and implementation of "structure" progressively change -- that is, in ways that allow each successive layer to exploit the preceding one.

In Ownership: structure secures capacity for generating resources
In Infrastructure: structure aligns resources for utilization access
In Competency: structure defines assurance of procedural options

In Performance Logic: structure prioritizes support for value generation
In Market Position: structure distributes locations for value capture

Facing opportunity and demand, the business must be able to dynamically re-organize itself internally, to draw on the latent throughput of capability that is most pertinent at the time. It requires an intelligence similar to that used to determine ad hoc routing alternatives through networks, or designing collaborative systems on the OSI model.

By further analogy, the language and the grammar stay the same, but the expressions spontaneously conform to the needs of the communication event by exploiting the connections allowed in the language and the grammar.

The real advantage comes from the impact of the expression; sustaining advantage requires a capability to generate new expressions continually -- to continue making impact and to leverage impacts already made.

For a fuller elaboration of this functional architecture, see the Archestra Topical Framework.

Posted by Malcolm Ryder at 12:02 PM | Comments (0) | TrackBack

December 3, 2005

Performance Analysis and the Six Types of Performance Management Information

Performance is a measure of the degree to which observed effects are meeting the plan.

In management, planning represents the "agreement" that a manager has proposed between the possible and the probable.

I.

The plan is developed from a theory or model of how progress towards value results from the organization of the operations.

But a more general function of the model is to define all conditions that must be present for value generation, and describe why their combination is coherent for the purpose at hand. That is, the model describes conditions that drive progress, while explaining why those conditions must be supported.

Meanwhile, monitors will determine that a condition is in this state or that state, while the plan describes the target state desired. That is, the measurements supported by monitoring presume that conditions and states are two different things. Observation confirms conditions, while measurement confirms states. (For example, cooking requires heat -- representing a necesary condition; the heat may be at a certain temperature, representing a state.)

This means that managers must not only work on distinguishing conditions that matter from those that don't (as per models), but also the states (of conditions) that matter versus states that don't (as per plans). Only within a certain range of states is a condition significant, and only at the proper state are certain conditions significant.

II.

Management attends to the actual versus the planned organizational status of operations.

By "organizational", we mean the distribution of resources in a structure designed to support fulfillment of demand. This structure is an implementation of the model, in the same way that an actual building is an implementation of the design in a blueprint.

In management, we assume that the necessary conditions are in the required states unless proved otherwise. If things are proved to be otherwise, we revisit the necessity of those conditions, the states of the conditions, or both. Faced with gaps between the actual and the planned, we make repairs or we make modifications -- to restore coherence to the conditions, restore compliance to the target states, or both. But to do that appropriately and tolerably, we have to account for our decisions with information that
- (first) describes and confirms the gap, and
- (second) interprets the gap for its probable meaning versus our purpose.

This all amounts to six uses of information that contribute to a full cycle of analysis about performance. Information is used to:
1 - develop the model
2 - develop the plan
3 - initialize and prioritize action
4 - monitor status
5 - confirm underlying and correlated events
6 - reconcile differences.

With those six uses of information, managers can continually influence the state of conditions that are likely prerequisite to the capture and delivery of value to the organization's targeted stakeholders.

III.

The purpose of organization is to support desired behavior.

In managing performance, the desired behavior has significance because of the effects it produces relevant to the model.

The first priority of behavior is to create the states that conditions need to be valid per the model. Variance from targeted behavior is not just an enforcement issue, but since success sometimes accompanies variance it is also a way of understanding that different but similar plans could work for the organization immediately.

Many different behaviors may achieve the same effect, so if there is any reason to prefer one behavior over another, analysis of the behavioral facts is key to finding the best behavior. Because the main point is just to distinguish the behaviors from each other, these "facts" may be more descriptions than measurements.

In producing these descriptions, most managers are actually focused on "business intelligence" (BI) instead of on performance analysis. This is because the Plan is the central and most public manifestation of management. Business intelligence has the capability to expose facts such as patterns of relationships, that can then be judiciously embraced or avoided for the future. By suggesting the needs or options to make decisions that affect compliance with the plan, BI broadcasts visibility of the accountability of managers.

Meanwhile, as an aftereffect of increasing exposure, BI can have the "feedback" effect of informing and suggesting evolution of the organization's theory of progress, so modifications to performance plans might also follow.

But performance analysis directly concerns itself with the degree of tolerance the organization has for complying with its own model. In that way, performance analysis will explore how flexibly the plan can be executed before the plan is considered "violated" or "broken"... and thus unable to support the ultimate goal for which it was designed to serve.

IV.

Performance managers must recognize that performance analysis must be done with or without BI. In order to understand how that can make sense, managers need to understand that while observation and measurement both generate descriptions, they are not the same thing.

The essential purpose of BI is to gather enough evidence of activity patterns, in operations and transactions, for identifying the most probable patterns associated with "valuable" outcomes. However, BI starts without an idea of why things work, and builds a picture of what is working or not, regardless of the plan.

In comparison, the main purpose of performance analysis is to discover and prioritize the factors having the most significant current impact on the "effects" of the plan's execution. Performance analysis information starts with the existing idea of why things should work, and acquires more information to test how to make it work in light of reality.

Business intelligence clearly has a role in performance analysis, because it can help tremendously with the discovery tasks in performance analysis. However, BI's capability to help is not automatically used that way. As is pointed out by many experts: "it's all good for measuring and reporting information from events, but if you don't have a hypothesis to test, you can be incredibly efficient in measuring events and still learn nothing about how things really work." (Christopher Kenton, columnist for Business Week Online)

Furthermore, representing the hypothesis and how things really work is a task for "knowledge" as opposed to "information". The role of an information system is to feed knowledge, but then management needs a knowledge system to process the information.

In the knowledge system, here are six fundamentals for the performance manager:
1 - Goals
2 - Assumptions
3 - Progress
4 - Priority
5 - Variance
6 - Status

Again, the objective of performance management is to identify and control occasions calling for repair or modification of the coherence of, or the compliance to, conditions prerequisite for appropriately meeting demand. Performance analysis features a method for interpreting information pertinent to that objective.

V.

No less impressive, but different, is BI. In this definition from an e-commerce glossary of the Pennsylvania Department of Environmental Protection, we see the difference and the overlap:

Business Intelligence (BI): An interactive process of analyzing and exploring structured, domain-specific information (often stored in a data warehouse) to discern trends or patterns, thereby deriving insights and drawing conclusions. The BI process includes communicating findings and effecting change. BI domains include customers, products, services or competitors.

That notion of BI "process" is a little hyperbolic; it really is describing the uses of BI that give it importance, rather than the process of BI er se. However, it is definitely appropriate to put BI into the larger perspective of business management. Along that line, we consider that BI can affect the perception and acceptance of the business model:

Business model: a design of the operations of a business which focuses on how revenue will be generated. -- Webster's New Millenniumâ„¢ Dictionary of English

BI's emphasis on domains is vital to validating the integrity of "business models". It tests assumptions about processes and relationships that underlie expectations of operational output.

But performance analysis' emphasis on behaviors is vital to validating models of business value and operational outcomes. This takes the management consideration to a higher level, for understanding the organization's capability, relevance and fit to its environment instead of just its activity and discipline.

Business value: In management, business value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long-run. Business value expands the concept of value of the firm beyond economic value (also known as economic profit, Economic value added, and Shareholder value) to include other forms of value such as employee value, customer value, supplier value, channel partner value, alliance partner value, managerial value, and societal value. Many of these forms of value are not directly measured in monetary terms. -- Wikipedia

Posted by Malcolm Ryder at 9:18 PM | Comments (0) | TrackBack

December 1, 2005

Swat versus Clobber: getting and using the Upper Hand

We track the ever-attending Bob Lewis of InfoWorld and IT Catalyst, Inc., because we can ask him anything and he'll figure out what it is in your question that is worth giving advice on. Clearly he should have been a doctor, but let's be selfish: he's here instead, so we win.

One of the best things he advised about is the strength/weakness/opportunity/threat analysis, or SWOT. Said Lewis, TOWS [not SWOT] is the logical order for a business that wants to win in the marketplace, for this simple reason: "Strength" and "Weakness" only have meaning in the context of what you're trying to accomplish in the marketplace. So for companies trying to win, looking first at threats and opportunities, then evaluating strengths and weaknesses in that context, provides a more intelligent way to decide what to focus on...

It's one of the key things in business, then, that winning means context and the idea of performance must not be separated from each other. As Bob's insight really points out, being pretty good at doing the wrong thing doesn't matter much.

So when you're measuring or managing your performance, doesn't it have to start with knowing what does matter? Then why do so many organizations try to define performance in ways that don't matter?

The classic example of this is the project that survives the pre-start justification phase by promising "ROI" but then generally gets operated only in terms of being "correctly" executed instead of "valuably" executed. Time and time again, projects get nailed by evaluators who conclude that the project didn't deliver the right thing at the right time and cost -- even though the management discipline applied to the conduct of the project has been able to fully account for its correctness, which of course it absolutely had to do. So the party in control of the project "ensured" that "performance" was good, but to no avail.

Having looked at things that way, it seems clear that there are two kinds of value to the organization. Usually, it's the question of how appropriately things were conducted (execution), versus how compatible the output (deliverable) is with the prevailing need (impact).

Indeed, using Bob's advice, we see impact (compatible output) in terms of Threats and Opportunities, with execution (appropriate conduct) in terms of Strengths and Weaknesses. But once we recognize that there are two ways to evaluate -- per effort and per result -- then it doesn't make sense to do the usual -- namely, evaluate one thing only one way and not the other way too -- for example, only execution per effort, and only impact per result.

Instead, execution has both an effort component and a result component; and likewise, impact has both components. This makes sense not in terms of actual functional tasks but rather in terms of operational context.

Keeping that in mind, here's how the work scenario lays out:


The quadrants of this picture identify the categories of terms needed for a complete evaluation, and the outer labels show how these terms were surmised and how the terms relate to each other. Execution and Impact represent the perspectives for the operations managers. But critical to this picture is the addition of the two ways that the business assigns responsibility for the business management of the conditions that the project involves.
- A "production" perspective attends to the business-appropriate conduct of the operation.
- A "product" perspective attends to the business-appropriate purpose of the operation.

The biggest problem with projects is not that the execution fails to generate significant impact, but rather that the production goes off track from the purpose that will be setting the final criteria for evaluation. If the top two quadrants are usually where Threats and Opportunities are assessed, and the bottom two where Strengths and Weaknesses are seen -- then given their alignment as we discussed earlier, this discussion now poses the problem differently: that production strengths and opportunities (as perceived by operators) don't preclude product threats and weaknesses (as perceived by customers).

Put in terms of management issues, this is really a difference between performance management (capability) and value management (competency). It is a failure to translate capablity into competency.

What clobbers capability on the way to competency? We take it for granted now that projects must have sponsors who are high enough in the food chain to provide the proper environment for project completion against other potential inhibitors from the ongoing (and competing) business concerns. These sponsors must be able to exercise value management as a way to provide the necessary "customer context" for the performance management of the production.

Value Management issues are not the SWOT we all study, but instead the CLBR -- credit, liability, benefits, and risks.

Arranged in the most effective way, risks and liabilities are considered first. The reason for this is that a new initiative, almost regardess of scale, is an attempt to produce something that will have to fit into a dynamic system of existing commitments and options. Risks and liabilities describe the potential of the current state to support the transformation to the future state. Usually, assessments should take the responsibility to account for risks and liabilities.

Credits and benefits further reflect the business's investment perspective on incorporating the initiative. Credits and benefits are more realistically defined and agreed when the risks and liabilities have already been set. This rationally divides responsibilities and authorities so that producers are not working against undefined expectations.

Production should be aware of needs and aim to satisfy them, but needs must be specfied. Specification defines expectations. The specification progressively translates needs into demand and then into requirements.

If "demand" is not treated this way, then expectations are actually left unmanaged. Meanwhile, if demand changes, requirements must be revisited. This problem pattern is already familiar, but the point is that if it is handled responsibly then the ultimate evaluation of the production effort will allow performance (capability) and value (competency) to remain linked.

In the Archestra collection of content, this link will be explored from numerous angles. Along the way, we'll make a general effort to describe the motives and behaviors that distinguish performance and value but that also suggest the linkages between them. As an example of the effort, the table below catalogs and contrasts concepts distinctively associated with performance and value. The distinctions intend to isolate the context and expectations that typify relevant evaluations.

Posted by Malcolm Ryder at 6:41 PM | Comments (0) | TrackBack

Governance: the Stakes

In an ongoing dialogue with colleague Dan Krimm, the future governance of the internet is the feature topic, and our cross chatter is working in two directions. One is to solidify the stance and urgency for protecting the breakthrough in information access that the internet provides our societies. The other is to give shape, and even a model, to the analysis of the stakeholder issues involved.

The latter is rife with complexity because it is currently more like sorting out a collision than it is like planning a development. Enough groups with enough special interests are already in the space with either enough momentum or enough determination to make it, amazingly, crowded -- not in terms of room to maneuver but instead in terms of how to maneuver. On second thought, to face up to this problem means getting ahead of the collisions, like air traffic control .

Recently Dan put a fine point on the general thrust of legal activity around internet governance. Said Dan, "As long as there is consumer demand for certain features, and someone willing to build the products with those features, and no law against building those features, there should be a market for them. In short, the hardware manufacturers are not the corps invested in content control, more the media and telecom corps. So consumer electronics corps tend to be open-design oriented, while RIAA/MPAA are trying to shut things down."

My riff on that, which I replied to Dan, went like this: " the hardware manufacturers are not the corps invested in content control, rather, the *content manufacturers* are the corp invested in hardware control."

Putting it that way, it's easy to start thinking that content manufacturers have two fish to fry: (1) distributing content specifically to increase its value, while having the means of distribution NOT decrease its value; and (2) creating content specifically to leverage the existing means of distribution.

Relative to each other, the first item leans towards regulation while the second leans towards innovation. But if we took that as an "axis" (regulation vs. innovation) then maybe another significant axis -- "liberties vs.security" -- would give us a social cross-reference to the operational issues...
Running with that, I get this:

We need say more than this, but this looks immediately useful as a way to organize the description of concerns that characterize any given stakeholder.

The thought now: use the tool to describe, in turn, the individual personal user, the business user, the content product manufacturer, the hardware product manufacturer, etc. -- and reveal the "interests" that need to be prioritized and/or reconciled.

Is a reconciliation necessary? For whom? As Dan puts it, there's an awful lot at stake -- too much to not pay attention. Just one of his examples: he notes that "the gist of it is that corporations are lobbying government for legislation that would increase their control over content transmission and CPU design... Some legislators are not averse to designing the technology with more control, because government could use that control as well. In other words, it's not just a free market here, but collusion of strategy between government and big business to build the Big Brother society..."

P.S.
How about the "space" within the more typical business enterprise? Governance has become a huge issue both in terms of the business functions and the enabling business infrastructure.

To the extent that a business has a strategy that drives its decisions and activity, the business's "special interest" now faces greater scrutiny by public and other authorities than ever before, who want to get a better grip on what the business does not just "in" the marketplace but to the marketplace.

And within the enterprise, the idea that multiple divisions, processes and managers -- all trying to hit performance targets -- will "share" the company's resource capacity is also under greater examination than ever. It would seem that these are situations which lend themselves just as well to decoding by the same framework as the one above.

Posted by Malcolm Ryder at 4:59 PM | Comments (0) | TrackBack