« Research, Identity, and the Authority of Desire | Main | Execution as "Progress": The Four Types of Value in Performance »

January 5, 2006

Infrastructure, Information and Innovation - Who's on First?

"Business improvement" is an easy ambition to have but often hard to act on effectively, because it is so vague. However, the beginning steps of defining it are well known -- they always include deciding what are the needs and requirements of the business.

Yet too often that yields to confusion bred by habitual thinking, political and religious energy, risk-aversion, and inexperience. Each of those different influences is a considerable threat to "improvement" if it distorts a constructive path of change. However, all of them can be dealt with through the same review of basics that help identify why anything should change.

The outcome of the review is clarity on what kind of change is most likely to constitute meaningful improvement.

I.

As a rule of thumb, needs are recognizable as what effect must be obtained from activity; requirements are recognizable as how the effects must be achieved.

This is how we can understand that even when "everything was done correctly", the result may be unusable or unacceptable. In such cases, the mistake is often that needs were not adequately translated into requirements because the nature (persistence, priority or timing) of the need was not strongly enough determined. This uncertainty allows the "wrong" requirements to be derived, because the requirements do not actually solve the right problem even though they drive downstream impacts inviting not only failure but the "law of unintended consequences".

Paralleling the importance of that distinction, the key difference between capability and competency is that capability addresses requirements while competency addresses needs.

Because of this difference, when "business needs" change it is the type and strength of competency that must first be determined.

On the other hand, business requirements may be changing even when needs are not, and this should be addressed with capabilty.

The message to the business improvement crowd is that the organization's leaders must confirm the right problem to solve before it decides "the right way" to solve anything.

Meanwhile, for managers the most interesting aspect of the relationship between needs and requirements is that an inability to satisfy requirements that support a need can actually force the need to change. That is, if a party's capabilities leave its problem effectively unsolvable, the party must then either reposition itself to make the problem irrelevant, or it must suffer consequences that will alter its circumstance in ways that most likely reset its agenda. Either way, the needs will have changed.

In effect, business actually predicates its success on "picking the right needs"... That is, its needs come from a position that the business takes in order to have certain advantages, and it typically organizes itself around the needs of the position. Thus, unless the position is intentionally changed, the business is actually reluctant to have needs change! This focus on a status quo encourages a mindset of, primarily, attention to planned capability over competency. But capability improvement will prove to be no more important than competency improvement.

II.

Business looks to "IT" to provide capability that is appropriate for needs. The business value of managing IT is in that it manages a "resource", which in this case involves managing both the quality and delivery of information and of technology. But the key responsibility of that management is not to select the "correct" information; rather it is to establish and operate technology that assures quality and delivery of information.

A strict understanding of that scope of responsibility makes it easy for us to identify that "information technology" is different from, but accompanied by, "information process".

Information process, for example, determines what information should exist, where it should exist, when, and why -- in utilization. Information technology is then employed to enact and defend those decisions. A typewriter doesn't decide what to put on the paper, but it enables putting the right thing on the page.

If we extend this idea by using customary business mantras, we ultimately also distinctly consider "information people". Information people determine whether information is valuable or not. They must determine which information (from that which is available) should be accepted, and what purpose demands the acceptance.

Information people operate with a chain of dependencies -- they need information process to make suitable information available, and process needs technology to provide practical information-supply. Thus each link in the chain offers an element of opportunity to the business activity relying on information. But likewise, since each link has its respective responsibility, a lack of capability can strike at any of the three points, disrupting their interdependencies.

Supporting the integrity of the chain requires a practice that addresses the risk factors especially pertinent to each part of the chain. These factors can differ radically from one link to another, and ultimately the approach to maintaining the chain's integrity is not just one of spot maintenance of the links but instead systematic and ecological balancing of overall stress.

Seen as the "requirements" arena, this approach has to be translated into a management practice. The practice must include -- and organize dynamic access to -- knowledge that spans the experience, expertise and expectations of the three points in the chain.

III.

That holistic perspective strongly affects how we understand the three most urgent management concerns of the business "performance" -- infrastructure, information and innovation.

In general, "performance" measures how much achievement occurred towards a target amount of progress. Ordinarily, management emphasizes execution of planned procedures when trying to improve achievement. But to really grasp the situation, we need to look at prerequisites for progress, understanding that execution simply exercizes the potential these prerequisites provide.

Infrastructure provides the environment in which things can get done, in the form of services and facilities that support processes. This makes information technology and infrastructure parallel concerns, but the components of an adequate infrastructure are clearly broader than just technology. Obviously, you cannot have a service or a facility without also incorporating decisions and procedures. The challenge is to coordinate the various success factors of a "service" or "facility" to assure their presence for users in the environment. (Thus, infrastructure all by itself already includes technology, process and people dimensions to manage.)

Information provides the description of states and events that distinguish what needs to be done. The decision about what needs to be done will matter not just because of its eventual outcome, but more because at any given time more than one thing might be do-able and the challenge is to make the optimal choice.

Innovation provides the opportunity to bring new solutions to problems and/or to solve new problems. This represents a party's ability to act beyond its previous limits, but on its own it does not automatically mean that there is a need to do so. Without context, innovation has little intrinsic business value, so first the challenge is to identify the context that represents a "necessary change".

Given the co-existence of these three problems -- assured presence, optimal choice, and necessary change -- a party must consider its ability to work on all three, which calls for both capacity and prioritization.

Capacity will involve both (a.) resources and (b.) the practices that direct and constrain their lifecycle. Practices will in effect generate the technology, information and people that are actually employed at any time for the purpose of business improvement (i.e., solving the three problems). Pragmatically, that overall employment effectively predetermines the capacity.

Priority will involve both (a.) importance and (b.) urgency. Urgency will be the bulk of the influence by which the business's activity shapes the environment in which it finds itself. Urgency is not about how fast and hard something is done. Rather, it is about how soon the party takes significant action on a need. Pragmatically, urgency doesn't make an action important; instead, the significance gives the urgency priority.

Resources, practices, importance and urgency are ingredients that must be blended into a solution for each of the three problems.

But to direct that blending, the right first move is to isolate what the most fundamental inhibitor of business improvement is at the time, and rank the problems accordingly.

IV.

For example, each prerequisite has a characteristic underying issue that dominates its intensity, persistence, and overall difficulty. That issue is a candidate inhibitor.

According to the basic purpose we've identified for each prerequisite:
- Infrastructure must work within the certainty of user demand
- Information must work within the complexity of the operating circumstances
- Innovation must work within the equilibrium of the environmental dynamics

Levels of certainty, complexity and equilibrium -- which can dramatically and suddenly vary -- must be consciously approached with an awareness of what kind of opportunities and risks they present to the business agenda. In that awareness, rating them individually and against each other as problems establishes a sense of what needs the most attention. Thereafter, the issue is to look at whether the existing capability to attend to a problem is already sufficient or needs to be modified.

This does not mean that each of the three prerequisites has a single unique issue to address. The reality is that each one (infrastructure, information and innovation) has its own flavors and ingredients of uncertainty, overcomplexity and disequilibrium that it may need to resolve.

But the business overview of the problems must try to reveal where the biggest bang for the buck is in directing its capacity and priority, and this takes the matter back to understanding the interdependencies that create the chain of throughput needed for the business to succeed with its agenda.

As businesses become more knowledge-driven, the view and prediction here is more systemic: if infrastructure cannot adequately address the level of demand, then information cannot adequately address the level of complexity, and innovation cannot adequately address the level of equilibrium.

Success looks different at each of the three different points, while success at all three points maximizes overall "throughput". This is the picture of business capability -- the ability to generate necessary effects in the required way. But what about competency?

Business competency exhibits the ability to produce what is necessary on demand, but it must largely concern itself first with being able to determine and understand what is necessary.

Necessity cannot be determined without a model that defines (a.) the intended effect of the business and (b.) how the structure of the business logically addresses the intended effect. If the business has decided what it intends to be, then it has a reference point for determining what conditions are compatible or incompatible with that intent.

This awareness may never even reach "perfect knowledge", but it doesn't need to be perfect -- rather only "good enough", for health and growth.

V.

Increasingly, business looks to "IT" to improve business competency. This is important in two major ways.

First, it represents a set of expectations of IT-based capability that may need to be validated before they can be considered reasonable.

Second, it becomes mandatory to distinguish but then logically relate "IT competency" and "business competency".

The idea that IT might "improve competency" is probably an unhelpful contraction of what should really be stated: "IT support of improvement in business competency." This way we initially (and properly) focus on how business competency is recognized, and then on how those terms translate into (business) requirements that IT can help to meet. To complete the thought process carefully, we finally describe how those business requirements compare to the model of IT activity in the business, and concentrate on aligning the IT model with the business requirements, so that IT's position has the "right needs" defined for decomposition into IT requirements.

Some may say, "but what about e-business?"

E-business, in the form of end-consumers using IT to directly interact with the business, puts more business pressure on the performance management of the IT infrastructure, but it does not fundamentally change the relationship of IT competency to business competency.

Instead, what is brought into high relief by ongoing e-business is the business's ability to position the IT infrastructure in a more valuable sustained position for consumers (business capability), along with the IT organization's ability to comprehensively support information process (IT capability).

However, the transformation from pre-e-business to post-e-business was a crucial demonstration of business competency in the marketplace, and the accompanying management reengineering of IT practice to incorporate the e-business needs is a parallel demonstration of IT competency.

How do we recognize the position of infrastructure, information and innovation in the realm of business competency?

As a baseline:
- Infrastructure calls on Architecture;
- Information calls on Predictive Analytics;
- Innovation calls on Prototyping.

These three disiplines share the common objective of designing operations for optimizing the two-way relationship of change to demand -- the two factors most critical to business survival.

Architecture, predictive analytics and prototyping all recognize change and demand as independent factors. Then they all attempt to identify the ways that change and demand affect each other -- and thereafter they provide direction (requirements) to the development and use of capability -- for meeting needs dictated by the influence (i.e., opportunities and risks) of the change-demand relationship.

Posted by Malcolm Ryder at January 5, 2006 7:47 AM

Trackback Pings

TrackBack URL for this entry:
http://www.malcolmryder.com/cgi-bin/mt-tb.cgi/186

Comments

Post a comment