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February 9, 2006

BSM: Play to Stay

Sports analogies aggravate a lot of people, maybe even more than military analogies do. But why do they keep coming up anyway? Because at least in sports, the rules of the game make the court or field a laboratory demo of problems, at a scope and level of complexity that we can easily grasp.

It's easier to see the relationships between the elements:
- assets (such as players),
- configurations (such as formations),
- functions (such as manuevers and roles),
- processes (such as plays),
- outputs (such as positions and possessions), and
- outcomes (such as points).

It's easier to see discrete management decisions about each element. It's faster to observe whether the impact of the decision is short-term or long-term, slight or heavy. It's even easier to remember what worked and what didn't, or no less important what actual effect occurred as opposed to what expected effect occurred.

When a point in the game calls for a certain type of change or benefit -- that is, a certain need -- we look at how many of those elements probably need to be adjusted to respond organizationally with success. We feel like we can see them all at once.

I.

When we ask a losing team what happened, there are hundreds of specific things that they might cite. But in the big picture, every team knows before they go into the game that they will have to do three things.

(1) Not make mistakes
(2) Stay in the game
(3) Give themselves a specific chance to win.

Said differently, execution, priorities and opportunity are the three dimensions of winning. They are not hierarchical; but they are systemically interactive. If one changes, the others do too. The challenge: any one of them can change independently of the others, and when one changes, the degree of change by the others is not always predictable.

So, in the heat of the moment, when the team must mount a specific response to a specific need, the actual response carries the burden of all three dimensions. The team's "game manager" needs to understand the possible trade-offs involved in giving more weight to one thing than another. Execution, priorities and opportunity then look and feel like risk, strategy and advantage.

The "organization" of a business response is multi-dimensional and multi-layered in exactly the same way as is the team response in the game. Material and structural interdependencies are exercised in operational interactions -- and there is always a question of whether the networks of relationships are adequate against the real pressure of demand.

The adequacy of the interrelationships is a result of whether their components -- like links in a chain -- are all strong enough as a group to allow their collective effort to withstand the attempted intensity of response. What difference does a change to any one of the links, intentional or otherwise, make to the ability of the overall capability? Is it the same difference whether the response is a risk-response or a strategy-response, or a stretch for advantage?

II.

Business theory presumes that if the game keeps changing then the way to stay in it is to constantly regenerate advantages, because otherwise "the competition" will eliminate you. In effect, this suggests making intentional variety a big part of the game plan. But every business has some limit to its economy of scope that prevents it from basing its day-to-day health and competency on irregularity. This is because the business is, by definition, predicated on relationships with stakeholders. Managing the value and success of the relationship dictates that the organization have behavioral consistencies that require underlying operational continuities.

In the game of business, a business service is a managed and structural response to a requirement for supporting a need in a business relationship. (Why "structural"? In the same sense that services like the Army and Parcel Post are different from the Navy and Email: they shape organizational resources differently for action.) The purpose of the business in the stakeholder's world is to produce a particular outcome, and the business addresses that stakeholder with appropriate services to facilitate that outcome. The facilitation itself might be directed with emphasis on risk, on strategy or on advantage to the organization -- but regardless of which constraint it is under, its orientation is towards the outcome that the stakeholder needs.

The business service is itself operationally composed of interacting processes. The processes exploit some logical interaction of assets, configurations and functions -- often without knowing whether it has to generate that interaction from scratch or whether it is ready and available.

In the business game, when the stakeholder need presents demand, the business must "call the play" and execute it, relying on the presence, quality and coordination of the players in the formation to provide the real-time means for producing the required impact. It seem obvious when put that way, but that is precisely the point regarding business service management (BSM).

BSM brings classic "management" attention and intervention to the interdependencies that make logical, intentional production of appropriate responses reliable.

III.

Management always includes mechanisms for:
- visibility
- measurement
- analysis, and
- communication

which will be employed in tasks for:
- design
- development
- alerts
- control,
- evaluation, and
- change.

To put business responses under stronger management, the two major efforts in a BSM initiative are:
- to conceive and model business responses as services made of essential components and their relationships;
- to implement resources in a way that they are visible, sustainable and controllable as those essential components.

Complex? Yes. Controversial? No. Agreeing with the reason for BSM is no more difficult than is appreciating what kind of success a team would likely have if it couldn't keep the team organized on the field well enough to make the best use of its best players most of the time.

The play cannot be successful if:
- the maneuvers it hosts are not logically cooperative in how they influence the conditions on the field;
- the manuevers and their owners (the roles and functions) cannot cooperate effectively against the conditions without awareness of each other's dependencies and intent
- the formation (configuration) is not designed to position the manuevers for cooperation
- the players (assets) that incorporate the formation are not the right kind of players or are unreliably ready for the duty.

IV.

Since these ideas are nearly self-evident to any experienced manager of an important operation, why are businesses only now likely to find BSM as being a critical success factor?

First, the amount of work involved is quite substantial, given the investment already made in achieving repeatable accounting for business events along the lines established in earlier business eras. Attention has, for good reason, been elsewhere. Expertise for transforming to each facet of BSM has to coincide with available time and cost -- and the appropriate knowledge management was not until now "on top of" the ways to make BSM initiatives viably and meaningfully incremental, giving it a plausible entree.

But another answer is that companies are not only just now practicing "BSM"... What has fundamentally changed is the opportunity to practice it both cost-effectively and pragmatically, rather than mainly conceptually or experimentally in implementation guidelines or enlightened point-solutions. Technologies that support management tasks have dramatically emerged and/or matured, in ways that are compatible with service modeling. Prior to these developments, management teams knew that the interdependencies within stakeholder-facing business activities had critical influence, but there was relatively little that could be done about it in both a rapid and enterprise-wide fashion. But now, the proven managerial ability to broadly affect those things in real-time makes it virtually mandatory to do so, since having that ability eliminates the business case for accepting the risk, inefficiency and opportunity cost of not doing it.

A last, but not least, answer is that business paradigms have changed with the environment. Just as CRM was not in the regular vocabulary in pre-internet 1989 but dominated 2003, another re-oriented perspective on business dynamics is settling in, driven by more attention to managing performance than to managing costs. BSM promotes much greater alignment of the architecture and infrastructure for business processes. This improves resource cost-effectiveness, but more importantly it improves responsiveness, through which more advantage can be developed and sustained, producing better top-line outcomes at lower risk. Enterprise architects have argued this exact point for over twenty years; but the fire that has been lit in modern businesses is awareness of the gigantic liabilities of unmanaged change. For many businesses, processes actually put a leash on the danger cost posed to execution, only to reveal the danger change poses to investments. Through business services, the company makes responses rationally manageable for quality and cost levels. But the change that is imposed on the firm's current state by multiple stakeholders including governments, partners, customers and employees ratchets up the requirement for fast reconfigurability against error and obsolescence -- which means visibility and control of the service's many moving and interlocking parts.

Few teams would expect to win with a disorganized roster. Few businesses of any significant size or durability would rest their information operations on an unmanaged network. Likewise, where the kind of functional resilience and advantage that a business needs is dependent on capabilities that only come from savvy complexity, BSM must be instituted to stay on the playing field.

Posted by Malcolm Ryder at February 9, 2006 11:35 AM

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