« Business-IT Alignment: Revisiting ActiveROI | Main | The ROI of Complexity »

April 9, 2006

Uncertainty versus Execution

Understanding agility as the solution to executing versus uncertainty.

Everyone is accustomed to the idea that change is now the rule rather than the exception.

But despite this level of anticipation, how will your operations be affected by events and trends that represent sudden or intense change? Are management capabilities up to the task?

Our operational concerns are usually cast in the perspective of Success versus Failure, but measurement in those terms is often accompanied by a significant confusion. Operations typically require several different planes of activity to interact and build up to an ultimate outcome. The factors critical to success on one plane have no necessary simlarity to factors on another plane. (For example, running fast requires energy on hand. But what produces the availability of energy on hand is entirely different from what produces the smooth mechanics of speed.) The problematic confusion of measurement is that distinctions indicating "success" on one level of activity are mistakenly expected to "cause" impacts or "represent" outcomes at some other different level -- and thus may be used as measurements of the other level. . This mismatch makes the problem of decision-making more difficult and/or less effective, as it encourages trying to solve problems with the wrong tools (e.g., inappropriate metrics).

While "success" may go by many names, solutions are generally recognized in terms of "impacts" -- and it is the impact that finally gets measured. To avoid the confusion of looking for impacts in the wrong places, we need an overview of how different basic types of impact generally relate to each other. With that visibility, it is safe to go directly to a consideration of (and plan for) what is fundamental in operational modifications that successfully address change.

Because change may be neither predictable nor temporary or infrequent, the idea of "operational fundamentals" increasingly refers to what is necessary for becoming "agile". Put simply, the challenge is to address how to deal with variety without sacrificing coordination.

As seen in the diagram below, this agility involves two basic kinds of variety -- changes and exceptions -- as they cross reference two challenges to coordination -- complexity and risk. Organizations bring different capabilities to the problem of developing agility; as pictured here, these differing capabilities respectively support agility in limited but interrelated ways that should be set within reasonable expectations.

This view illustrates the possibility (if not necessity!) of maturing capabilities from an relatively static objective of pre-emptive or reactive "control" (lower left) to a very dynamic objective of predictive or real-time "mastery" (upper right). In this maturation:
- controllers become solvers by gaining the ability to accomodate complexity, and likewise they become experts who are able to accomodate exceptions
- change and risk separate solvers and experts from masters;

Even more important, the same key elements of coordination and variety frame the management impacts (i.e., types of "success") that should be expected. As suggested in the picture, managing to more than one type of impact is necessary for developing the ultimate ability to deal with how external change challenges operational success.

The key is to understand that management achievement in one area must translate across the coordination and variety elements to other areas -- finally allowing management of externally-driven demand. Failures of translation mean that agility is not achieved.

To assure successful translations and mature to agility, management must turn its attention to being able to systematically deal with those factors -- typically by creating a policy that allows and fosters agility. For example, the table below clarifies where the challenge of external change hits management directly -- and thereby points out where policy should provide directions, permissions and limits necessary to the agility of operations.

With that visibilty of what is specifically being challenged by events, we can then slot customary target management outcomes like efficiency, effectiveness and so forth into the main framework of coordination vs. variety, and see where they come from.

For example,
- complexity in configurations separates or links efficiency and effectiveness; but to get to effectiveness from efficiency, the key to solving the problem is in the "logic (design) of the configurations" that efficiency is dedicated to.
- Likewise, what separates or links effectiveness and demand is change in preferences, but now we see that "priority of preference" is the solution key.

In fact, this illustration argues that if policy can manage the links between the different types of target impact (and thus align variety and coordination), agility can be strategically developed. To make this more explicit, the illustration identifies that dimensions of strategy such as objectives (top row) and opportunity (right column) are rationaly related by these same linkages established between variety and coordination.

Finally, it gives management a way to address the issue of "best practices" versus "competency". Ordinarily, the two ideas are used synonymously OR competency is assumed to be an effect of best practices. However, we now see that they are complementary yet significantly different, when faced with the problem of operational balance against shifting external demand. Best-practice operations can be derailed by risk, while Competent operations can be derailed by change. As can be seen in the ilustration, management initiatives for "capability maturity" are likely only half the battle when it comes to strategy, because "opportunity tolerance" (i.e., picking your fights) will be likely just as decisive.

Posted by Malcolm Ryder at April 9, 2006 12:21 PM

Trackback Pings

TrackBack URL for this entry:
http://www.malcolmryder.com/cgi-bin/mt-tb.cgi/236

Comments

Post a comment