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June 26, 2006
Recognizing Progress: Effects versus Results
We know the old saying, "don't confuse activity with achievement." It warns us that making an effort doesn't necessarily mean we're making progress.
But one of the problems in recognizing progress is the need to know whether the conditions being generated by activity are beneficial or not.
To do that, there first must be an awareness that benefits may be unintentional as well as intentional. And meanwhile, we might get to the benefits in a planned or unplanned way.
This quickly catalogs four kinds of outcomes:
- intentional benefits from planned activity
- intentional benefits from unplanned activity
- unintentional benefits from planned activity
- unintentional benefits from unplanned activity
But along with activity and benefits, there's a third dimension too.
In management, we have to especially notice that planned or assigned activity is a mode of change, and that the circumstances (think "environment" or "context") of the activity can also change -- independently of the activity and especially during the activity.
With two sets of changes occurring -- activity and context -- the impact of each one on the other will shape the emergent conditions that are examined when we look for "progress".
When it comes to an assessment, history has shown that some combinations of conditions are far more associated with ultimate success than are others. This is why the "profile" of the conditions is so important to detect, not just a measure of an action or event.
This is a way of saying that success is relative to circumstances, so describing the circumstances adequately is more important than anything else in understanding whether an effort is being "effective" as opposed to its being ideally conclusive. For example, in a long race, the "patient tortoise" is more successful than the "impatient hare". The progress profile includes the awareness that the race is a long one... not just that the runner is fast or slow.
Here's another similar example. Imagine a motorized walkway running from point A to point B. If we decide that "progress" is to get from one point to the other, then the following problem occurs: walking on the walkway against the direction of its flow might "net out" to going nowhere. That seems to represent no progress.
But alternatively, if one must try to get to the opposite point even if walking against the flow, then going nowhere is better than going backwards -- so in making the effort, avoiding a likely loss of ground is a benefit to the cause and must be seen as making progress.
In the latter case, the benefit is clearly an "effect" -- meaning that it is an outcome contributing to the overall desired "result" although we don't yet have that final result. And we can see that the idea of "effectiveness" is most strongly associated with the way (and the fact) that we have predefined the requirement, not the goal.
Meanwhile, the effects of an effort are not always beneficial. We'll be getting effects from any effort, but they may not all make positive contributions to the desired result, and furthermore they may even be counter-productive.
The above perspective on things yields a description of the approach we need for understanding and communicating progress:
- We identify effects;
- We rate the impact of the effect(s); and...
- We measure the result
Thus there are three kinds of achievement to observe:
- producing the right kind of effects;
- gaining more beneficial impact from the effects; and...
- getting closer to the desired final state
Superficially, this mimics the structure of organizational responsibilities:
- operations (for the right effects)
- management (for the beneficial impacts)
- executive (for the target state)
But more importantly, there should be a strategy that guides the prioritization of efforts by telling what kind of progress is most critical, giving the most bang for the buck, at different times and places. Changing operational competencies is radically different from changing targets. Changing the wrong thing can be at minimum wasteful and at most catastrophic.
Postscript:
Extensive practical analysis of this issue -- including further distinctions between "activity", "achievement", and "progress" -- is available from Eliyahu Goldratt, who developed the Theory of Constraints.
Posted by Malcolm Ryder at 8:02 AM | Comments (0) | TrackBack
June 18, 2006
Operations Value versus Operations Performance
To say the least, operations are a lot of costly effort. Then, because we're concerned about what our expended effort is worth, everyone wants to measure value and measure performance.
But not many bother to distinguish the two well enough.
The point of measuring performance is to determine what one's effort is worth. In fact, we'll often think and say that if performance is good then the effort was "valuable". But it doesn't necessarily follow that the effort wasn't valuable if performance was not good. Why not?
Don't confuse "value" and worth: instead, think of worth as the target impact of the overall effort -- or in other words the goal.
Meanwhile:
- Performance indicates how close to the goal your effort got you;
- Value indicates what was effective about how the effort got you there.
The danger in confusing the two is that steps taken to "correct" or "enhance" previous results can too easily turn into solving the wrong problem. For example, in the name of getting better results, changing value doesn't necessarily change performance -- nor vice-versa.
To choose and make the right kind of change, and to know how it will finally help, each kind of change -- value or performance -- must be accurately conceived, and their relationship to each other must also be defined.
I.
First, consider value. Put simply, value within operations is identified in the production of a significant difference.
Ordinarily, we think that "significant" means that things didn't just get different but that they got closer to what is desired. But more strictly speaking, any difference that alters the dynamics of conditions from what they had previously been must be recognized as "significant". In that case, determining value means understanding the meaning of whatever actual difference has occurred -- whether the meaning is desirable or not.
One of the main reasons to recognize different roles in organizations is to be able to focus on different kinds of value being created. For example:
- Leaders see themselves as creating culture.
- Managers see themselves as creating viability.
- Implementers see themselves as creating capability.
So they each have different ideas about value -- and also possibly about performance. More importantly, these different approaches have to be leveraged in a way that actually does improve overall performance, which means there must be some model or "performance logic" that explains and reconciles how the various approaches get the job done.
Let's take the example of what a business wants from an IT organization. To understand this relationship properly, it must be recognized that a business person who has responsibility for leadership, management or implementation is in the role of a "leader", "manager" or "implementer". Where IT is concerned:
- Leaders want IT to provide advantages through innovation and cost-reduction.
- Managers, serving the leaders, want complexity and risk minimized, and availability maximized.
- Implementers want customizations and configurations to be prefigured and completed, not ad hoc and hurried.
And to fully understand that state of affairs, it must be recognized that ideally an IT person can take on all of these roles as well. What should happen is that in sharing a given role, the business person and the IT person should divide the labor called for within that role, and conduct the labor to make the appropriate kind of difference with that role.
The division of labors starts with clarity on what the issues are to which each role should be primarily attentive.
- Leaders see change in terms of Opportunities and Threats.
- Managers see change in terms of Strengths and Weaknesses.
- Implementers see change in terms of Norms and Exceptions.
With the issues distinguished by role, a given role's two main viewpoints on responding to them are as a Decider and as an Enabler.
II.
In the Business/IT example, it is common that the Business takes the Decider view and IT takes the Enabler view. But -- to cite an instructive case in cooperative role-fulfillment -- these days IT executives are usually strongly urged to acquire the ability to understand things from both points of view, and to exploit that ability within their responsibility and domain expertise for managing IT.
In pursuit of goals (i.e., worth), everyone wants change to be positively valuable instead of indifferent or destructive. In the normal business context, recognized value is associated with the ability to positively influence the customer's acceptance of what you want to offer. For this purpose, the roles align with each other to systemically (not systematically) address each other's requirements and leverage each other's contributions. Leaders look at the market and respond to it; but Managers respond to the leaders, and Implementers respond to the managers. In the flow of requirements from leaders to implementers, this alignment -- or better, coherence -- can draft progress towards the goal. The point is that each role makes a kind of difference that nurtures the effort of the role next in line. In the following illustration, we go further and argue for a fully interconnected set of relationships.
Given this "closed loop" view, the final link of alignment would appear to be that Leaders will also look to Implementers in some way, not just to the market. Superficially, it's hard to argue against that link being "evaluation" or "assessment" -- that is, leaders taking the time to decide whether the implementers (were able to ) have realized what is needed.
But based on long-standing arguments in the field, most organizations need a better understanding of what this last apparent link is really about. The starting point for clarification is simple: Leaders should not tell implementers what to do -- but instead tell implementers what is needed. The better Business gets at defining needs, the more likely it will wind up with something valuable that it wants -- so it falls to Leaders to assure that Business Needs are well defined and communicated. For example, in the classic case of trying to coordinate business and IT interests, leaders need to set the business agenda for IT -- but business should not set the technology agenda.
But how do they forge their cooperation?
III.
In general, agreement, not command, is the "constructive" mode for their coherence or alignment:
- The business agenda for IT is made up of objectives; it should be all about when and why. Leaders and managers should agree on that -- on when some condition should be developed or pursued, and why. This will be reflected in planning.
- The production agenda is made up of requirements; it should be all about which and how. Managers and implementers should agree on which activities should be executed and how. This will naturally be reflected in the choice of producers but will also be reflected even more basically in processes.
- The technology agenda is made up of resources; it should be all about what and who. Implementers and Leaders should agree on what gets used and who gets to use it. But that agreement will be based on business needs. Policies, especially, will hold this connection.
The set of agreements describes how the continuously interacting roles stay contained in the loop.
How does this model the logic of performance instead of just the range of value types?
Going back to the basic definition of "performance", the focus is on how far the effort has taken us towards the goal. The key idea of the performance logic is that certain types of value are created by the effort, and the value-types combine to foster progress towards the goal. The "logic" of the progress is in how the value-combinations create advantages for, or remove barriers to, progress -- and the punchline is that progress itself must be defined before it can be measured. In the model offered by the diagram above, performance is seen in the additional degree to which a goal-oriented change means capability (through implementers), viability (through managers), and acceptability (through leaders). Said differently: what can be done, how well can it be done, and how much will we support doing it? To the extent that those factors account for successes already noted, their combination may be used as a predicter of future success. For the most part, amongst roles that generate these "success factors", the coherence provided by plans, processes and policies mirrors and directs the logic and its re-use.
The table below pulls together the above thoughts in a representation of discovering and cataloging the generation of these success factors. It overlays the distinction of the key roles with the main viewpoints within each role. The table lays out the task of identifying what decisions and enablements can be associated with each role -- and from there, alignment would be tested or attempted in plans, processes and policies.
IV.
Postscript:
Because production flows from implementers to the leaders, Managers bear the responsibility for proving that implementations can be aligned sustainably with the business objectives. In effect, Managers act as the "agents" and "brokers" for Leaders.
Of particular note in the IT example scenario, change is the biggest problem in IT, because it challenges standards, forecasts, and budgets -- all the things that make it possible for managers to minimize complexity and risk. For that reason, Change Management must be something that Leaders are willing to be champions for, otherwise they should not expect managers to do well.
Posted by Malcolm Ryder at 7:25 AM | Comments (0) | TrackBack
June 16, 2006
Hey, What About Me?
Deloitte Research gives us a handy path to the illustration of Clayton Christensen's disruptive innovation. On numbered page 6 of their downloadable paper, the diagram of a value gap attacked by innovation stresses the problem of improvements that are "missing the mark." In this case, customers have already decided on what their quality requirements are worth and have stopped asking for more quality.
But let's cut through the innovation buzz right away: what is vitally important is that the customer's preferences do not consist only of quality issues. The value gap arises from the "customary" product not meeting preferences well enough.
Cued by that, let's look at the issue of "profiling" the potential customer. In a highly general view, this profile should be able to account for at least a few simple things like:
- what's good for the person,
- what the person wants; and
- what the person needs.
In fact, as we cover those items from top to bottom, we earn more and more permission to take a critical place amongst the prospective customer's set of reasonable alternatives.
Prospects can make this tough to figure out, though. The sources of their apparent resistance can range from indifference to confusion, and can be passive or active.
One view on this problem comes from the question, how do we get to know the customer? Do they want us to know them? We start out not knowing them, and we're trying to get to persuade them. But in really tough instances we may have to solve problems ranging from their anonymity (versus our knowing how to find them), on through these:
- their secrecy (versus our knowing what's good for them);
- their privacy (versus our knowing what they want); and
- their security (versus our knowing what they need).
It is an unusual list, but the items are related by the idea that the prospective customer is actually taking some risk by getting discovered or exposed, in which case they will psychologically work to minimize that risk. Offbeat?
Maybe, but not so much. This corresponds to our real-life experience in which being pigeonholed by others reduces our ability to get what we really want. In effect, other parties are actually competing with us for the right to define our identity.
My real point: the notion of risk is significant to the notion of preferences. Furthermore, preferences are critical to the notion of identity.For us suppliers/marketers, then, the underlying principle in engaging the prospect is to get the prospect's permission to "cast" them in a role that we want them to play. We'll get that permission due to preferences.
Marketing to an identity is an effort very well paved in the customer relationship management practice. Any number of references and cases are easily obtained, such as work still found online from MIT's Sloan Management Review about demographics, psychographics, and branding. This particular work brings up the idea that identity is a result of layers of multiple personalities, and furthermore that a cetain hierarchy of these layers may be persistent for one prospect -- although not consistent across more than a small percentage of many prospects.
What is going on in these layers or hierarchies? Maslow's Hierarchy of Needs has long given us a representation that proved very helpful in taking the prospect's temprature and generating some segmentation of general populations. But the most interesting twist on that view is that people are not fundamentally "rational" in their behavior, and they might for example routinely prioritize entertainment over safety. Psychographics has to account for those kinds of things if it is really to be of any reliable use.
Without saying that psychographics hasn't been or isn't effective, the identity definition model that follows below takes on the hierarchical issue without needing caveats. It's not so much a hierarchy of personal progress that matters; instead it's an architecture of identity.
Agreed: the prospect's challenge is to choose who to be. The result of solving the challenge is a predisposition, and the predisposition is what the marketing initially engages.
This challenge would have little importance if the prospect had no need to be social. So a major point of what follows is that solving the challenge is done in terms of factors that affect perceived and actual relationships -- notably, comparisons of one's own identity against either (a.) the apparent identity of others or (b.) the identity that they appear to ask of you.
With that selectivity behind its pertinent factors, the following model illustrates the construction of the identity that the prospect puts into in play:
This self-construction by the prospect can range widely in nature, from being tacitly intuitive to explicitly calculated, as well as ranging from being passively conducted to aggressively.
Regardless, it starts with a prospect's self assessment of two things:
- how they want to fit in (association), and
- how they think they do fit in (accommodation).
The model here identifies association and accomodation as the two key dimensions of the "demographic". The point to remember is that the prospect is determining his/her own demographic.
The prospect then takes that demographic into the realm of immediate experiences. This happens either actually, or by the prospect's forecasting or hypothesis. The model here refers to that "realm" as the "location" . Location, which is predominantly a mental coordinate, has three interacting components:
- negotiation
- position
- status
These components have individual definitions, but right away lets point at what they mean to the prospect:
- association (how I want to fit in) is a result of balancing negotiation and position.
- accommodation (how I think I do fit in) is a result of balancing position and status.
- I need to have my sense of association and of accommodation be compatible with each other.
Now, to get to the particular definition of the components, first note the central role of "position". Position is the product of current goals versus current constraints. Goals may be determined by some decision calculus related to a value system such as ambition, competition, or morals. But goals can be highly sensitive to the situation at hand. Meanwhile, constraints are defacto limitations or dependencies that exist in the way current circumstances are arranged, especially when imposed by other parties or by natural laws. Since both goals and constraints change all the time, the position in the current moment may or may not be reasonably similar to the last time we checked.
Next let's look at "negotiation". What gets negotiated is deviation versus tolerance. Deviation refers to rules, while tolerance refers to expectations (or as some put it, mental models). It doesn't matter yet whether the rules at hand are synthetic (contrived, arbitrary) or natural (circumstantial, self-evident), but moreso whether they seem inevitable. Meanwhile, expectations build up from the impact of actual experiences, so their strength is subject to the influence of new impacts even if the current strength is high. Deviation from rules is a possibility, but the amount of deviation is often bound up in the attractiveness of some imagination or ethic. And tolerance framed by expectations can set boundaries around sensitivity and acceptance -- but those boundaries may be flexible because of changing expectations. Balancing deviation and tolerance often produces what we commonly see as the main signs of differentiation or character-type.
The third component of location is "status", which in this model is a component still under study. But to date it refers to the prospect's environment and particularly to the fit in the environment. Generally, this pertains to the actual external circumstances in which the prospect is having current experiences, as opposed to the more internal mental coordinates of position and negotiation. The common form of this status crosses the mind as, for example, a sense of whether "I belong here" or whether "I'm in good shape here". We anticipate that statuswill also break out into at least two factors, not just to environment -- or that "environment" is the placeholder for a pair of more precise items -- but for now we have enough of a working distinction, and we note that environment can change a lot or a little, depending on at least the prospect's mobility, obligations and luck...
All of the items to which the "location" components refer are what this model calls "conditions".
As seen in the diagram, the prospect's overall predisposition is formed from the way that conditions determine location, which in turn determines the demographic and finally the identity.
The prospect faces the world in terms of those conditions. The conditions posed to the world are dynamically establishing themselves all the time, both separately and against each other. As described above, these dynamics are what the model calls "governors", and it is the governors that comprise the likely interaction with the world. This is, in other words, the "interface" that the prospect has with the world. Typical influences are on one side of the interface; while on the other side, underneath that interface, the derivation of identity is constantly being repeated to generate the prospect's likely response.
In the big picture, the model describes what goes on between (at bottom) the sense of identity that the prospect is forming or maintaining, and (at top) the typical influences that everyone might suspect surrounds them. From bottom to top, the prospect does not decompose an identity to figure out how to face the world; instead, this hierarchy of states is all there all the time, and the typical influences are running the pathways that derive the prospect's sense of identity in the moment.
For influencers working on prospects, there are many types of influence -- from (at top) authority to features -- thus there are many ways to try to "form" a prospect's momentary identity for more correspondence to the influencer's agenda.
It can be important for the influencer to understand things lower in the hierarchy to be more quickly effective. Remember the basic tension:
- how they want to fit in (association), and
- how they think they do fit in (accommodation).
For example, if the prospect thinks "I look good in yellow, but the group that I want to belong in thinks that red is cool", then the prospect is trying to balance association (red) and accommodation (yellow). The prospect has to gauge, "what's my risk of not embracing red, versus my opportunity to get away with yellow?"
Or what if it is important to the prospect to NOT be associated with a group that likes red (accommodation)? Then a preference for "not red" can become highly activated, leaving plenty of identity room for deviation from the norm (association). This is a scenario that, in revolving around a change of goal, relates to the popular notion of the "tipping point", in which rapid adoption of a new standard takes place when an early instance of the new standard proves to satisfy a preference of either unusual or previously unsuspected importance, AND the environment proves to be a reliable supplier of more instances. Put that way, it is easy to recognize that tipping points and disruptive innovations both address the value gap between what is customarily offered and what is actually preferred.
[This article developed from related studies of dynamics in behavioral economics and complexity theory, which other articles at Archestra will eventually discuss with links to this one.]
Posted by Malcolm Ryder at 9:06 AM | Comments (0) | TrackBack
I.T. Been Berry Berry Good To Me, Part Two
Our colleague Howard Hastings writes in:
Fundamentally, I agree with your concluding statements: that statistics from "the analysts" based on relatively small survey samples using questions of a naturally subjective nature are NOT very useful - unless accompanied by the explanations (read: deep and broad thinking) behind those questions and the final premise.
HOWEVER, I believe that the CIO Magazine article highlighting the Forrester numbers largely misses the key point - "IT Decision Makers" are NOT well positioned to properly and successfully influence the business (i.e. innovation).
Why? For those of us who "stumbled" into IT from business backgrounds it isn't that difficult to understand - IT people too often can't/won't adjust their own mindset and delivery to effectively communicate and/or work with business people. Essentially, "logical thinkers" generally don't see the need to empathize with the "targets" of their ideas … the notion that "experts" should be required to understand the motivations and perceptions of mere "users" is, in itself, irrational.
Anyone familiar with "personality typing" (Myers/Briggs, Keirsey, et al) will easily recognize this behavior and the inherent challenges it represents.
That said, I would strongly question the validity of successful innovation driven by "IT Decision Makers" being awarded a score of .200!
I suspect that most, if not all, of the innovation success came as a result of IT being TOLD that they needed to achieve a particular objective. Anyone who has been involved long enough in IT at senior levels who can be reasonably rational with themselves will admit that technology itself addresses AT MOST 30% of the overall solutions to business problems. The rest comes from people, processes, knowledge/content, etc. -- H.G.H.
Which reminds me of what I left out last time... the best examples of IT effectively driving innovation are examples where the use of IT was the actual basis of the innovation. But this still leaves two other issues to deal with. One of them is that the innovation might have been a highly successful output of IT, but the business built on the innovation might still be pretty poor business. The other is that there is a difference between innovative technology and innovative use of technology -- the point being that just saying "I.T." doesn't tell you much about what is actually happening. For more on this difference, search Archestra for the discussions on (a.) operations and competency; and on (b.) invention versus innovation.
Posted by Malcolm Ryder at 1:06 AM
June 14, 2006
I.T. Been Berry Berry Good To Me
The best quote of the year so far: from Romano Prodi, former president of the European Commission running for prime minister of Italy against incumbent Silvio Berlusconi back in April. Said Prodi about Berlusconi, "you lean on numbers like alcoholics lean on lamp posts, not to be enlightened, but for support..."
Yeah. That's the spirit! Numbers should be fought over. A bunch of new ones from Forrester, in CIO Magazine, show IT organizations doing the same old same old, when it comes to providing value to the business. In this report, IT's top batting average of .380 against Business Pitching feels bad, but that's really hot in baseball.
Just Makes You Think: Oh yeah, that's right... this stuff is pretty hard...
For the sake of skirting copyright, I memorized the information so I can now fearlessly just "tell you what I remember"... OR you could go see for yourself online (or...the June 15th hardcopy includes the Forrester survey numbers chart).
I remember that Forrester said:
1 - Improving productivity or products/processes rates in the high .300's
2 - Optimizing cash flow or customer lifecycles hits the mid to low .300's
3 - Powering successful innovation in process collections or in product collections steps in the mid to low .200's. Wipe your shoes.
But what do these numbers mean?
First, the way Forrester set it up, the batting average actually represents the number of "IT Decision-Makers" who gave IT strong credit when given the chance to do so. For example, almost-but-not-quite four out of ten gave IT credit for improving productivity or likewise for improving products.
Now, looking at the numbers and what they are attached to, is it insane to say that the more complex a problem is, the less likely IT is going to make an obviously critical contribution?
We know the problem complexity rises as you go from the top of this list (e.g. productivity) to the bottom (e.g., innovation). Why?
Well, in each case, think of the number of variables that are reasonably under critical IT influence as they combine with each other. In order of appearance:
- There are simply fewer of them when it comes to improving productivity or improving products/processes. (We didn't say the tasks were any easier, we just said simpler.) That level of influence is a lot like construction work.
- But the next level -- optimizing cash flow or customer lifecycles -- is more like winning poker games. More participants trying to not be on your same page.
- And the remaining level -- innovating (reconceiving, not just improving) products or processes is more like herding cats. More participants who see your page but could care less.
Here's the main suggestion. As we drop down the list, and move from productivity to optimization to innovation, the necessary influence on the variety of participants who need to buy in becomes increasingly less a deliverable of IT.
Going along with that, we can still hope that IT can contribute to the necessary influence. But then of course, we must identify what kinds of influence are necessary, before we can understand whether IT can make a significant contribution.
What this calls for is a perspective in measurement that can recognize and understand the game-saving catches, the turning point singles, the continuity of getting players on base -- the things that go missing in games that are not winnable. Eveyone sees the home runs, but most of the time, most games are won by most players being good enough to allow a win. Their individual responsibility is to be good enough for the other players, not to win the game by themselves.
The Forrester numbers superficially tell the story a little differently, but let's decode them. Given what was argued just above, they suggest that very few of every ten IT Decision Makers understand the difference between how well IT does its part and how likely it is that the IT part will "cause" a win. This further suggests low understanding of what it takes to win at productivity, optimization and innovation. That is, statistically, some of the decision makers may have given 100% credit to IT for effectiveness, but those that gave little or no credit (due to lack of understanding) dragged the Forrester averages down.
Meanwhile, the reason why batting .300 in a game is good enough is because it's enough to allow the other parts of the operation to add up to a win. Batting .300 represents about 100% of reasonable expectations, not 30% of requirements. The decision-makers who gave IT high credit likely saw this.
So the numbers we see from Forrester are not what we really want to see. Instead, we want to see the explanations given by the decision makers who credit IT with high effectiveness, and compare those explanations to the ones given by the nay-sayers.
Post Script: Saturday Night Live was a hit before lots of IT people were old enough to tell a joke. If you're older than that, you might remember Chico Escuela played by Garrett Morris, who broke the line that we cloned for the title of this article, but who for all we know now works in IT somewhere as a decision maker.
Posted by Malcolm Ryder at 4:48 PM
High Noon in the Garden of Good and Evil
.
WHEW! Close one.
Posted by Malcolm Ryder at 7:37 AM | Comments (0) | TrackBack