September 21, 2007

CIO 2.0 part One

Faisal Hoque, father of the Business Technology Management Institute, talks about the issue of solving the right problem instead of the wrong one in the CIO Insight article "Convergence, Yes; Alignment, No." As CIO Insight put it, Hoque noted that "rather than a goal, alignment is a stage on a journey to a more complete merging of IT and business that he calls convergence." With convergence, Hoque explains, "The business model is so intertwined with IT that there's no separate orientation."

What are the key features of this view for the top IT manager, for the CIO of the future? The same as for the CIO of now.

The first is the working definition of IT, which must position IT as business technology. This means technology of the type of business, not technology owned by the corporation of business. Here is a brief primer on business technology:

The second key feature is the working definition of "management". In the abstract, this has to mean "drive and authorize all key decisions about the utility value of the phenomenon at hand throughout its lifecycle." Naturally, the scope of this responsibility may involve or even necessitate collaboration and power sharing, and this means that a model of value-generation must exist to which all can subscribe. If this is to occur with IT, the concept of "IT" must be "operationalized":

From there, the third key feature, the point of it all, is to apply the operational potential to the business needs: this is how the IT model becomes the "dynamic" of the business model.

dynamic

1817, as a term in philosophy; 1827 in the sense "force producing motion," from Fr. dynamique (1762), from Ger. dynamisch, introduced by Leibnitz 1691 from Gk. dynamikos "powerful," from dynamis "power," from dynasthai "be able to have power," of unknown origin. The fig. sense of "active, potent, energetic" is from 1856. Dynamics as a branch of physics was in use from 1788.

Online Etymology Dictionary, © 2001 Douglas Harper

Given the numerous points at which IT could be mapped to needs, it isn't hard to appreciate that the current state of a business operation may have to go through significant re-modeling (transformation) to base the business model itself on the influences of IT. Speaking of that, the evolution of IT's realization as a business enabler actually is a goal, not just a stage. But the sneaky punchline to this is that the business may not need to be its own "IT-enablement" provider. Fusing the IT model and the business model (value management) is not the same problem to solve as the problem of establishing competency in the role of IT provider (performance management).

(This discussion continues in the follow-on article CIO 2.0 part Two.)

Image credits:
http://www.how-to-draw-and-paint.com/images/BasicHorse3.jpg
http://www.chss.montclair.edu/~pererat/7751.jpg
http://www.tsc-global.com/index1.html

Posted by Malcolm Ryder at 5:29 AM | Comments (0) | TrackBack

July 9, 2006

Driving Action with "Values"

In most conversations about how to properly focus an organization for success, the prescription calls for the organization to leverage its identity as a source of performance strength. For doing that, the notion of "values" is promoted as a major success factor.

What makes "values" so important? The key ideas are that it is typically easier to maintain effort for what one believes in, and that not knowing what matters the most "internally" leads to an inability to sort out and navigate through what matters the most "externally".

In trying to make "values" an integral part of operations, the organization will typically develop priorities; then it will group and cascade the priorities into policies -- ones that can be applied as instructions accompanying activies that the organization anticipates it should conduct or host.

While policies provide the practical expression of the priorities, many organizations are only partially successful at providing them and even creating them. The initial challenge in developing the priorities is usually to decide not just what is considered to be a representative "value" but also to get agreement on why it is necessary to hold onto it. The challenge is made tougher by the fact that the circumstances surrounding the organization may be constantly changing in important ways demanding direct attention. Further, the identified priorities may seem to compete with or even contradict each other.

Consequently, this period of investigation and definition takes many forms and often must be repeated -- but while no two organizations may arrive at the same conclusions, they all try to arrive at them through what will be called a "value system" -- some model for evaluation that is persistent above and beyond the level of ordinary circumstantial change. This sytem will then govern, more or less, the ongoing refinement and validation of priorities and policy -- at least until again too many new occasions prove to be irreconcilable within that system.

When this roadblock occurs, individuals or organizations experience conflicted priorities as indicators of a defect or breakdown of the value system. But in this experience, it can be unclear as to whether the apparent conflict is really due to the system or instead due to a lack of rigor or understanding within its use. For example, rules are often seen as the specific expression of a priority. Sometimes in using them, there may be confusion about whether an undesirable situation -- meaning, one in which prior action has turned things sour or subsequent action will likely do so -- has been forced by "a bad rule", or whether instead a good rule has been inappropriately applied. The conflict stems from uncertainty about the correctness of what was done or of what to do.

This example is notable because the action that makes the situation "undesirable" normally derives its justification from the presumed value system. When the undesirability of the situation makes us debate the system's own correctness, we tend to wonder if the system is unfairly "skewed" one way or the other. Meanwhile, the conflicted priorities that come with the undesirable situation may be a disagreement between two or more parties, but the conflict can also be a disagreement that one party feels within itself.

An important part of a value system's responsibility is to provide a means of distinguishing the character of one action from another. A critical understanding of the importance attached to "value systems" is that they are focused on why things should or should not be done a certain way -- not on what the actual results are. But perhaps most important of all is that a value system's force comes first from its ability to identify and describe things, not from asking it to measure things. That is, a value system is a perspective, not a set of scales.

With that in mind, the discussion below takes a look at how the essential form of a "value system" works to provide critically distinctive identification (not measurement) in a "situation at hand".

To begin with an example, the following picture shows a highly generic framework, intended to more precisely declare the main factors that go into the often fuzzy notion of "values". These factors are what goes into actual decision-making in "real time".

In an ideal situation, this framework would represent an organization's or individual's "mindset" -- one with consistent awareness across all of the framework's factors. That is, there would be an equal and simultaneous grasp of what is "responsible" or not, and what is "right" or not. Armed with that awareness, the character of the action that is possible at any moment could be evaluated as one of a few basic types -- for example as being "virtuous" or being a "gamble".

The framework identifies these basic types by introducing and cross-referencing a major distinction between acts and beliefs -- which respectively translate into the corresponding difference between ethics and morals.

This framework can offer the terms that it uses without the burden of emotional and philosophical histories, because it is not concerned with persuasion but rather with description. All descriptive systems have built-in assumptions, and this framework is not an exception; however the purpose of the framework is completely explicit, with no ulterior motive -- and therefore it can easily be used or ignored according to the practical interest of the observer. It's not that one must compare acts and beliefs, but rather that one usually can.

Two important assumptions in the framework are indicated by the lower left and upper right tags added to the central 4x4 grid. (Arrows are also supplied to signify these assumptions in the diagram.)

The first assumption is that Laws are primarily concerned with enforcing behavior away from transgression and towards virtue. (Moving behavior both higher and towards the right eventually would converge in virtue.)

The second assumption is that Principles are primarily concerned with defining and promoting behaviors that meet acceptable standards. Principles "pull" behavior towards them.

The lower left and upper right regions in this framework are readily comparable. But what is among the most interesting experiences of our society and social value systems is that we are constantly bumping into behaviors that occupy the "middle zone" of sacrifice and gambling.

For example, with sacrifice, a person discovers, perhaps unexpectedly, that they feel an innate (not externally imposed) responsibility to do something that they actually did not otherwise believe was "right". The very occasion itself exposes the difference between what they recognize as acceptable from the standpoint of need, versus from the standpoint of preference. As very dramatic samples, commiting a mercy killing or submitting oneself to bullying in order to protect someone else both fall into this category. As a very mundane sample, giving up properly ("rightfully") earned profit in order to placate a confused customer falls into this category.

In the case of gambling, circumstances are such that the gambler (the actor) often knows a gamble is being taken when others cannot tell. TV shows regularly feature examples of this, where with the best intentions detectives search crime scenes without a warrant, or prosecutors try to use the "fruit of the poisoned tree". Yet sometimes the actor is doing something with self assuredness about rightness, while unaware of how it might be irresponsible. This latter case is accounted for by the framework, but in our discussion the framework is primarily interested in the awareness that motivates the actor. How does the actor decide to do something "irresponsible" in order to do something "right"?

The thinking behind this framework additionally assumes that the actor chooses to gamble -- to take an irresponsible action -- due to his perception of need, while the preference to cause something "desirable" is normally what actually provides the actor with his "justification". Clearly, this is the formula for pragmatism, or the idea that the ends justify the means. The problem lies in whether the "desirable" is also what's "right".

On the other corner, back to sacrifice, actors and their critics often mistakenly judge sacrifice as pragmatism. The judgement error lies in not realizing that sacrifice is not about the ends but instead about the means. Compared to gambling, sacrifice is about not having a choice in how to proceed and doing what is possible instead of doing nothing. This is why "heroes" are not always seen as "the good guys", even though they are usually distinguishable from anyone who is not heroic. Heroism is a way of being that is actually not defined by results. A sad and common example of this is the case of dysfunctional personal relationships wherein one party is routinely heroic but with only the effect of propagating a bad relationship. Likewise, heroic corporate leaders can quickly take the company to ruin. By the way, these examples only reinforce that the actor's overall frame of reference is the dominant one behind the activity. Meanwhile, external observers might readily conclude that the heroism was "noble" but still "not right". (Gambling is generally not seen as being noble.)

The above comments tend to suggest that action is based on needs while beliefs are based on preference -- and that suggestion is intentional even if conceptually experimental. Assuming the suggestion is valid, there is notably still no reason why both need and preference would be unaltered over time by experience and education, or by each other. So it is not a simple opposition of "needs vs. preference" that is unlikely to be valid -- rather, it is the actor's sophistication about the two of them that will make their opposition more or less complex and reconcilable.

We see this continuing dialog between them on a grand scale in the court system, where laws and principles tussle with each other for control of the interpretation to be applied to sacrifices and gambling -- to idiosyncratic heroism and to pragmatism. In light of the framework's clinical terms, the history is saturated with debates over things that seemed ethical but immoral, and things that seemed moral but unethical. Often, the challenge is to "unload" the labels of their psychological baggage, so that the important contrasts and comparisons can be made between the context that declares "right/wrong" (correct/incorrect) and the context that declares "responsible/irresponsible" (proper/improper).

On a corporate scale (i.e., a microsociety), requirements wrestle with policies to control the interpretation (and exploitation) of "opportunities". A company will agree that a lucrative and reasonable proposal should be accepted, but it will disagree that a non-executive should make the deal. The idea and goal of the deal might be right, but the non-executive taking charge of the transaction is irresponsible.

On a personal and private scale, roles wrestle with desires and wind up shaping personalities and relationships. In this discussion, the personal level is really not intended to be directly explored any further, but the recognition of the dynamic is not difficult on a personal level, so the discussion has leveraged this fact to help reinforce support of the framework's idea at other levels of organization or influence.

What clarification does the framework present, finally, about the notion of "values" ? The main clarification is that "values" are an idealized way of pointing at something more specific -- namely, the prescription for the balancing of beliefs and acts. But the framework shows that values come in a range from unambiguously good to unambiguously bad. Naturally we promote the "good", but this doesn't logically eliminate the others nor their actual practice.

The other key clarification is that the influence of values on action is by will of the actor -- meaning that values are not inherently compelling. Instead, the value system has to propose definitions of right and wrong, and propose definitions of responsible and irresponsible -- and the acting party (individual or organization) still has to find reasons to position itself within the range of values generated.

Posted by Malcolm Ryder at 10:22 AM | Comments (0) | TrackBack

April 16, 2006

This Just In

The Washington Post's Mensa Invitational once again asked readers to take any word from the dictionary, alter it by adding, subtracting, or changing of one letter, and supply a new definition.

Here are the 2005 winners:

1. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period.

2. Ignoranus: A person who's both stupid and an asshole.

3. Intaxication: Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.

4. Reintarnation: Coming back to life as a hillbilly.

5. Bozone (n.): The substance surrounding stupid people that stops bright ideas from penetrating. The bozone layer, unfortunately, shows little sign of breaking down in the near future.

6. Foreploy: Any misrepresentation about yourself for the purpose of getting laid.

7. Giraffiti: Vandalism spray-painted very, very high.

8. Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.

9. Inoculatte: To take coffee intravenously when you are running late.

10. Hipatitis: Terminal coolness.

11. Osteopornosis: A degenerate disease. (This one got extra credit.)

12. Karmageddon: It's like, when everybody is sending off all these really bad vibes, right? And then, like, the Earth explodes and it's like, a serious bummer.

13. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.

14. Glibido: All talk and no action.

15. Dopeler effect: The tendency of stupid ideas to seem smarter when they come at you rapidly.

16. Arachnoleptic fit (n.): The frantic dance performed just after you've accidentally walked through a spider web.

17. Beelzebug (n.): Satan in the form of a mosquito, that gets into your bedroom at three in the morning and cannot be cast out.

18. Caterpallor (n.): The color you turn after finding half a worm in the fruit you're eating.

Posted by Malcolm Ryder at 12:13 PM | Comments (0) | TrackBack

March 13, 2006

Aligning Strategy and Production

In management conversations, the vocabulary uses ideas like value, performance, and success in urgent and motivational ways. But their usage is too often so flexible that it is nearly impossible to be sure whether the means of achieving them are being sorted out for better manipulation, or instead just all lumped together (where measurements start to lose their meaning as well). In general, less definition brings less likelihood of predictably gaining necessary effects.

To begin the more detailed look into definitions, the following line of thought offers a point of view about how -- in a context of marketed deliverables -- execution turns intentions into realities that matter.

The home base of this point of view is a significant simplification in identifying the key objectives associated with execution. That is, what does "execution" mean in the value systems of its stakeholders? It's not just about going through the motions. What is needed from execution?

As shown in the first picture below, there is a demand perspective and a supply perspective -- which are important to compare because they are basically independent of each other and yet, in order to create the value sought by stakeholders, must come to correspond and agree with each other.

- Demand asks for something, and the provider gives it through two main features: implementation that creates the factual difference between "requested" and "realized"; and, specification that ensures the right thing was realized.
- Supply offers something. Correspondingly, it promotes availability as the difference between requested and realized; and it offers quality as the assurance of the rightness of the realization.

By describing supply and demand in terms of effects, this viewpoint also allows us to include an initial mapping of the execution-related ideas called "support" and "delivery" as values. With this mapping's cross-reference, it is more evident what it is about demand and supply that stakeholders feel execution needs to accomplish. In this view, Support represents the activity in demand and supply, while Delivery represents the item in demand and supply. We understand that the intended support or delivery has measurable practical significance that from one instance to the next may differ in level while not in type.

The next key idea is that all stakeholders, despite their different roles or positions, actually have the same goal -- which is that the execution linking supply and demand will be successful in negotiating a viable relationship of offers to requests. At any given time, a particular stakeholder may have more or less interest in detailed visibility on the mechanism; but everyone wants the same overall success and can appreciate that overall execution may be a highly collaborative multi-party effort.

All the more reason to stress that everyone should be able to see themselves from a common point of view. That, in turn, is what allows a shared appreciation of the three basic elements defining the execution's success: the design, the plan, and the ultimate output or product.

Each of those elements represents a set of definitions and decisions that are made within the execution, promoting the realization of the request. Each represents an area that contains many options, making the particular decisions as important for what was not chosen as for what was. The decisions represent the actual propagation of potential value throughout the effort to realize the request.

Typically, we expect the translation of intent to reality to be captured in a plan. The following picture generically identifies and arranges the major points of reference within the plan definition that characterizes the before-to-after execution.

From the bottom up through "Workflow", we see the buildup of activity that will ultimately transform the current conditions or state (need) into the targeted later state (satisfaction). What happens above Workflow establishes the mechanism by which we can assume the right thing is actually achieved from that base of activity.

But in actual practice, the definitions of design and product, not just plan, must all be attended to in detail. Like the plan, the design and product aspects each have a hierarchy of key decision-levels that are execution components. The following picture identifies the components of the design and product definitions, along with how the key details of the plan components pertain to them.

This full articulation of the execution effort shows a series of decision interdependencies that, followed from the bottom up, chart the generation of an eventual "Production" as an accurate, reliable and safe instrument for fulfillment. The point of having and using this big picture is to create, before execution, the logical alignment of an end-to-end system for fulfillment.

Going from the bottom up, what we see about the "Plan" group of execution components (middle column) is that each of them allows a "Design" execution component to generate a "Product" execution component, or vice-versa. For example, Strategy uses Modeling to generate an appropriate Architecture; and through Resourcing, a related Organization (i.e., functional unit) is generated from Architecture; and so forth. Furthermore, the details of those Plan components reveal issues in which decisions drive the design component towards the product component. For example, the Organization will use Development to generate an Infrastructure; and in that Development there are issues about standards, methods and schedules that get decided and shape the actual path to Infrastructure. Higher up, decisions about Change issues including authority, scope and risk likewise channel requirements into Production.

In that sense, the zig-zagging between design definition and product definition is controlled by Plan items. Control is, of course, a basic management concern. Everyone wants to get all the way to the finish line. But as the saying goes, if it doesn't matter where you're going, then it doesn't much matter how you get there. Tthe most important aspect of this control is the value problem -- that is, how the control links the values in Supply and Demand.

Looking at the big picture, the intuitive expectation is usually that, Supply is "pushing" from the bottom of the arrangement, tempered by management controls -- while Demand is "pulling" from the top. But in terms of validating stakeholder value, the dynamic is different than that. We spot it in terms of support and delivery.

Given the big picture, the expectation should be that Design will build up the offer of availability that is eventually substantiated in the facilities underlying (i.e., supporting) the Product. Meanwhile, those Product facilities, through prioritization, will promote the request for implementation that is represented by the intentions defined throughout the Design.

In other words, it is not Supply that pushes upward, but instead Support.

Meanwhile, "Delivery" -- featuring an assured ability to provide the correct thing -- should be able to "poll" an auditable trail, down through all levels of decision-making. Because recipients hunt for a provider of what they specifically want and will consider more than one provider, real-time polling would be the ideal, verifying the character of current options. In other words, Design will drill-down into how the provision of the Product specification will be logically assured, and the Product must be able to track down its characteristic quality to Design origins.

That is, Delivery, not demand, is pulling from the top.

The summary of all the above is that in execution there are generally three different arenas -- the sets of definitions driving decisions in Design, Plans and Products -- within which one might track critical success factors and/or points of critical failure. By parsing those numerous issues according to a value orientation on achievement, opportunities that are relevant to stakeholders for linking supply and demand can be anticipated or detected more consistently and thus better managed. This aids fulfillment by way of enhancing problem resolution, optimization and agility -- respectively reducing risk, securing effectiveness, and cultivating advantage.

Posted by Malcolm Ryder at 1:20 PM | Comments (0) | TrackBack

February 20, 2006

A Comprehensive Governance Framework

Why Governance?

Institutional control is a matter not only of doing things "correctly" but doing the proper things correctly. And, we want to control the institution in a way that is itself institutionalized -- just as a mature person would normally control themselves in accordance with appropriate principles of behavior that should be habits of character.

But what is it about an organization that particularly needs governing?

If the organization is a "business", then the motives of a business will drive organizational activity and the point is to steer those activities in principled ways that actually help the business.

The framework below sets the high-level business motives (across the top) as the outlook on key focal-points of the organization's management.

One set of points -- competency, policy, and strategy -- together describe the organization's makeup stretching from what it knows how to do on over to what it should do and finally what it has decided to do. In effect, this describes the current predisposition that the organization brings to its work every day.

The other set of points -- strategic development, operational availability, and transactional consistency -- summarize the organization's major proactive mechanisms for generating "delivery of value" to stakeholders. This is more like the organization's position (not to be confused with positioning).

The balancing act between the organization's predisposition and its position can be seen as a basic behavioral phenomenon demonstrating what the organization knows about how to translate its potential into reality. (Of course, this should include some consideration of whether the current potential is desirable and/or needs changing.)

Given those two axes, the framework looks at the internal structure of the organization for the key contributors that govern relevant business activities -- that is, what it actually winds up doing.

A key observationof the framework is that the organization's capacity to respond to opportunity and demand is hugely shaped by the coherence of its governance. While a lack of governance does not preclude notable capacity, the exact lesson learned in business between 2001 and 2006 is that risk factors in responsiveness can make existing capacity more of a liability (dot.bombs, Enron, etc.) than a benefit. This makes the influence of governance a major force to be leveraged in value management.

At the high level, this is referenced through the framework by its correspondence of the organization's processes, services and portfolios to the goals for progress, production, and achievement.

Naturally, real organizations are not governed only in terms of the intersecting issues presented here. However, governance must attempt to identify the most critical types of decisions to attend to at the various locations and levels of the organizational structure. A primary objective of the framework is to describe the sources and flow of information that can sufficiently account for the effectiveness of the organizational structure.

In that regard, a management ability (BPM) to associate competency and policy exploits certain types of information that can organize appropriate behavior. In like fashion, an ability (BI) to discover and exploit value-laden opportunities for that type of behavior keeps the governance in service to the goals of the business.

The final note for this introductory discussion is that the framework is intentionally abstract so as to allow it to be applied to organizational units of widely differing scale and flavor. There is no reason why a small business unit would have less of a need for governance, and no logical reason why the essential points of governance would be different. Instead, the most likely difference is in the level of awareness that the business unit has about what kind of opportunity governance would bring to the unit if successfully instituted. This is not intended to make any point about the intricacy of particular best practices in governance applied and distinguished between "corporate" or "IT", "profit" or "non-profit", and so forth. Those practices are rightfully derived from the communications needs held by stakeholders in the responsibilities that distinguish their domains from each other. Yet the framework presented above argues for the similarity of management across those domains, and calls out for a certain breadth of awareness that is about explaining why control becomes valuable.

For a related discussion of IT Governance in particular, see the article Surveying IT Governance by clicking here.

For an in-depth discussion of related value-creation issues, click here to see the article, The Business Creation of IT Value, which looks at how business management takes the organizationof IT and develops it to support the business position. While this is not strictly an example of implementing governance in IT, as a followup to the discussion here it illustrates how the problem of "Business-IT alignment" works out in overlapping areas of governance and resource optimization.

Indeed, if we look at coordinating the issues of managing organizational behaviors and resources, we return to the earlier observation that there is a correspondence of the organization's processes, services and portfolios to the (governed) goals for progress, production, and achievement. Seeing "IT" as a corporate resource, the correspondence might be articulated (see illustration here) as an allocation of IT organization responsibilities to those three aspects of the business position.

The thought it leaves us with is the question of how running IT "for" the Business relates to running IT "as" a business, and how business governance and business strategy connects to IT governance and IT strategy. From the framework introduced in this discussion, the indication is that strategy is an area in which governance has an influence -- and that influence is likely to shape Business objectives in ways that IT's influence will have to respect. Thus, IT's own governance will have to establish IT's business-like predisposition and position for compatibility with the way the Business's objectives are meant to be addressed.

Posted by Malcolm Ryder at 1:27 PM | Comments (0) | TrackBack

Alignment, Coordination, Integration and Lifecycle

Business presumes that relevant achievements on a sustained basis will bring success.

Relevance is often a matter of timing as well as being very sensitive to the periods and duration of elapsed time. Without changing anything about itself, an organization's achievements may change in relevance simply because of who is paying attention from outside of the organization.

Sustainability is different. Functional organizations can be distinguished from dysfunctional ones in ways that do not begin with measuring their outcomes. Functional organizations are not always successful performers, but good performance itself is not a guarantee that the organization has avoided being dysfunctional.

Performance is part of relevance; targets or goals are provided as the perspective from which achievement is interpreted, so a suitable level of ability to achieve is as wide ranging as is the "stretch" of the targets from easy to hard. The big issue is about who sets the targets. As we say, "who's calling the shots"...

But as we know, just setting targets doesn't cause success. Our attention invariably dwells on what mechanisms we need for reaching the target.

Discussions about alignment therefore have two flavors.
- One considers issues from a design perspective: should a certain arrangement of elements and components logically suffice for the desired purpose?
- The other considers execution: should the typical activity of the mechanism likely meet the requirements

The second consideration, execution, itself has two flavors. One considers whether the mechanism is "keeping the target in its sights"; the other considers whether the mechanism, composed of many parts, is structurally sound enough in the real-time of effort (that is, actually constructed well enough) to get the job done. Today, these are both usually referred to as Alignment.

Although it is strangely rare these days to hear it called otherwise, both flavors of "alignment" are simply the issue of co-operation.

In the execution sense, which is essentially about quality, the combination of technique and management coordinates the parts for a unified, systematic cooperation. By coordination, it's meant that all parts conform their availability and output to the pertinent requirements of a common objective. No two parts need to be similar, but all must be explicitly assigned to the operation that meets the objective. Coordination is the most actively managed form of cooperation, and it is the form that is easiest to change.

The efficiency and security of that coordination is largely dependent on what level of readiness the coordinator finds the elements or components to have for the sake of their being combined. Combination unifies separate parts, but again for the sake of real-time confidence in the effort we normally see integration employed. Integration prefabricates the readiness of the parts, establishing their suitable availability independently of the actual frequency of demand or use.

Integration makes a big assumption, however, which is that the condition of each of the parts stays within a range of tolerances that allow the integration to persist. Managing the condition of the parts means attending to their lifecycles of arrival, interaction, ageing, and replacement or removal. Essentially, this lifecycle management is strategic to the maintenance of integrations that optimize coordination -- resulting in alignment.

But what about ad hoc coordination that does not rely on integration?

Lifecycle management prepares for ad hoc coordination by managing changes within a part's lifecycle according to predictions about future coordinations and the utilization that those predictions suggest. For each predicted use of the part, its degree of usability is certifiable at each of its lifecycle stages.

An architecture typically contains a documentation of the predictions and can produce part specifications that identify the quality tolerances for the anticipated use.

Lifecycle Management's benefit flows through architecture and integrations into real-time coordination.

Posted by Malcolm Ryder at 5:00 AM | Comments (0) | TrackBack

February 3, 2006

Decide, Design, Deploy -- Then Assess

More than any other role in the enterprise, managers are the focal point for accountability of execution results. On the one hand, this means that the organization's overall visibility of its progress is created by managers. On the other hand, it means that poor visibility is attributable to the way managers view things. It therefore becomes crucial for management and the organization's other stakeholders to have a given view that they both understand the same way.

Evaluations and assessments strive to create that shared view. But while most organizations mandate evaluations, many use them without any strategic impact on the direction of change or the continuity of improvement. Confusion is easy when the effort is to describe comprehensive responsibility for consequences. Managers sit at the center of this disappointment, but they need not. The solution is to be sure that all parties know beforehand what it is that the evaluation can really explain. For managers, evaluations should explain not just a nebulous idea of "results", but a specific idea -- progress. And for all parties, it is necessary to understand that evaluations and assesments are not the same; without this understanding it is far more likely that one or both of them will be ineffective or mis-used. Too much effort will be spent boiling an ocean or too much spent looking in the wrong place for answers.

I.

Three kinds of issues dominate visibility of progress.

One: "performance" must have the same definition for everyone. The generic definition would be "the degree of achievement towards a set goal, as generated by execution under demand." This is the context within which "progress" makes sense. The equation must be that the results of execution must amount to achievement, not just difference.

Two: a consistent understanding must be established of what is meant by "results". Here, the relationship between execution goals and impact goals is the subject. That is, since execution adds, moves, and/or changes things, one result is about whether those differences work out just as prescribed; but another result is that the influence they have works out as is needed. Progress is really the direct measure of whether the prescribed differences were obtained. The equation is that change equals requirements.

Three: the ability must be developed and used to accurately identify both what is "necessary" and what is "sufficient" -- and distinguish them! This subject is often complicated by confusion over where it is in the realm of execution that "needs" ought to hold top sway. This is not so much a debate about whether satisfying needs should be the driving purpose, but instead about who gets to declare the needs to which all production should align.

For those three interlocking reasons, the idea of evaluating performance is inherently a complex one. All organizations do a number of things that they call "performance evaluation" -- but the huge variety in how one outfit does them versus another is exactly why there is an industry for "best-practice" advice on the matter instead of only for precision techniques.

II.

Given the above, any organization could likely find significant differences in its view of achievement, progress and production -- once it knew to look for differences. This is one practice-level aspect of evaluations.

That said, two different organizations using the same practices should be able to understand things the same way, albeit this makes sense only to the extent that they both ought to -- and a given practice still allows wide differences in technique. So why bother with evaluating things on the practice level?

Answer: a "practice" is not mainly about "the right way to do something". Instead, it is really about associating ways of doing things with value. In this case, the point is to get value from the evaluation effort, instead of just going through the motions of supervisory responsibility.

Typically, organizations have a lot more familiarity and experience with the technical aspects of evaluation -- while not necessarily knowing where their technique fits into general best practice. This might signal a situation where there is ambiguity about whether the evaluation is actually solving the right problem (or any problem at all.) What issue is the examination really expected to resolve, and why?

An important starting point in clearing that up is to apply not only the above distinctions about "results" but also -- and even more importantly -- the following ones that reflect the difference between the beneficiary's stakes and the provider's stakes.

III.

What do organizations want "good performance" to mean? Essentially, it should mean that the organization's target stakeholder agrees that the organization's activity has created value for the stakeholder. The stakeholder's sense of received value can be quite varied -- ranging from relief to opportunity, and from intangibles to tangibles. From the provider's viewpoint, this extrinsic value is a goal of the provider's intrinsic performance.

Unfortunately, it is very common for external measures of an organization to be called "performance measures" -- but most often what is really being measured there is the extrinsic value of the organization's effort. Properly recognized intrinsic performance, which is an internal goal of the organization, is essentially a characteristic that the organization wants to acquire.

To be specific, the desired characteristic is the ability to produce an extrinsically valuable achievement. To get that characteristic, the organization has to get internal progress from its execution.

That gets us back to the issue of accountability and progress. The general question that performance evaluations try to answer is, "Did the way we do things get us the results we wanted?" If the answer is yes, management should be able to take the credit. But if the answer is no, then management could likewise take the blame.

In the credit and blame game, it's easy to react to a broad range of direct and indirect consequences, and lose focus on what should be specifically discussed about management -- namely, progress. Evaluations that seek to show comprehensive "responsibility for consequences" are too often boiling an ocean or looking too much in the wrong places for answers. Avoiding those problems is easier when we stay focused on accountability for progress.

IV.

How do we describe "the way we do things" and begin to account for progress? Most management activity can account for eventual progress in the way the management activity affected things at three different phases:
- decisions;
- designs; and,
- deployment.

In "making" progress, management has a short list of essentials to worry about -- all fitting under the umbrella concern of "can we do well what we are required to do?" Requirements generally come from:
- the dynamics of prevailing circumstances that are creating opportunity or risk,
- from formal restraints or orders, and
- from literal limitations of resources.

Correspondingly, the essential elements of execution that are to be managed are:
- Awareness (appropriateness of choice of response)
- Competency (effectiveness of response versus demand)
- Discipline (behavior or application consistency versus rules)
- Capability (the inherent functionality of a resource)

Managers "make" progress by cultivating and coordinating those elements -- through decisions, designs and deployments -- in ways that are specifically compatible with the terms on which activity is approved, by the organization, for responding to designated circumstances. As a final concern of management, the approval of the actual activity may come before the action or afterwards. While the terms of approval may be constant, the action may be prescribed beforehand, or justified afterwards -- reflecting the existence of some range for management discretion. Use of that discretion may become a particular point of evaluation -- one that questions the skill of the manager or the logic of the terms of approval, or both.

Taking progress as the subject, an evaluation is not really a "performance" evaluation except in terms of the performance of the manager who is responsible because of his or her presumed capability to manage.

Instead, regarding the measured execution results, the evaluation is a progress evaluation and what that evaluation is trying to explain is how the actual execution relates to the actual differences made towards meeting requirements.

V.

One of the profound realizations from that clarification is that execution always points in the direction of requirements. Wherever the requirements go, execution is responsible for meeting them. In real life, this means that the "fallout" of proper execution can easily feature enormous amounts of change, cost and discontinuity, because it was unavoidable as a consequence of the requirements. Therefore, if an evaluation of execution seeks to judge it by how much it was able to rein in change, cost, and discontinuity, then the evaluation itself is not measuring progress -- thus it is not measuring the intrinsic worth (the logical benefit) of execution. In such a case it is easy to see that execution might get modified as a reaction to factors that have not actually been linked to enabling the execution to better contribute to intrinsic performance. Anyone preparing or reviewing a business case will wrestle with this threat.

Clearly, however, factors such as change, cost and discontinuity are necessary to factor into the big picture -- the one shared by multiple stakeholders. After all, if execution is not sustainable, or if the side-effects of progress are corrosive to the organization's stability, then fundamental rethinking should be taking place. The difference between an evaluation and an assessment lies exactly here -- an assessment explains how the subject's results relate to the larger sphere of enterprise influence.

An evaluation can explain whether a job was really well done. But an assessment can explain what an evaluation cannot: namely, whether the job was the best "right" thing to do.

Posted by Malcolm Ryder at 5:35 AM | Comments (0) | TrackBack

January 14, 2006

"Effectiveness" -- the essence of Operational Performance

As with so many "enterprise" issues, whether you're an executive or a manager, sorting out the messiness of your performance management options probably means first checking to see if you're sure they are solving the right problem.

Executives and Managers don't see things the same way. But they do look for the same thing: "high performance".

Sadly, too much of the time they don't know when they're seeing the same thing until it's after-the-fact, so it's difficult to coordinate their decisions along the way.

This obscurity of view can be resolved, but today the solutions themselves are often confused about what parts of the problem to solve -- because the stakeholders aren't sure themselves.

At the heart of the uncertainty is a lack of understanding, or agreement, about where one stakeholder's authority of (which establishes a scope of influence) should exploit another stakeholder's responsibility (a degree of accountability). "I have a right to protect my accountability, no matter what you order!"

Research departments of consulting firms discuss this difficult situation, such as in Booz Allen Hamilton's take regarding a need for determining "decision rights" -- but there is also a more basic cultural aspect to consider: what everyone refers to as "being on the same page". This unanimity is not just about naming a common goal, but instead about whether everyone understands, to some reliable level of generality, the logic of how to make things work. In action, the key complication here is the variety of practical and political predispositions found within the organization, despite decision-making rules. Predispositions generate expectations that give "reality" its appearance and thus present what looks like moments needing decisions. Different realities offer different moments...

A pretty good way to start resolving the confusion is therefore with a globally coherent picture of what the decisions ought to be made about.

I.

The underlying logic of what gets called "high performance" aims for advantageous on-demand results, which calls for alignment of three key elements:
- clarity of intent
- realtime responsiveness
- agile navigation of capacity

Linking those three things allows for "executing" (as it is usually called) with the right thing at the right time for the right reason. But what must also happen is to have all three things simultaneously.

Clarity about "reasons" is the most important challenge. Setting aside the specifics of any given business, two major classes of reasons usually steer the management of the execution.

- One class focuses on the worth of the designated objective. (This is about the kind of advantage that the achieved objective offers. )

- The other focuses on the value of the execution. (This is about the importance of the difference made by the execution.)

Often the difference between this pair is referred to as the "gap" between strategy and execution -- implying a causal but dysfunctional relationship that somehow has escaped management's influence. That clearly oversimplifies the matter, except by assuming that management has to be "fixed", which is not a simple matter. Popular cited examples of management's problems include this: so many definitions of strategy are presented that strategy becomes a moving target; meanwhile a culture of short-term gains increases skepticism about whether strategy is pragmatically important anyway.

Yet stepping away from that suspicion begins with a related observation: the direction [verb] provided to execution by management is precisely where the accountability for "performance" lies. Most decisions about execution are made under the pressure of accountability.

When we're worrying about management accountability, we'll call our real subject something other than "performance".

II.

In practice, the highest-level concerns of accountability are two expectations.
- One is that the designated objective should be logically critical to creating the conditions necessary for business functions to matter.
- The other is that execution should be logically critical to creating states at which the objective is achieved.

These "functional-conditions" and "objective-states" are thresholds. The chemistry of what occurs when the thresholds have finally been reached or crossed is described in the business model (of conditions) and the business plan (of objectives).

Given that, the essential significance of execution seen is its role as an enabler (of hitting the thresholds).

However, both executives and managers persistently but incorrectly treat execution as a cause. Correctly seen, execution dwells on necessity but it is production that dwells on the ability that gets the job done.

Nearly all parties acknowledge the reliance on programmed production. Production is a designed activity, the place for which is set as follows:
- execution, meaning the decision to act and the followup, should itself be "caused by" explicit intent to reach thresholds; and...
- the activity-design of the followup focuses exclusively on realizing the intent.

This clarification of the notion of "execution" versus "production" is complemented by similarly distinguishing the idea of operation (the chemistry beyond the threshold). All together, they describe the functional depths of the organization:

Operation refers to an intentional activity that distinguishes the purpose of the organization in a situation. Here, the key concerns are quality issues, about targeted "impacts and reach".

Execution refers to the explicit and controlled pursuit of meeting requirements for successful operations. Here the key quality issues are about "options and decisions".

Production refers to the mechanism used to realize and sustain execution from current circumstances. Here the key quality issues are about "cause and effect".

Executives and Managers must have a common (shared) way to see and understand the alignment of these three layers of organizational functionality. The key is to grasp the systemic nature of production's influence on execution, and likewise execution's on operations. Optimizing this systemic influence is the management goal called effectiveness.

When executives and managers agree about "effectiveness":
- They more rationally exercise the "throttles" that change the levels of throughput and output that they interpret as "performance".
- Their efforts, even independently of each other, are then truly more akin to driving, in which they both use the same logic of inputs for moving the vehicle in the right direction at the right speed at the right time. The specific point of any moment's maneuver may be quite different from another moment's, but the overall navigation weds all the real-time changes to the purpose of crossing the terrain.
- Most of all, the participants' recognition of when it is important to change an input is based on the same (shared) ideas about alignment.

The support of this alignment is two-fold: it must span attention to issues that are peculiar to each element, and to issues that determine the success of their linkage.

III.

In understanding and maintaining effectiveness, correctly addressing its specific elements involves using the right mindsets for staging and conducting their evaluations.

These mindsets -- which show up in their semantics -- prescribe the basic types of awareness needed to communicate whether a given element needs to be changed.
- Measurement uses the most granular set of standards, to specify the difference between fixed requirements and current reality. (Correct vs. Incorrect)
- Rating uses a less granular scale of difference to compare a current position against a range of possible positions. (Better vs. Worse)
- Confirmation uses a definition to test for the actual existence of something versus a plan (Yes vs. No)

But the full description of the mindsets includes sensitivity of another kind: an organizational effort meets its purpose with competency built on capabilities. This awareness overlays the layers of functionality from production up to operation.

The table below illustrates this overlay. For example, in representing the high-level top-down view from the perspective of purposein an organization's effort :
- Operations are best "measured", while...
- Execution is "rated" and ...
- Production is "confirmed"

This describes the immediate "surface" visibility needed for an evaluation in terms of purpose, and it de-emphasizes other background levels of elemental visibility unless the immediate visibility is unclear. This means that to understand efforts against purpose, "measurement" of execution is not automatically necessary, but we want it to be possible if execution's ratings are unclear.

IV.

Further support of alignment includes the design and maintenance of linkage mechanisms for the layers of functionality. Both static (preconfigured) and dynamic (ad hoc) linkage must be arranged.

Executives and Managers often try to do this symbolically, by defining and then "rolling up" or "cascading" measurements across the functional depths of the organizational effort. This typically involves translations from one depth to the other, and it has been historically maddening and insecure. The chosen problem has usually been to determine what the measurements at one depth mean "at another depth".

Sometimes in the hoped-for translation of measures, the semantics involved are "codified" by process designs that link (i.e., integrate) events at one depth to events at another. The hope is that the process design is valid, so that measuring just the integrity of the active process can provide a suitable proxy for a much larger set of discrete observations. This approach of "automating alignment" is not unimportant, but it confuses the "systematic" for the "systemic" -- that is, it risks that executives and managers will mistake the description of the process for a description of the current conditions. The problem with that, as has been historically borne out, is that improving process may not cause conditions to improve, even if it allows the conditions to improve -- and processes continuously proliferate their complexity and variety. (This is why process management is not the same as performance management but instead is only an aspect of it. Process, although likely necessary, cannot be a sufficient translator.)

Instead of all that, as the table above suggests, measurements at one depth establish facts that are likely important to the next depth only as they relate through the virtue of commitments made (i.e., assignments) and through the likelihood of positions established (ratings). Thus, with much more generic linkage involved, as we move up from production to operations we see the subject of "measurement" moving from capabilities to purposes, telling just a part of the story.

For example: let's say that we're driving, and as an execution matter we've decided to "go left".
- We produce this turn by assigning (committing) a selected turning radius and selected velocity. We may find out only later, through measurement, whether those specific selections should have been allowed. The results of our production effort leave us more or less satisfactorily turned to the left; that is, we retrospectively evaluate the production with a rating.
- But how useful is the turn that we produced? Is the precise "leftwardness" of our resulting achieved position suitable for the need at hand? Does it matter which lane we have gone into, and how far we are from other vehicles, at our post-turn speed? Did we hit anything during the turn? Are we about to, afterwards? All of these issues carry potential requirements that we address throughmeasures reflecting our competency with the turn (i.e., our execution).
- Our demonstrated production capability will strongly suggest whether in the future we should consider a decision to turn left to be a "good" decision -- but meanwhile a recurring need to turn left may insist on efforts to improve our production capability for the future.

V.

The bigger message from this situation is that "measurement" per se is an incomplete understanding of conditions, which needs to be supplemented by additional means of understanding. We cannot manage what we don't understand.

When we look at achievements against targets, the matter is about "performance". But sustained or recurring achievement is the whole point of management, and awareness doesn't cause that.

So, more to the point, when we have a supervisory understanding of functionality against goals, we work on managing their alignment as a matter of managing "effectiveness".

The next table below again elaborates the "effectiveness mindsets" -- except in more colloquial or "ordinary" language. This set of semantics illustrates how terms of alignment range in a general progression of influence from "optional" to "critical" as we go from (bottom left) production capability to (top right) operational purpose. For each intersection of functional depth or change level in the table, the provided term points at the notion of "in what sense does this matter?"... For example, an assessment of Capability is important, but it is important in different ways depending on what functional depth is being considered. In this version of the table, each term represents a distinctive expectation that executives and managers can always initially share as the default question of interest or comparison about each issue.

Overall, a baseline is established for discussing the "role" of each functional depth (row) or change level (column) in terms of effectiveness. It's not difficult to envision a series of conversations that explore progress and effectiveness, consistently using the language presented here, in mixed audiences, without confusion about how things are expected to influence each other.

VI.

The semantic resolution doesn't stop there, but since management tends to institutionalize its solutions, our various expectations of the management effort should be conceptually distinguished -- in a general way that clearly indicates what their evaluations will really care about and how they relate.

The conversation with our mixed audience should be able to cover the two broad reasons that usually steer the management of execution. Most organizations bring their concerns about achievement to the table in two flavors: financial and operational. If we cross-reference those against the worth of designated objectives and the value of execution, then we get guidance as in the table below.

Financial and operational concerns represent the two main ways that the organization keeps track of why any other party would want to have a relationship with the organization. Generally, the assets and trust that an organization has to offer are its main attractors. Management looks for, and distinguishes, related outcomes from its activity as follows:

Posted by Malcolm Ryder at 7:04 AM | Comments (0)

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

November 28, 2005

ITIL, Optimization, and the Performance Management Approach

Business derives value from the utilization of IT in the same way that it derives value from the use of money or people: the business applies the asset to enabling those events that have a designed ability to impact business conditions.

Assets may be applied directly or indirectly to the target event.
- Directly, the asset is deliberately "consumed" by the event itself. This involves using the asset as a material element of the event. The event may employ, transform or exchange the asset, in order to produce another output.
- Indirectly, the asset may be used to deliberately affect circumstances surrounding the target event. By "circumstances", we mean conditions surrounding the moment or location of an event.

Consumption and circumstances often develop independently, and they often coincide without much resistance on the way. But management's intent is to replace coincidence with planning, and move consumption and circumstances to co-operation .

If cooperation didn't need to be planned, we wouldn't need management. For this concern, the proper focal point is not the assets, but the events in which they are involved.

I.

In producing cooperation, one of management's primary responsibilities is to establish compatibility between the circumstances and the consumption. With assets at stake on both sides, competition for the supply and deployment of assets is an issue. Since no event goes unfollowed by others of equal importance, organizations need to know what will happen to their capacity as an aftereffect of the cooperation.

In effect, whatever requires the cooperation -- namely, the target event -- is seen as something that must either conserve or replenish assets, so that business will be continuous and ongoing instead of episodic or temporary.

Yet placing that restraint on the target event must not prevent the event from bringing the needed impact on business conditions.

This reflects a broader principle: environmental conditions are part of the "infrastructure" for business functions, and meanwhile, consumption (business function) has prerequisites (specifications). Circumstances (environmental conditions) have effects (states) that must productively correspond to those prerequisites.

This "productive correspondence" of current specifications and current states is exactly the compatibility being sought from management.

Consequently, it is evident that the key issue is not asset management; rather, it is event management driven by business requirements -- which is the ordinary description of business capability.

II.

The history of the business capability is largely recorded in the history of events that occurred under the pressure of demand. As pictured above, an "event" is the overall result of interacting capacities and requirements. Thus, we easily expect an event to vary widely as the number and strength of influences on its separate elements varies. The primary threat to manageability of events is the inability to control that variation and maintain a useful synchronization of the elements.

In periods where management efforts are successful, events are the normal focal point of attention to whether the business is getting what it desires from IT. The benefits of events are the most ordinary measure of success. When event benefits fall short of desires, then the typical approach is to look for what disabled the event from being beneficial. This disability will usually be found in either of two areas: one, the context of the event (as in time and place); and two, the makeup (causes) of the event.

In accordance with the "event model" discussed so far, we can especially appreciate thatprocesses are used to place controls on the makeup of an event, so that the event's final character is appropriate to desires.

Ideally, a process predictably selects and coordinates the event's elements, with as much aggressiveness and detail as necessary to assure the needed character of the event. By increasing the process's ability to reliably find and control necessary event elements, management can mature the process to a point where the timing and location of a certain type of event also becomes more and more predictable -- which is hugely valuable to selecting and organizing responses to demand.

Process-modeling (now evident as a form of "event-planning") usually seems highly convenient to management. Mmanagement readily adopts a "process" approach to designing and cultivating desirable events. And more maturity in the approach promises the business greater opportunity to create (or find) and leverage advantageous business conditions, strengthening the approach's justification.

But acquiring strength and quality of maturity cannot be taken for granted. This means, in turn, that the assumed benefits of processes are always to some degree uncertain to occur.

“Complexity is intrinsically predictable,” Wharton management professor Saikat Chaudhuri notes, with a very major caveat. “If one places sufficient resources and project management strategies in the right places, it’s possible to manage the complexity. You can learn how to do it. But uncertainty, by its very nature, requires constant adjustment. This type of flexibility is tough to achieve, especially in the middle of integration activity.”

Challenges to process maturity are a part of the uncertainty, affecting the makeup of anticipated events. Another big part is shifts in demand, which reflect changes in the context of events. This indicates a need for an alternative to process management to serve as the lynchpin of business value.

III.

In the discussion that is most interesting to business people, the working definitions of "performance" pertain to the generation of value versus demand. Business runs on competitively satisfying external party demands -- and it is constantly translating those external demands into demand on its internal constituent organization. In that light, maturing the management processes for events-- which links an organization and its environment -- is a critical aspect of managing improvement in performance.

Yet with management process maturity in place, the unpredictability of demand remains a highly significant type of uncertainty threatening management results. Because uncertainty is a fact of life; organizations must simply take a useful position against it.

Thus, complementing event management, the most critical aspect of deliberate performance improvement will be demand management.

Consider "benefit" in a general sense, as a constructive impact of an event. The effectiveness of management is measured by the benefits delivered, and events deliver the benefits; so we continuously scrutinize how we manage the enablement of the necessary events.

But without at least hypothesizing alignment of events to demand, it is difficult to foresee what "benefits" (if any) will likely be obtained -- thus leaving operations without a significant justification. Demand management represents the "business dimension" of overall operational alignment -- events are planned specifically against the known or expected range and scope of variability in demand.

This makes it clear that "performance" always presumes a capability with a justification -- and that is the most important slant that ITIL has on IT management.

IV.

Being able to foresee benefits is essential to executive responsibilities for planning. With planning, we chart the overall path from capacity to events to benefits to demand. The path must be accurately envisioned as management efforts.

The IT Infrastructure Library (ITIL) documents key principles and practices that organize the IT management path from capacity to demand. In describing how organizational resources are used to conduct the practices, time-tested examples of management processes are offered that show the coordination of distributed assets, utilization controls, and business requirements. Because processes are so important to implementing the management of these factors, process integrity and maturity are enormously important objectives of ITIL's information. Yet often the approach to understanding ITIL is too easily distorted by a competing perspective -- not the necessary one of "implementing management" but instead the habitual one of managing implementations.

The misfortune of this latter perspective is that it significantly discourages understanding and appreciation of ITIL at the organization's executive business level. The key to repairing or avoiding this situation is to understand how ITIL information helps to describe the management of events that characterize the business capability.

Performance Management is an evolving discipline that uses forms of communication and visualization that are strongly suited to mapping the origins of and connections between an organization's assets, functions, events and demand.

To maximize the positive influence of ITIL in the organization, performance management instrumentation can bring two things to executive attention:
- relevant business issues expressed in terms of the ability to impact events; and,
- the improvement of that ability as a consequence of pursuing compatibility with ITIL.

The target effect of the ability is to drive benefits that improve the infrastructure for business functions.

The key is to communicate this ability to drive benefits as more a cultural effect than a merely mechanical one.

With the more conventional "mechanical" view, the active drivers of business benefits (from events) are usually more about linear procedures, assignments, and accounting -- concepts that gain their meaning at deep levels of granularity and organizational segmentation. Their main objective is to establish compliance in the organizational activity, which fosters predictability (a lower risk) and scale (a benefit).

In contrast, by "cultural" we mean that the active drivers of business benefits (from events) are goals, priorities, and agreements -- concepts that need to be collectively meaningful across the organization. The main objective is to establish compatibility within organizational diversity, which fosters agility (a lower risk) and resourcefulness (a benefit) in the focus on demand and progress.

One thing we want to know is whether the two approaches shape different kinds of events in order to deliver benefits in their different ways.

V.

Rather than assume that a given business problem can be solved by differing benefits, we normally assume that the problem calls for a certain benefit and that we can get it, if necessary, from more than one kind of event.

But generally, events are cultivated not only to deliver certain benefits but also to do that with certain characteristics.
.
In driving the benefit, any advantage of the cultural approach over the mechanical would first be researched in how it addresses management's responsibilities for producing three critical delivery characteristics:
- functional excellence,
- quality, and
- economy.

Typically, each one of those characteristics can be framed as a measurable effect of premeditated standards, expertise and efficiency -- factors that go into shaping the events that are the source of benefits. So, what we can consider is how a cultural version of these factors differs from a mechanical version.

Standards, expertise and efficiency are all intended to maximize the stability and continuity of the health of the business by "optimizing" organizational responses (events) that generate benefits. Stability and continuity presume that the way the event occurs should leave the organization in the best shape to both use the benefits immediately and make additional future efforts. However, "management" brings intentional design to the way the event occurs. So, we look for the "optimal" outcome in the effect of the design.

- From a cultural standpoint, "optimal" means that risk and opportunity are in balance.
- From a mechanical standpoint, the "optimal" concern is the balance of cost versus output.

Within either case, the challenge to stability and continuity is fundamentally the same: despite the uncertainty of demand, which increases complexity, achieve an intended balance.

VI.

Optimization is the name of the effort to resolve the complexity. Optimization is not just opportunistic, but instead it follows a model, to logically pursue the highest priority outcomes. Here we have two models from which to choose -- a cultural approach and a mechanical one.

A cultural perspective on standards, expertise and efficiency does not exclude or contradict a mechanical one. Both perspectives emphasizes the idea that managing uncertainty in business is a critical success factor, and they both aim for stability and continuity of the business.

Instead, the cultural perspective argues that both stability and continuity are predicated on goals, priorities and agreements -- and that goals, priorities and agreement require dynamic and collaborative maintenance.

To associate either approach with the needed business benefits, we start by identifying and cataloging the functional expectations and targets that we attribute to them regarding:

Standards -- how they contribute to functional excellence,
Expertise -- how it contributes to quality
Efficiency -- how it contributes to economy

That is, we look at each of those as evaluated from the perspective of:
- business opportunity and risk (cultural)
- execution output and cost (mechanical)

The group of findings generated about the two approaches represent our expectations of them. Those are then immediately set against the logic for creating business benefit. That delivery logic will necessarily include these two components:
- The organization's availability of resources must be sufficient to realize the expectations.
- The combination of resources must amount to the "means" for generating the events that deliver the target business benefit.
Initially, the question is whether the necessary means are evidently "more likely" to be generated and sustained for the cultural or mechanical approach. But shifting demand changes the focus.

Understanding how to deal with demand means acknowledging the challenges of complexity. Complexity features a multitude of moving parts trying to come together to hit moving targets. Generating value from the complexity is tough:
- the organization must be resourceful enough in its diversity...
- to engineer appropriate events in real-time...
- from circumstances that have variability frequently exceeding "best case" or ideal formulas.

Dynamic, collaborative access and utilization of resources may be the only path to meeting a business need -- the path facilitated by the cultural approach.

The difficulty of the cultural approach is that it is more complex and thus is harder to organize and measure in a singular, objective way. Addressing that problem, the evolving discipline of performance management provides a solution that can consolidate these influences in a centrally manageable view.

Given that, the general importance and advantage of the cultural one is that it proves to explicitly relate to a wider range of demand on the business.

VII.

Demand management is staged as a shared responsibility of business and IT.

In planning, monitoring and measuring the coordination of resource diversity and demand variability, executives find that performance management can track and illuminate IT's contribution, position and progress.

In turn, leveraging ITIL should be done in ways that aim to maximize consistency and persistence in coordinating diversity with variability.

ITIL's guidance offers IT and business stakeholders a single way for both parties to see requirements and operations. The alignment cultivated through that common view reinforces expectations that consistency will increase in the Business-IT relationship.

The business intends for that consistency to translate into business capability, but the range of needed capabilities introduces more complexity against the intended operational effectiveness.

ITIL describes ways to resolve the complexity, towards consistency in the IT enablement of business capability.

With IT organizations expected to implement management that cultivates beneficial events, bringing ITIL to performance management helps the IT organization to describe the logic and importance of the difference that it makes -- i.e., "IT's value" against demand.

Posted by Malcolm Ryder at 12:11 PM | Comments (0) | TrackBack

November 26, 2005

The Value of Performance

A key threat to an organization's effective capability stems from missing the distinction between managing performance and managing value.

Naturally managers are expected to manage both, and the methods used are expected to generate information on which decisions are made about how to structure and drive the organization. If the wrong information is used, the organization may needlessly change or may change unsuccessfully. Becoming misaligned with the business, or becoming disfunctional through structural flaws, will reduce the effective capability of the organization.

To avoid the misalignment or dysfunction, decisions that provoke change must cause change for the right reasons.

The significance of information taken as an indicator of a need for change derives from a model of progress or a model of success. The model is both a theory and a plan that logically accounts for how progress or success is generated.

In practice, Progress and Success are defined in certain terms for the record, and operational achievement towards meeting those definitions is considered valuable. To be relevant to the model, information must help to account for the generation of valuable achievements.

This viewpoint allows us to understand why value and performance seem synonymous, but the distinction that needs to be made and preserved is a critical one for the relationship of the organization to its clients and hosts.

The target beneficiary of an operation has a need, and the need generates demand. But needs get prioritized without necessarily going away, and demand is generated from the priority. This illustrates that demand is actually not the same thing as need.
Meanwhile, organizational operation is meaningful because it addresses demand, and the way it addresses demand is to satisfy requirements. But different demands can "call for" the same requirement, which illustrates that requirements are not the same thing as demand.

Seeing those facts, we can understand the essential difference that management decisions and their suporting information must recognize and relate:

- Value pertains to the generation of a difference versus needs.

- Performance pertains to the generation of value versus demand.

This establishes the basis for management decisioning: managers are charged with driving and protecting progress and success, and now we know the essential terms by which they recognize and communicate the effectiveness of the management effort.

This view on the general relationship of value to performance clarifies the proper meaning and charter of "performance management". This view emphasizes that the concept of "performance" doesn't really materialize meaningfully until reference points (a model) are provided that both precede any actual execution and that afterwards evaluate the execution. The main goal of performance management must be to synchronize the actual outputs of operations with demand.

In contrast, the concept of "value" doesn't really materialize meaningfully until need is defined and confirmed. This puts planning into proper perspective: since plans by definition commit the organization to one scenario by excluding others, the importance of the commitment must be in its relevance to needs. The main goal of value management must therefore be to synchronize the actual outcomes of operations with needs.

Overall, the challenge presented to management is clearly visible. Since the "operations" effort is built around requirements, it can faithfully address them while actually becoming largely irrelevant to emergent needs. The translations of need into demand and then into requirements must be continuous and as real-time and seamless as possible if the organization is to maximize the effectiveness of its capability.

Information management techniques are developed to provide the visibility necessary for doing, tracking and using the translations. But technical support is not effective if the information is used to solve the wrong problem. For example, confusing value and performance leads management to attempt to address needs with outputs, or to address demand with outcomes -- mismatches that (worst case) leave organizations and stakeholders with false impressions of control and ROI, and with unproductive management agendas that are dedicated to changing things for the wrong reasons.

Such errors might be attributed in a general way to failures in knowing how things actually work. To avoid this very problem, management is saturated with initiatives in "intelligence" and "analysis" but there is then the complication of figuring out whether the intelligence and analysis are of the right type and the right amount.

Management typically puts a lot of attention on monitoring the "components" of a plan. But there are two ways to conceive of components.

In one approach, the plan's assumption is that there are mechanical "parts" -- such as the steps in a procedure or the quality of a particular resource being used -- and that their use is specially necessary to the intended progress and success. It's safe to say that this level of thinking is mainly operational.

But a more critical aspect for management attention concerns the actual reasons why the usage of those components is necessary, and concerns the requirements for their usage in the planned way. These are the success "factors", as opposed to parts, and the attention primarily takes the perspective of demand, not of supply.

Together, the reasons and requirements would determine that the mechanical components are "appropriate" for the organization's attempts to execute its strategy. But the components still do not drive the intended progress or success.

As seen below, the reasons and requirements cross-reference to form a framework for understanding how the organization can operate for performance. In this example application of the framework, a new product is to be reliably supplied to a target customer group. Basic assumptions emerge in the framework, representing a set of defined operational parameters or conditions that are to be managed. These are the success factors.

Now, information management steps in for decision support.
Where intelligence is concerned, if current findings indicate that the framework's success factors are not being met or validated, then adjustments would be justified -- to protect the execution of the plan from any significant divergence from the operational goal of providing relevant outputs towards demand. This would mean that the right changes are being made for the right reasons.

As for determining the right success factors in the first place, analysis is usally the weapon of choice. The framework's dimensions direct analysis at conditions that have categorical relevance to implementing for demand and thus will be about performance.

Posted by Malcolm Ryder at 7:32 AM | Comments (0) | TrackBack

November 13, 2005

Competency: the Organization's Inner Self

We know a lot about automating processes, and we do it to improve performance. But performance is all about behavior, the best of which is the competency that drives performance. While processes represent ideal behaviors, do we really expect to automate behavior?

The painful lessons learned from earlier efforts such as "sales force automation" may never be appreciated by today's innovators in knowledge management, operational performance management and social networking -- business's new power rock trio -- unless they recognize the secret: technology works when people want to work, and it doesn't when people don't. This gives technology two jobs: one, make people want to work; and two, make the work fit the people.

That looks like something automation can do. The easiest and most prominent example is found in great automobiles. And amazingly, a lot of great automobiles are now fairly cheap. Yes, mileage may vary with the driver, but the drivers nonetheless do what they intend to do more confidently, as they interact with t