August 10, 2008
The Foucault Funk
The Michel Foucault Postmodern Blues (here)
Category: Stuff That Totally Speaks For Itself. (here)
Some actual music, too. (Copyright Gary Radford, Marie Radford, and Stephen Cooper.) (there)
But if you can't drag your butt to the site, there's at least this excerpt:
Verse three is based on Foucault's response to the charge that his work changes constantly. Foucault responds: "What, do you imagine that I would take so much trouble and so much pleasure in writing, do you think that I would keep so persistently to my task, if I were not preparing - with a rather shaky hand - a labyrinth into which I can venture, in which I can move my discourse, opening up underground passages, forcing it to go far from itself, finding overhangs that reduce and deform its itinerary, in which I can lose myself and appear at last to eyes that I will never have to meet again. I am no doubt not the only one who writes in order to have no face. Do not ask who I am and do not ask me to remain the same:"
That's what I call a smackdown.
Posted by Malcolm Ryder at 3:15 PM
July 9, 2008
What's In Your Portfolio?
For providers (instead of consumers), Portfolio Management is a robust and widespread discipline that has meaning which crosses industries and departmental functions. In short, it organizes opportunities deemed to be beneficial into suites of categorized commitments that make the opportunity "actionable" . But portfolio management is most often associated with related efforts that represent either the authorizations of the action, the methods of the action, or the customer of the action -- in effect tracing the run from supply to demand. The efforts articulating this run are, respectively, programs, projects and solutions. One confusing aspect of the way these efforts are supported is that portfolios are mistakenly thought to be components (or "children") of programs and supersets (or "parents") of projects. In fact, that is an erroneous association: instead, as illustrated below, a portfolio is a model that relies on the other three efforts to be actualized. Further, it is the interoperations of these efforts that powers and stabilizes the portfolio.
Why is portfolio management often misplaced amongst these efforts? There are two predominant reasons. For one, practitioners of these efforts often mistake scorecards and dashboards for portfolios. And two, portfolios are often pursued under "performance" requirements (i.e., requirements to increase the rate of return on equity), whereas the actual purpose of a portfolio is to provide a model for the commitment to the opportunity, defining how value will be recognized, not how "value will be generated and captured".
The language that helps to understand where portfolios help goes like this: "what is the benefit of the investment model?" Obviously, one model could be modified or even discontinued and replaced, while still addressing the same apparent opportunity. At the least, this simply acknowledges that two competitors may chase the same prize in different ways, with both making progress (without predicting which one will prevail or even whether one necessarily must). But within the model, other key actions are generally positioned as catalysts or governors -- including things like identifying a distinctive market niche and specially producing for it, tracking the cost of scaling up for the demand level in that niche at a given quality benchmark, and exercizing policies to keep decisions and approvals predictable throughout changing circumstances -- all relative to a certain type of enabling stakeholder who is the primary beneficiary.
Posted by Malcolm Ryder at 9:21 PM
July 5, 2008
Beyond the Spin: Measure What You Give
Does your organization really measure what you give, or does it mainly spin what you measure?
Bruce MacEwen's industry-leading website Adam Smith, Esquire offers an opportunity to gaze into the abyss of metrics and walk away without jumping. In the article
"How High Quality Are Your Lawyers? (How Can You Tell?)"
a close reading shows contrasting business models contesting notions of "performance @ cost" and "value @ quality". In the competitive situation covered, one upstart model strategically goes after a chunk of the opponent's business by bringing customers the performance/cost equation, surprisingly leaving the traditionalist competitor to justify how pricing for that same chunk of business could rationally be based on value/quality. What makes this all interesting, notes MacEwen, is the idea that 99% of what the traditionalist does is what the upstart can steal away.
For those of us who fell out of the old hot habit of saying "disruptive innovation" once a month, this looks like news, but not new news. Still, there are some fresh perspectives worth bringing to this contest.
As seen in the diagram below, the different models above are easily distinguished by what they actually offer, making it inappropriate (for managers) and intellectually dishonest (to customers) for either of them to masquerade as the other. Customers buying into cost/performance are investing in the promise of efficiency, while those buying into value/quality are investing in the promise of reliability.
In MacEwen's article, we are sensitized to the problem that high-prestige value/quality law service firms institutionalize a significant unmanaged cost in the form of "available overachievers", against which these firms then build a hedge by charging premium prices beyond rational evidence of economy for the customer. But what is sold as the justification for this pricing? Their quality?
To be sure of avoiding management posturing, "quality" here must mean only one thing: adherence to the promised appropriateness of the deliverable versus the stated need. Consider that meaning against the question of what it takes to get quality: the value/quality firm proposes that by exceptional capability they eliminate the risk of not getting quality. Therefore, the key variable that this firm actually addresses is unpredictability in the customer's need. As an operational tactic, the value/quality firm hoards talent in order to avoid outsourcing and to presume agility.
But the cost/performance firm basically argues (by demonstration) that legal work requires only competency to sufficiently meet most stated needs -- not a matter of being exceptional but instead simply correct for the task, which eliminates unnecessary effort from the equation right off the bat. Of course this presumes a degree of predictability in scope of need -- and agreement on the scope becomes the main feature.
The discussion above intends no effort to offer a wisened critique of law firm strategy. That said, on the surface there are no truly important differences between marketing professional services in law versus other disciplines where subject matter expertise is the raw material and advice is the product.
Idiosyncracies in the legal services industry will of course provoke distinctive problems and solutions there, yet these are probably driven more by the state of mind of the customer - which is the underlying important difference because it is the competitive arena. Oversimplifying MacEwen's article, the difference between the value/quality firm and the cost/performance firm is that the former sells confidence while the latter sells credibility.
Are there spats? One accusing the other of con games, and the other accusing the first of being incredible? MacEwen's article says yes; but what is further interesting (per evidence of the illustration above) is the opportunity that both types of firms can objectively profile themselves on common ground (efficiency, capability, reliability and acceptability) -- and use those profiles to determine how to optimally segment and grow a shared market. When they don't do that, you can bet it isn't because the customers don't care.
Posted by Malcolm Ryder at 9:59 AM
June 18, 2008
When is "value" not valuable?
A wonderful discussion on Bruce MacEwen's website Adam Smith, Esquire included this challenging note from Paul Lippe about what logic is available to explain the connection between quality and value. While he questions "reputation" as an indication of warm fuzzies like "quality", he also kicks off his note citing the less fuzzy implication that better performance presumes to justify higher price:
"I'd be curious if anyone can come forth with any data to show that in fact (as opposed to in repute) more expensive law firms produce better results, e.g. can it be shown that the investment banks who had the largest losses on their mortgage portfolios were served by lower reputation law firms?Once this conversation settles down, I will start a separate string (and perhaps a wiki to really pull something together) on what I consider to be the core issue: how can we develop a definition of VALUE in legal services that is meaningful and useful, and not simply measuring inputs like hours spent, diligence of lawyers, law school attended or reputation of the firm. With such a definition of value, I think we could expect that some lawyers' reputations and income would go up, but some would not."
Let's dig into that overall observation by making the undercurrents obvious.
- "Value" is a label for the significant distinctions attributed to something. "Value" in professional services is 3-dimensional, at minimum. A certain method of co-operation with the customer interacts with a certain type of target outcome at a certain level of effective cost to the customer. The method, outcome, and customer cost are variables, each having a range of acceptability, which in turn allows some universe of acceptable overall impact to sprout from their combination. Now, from that dynamic, some professional service providers are great at being predictably consistent within a smaller universe (range of impacts) that the customer prefers. Some are great at being agile enough to cover a larger universe, keeping up with a customer who has more volatile preferences. And there are several other "flavors" of competency that a service provider may have. Ultimately the provider wants to be paid for the competency, and then be paid even more for a competitively greater level of competency. But the customer wants to pay for customer satisfaction, which is something different. And what mediates the balance of the two things is often just culture. I wouldn't choose to drive a perfectly good Tercel to the White House Christmas Ball, but I could; and I wouldn't choose to drive a Bentley to the 7-Eleven, but I could. In fact, I could use either car to get to either destination.
- That's all well and good in theory, but in practice the realization of the potential value is hugely affected by the ability of the customer to appropriately and effectively align to it. (There is even plenty of historical evidence that customers sometimes buy based on how they wanna be seen, not based on how they really are.) That reality is the "forest". Relentless pursuit of profit is the bulldozer that strips the forest. Atomic metrical inputs like law schools and hours spent risk merely being "trees", where excessive attention obscures the view of the forest and therefore obscures the proper understanding of the value. Profit and arbitrary metrics actually must not dominate an analysis of value. Instead, value, properly identified, can be correlated with profits and other interesting measures, and the correlations may be revealing or even exciting.
- The final point from the above is that it is probably important to use rigor in discussing value, because "value" is not a reliable synonym for other things that deserve their own names, such as "competency" and "satisfaction", and "culture". It's important to know what is actually being taken into consideration and not gloss over things for convenience, because otherwise we find out too late that we're actually sitting on some key coordinate that does not allow us to "get there from here" (i.e., to the necessary value) on time. Meanwhile -- if we would like to elevate the discussion of value from the 3-D space of CustomerCost /Outcome/Method to the 3-D space of Competency/CustomerSat/Culture, while remembering to map the current coordinates in both spaces, well that's fine.
Posted by Malcolm Ryder at 12:17 PM
April 26, 2008
Inciting Insight
It's customary to eschew information overload; but the key to their useful combination is not the specific information compared, rather how the available information is positioned in the overall scheme of interpretation. As seen in the picture above, intents and impacts which superficially represent "how things are going" will relate in terms of the "5 W's and How". Seeing the certain blending of factors here, it is easier to realize that most insights will be moments of correlation that are the prize for maintaining ordinary but diligent awareness in a variety of ways.
But just like money, insights are mainly worth the use to which they are put. So, whether this big picture describes the competency of an individual savvy person or of an enterprise, it tells something about being strategically capable but the goods are in the doing after the learning.
Posted by Malcolm Ryder at 6:15 PM
April 19, 2008
The Innovator's Real Dilemma
Jessica Stillman at the new BNET1 blog rounds up research from Accenture, the Conference Board, and Wharton to talk about why Fostering Innovation Stumps Executives ...
This is an interesting situation to ponder: making choices about how much to invest in innovation , versus in knowledge management and, separately, business intelligence as other paths to insight. Overall, what the organization is mainly after -- where the real money rests -- is the insight, whatever the path. But the current thinking about management priorities indicates that insight is pretty hard to come by, so lesser-beaten paths to it are also getting a lot of attention.
One challenge that surfaces, somewhat amusingly, is the presumed need to be innovative about how to foster innovation. For example, given that "innovation" is so easily approached as "creativity", it is not surprising that at places where real urgency comes from competition against either industry rivals or the budget, the idea of stimulating the worker's right brain with art experiences can gain some real traction.
But perhaps everything new is old again... The simplest way to assure that innovation is "fostered" is to provide
(1.) a clear statement of why the company will consider something to be "innovative" and...
(2.) a clear statement about what circumstances will cause the innovation to be rewarded in a way that directly benefits the individual(s) involved.
Generally, if company leadership can't get that much communication together and abide by it, then most other "fostering" efforts are essentially arbitrary.
Furthermore, this effort should not be confused at all with management's concern about how to measure the innovation's impact on the company's performance. The performance impact issue is not something that should be making innovation special. Any management team that rewards "performance impacts" with bonuses should simply add innovations to the mix of things that can be clearly accounted for as contributors to better performance. Meanwhile, innovation is about doing things differently to create opportunity; but execution is about doing things a certain way to hit performance targets.
This is where managers have to get real: if they will not reward innovators for being innovative, as opposed to making the reward conditional upon performance increases, then people will learn that innovation is not worth the effort at this organization. So in step (2.) above, the "circumstances" to be declared must start with something other than performance metrics.
Posted by Malcolm Ryder at 8:42 AM
March 23, 2008
Suddenly, It All Made Sense
Finally, that track that everything went off of, and where to get back on.
For the hi-res view, click here and go full screen or print.
Posted by Malcolm Ryder at 6:42 PM | Comments (0) | TrackBack
February 6, 2008
Proof Politicizes Architecture
Management requires an ongoing accountability for effectiveness. Normally, this accountability is the recognized set of terms for "proof". The accountability includes some model of measures, and while the model may be good or bad, the agreement by interested parties to use the same model makes it the argument that counts the most, even if it is wrong.
The model then represents the ruling hypothesis about effectiveness and, in short, memorializes the belief system in place about how to make progress. This fuels, in turn, a prevailing culture of proof that casts its influence over the several necessary layers of enablement that allow for effectiveness to result. The problem is that this influence may be inappropriate, and to avoid being misled by it we need to know why.
The answer is that the layers of enablement are variables, and the combinations of their variations offers more than one path to effectiveness. To describe an occasion of how effectiveness resulted, we would monitor variations within threshholds on as many as seven layers:
- Effectiveness is usually a measure of the degree to which an actual outcome matches a desired outcome.
- But the outcome is a strength of reaction to an impact generated by some agent.
- The level of impact observed can itself be more or less than expected, or desired, or needed -- and often there is insufficient attention paid to distinguishing the three characteristics (which is what allows the seeming inevitability of unintended consequences).
- The cause of the observed level of impact is a state or an output.
- The agent of that state or output is a quality level of process.
- The runrate of the process consumes inputs.
- The level of supply of inputs allows the processing.
In this view, the bottom four layers predispose whatever can happen in the top three, which is why the bottom four are so routinely captured by the design of an architecture. But if the architecture is unfamiliar or expensive, the distance between layer 4 and layer 3 is quite large. The burden of proof will fall to the architect to demonstrate bridging the gap.
With some "proof-of-concept", the effort is made, but it must be accompanied by its own "concept-of-proof" that relieves it from the pressure of "measuring up to" the top two layers.
It takes gutsy decision makers, or ones with little to lose, to accept this -- rather than to impose the top-line measure as the justification for considering the architecture at all. Innovators and early adopters accept their proof points at level 4, while laggards are hard pressed to dig below level 1. Consequently, the architecture in question gets positioned on the spectrum somewhere between demonized and championed.
Posted by Malcolm Ryder at 10:37 AM | Comments (0) | TrackBack
January 9, 2008
Run That By Me Again?
It's only January, but here, from Datamation, by Mike Elgan, is the most important IT article of the year, so designated because it whacks the pollution of communication that eventually separates responsibility and authority at the worst possible times.
Where Annoying Tech Buzzwords Come From
http://itmanagement.earthweb.com/cnews/article.php/3720391
Posted by Malcolm Ryder at 5:55 PM | Comments (0) | TrackBack
October 22, 2007
Dr. Cinderella or: How I Learned to Stop Worrying and Love (?) the BCS
In the entire known world of metrics, nothing is as important as the American college football rankings.
But if you believe the BCS rankings, then you probably believe in yesterday's weather reports, and you're probably not a gambler. Or, you believe some teams go to Hell, while other teams go somewhere else.
For the most part, it's really a given that most teams will go to hell at some point, and it is well known that when ranked teams go to hell, they go to a harsher hell than do most unranked teams.
All teams try their best to go to hell in the preseason, under less scrutiny. Whether it's preseason or not, good teams may go to hell only for a brief stretch of a practice, or in season perhaps during one quarter (probably the first or the third) of an actual game or two. You can see it on the coach's face: "Well, that just went all to hell."
But back to the BCS and metrics. If your team is ranked say number seven in the top twenty-five in the BCS list, does that mean that the teams ranked higher than your team are "better teams", and the ones ranked lower are "worse"?
Of course not. At best, it means that higher-ranked teams had a higher frequency of important beneficial results from the circumstances they met while operating. The key part of that explanation is the slippery part: "important".
With the formula used to calculate the BCS rankings, there is not nearly so much debate about what factors are important to each team, as there is debate about whether the factors important to Team X are also equally important to Team Y. In a measurement system like the BCS rankings, the point of the formula used is to impose it as an identical calculation on all teams. Whereas in gambling, the beauty of its complex logic is that determining the probable winner of a contest emphasizes what each contestant uniquely needs to have the best chance to win.
Another very interesting counterpoint to the BCS rankings would be Wall Street. Should we think of the BCS ranking as being analogous to the "stock price" of a team?
Well, even given the similar degree of analysis that goes into each contributing poll underlying the total BCS calculation, stock price is based on much the same idea that gambling is: given some degree of uncertainty, what is the probability that the contestant will actually generate the critical advantage it needs to have its unique formula for success prevail in its expected future circumstances? Unless contributing polls focus on that, there's not much reason to "put stock in" the composite ranking.
But so what, we still want to use the BCS ranking as an indicator of how probable Team X is to defeat Team Y in a hypothetical matchup. There, our desire reflects our interest in relying on "intelligence" -- on the power of facts to reveal truth (or at least repeatable or persistent patterns) -- just not nearly so much as we pretend it does. The determinant feature of this ambition is the matter of whose intelligence we choose to use, because we rigorously choose to not use other intelligence outside of that. And as we know from "experience", the flaw in this approach is that probable outcomes in sports are determined as much by what we don't know as they are by what we do know. And guess what, this limit on the BCS exposes that the real point of the BCS must be something else -- namely, not to find the best team but merely to promote an agenda of creating artificial interest ("need") in order to then make money by satisfying it.
On that note, it becomes apparent that an ideal, non-commercial performance ranking system (not the BCS) would not be a weekly list of mainly historical accuracy comparing apples and oranges to each other. Instead, it should be a monitoring system that takes the current probability of a team's next future win, and describes the importance of that probability relative to the importance of each other team's similarly described outlook.
Let's say that a largely uncelebrated team from a so-called "minor" league has a high probability of winning all of its games, and so does a high-profile team from a so-called major league. What is the relative importance of the minor team's perfection versus the importance of the major's? The real importance is not that we think the one team would probably beat the other in a playoff.
Instead, the real importance is in how each team's own league (or said differently, its market) can respond to the performance of the respective teams. The major league team can't do very much (that it likes) with the excellence of the minor league's team -- or at least not much more than the major league's scouts and recruiters have already done. But is there some important relationship between the minor league team's excellence and the major league team's league? How does the minor league team benefit (i.e., "play in") the major league market? Even the major league as a whole is lukewarm to the good minor league team. The minor league, however, can of course do a lot with its team's excellence.
The point would be that even if the minor team is in the BCS top ten along with the major team, but they don't actually play each other, it doesn't matter and it doesn't mean that the higher ranked team (whether major or minor) is the better team.
With that admission, it's easier to relax and understand what we do want the BCS for: we want it to suggest who should go to the playoffs to make the playoffs more interesting -- at which point the bookies (stockbrokers, traders, stakeholders) can take over and do their job.
Oh... wait... There are no playoffs...
Soooooo...
What's wrong with the BCS? Nothing, really, except that it's a gun pointing at a non-existent target.
Is your own measurement system loaded but pointless?
[Pick that Nit Dept. -- at least the BCS, or "Bowl Championship Series", isn't actually called the "National Championship Playoff". A series of bowl champions we can live with; why not? All ya gotta do is like bowls.]
Posted by Malcolm Ryder at 7:02 AM | Comments (0) | TrackBack
September 19, 2007
What is "Scope", anyway?
Lots of Archestra stuff points out that needs are not requirements. This is worth repeating because it's so easy to forget. But keeping that in mind, when is a solution not a solution? When it doesn't solve the right problem.
One of the best ways to not solve the right problem is to not identify the problem correctly in the first place.
Over and over again, organizations experience confusion in problem definition. Often they are helped by the funny way that solutions arrive on the scene without enough definition themselves, and start redefining the problem the way somebody stretches into a badly fitting suit.
When that happens, the hard questions about scope should kick in. Most solution consultants will say that the point of adopting a solution is to reach a target "future state" that is measurably different from the "current state". What ought to be front and center is the probability that the "future" is soon enough and that it's a place you can stay long enough when you get there. In other words, what has to happen, as opposed to what hypothetically could happen, is something that is feasible (you can do it now) and viable (you can keep it up). If those two points aren't covered, then what is the point of struggling so hard to do something relevant to generate benefits?
Posted by Malcolm Ryder at 8:54 PM | Comments (0) | TrackBack
September 3, 2007
Performance Management meets Business Intelligence
If we assume that management prominently features Planning at the front end of the cycle of "management performance" (i.e., exercizing good competency in the discipline of "management")...
...and if we assume that planning uses intelligence in the form of research that provides indicators of the potential for future success and risk...
... then to establish that business intelligence (BI) is part of performance management (PM), it is unnecessary to go any further than the concept of forecasting. The important view of this involvement is that neither effort (BI nor PM) wholly includes or excludes the other; rather, they logically intersect, co-operatively.
BI manages the perception of the operational environment. PM manages investment in the operational dynamics.
Perhaps there will be comments from the readers on the idea that strategy manages the relationship of BI and PM for a target group of stakeholders...
Posted by Malcolm Ryder at 5:35 PM | Comments (0) | TrackBack
March 18, 2007
Personal Value, Company Worth
Despite the buzzing about organizational flatness, it is still customary to think hierarchically about the relative importance of individuals in the corporate workforce. This is continuously fortified by the dual notions of "promotions" and "tiers" that characterize most organization charts.
The attendant mythology is that if people are higher up the chart, then they are more important. More factually, there's little debate that more organizational power resides at higher altitudes -- but what must not be lost on everyone, meritocracy notwithstanding, is that even higher power is not the same as higher performance.
Org charts are just a sketch, with limited ability to explain three key issues.
1. How does the individual decide what kind of contribution to make? Does he want to be influential or just billable? Particularly critical, or broadly resourceful? What does it take, and is it possible in his workplace?
2. Conversely, when a particular company initiative or problem rolls around, what kind of value is most needed from the individual, and therefore what individual has the appropriate profile to meet the need?
3. Finally, is the company really cultivating the potential for getting the contributions that it most needs -- or is it just coasting on organizational conventions?
From the standpoint of performance, not only can higher ranking individuals be objectively evaluated in the same way that lower ranking ones are, but every individual actually thinks in the same terms to decide what kind of value he or she is really going to bring to the organization's performance. For everyone, there are the same two steps: they make decisions about modeling themselves, and they align the personal model with the circumstances. The effects are not uniform -- not for one person over time, nor for different people in the same moment. But what actually gets done by the organization is pretty much the consequence of all these individual decisions pitted or adapted against the day's environment.
To see how the self-model fits in at work, first walk through the self-modeling picture:
Here, within the main oval, we see the four key reference terms that the individual uses to describe their predisposition coming into the work situation: Billable, Critical, Resourceful, and Influential.
It's fair to see these terms as multiple "ambitions" occurring simultaneously but with varying degrees of strength; thus at any time the individual has a "profile", which may fluctuate from one time to the next.
Some individuals fluctuate more than others. But more to the point, there are surrounding factors that encourage or inhibit the person's profile, and that is how the rest of the picture comes in.
From the management viewpoint, the objective notion of the individual's value is simple, and twofold, in summary:
In effect, this is what the company is trying to do with or get from the individual.
When evaluation time rolls around, the question is largely one of whether the individual has committed to these two conversions as much as the company wanted him to. (In our research, we've noted that most observers initially believe the terms provided here are mis-ordered, and that the conversions should be "skills into quality" and "time into revenue". But, through most simple ROI analyses for intellectual capital and capacity management -- mandatory stuff for an enterprise -- that belief is quickly shown to be misguided.)
So, to understand why any success was possible or achieved in the person's alignment with the company's wish, it is necessary to see how the person's self-modeling fits into the company's model.
As arranged below, the remainder of the terms from our first illustration are indicators of that company model. They bring up the points at which the company makes things more or less hospitable through making investments that resolve key resources and constraints.
If the company doesn't make the investments, then the constraints do not enhance; instead, they become "restraints" -- and the resources (people) cannot be effectively heightened in value.
Roughly speaking, that final illustration compares "what kind of workplace" is available (worker in context) with "what kind of company" is there (work in context). Not coincidentally, these are the two key perspectives that the worker intuitively brings to the situation, greatly affecting his motivation (at least) or ambition (at most).
Back in the initial illustration above, the interdependencies involved in that comparison of workplace and company are laid out along the main oval, where they can be individually inspected.
Companies often make defacto decisions regarding those interdependencies that seem like no-brainers but may really be value-inhibiting. For example, assignments are an ordinary feature of the organization's workday. But assignments link skills to time and literally position the worker in the workflows. Thus, the potential of the business process is critically afffected; meanwhile, the logic of the process design is either a smart reason to invoke the worker or a not-so-smart reason. Bad processes can easily mis-position (i.e., waste) a worker, just as a bad worker can make a process ineffective. Management needs them both to be "good".
Likewise, it isn't hard to understand that overworking the person (in the "billable" link of time and revenue) lowers morale, or that training (education) would beneficially link skills and the quality wanted from the use of time.
Similarly, other "ordinary" aspects of the company will predictably map to the dynamics underlying value-capture. Depending on the point-of-view, these aspects may be recognized through other names or circumstances. For example, in our illustration's set of work-in-context constraints:
- Policy = "governance"
- Expertise = "intellectual property"
- Process = "organization" (dynamic, not static)
- Capacity = "goodwill" (of the stakeholders)
This helps us envision what impacts are really being obtained from things we know we're already thinking about or doing. But as arranged in the original oval, the most interesting part of the dynamics shown may be their bilateral nature. For example, just as education should be derived from investing in expertise, the picture asserts that strategy execution should be cultivated from policy (governance) -- certainly not only the reverse.
It is easy to recognize that the corporate valuation relies on those very issues of policy, capacity, etc. But now it is also easy to see how they are not just "performance results" but instead actually success factors -- due to the need for the company to invest in them as constraints to be managed around workers.
By tracking decisions and actions about the key factors illustrated above, we get answers to performance questions that may not have been apparent before.
Posted by Malcolm Ryder at 7:28 AM | Comments (1) | TrackBack
Lies, Damn Lies, and Innovation
"Improvement" is always near the top of our agenda, if we think we can have it. But meanwhile, method and performance are so deeply intwined in our thinking that we have a hard time untangling the language to think about them differently. The problem with this is that we are so reluctant to give credence to alternative methods. We see something being done differently and actually think that it can't be successful because of that, until proved otherwise.
Because of the misunderstanding, scientific management is still amazed by the vaguery of creativity and innovation, and with 20/20 hindsight struggles to find their formulae.
This pursuit of formula is legitimized by what is thought to be the example of science, which accounts for nature (the essence of creation) in the metrical way. We then generalize the practice to our professions when we need similar balm for our uncertainties... and (except in marketing) we push back against accepting theory without the proofs. To get closer to the truth, we'll sign up the experts -- people on whom we can impose performance standards as our paid proxies -- to bring academic proofs to the problem.
The enduring vanity of academia, as opposed to intellectualism, is the scientific method. Ironically, the scientific method accumulates a shroud of dificult esoterica that obscures what may be its most important characteristic: good science is essentially democratic. The whole point is to lay it out so that anyone who follows the instructions can do it. It's just that it is often really hard to follow the instructions. So when it comes to scientific experts, we wind up commissioning their stamina even more than their knowledge.
The alternative approach to credence is evidenced by the great artists and athletes of any time, who's business of constant microinnovation under pressure is their working definition of performance. What underpins their performance is experience and the consciousness of that experience -- and there they have the key reference needed to justify their claims: the school of hard knocks. Getting back to science, it isn't really the metrics that drive things, is it? It's the experiments!
No reason to discount the "excellence of expertise"; on our budgets there often isn't enough to go around. But the "genius of experience" is equally valid, established through a different mode. The thing is, for most of us, genius is actually no less accessible than academia is, and practically speaking, it is "most of us" that cause something to happen with what we can get. Until we use what we can have, we can't discredit it. When it comes to pursuing improvement, the real difference is in whether we want to prove something or whether we just want the proof.
Posted by Malcolm Ryder at 4:12 AM | Comments (0) | TrackBack
February 17, 2007
Split P Soup
Be careful what you ask for. This is the part everyone already knows to heed, but who actually does?
Here's a favorite view of the intensive efforts made to satisfy the customer: Forbell's "Splitting Peas for Split Pea Soup" printed in Old "Judge" Magazine. We love the "system" of production controls, and the implication that the overkill is necessary to get the soup right.
This worked for Andersen's Pea Soup Restaurant in old Buellton California; the "home of pea soup", they were very clear on what their customer wanted, and they did that one thing well.
But isn't that the exception? From what we read and hear, throughout many fields of effort, from projects to purchasing, failure or buyer's remorse is easily just as common as their opposites. Despite decades of programmatic attention to "improvement", things have only marginally improved when it comes to actually wanting what gets delivered.
This obviously suggests that the supply side of improvement is only part of the problem. The other part has to be on the demand side. But as the customer, we're supposed to be always right. So why do we not get what we want? Because we don't ask for it. We might only ask for what is "high priority", to try to reduce the risk; but what does "priority" really mean?
Most often, the problem with priorities is that the way they relate to the "want" isn't understood or isn't communicated. They wind up being not ambiguous but out of context, leaving it much more likely that other parties responding to them (as providers or stakeholders) will respond the wrong way or simply disagree.
To sort this out, we have to trace the "priority" back to what made it a priority, and set that out as an explicit part of the receiver's specification for the deliverable. As seen in the picture below, this will show four different aspects that may get evaluated when the deliverable arrives. The risk is that the provider and the receiver didn't agree, in the first place, on what mattered -- making the deliverable less tolerable, suitable, usable or whatever, having not met the unstated criteria... At the point of delivery, disagreements about whether the right thing was provided often seem to be about splitting hairs, and the reality is that the hair to be split is what was meant by "priority".
In this framework, it's clear that the key points to consider are neither indefinite nor synonymous. And that is why they are not interchangeable. Thus it is easy to get one or another of them right, only to find out that whatever wasn't addressed will cause a "failure" or buyer's remorse.
The sophisticated customer or likewise provider will recognize in advance that all these different aspects must be accounted for: each one either satisfied or ruled out, in an agreement between the supplier and the customer. For example: take television commercials for successful "diet programs" -- now they must try harder to pre-empt deal-breakers, because the key considerations of most potential customers are well acknowledged to "cover the bases"...
With an opportunity to identify issues in advance this way, there's much less reason to tolerate asking (or being asked) for the wrong thing. We see the path to getting it right.
Posted by Malcolm Ryder at 11:55 AM | Comments (0) | TrackBack
November 7, 2006
Be Careful What You Ask For, You Might Get It
Recruiting for "performance" relies of course on what is measurable, but even intuitively we know that an "unqualified" or "incompatible" or "misapplied" resource, if found, will be a key factor of an explanation for performance shortcomings.
The difference between potential, production, and performance is something often assumed to be self evident. Yet not only is the difference given final credibility only through "objective" measurement, but the gaps between the three points are actually seen as more important to manage than the three points themselves.
That is, resources are often seen to be *starting out* at one of the three points -- after all, we make a big point of "acquiring" them that way, whereas the real work (supposedly) is to get them to move up. Then, because we want an easier time of moving them up, we try to determine what characteristics at each level of acquisition are already the best predictors of a high rise.
From an analytic point of view, the question must therefore also come up as to why the predictors are reliable. In other words, if the predictors are singled out because of their association with desirable outcomes, is it because they are causes or are they just prerequisites?
"Development" is the generic term for engineering productivity from potential, while "management" typically stands for engineering performance from production. This brings up two more topics to consider. One: what type of resources are most compatible with development and management? And two: what kinds of development and management are best at moving resources up the value chain?
It's a fact that these perspectives essentially anticipate "processing" the resources -- but meanwhile the utilization of the resource becomes a third major dimension of the picture. That is, in the big picture, the Predisposition of the resource (its starting characteristics), the Processing of it (through engineering), and finally the Positioning of it (its utilization) will effectively decide how the resource relates to the outcome that we'll call performance.
In explaining performance, it thus becomes both notable and logical to discriminate -- not just suspect -- the point of failure or disabling constraint. In low performance, is the problem a resource? And if yes, then is it that the resource had a bad predisposition (low intrinsic quality)? Poor compatibility (hard to process)? A bad assignment (deficient position)?
In answering those questions, it will be necessary (for the sake of intellectual honesty) to identify whether the applied (or withheld) development and management was appropriate to the identifiable prospects for success. By prospects, we mean that we understand a rational relationship between what characteristics of resources should be opportunities for performance leverage -- and HOW they are opportunities.
Most often, sports provides a laboratory for observing how prospects fare. A resource becomes a part of a system, and may thrive or not. Superstar college quarterbacks disappear in the systems of losing teams that draft them and can't resolve a mismatch with the talent. Third-round draft picks costing orders-of-magnitude less money go to well-run teams that nurture a role or two in which the player becomes a league standout.
As architects of business processes know (and practice), the definition of a role is one of the two most decisive factors in process performance, with the selection of actors for the role being the other overwhelming determinant. It sounds like a simple idea, but the role definition and the actor selection turns out to be full of the nuance of interactivity, reliability, flexibility, strength and availability that finally accounts for whether the process runs well under the demand that is placed on it.
Given that demand is both variable and influential (some call it "pressure"), it cannot be ignored in the exercise of evaluating resources. The resource must help make an adequately sustainable process successful under demand. But the demand cannot be undefined. And the method by which the resource supports the process cannot be arbitrary. There's a way to make a sheet of paper hold up a brick, but you still wouldn't want to stand on the contraption if you had any choice. Yet both paper and bricks have their place in the makeup of a successful housing structure, as proven over hundreds of years of design.
Roles address the issue of whether a resource is a cause or a prerequisite. In a sense, a role says either "neither" or "both". In saying "both", the role means that the resource is integral to a system that produces the desired results, without saying that the system will necessarily always produce that way. Systems host processes, while the resources materially constitute the system. (Some might argue that systems "occupy" processes, which is an insightful description of the relationship between design/process and the construction/system that "realizes" the design. Increasingly, this is being called "orchestration".)
The punchline to this is that the secret of excellent resource selection lies in knowing the architecture that accounts for why outputs and outcomes can be predicted. In that architecture, the roles given to resources are part of a framework that helps point out when a resource is going to readily fit into the value chain of potential to production to performance.
Roles strongly help to define the prospects. In recognizing that the prospects may be quite idiosyncratic to the given organization, it becomes apparent that two very similar resources from different organizations may not amount to the same prospects at all -- and before these resources are acquired they should be evaluated as prospects of the future, not as products of their histories.
Posted by Malcolm Ryder at 11:45 PM | Comments (0) | TrackBack
August 25, 2006
What Matters versus What Counts
How do you decide the "most valuable"... the "best"... the "most significant" ??
Why Andre Agassi is on my list.
http://msn.foxsports.com/tennis/story/5892448?CMP=OTC-K9B140813162&ATT=199
When determining and understanding "value", it's all about what kind of difference the observed difference makes.
Posted by Malcolm Ryder at 1:44 PM | Comments (0) | TrackBack
What Matters versus What Counts
How do you decide the "most valuable"... the "best"... the "most significant" ??
Why Andre Agassi is on my list.
http://msn.foxsports.com/tennis/story/5892448?CMP=OTC-K9B140813162&ATT=199
When determining and understanding "value", it's all about what kind of difference the observed difference makes.
Posted by Malcolm Ryder at 1:44 PM | Comments (0) | TrackBack
June 14, 2006
I.T. Been Berry Berry Good To Me
The best quote of the year so far: from Romano Prodi, former president of the European Commission running for prime minister of Italy against incumbent Silvio Berlusconi back in April. Said Prodi about Berlusconi, "you lean on numbers like alcoholics lean on lamp posts, not to be enlightened, but for support..."
Yeah. That's the spirit! Numbers should be fought over. A bunch of new ones from Forrester, in CIO Magazine, show IT organizations doing the same old same old, when it comes to providing value to the business. In this report, IT's top batting average of .380 against Business Pitching feels bad, but that's really hot in baseball.
Just Makes You Think: Oh yeah, that's right... this stuff is pretty hard...
For the sake of skirting copyright, I memorized the information so I can now fearlessly just "tell you what I remember"... OR you could go see for yourself online (or...the June 15th hardcopy includes the Forrester survey numbers chart).
I remember that Forrester said:
1 - Improving productivity or products/processes rates in the high .300's
2 - Optimizing cash flow or customer lifecycles hits the mid to low .300's
3 - Powering successful innovation in process collections or in product collections steps in the mid to low .200's. Wipe your shoes.
But what do these numbers mean?
First, the way Forrester set it up, the batting average actually represents the number of "IT Decision-Makers" who gave IT strong credit when given the chance to do so. For example, almost-but-not-quite four out of ten gave IT credit for improving productivity or likewise for improving products.
Now, looking at the numbers and what they are attached to, is it insane to say that the more complex a problem is, the less likely IT is going to make an obviously critical contribution?
We know the problem complexity rises as you go from the top of this list (e.g. productivity) to the bottom (e.g., innovation). Why?
Well, in each case, think of the number of variables that are reasonably under critical IT influence as they combine with each other. In order of appearance:
- There are simply fewer of them when it comes to improving productivity or improving products/processes. (We didn't say the tasks were any easier, we just said simpler.) That level of influence is a lot like construction work.
- But the next level -- optimizing cash flow or customer lifecycles -- is more like winning poker games. More participants trying to not be on your same page.
- And the remaining level -- innovating (reconceiving, not just improving) products or processes is more like herding cats. More participants who see your page but could care less.
Here's the main suggestion. As we drop down the list, and move from productivity to optimization to innovation, the necessary influence on the variety of participants who need to buy in becomes increasingly less a deliverable of IT.
Going along with that, we can still hope that IT can contribute to the necessary influence. But then of course, we must identify what kinds of influence are necessary, before we can understand whether IT can make a significant contribution.
What this calls for is a perspective in measurement that can recognize and understand the game-saving catches, the turning point singles, the continuity of getting players on base -- the things that go missing in games that are not winnable. Eveyone sees the home runs, but most of the time, most games are won by most players being good enough to allow a win. Their individual responsibility is to be good enough for the other players, not to win the game by themselves.
The Forrester numbers superficially tell the story a little differently, but let's decode them. Given what was argued just above, they suggest that very few of every ten IT Decision Makers understand the difference between how well IT does its part and how likely it is that the IT part will "cause" a win. This further suggests low understanding of what it takes to win at productivity, optimization and innovation. That is, statistically, some of the decision makers may have given 100% credit to IT for effectiveness, but those that gave little or no credit (due to lack of understanding) dragged the Forrester averages down.
Meanwhile, the reason why batting .300 in a game is good enough is because it's enough to allow the other parts of the operation to add up to a win. Batting .300 represents about 100% of reasonable expectations, not 30% of requirements. The decision-makers who gave IT high credit likely saw this.
So the numbers we see from Forrester are not what we really want to see. Instead, we want to see the explanations given by the decision makers who credit IT with high effectiveness, and compare those explanations to the ones given by the nay-sayers.
Post Script: Saturday Night Live was a hit before lots of IT people were old enough to tell a joke. If you're older than that, you might remember Chico Escuela played by Garrett Morris, who broke the line that we cloned for the title of this article, but who for all we know now works in IT somewhere as a decision maker.
Posted by Malcolm Ryder at 4:48 PM
April 23, 2006
Metrics Myths: Miles Per Gallon, or Gallons Per Mile?
A cautionary analogy of measuring value.
Miles Per Gallon (MPG) is an oft-used example of the "bang for the buck" flavor of value. But as we all know, the fine print that comes with it is pretty much of a whopper: mileage may vary. The fine print makes the measurement a lot less reliable until we know a lot more about an additional little factor waiting to be included -- the driver.
That is, with MPG, what we want to think of as the value it describes is often less than what we're really after: the reality is that the independent efficiency of the system it describes (the car) has a relationship with the driver that is the real source of whatever association we want to make between the system and effectiveness. What we're usually really after is effectiveness, and MPG gets us only part of the way there.
If we don't forget that the driver will be involved, miles per gallon is more obviously an indicator about a resource input and the efficiency of its consumption. Yet although we know better, we tend to use it as if we "make" miles with the resource (gas) and the resource must "efficiently" cause more miles to be made. That is, intuitively, the story we want to tell with the MPG measure is one of effective process production. The problem with this is that we don't really make miles with the resource -- instead, we acquire them. As a measure, MPG is actually more a story about "spending" the resource than about process effectiveness.
For process measurement about effectiveness, we have to look at not miles per gallon, but instead gallons per mile (GPM).
Why? Because the Mile is the target achievement unit of the travel (process). Going from point A to point B, we want to cover the necessary miles regardless of what the cost in gallons may be. The cost might change our enthusiasm for making the trip, but the cost does not change the distance to the target (of the trip). Consequently, GPM speaks to a production efficiency that might be indicated by the phrase "gallons may vary" and brings up effective resource consumption.
Summing up the above:
- MPG pertains to efficient resource consumption for effective process production
- GPM pertains to effective resource consumption for efficient process production
So, what's the management difference between MPG and GPM? It's the difference in what kind of value is determined.
Value through GPM is about deciding which type of resource should be committed.
- Gas, electric, or steam?
- People, process, or technology?
- etc.
Value through MPG is about deciding which resource of a given type should be committed, as in from what category should the given type of resource be drawn:
- Basic/premium? Generic/branded? New/legacy?
- Stored vs. just-in-time?
- Standard? Custom?
- etc.
Put that way, such choices for how to change value relate to each other in a fairly straightforward way. The picture below makes this more visible in conventional management terms:
As an example of how this plays out, consider a company's IT operations. According to the framework above, IT has four kinds of value contributions to offer to the business:
- Capacity: through IT Assets (resource efficiency)
- Outputs: through IT Systems composed of assets (process efficiency)
- Options: through IT Services running on the systems (resource effectiveness)
- Outcomes: through Applications leveraging the services (process effectiveness)
The overall discipline of managing the value would be about making choices in all four cases that systematically increase the likelihood of desired outcomes -- meaning the odds of generating "explicit actual value"... As demonstrated by the framework, it need not be confusing to direct the appropriate measurement of value contributions when the important perspectives are both distinct and logically related.
Posted by Malcolm Ryder at 10:04 PM | Comments (0)
March 22, 2006
A New Way To Think About Requirements
All progress does not result from meeting requirements. Sometimes, luck prevails, and the conditions in which we were laboring simply change to our advantage without being influenced by us. But all requirements are considered meaningful because they indicate a path to progress. Although competing definitions of progress may exist, no one debates the purpose and virtue of setting requirements.
Defining requirements is difficult. The empirical contrast of results from carefully defined requirements versus ill-defined ones has demonstrated that, and also shown that the cost of failing existing expectations easily wipes out the apparent value of isolated progress. This setback happens when it is unclear where expectations are coming from, and/or when the activity develops new circumstances without certainty of being aligned with the expectations of record.
The frustration of unstated expectations or of ones that have changed or appeared without warning may be a legitimate feeling -- but that in no way exempts the failure from the oversight or purpose of management.
Although change management is successful as a remedy and is ready for use from the start, it comes late in the proceedings.
At the start, the more important and urgent instrument is a model that allows comprehensive discovery of expectations, in a way that allows them to be processed into requirements. Shown below are the four main categories of expectations, ordered to help reveal the multiple perspectives that result in requirements being adequately defined. The categories of expectations -- responsibility, organization, resources, and objectives -- are obviously reflected in most systems of accountability.
Yet it is typical that even knowing the accounting systems, confusion or obscurity develops between what gets done and what is expected.
This problem is most often referred to as a "gap" of some kind -- for example a gap between strategy and execution. But that reference is probably erroneous in two ways.
First, it is production, not execution, that normally gets measured against strategy and coughs up a "gap" between the intended and the actual. (Execution is not about the results. Execution is predominantly about the decisions that generate actions.)
Second, as represented in the model here, the key problem of developing progress is worked out through systematically and iteratively deciding potential values, not compliance, to be leveraged from execution's direction. Implementation proceeds moment by moment through reality, constantly asking the question "what difference will this next item make?" and adjusting its navigation accordingly. In answering, the point of view on that progression sequentially escalates from strategy to achievement, to performance and then to outcomes. The expectations at any one of those steps can trigger a reworking of the previous step. And the implementation does not "finish" but rather continues cycling through the four steps, until the risks outweigh the benefits.
That suggests the importance associated with translating facts about events into facts about states -- which not surprisingly is a huge business, built on faith in causality and an appetite for analysis.
On the other hand, translating expectations into progress is what is really mandated and is always being attempted. This translation demands concurrently managing construction, integration and target deltas (change) -- the main elements of production activity.
The model of progress shown in this discussion assumes a sensibility most like "implementation" (i.e., synthesis rather than analysis). The model's synopsis of "implementation" is that expectations become intentions, which become behaviors, which become events:
- execution formalizes expectations as "intentions"; namely, missions, plans, functions, and operations
- those intentions are used as instruments of execution, to determine the institutional "behaviors and effects" recognized as strategy, achievement, performance and outcomes.
- those behaviors cooperatively drive events, and are interrelated and assessed by general perspectives representing factors of change, such as What, Why , How and Which. These factors may be expressed both as preferences (future) and as facts (current or past).
As a result, "gaps" may appear between the "intended" and the "actual" for any of the effects -- but the progression of management attention from strategy to achievement, to performance and outcomes does not change in order, and outcomes regenerate strategy, closing the loop of influence.
Posted by Malcolm Ryder at 8:27 PM | Comments (0) | TrackBack
March 3, 2006
Driving IT Bang for the Buck: Evolution, Improvement, or Innovation?
When we think of effective IT spending, we're focused on making the best current use of the money, given competing alternatives or emerging options. But increasingly, the basis of effectiveness in business spending on IT proves to be in how the business manages its reliance on IT.
Sometimes we don't have enough visibility of legitimate alternatives and options. The urgency of our attention to the purpose that justifies the spend means that this lack of perspective could be left unsolved. But for that reason, a diligent evaluation practice looks for opportunity costs that should be factored in. As part of this diligence, what remains to be emphasized even more is not how the IT will make the organization work, but rather how the organization is going to make the IT work.
I.
In the full cycle of management, the business first conceives and identifies why IT is needed before it makes any other decisions. To avoid taking the need for granted, this first decision means describing the business model in terms of what potentials are granted it by available IT. That is immediately followed with a forecast of how sustainable those potentials are -- which necessarily means identifying and selecting how to make them sustainable.
When that architectural aspect is clarified, the next part of the decision cycle must create a "delivery" organization that can constructively practice the architecture. This means two things:
- establishing the sources and resources that will produce the infrastructure from the architecture, and
- establishing the processes that will link IT production cycles to business operating cycles.
At that decision stage, reliable design and reliable production easily wind up being qualifying criteria used to distinguish the various opportunities, organizations and risks that the business will incorporate as the elements of realizing of its model.
Thus, investments in their incorporation aim to relate reliability to the goals of business. That aim immediately offers a perspective from which a high-level assessment of the current business investments might be done. Normally this makes us think of metrics; but as pictured below, the main point is to allow the perspective to stage comparisons and guide questioning. Here we might just catalog known commitments by critical business goals.
II.
Those commitments might then involve or indicate spending on IT. But, as described there and below, the associated "IT investments" are not about IT per se but rather about the application of IT. We can understand the idea of "application" by considering the purpose of the IT utilization.
- At the highest level of distinction, the business goals of incorporating the opportunities, organizations and risks are recovery, health or growth.
- Within each of those goals, sub-goals are development, maintenance, and change.
- And within each of the subgoals, another sub-level features assessment, design, and control.
Consequently, it is possible to ask questions at the management level such as, "Can we control the maintenance of our health?" or "Can we assess the development of our recovery?"
These are not IT questions -- but they are questions that present opportunities for IT to enable successful management outcomes. In turn, management is focused on enabling successful business outcomes.
Taking that framework of IT incorporation as the main perspective, it is easy to appreciate that business utilization of IT is nearly always altering something -- either a behavior or a current state.
The importance of how IT is managed, though, is in how well IT supports management's ability to intentionally change how the business can behave. (From here on we'll consider "change" in this larger context.)
III.
The observation just made emphasizes that we can and should compare the kinds of value offered by different classes of change, and then associate IT's effects to those values -- as contributions.
To demonstrate that, compare evolution, improvement and innovation.
Relative to each other, these kinds of change differently affect the state of the business:
- evolution permanently modifies the fitness of the business's model to the dynamics of the environment in which demand develops;
- improvement modifies the fitness of its conduct to the current and targeted demand;
- innovation modifies the fitness of its output to the needs of the environment's population.
According to perceived conditions regarding recovery, health or growth, business executives must determine when any of these three modes of change requires higher-priority attention. A timely reaction is mandatory, but proactive change is potentially strategic to optimizing the benefit versus risk of those conditions. That may result in new or extended initiatives to create the necessary related sponsorship and opportunity, including competencies and technical support that might drive spending.
To support a proactive stance, a good device to have would be a framework for envisioning, monitoring and ultimately predicting circumstances that we can agree will signify a need for change. Not coincidentally, those circumstances have the look and feel of key ideas offered within the business justifications for IT spending. That device might look like the following:
IV.
But given those considerations, executives and managers together should ask the "big picture" questions -- for example, whether an improvement initiative is the most likely candidate to produce better recovery, as opposed to an innovation initiative. At the same time, it is important to recognize that one kind of change may be an element of another kind and acquire priority that way. After all, form allows conduct, and conduct (i.e., production) allows product. As another more specific example, innovation may accelerate evolution, and improvement may create more opportunity (security, income, knowledge, etc.) for innovation. Thus, an improvement initative can strategically foster the goal of accelerated evolution. But likewise, the requirements for supporting an adopted innovation may obsolete improvement efforts dedicated to earlier production, eliminating that legacy cost while potentially releasing resources for new purposes.
These interrelationships are characteristic observations in portfolio management.
IT management must be focused on applying IT to business operations present and future. On the one hand, it is typical that an IT budget might be evaluated in terms of how much spending goes to "maintenance" versus "R&D" and so forth. Those generic classes correspond to how IT responds to the business requests for support.
But the rollup of dollars into those classes can easily obscure the more important and time-sensitive issue of whether the right things have been selected for maintenance, or the right things are being pursued through R&D. By calling for a distinction between wise spending and merely approved spending, we get to a conversation about how management leverages IT for the business -- as opposed to mere responses. In that conversation business and IT organizations together find the logical path to measuring the effectiveness of the decisions, and to measuring how much that effectiveness was worth.
The view that unifies their concerns is not one about how "IT investments create business value", but rather one that business value subscribes IT.
Posted by Malcolm Ryder at 8:16 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 15, 2006
Measuring process improvement
Events become notable and interesting to business primarily because of their outcomes.
While outcomes range across the spectrum of pursued to avoided, desirable to undesirable, or benefitsto damages, they generally all figure into operations by the same path. That is, the impact of the event is studied for whether that impact is (or can be) repeatable; whether the repetition is (or can be) intentional; and finally whether the intention is (or can be) manageable.
In that light, four areas of measurement are associated with all managed events, and the manageability is ultimately what distinguishes an operations event from an operations process.
1. The impact itself is compared against some standard of expectation or some qualifying definition.
2. The likelihood or frequency of the impact’s repetition is tracked against elapsed time and/or a range of different conditions.
3. The intent to repeat is proved against evidence of supporting commitments made.
4. The manageability of the intention is modeled in terms of responsibility and authority.
These four types of measurements – comparisons, trends, proofs and models – provide the terms for establishing both the bases of process development and the deltas of process improvement. Each type of measurement refers to some defining aspect of the operations environment, and that environment is therefore the context of the measurements.
Process improvement is usually thought of in terms of the difference between the earlier outcomes generated and the outcomes gained consequent to a modification of the process. But this is an erroneous attitude. Outcome improvements are of course highly important, but they are different from process improvements.
Instead, process improvements always assume that a target outcome is achievable, and the process improvements are concerned with how to engineer and assure the achievement.
Given the above, the difference between the initial circumstances of a process and the improved circumstances for the same process is the critical difference to be determined in a process improvement initiative. Effectively, the following is pursued by the initiative:
1 - establish definitions and standards
2 - establish continuous event monitoring from multiple perspectives
3 - establish commitments to prerequisites and/or causes underlying the dynamics of events deemed pertinent to goals
4 - establish models of proprietorship for the commitments
These factors make it more obvious that process improvement is essentially a matter of managing corresponding organizational changes. These changes include, for example, the strength, state and pace of an organization’s adoption of:
1 - taxonomies and vocabularies
2 - reporting and analyses
3 - approvals, allocations and priorities
4 - assignments and authorities
Given alignment of those changes, the organization acquires the capability to literally do things differently for the better, and the groundwork exists for shifting focus to production technique that will be evaluated as a quality factor in execution.
Improvements in technique are again a different matter from process improvement but they manifest the ability to reliably conduct the process on demand, and therefore point attention towards improved competency as opposed to improved capability.
Posted by Malcolm Ryder at 11:53 PM | Comments (0) | TrackBack