March 8, 2009

Networking Social Behaviors

With the help of the McKinsey gang, important thinkers such as Soumitra Dutta and Matthew Fraser of INSEAD are hosting discussions about how the internet and the recession might collide. Their angle: "When Job Seekers Invade Facebook". In their conversation starter, Facebook is offered as a venue that has its own culture, now threatened with an alien influence that could change the nature of social networking.

This is a somewhat romantic notion, best held by facebook's marketing and legal teams but not a plausible or fact-based reality. The concern wouldn't be how social networks behave; rather, it would be how social behaviors are networked.

Interestingly, it brings up the question of how much a given tool can control its users, versus how much design can flex to assure that the tool is fit to its purpose. What's not clear is that there is any cultural "end state" of facebook that represents its purpose. Instead, both on the surface and in theory, facebook is one of multiple grand collaborative experiments to discover what social "connectivity" really includes, with social propriety being a necessary but secondary concern. This experimentation seems likely to show ongoing morphing in what we see being social networking, but it hardly seems likely that a horde of unemployed invaders at one site will change social networking into something it is not already.

The dominant feature of the most popular social networking tools is that they are gateways to fundamentally public environments where privacy policy controls get applied. But the trick is that the policy applications are done based on personal preferences, and the personal preferences reflect many different cultures. It is unlikely that any one culture actually governs a social network unless the network's environment is administered according to some dominant policy model that proxies a culture. The default condition is that public spaces (like facebook) are polycultural, and that the less polycultural the space is made, the more constitutionally private it becomes -- just like a club. Punchline: unless internet economics eliminate the chance for more new "price"-free gateways, it is not social networking that will change, but instead the variety of social network venues.

There is some counter-thought to this that insists on some "critical mass" of members for a social network to be seen as useful -- and therefore in some Darwinian way likely to survive. This presupposes that the "natural" limit on the number of networks is a small number, since most networks won't offer enough richness to be worth the troulble. But I think this oversimplifies things by assuming (arbitrarily) that the "richness" (value) of a member of the network must be measured by the interconnections within that network. Real life shows that assumption to be silly; incredibly valuable people join and use networks on a very limited basis all the time; and, some small networks can be incredibly powerful, like the smoke filled back rooms of old. We'll remember that these smaller ones tend to be more private.

Rather, some members who are not "rich" when they join public networks have the ambition that they can achieve some richness within the network. That is precisely the current sex appeal of the term "networking", as used for painting in broad strokes; well, fine, as long as we don't pretend that social networking is actually hostage to any network.

Posted by Malcolm Ryder at 9:07 AM

February 16, 2009

Consent and Dissent: the Decision Gate

Managing change usually means more than applying controls to some different way of doing things. And doing things differently nearly always first means being different from before. It follows that when attempting to get people to "do" different, they will entertain the notion from a point of view that initially reflects how they already "are".

We can describe the points-of-view in four general ways, which derive from the interaction of factors illustrated below. In most cases, for the person being asked, the idea of changing will be "familiar" or not -- and this degree of familiarity is a gating factor in what happens next. Familiarity is based on both recognizing and understanding the idea, so that it is "mentally owned" by the decision-maker. It directs their decision-making along one of four paths of agreement, each of which processes what psychologically appears to have been presented to the decision-maker.

 

 

 

 

 

 

 

 

 

 

 

 

In the four key scenarios, the decision-maker reacts to a suggested change in different ways. Meanwhile, there is no guarantee that, at the end of the path, acceptance will be reached. The change-presenter must determine which paths need to be navigated, and what sequence is called for. With that, the suggested change that is input to their decisioning may finally be output as an agreement.

- The idea of change that is being presented may in effect test the decision-maker's current level of acceptance. This is mostly like marketing for the purpose of highlighting a match between what both parties prefer. Messaging would be important here.

- More challenging than that, for the decision-maker, is being caught by surprise when the suggested change provokes some new or latent realization (discovery) that must be considered. Education would be important here.

- The third possibility is that an already acknowledged option is presented with higher priority, based on the attractiveness of its expected impacts. For the most part, selling is useful here, insofar as it emphasizes and offers the new availability of favorable future positions for the decision-maker.

- If the suggested change is not conceptually new to the decision-maker, but has not previously been acknowledged as an option, then the situation is most likely to initially be about considering trade-offs between the proposition and any personal alternatives believed to exist. Analysis would be important here.

Described more tersely, the factors that "gate" a decision include identity, knowledge, future value, and opportunity cost. Taking those factors as elements of a campaign, and orchestrating them to work with each other, the change-presenter can strategically and proactively design the presentation to the necessary audiences.

Posted by Malcolm Ryder at 8:44 AM

January 22, 2009

Notes 3.0 about Web 3.0

What kind of company could take advantage of the revealed "deep structure" of web 3.0? A company managing the intersections of community, culture and market.

Off-the-cuff example: a fictitious merger of Neilsen, Harris (polls), and Yahoo would go to market providing interactive services to web users that, within legal constraints, could acquire enough feedback and observation to discover hugely rich profiles of users and groups and offer the profiles in B2B transactions and public service sectors.

Posted by Malcolm Ryder at 9:50 AM

September 17, 2008

Business Process vs. Business IT: again?

Eric R. Chabrow checks in with the September 17, 2008 CIO Insight in an article called "Do CEOs Get Alignment?"

Chabrow's citations of a now-popular survey by IT professor Jerry Luftman bring to light a few things that, as it turns out, "represent IT" with an impact unhelpful to forging the "I get it" moment in the CEO/CFO offices:
- Personal experience with replaceable devices...
- management decisioning about replaceable providers...
- and of course the implication that CIOs are replaceable without strategic loss...

These frustrate the chances of recognizing "a business process called IT".

On the one hand, this is hard to overcome if people don't say what aspect of IT they mean to identify when they say "IT". An interesting point to put on the matter is that the primary expectation of IT users is actually "process management automation" -- not the same problem to solve as "information management" nor the level-setting about which sanctioned company processes are strategic/tactical/operational.

On the other hand, the word "alignment" itself continues to provoke and refresh the difficulty of reaching "I get it". The more important term to emphasize is not "alignment" but "integration". Imagine that some decision-making sector called "Business" was not integrated with the decision-making sector called "Finance". Since managing IT, like managing Finance, creates and governs a critical dimension of the business operational environment, some businesses cannot be dis-integrated with it and still rationally expect to succeed.

What might be really interesting short-term is to see and compare what stances about "alignment" come from CEOs who are Lawyers or are Technologists as opposed to Finance alumni.

Furthermore, however, as long as the "alignment" banner keeps getting hoisted by analysts and pundits in the trade, they'll keep educating CxOs to think about things in the wrong way. When it comes to IT, CxOs should be working on the management process competency at all levels -- an approach that would make it more obviously the responsibility of CEOs and CFOs to cultivate, not just for CIOs to offer.

Posted by Malcolm Ryder at 10:04 AM

September 6, 2008

Management Improvisation

Normally, management authorizes actions based on information. But the most frequent and expected connotation of the word "manage" is the word "control".

Given that management is undertaken to provide some assurance of "success", this connotation may be why management effectiveness is most often sought in terms of proof of control. The problem with this attitude is that it ignores more than half of the range of opportunity that is available to deliberately effect valuable progress in an endeavor.

In the framework below, a much fuller range of management is identified, in a way that puts "control" in context -- and shows it to be not only more varied than we typically allow it to be, but also that it is accompanied by important complements and alternatives for driving progress. To start with, the framework shows how the usual old notion of "control" is probably contained by items (left column) that are not best called control but rather "organization".

As seen here, a new semantics of "controls" is proposed (and explained later below). And still, the value of controls is to promote success.

A simple observation that may capture the ambitions about success in management is this: if it takes scoring to win, intending to score is more essential than planning to win. In management, progress is essentially like scoring. Given that, strategy is fundamentally about how to enable progress under the prevailing circumstances -- which in turn means that as circumstances change, strategy dynamically identifies and solves the problem of sustaining an ability to progress.

This readiness to improvise the action -- to take the "fast break", acknowledges that the circumstances of the game are all incidental within the basic boundaries that others play within as well. That is, within the same standing set of boundaries, many separate games are played -- and one game never necessarily predicts the next even if it winds up resembling it.

In that regard, what may be most difficult about competitive strategy is, first, to identify the boundaries that most matter; and second, to invent relevant actions within that awareness. In a competitive situation, much of what truly surprises the competition is an action that they didn't foresee because they hadn't identified the pertinent boundaries yet. (This is exactly why we often tend to speak of game-breaking competitors as being outfits that "change the rules"...)

Arriving at the necessary awareness is the product of surveillance and analysis, to which much dazzling and complex effort is formally dedicated now through business intelligence and knowledge management.

But the framework above imagines it more simply. It is not hard to see that the three forms of "management affects" -- controls, influences* and standards -- correspond respectively to knowledge, communications, and references -- are different modalities of common information that generate authority and action. The question is, how are the modalities currently being used?

So, what we get from this framework, mainly, is another perspective from which to assess how we manage now and whether the right modes are applied in the right ways.

Along with showing how information figures in, the framework helps show that the nature of management authority ranges (bottom to top) from being externally objective (standards) to being more cooperatively elective (influences) to finally being internally directive (controls). This tracks the application of recognized authority from its lightest to its heaviest.

The layout of the framework also corresponds (left to right) to the difference between micromanagement (organization) and macromanagement(improvisation). From that viewpoint, when we think of managed action as execution, the span of potential methodologies shows up being quite broad. Assumptions about what is needed to realize a strategy are challenged by showing that taking management more "micro" is possibly an inhibitor, but really just a supporting option, not a defacto requirement. For example, we have to allow for the possibility that individual contributors, rogues or artists -- left unbridled amongst changes -- may be enough, or even best.

In short, the old notion of control is really micromanagement. And as argued by the framework here, a big implication is that micromanagement and strategy are possibly allergic to each other or at least require arbitration -- a thought that may be the cause of some fresh assessment of management.

* While the word "influences" seems somewhat forced here (and may be replaced in the future), the intended sense of it is as a degree of imposition, here being neither benign (like standards) nor compelled (like controls).

Posted by Malcolm Ryder at 4:57 PM

August 25, 2008

The Mystery of I.P., or Not

What mystery?

The rule of thumb is that concepts are not property. The challenge is to wrap "property" around the concepts, so that the property is where people go to find the concepts. Since the value of the property is to some degree related to its scarcity, it is not difficult to understand what to do next.

- Use of ideas can be licensed in certain contexts.

- Information is either confidential or it is not, and you can sell access to confidential information.

- Knowledge is proprietary only if you have the ability to control the context of the knowledge delivery; control is all about packaging (whether the package is a venue, an event, a medium, or a box). You can sell the package; you can also sell delivery.

Posted by Malcolm Ryder at 7:27 AM

August 16, 2008

Why Leading Thinkers Won't Be Thought Leaders

In the ideas game, cutting edge thinkers are typically too far ahead of the approval criteria for implementers, and since "thought leaders" derive their credibility from the probability of implementations occurring, most leading thinkers don't become thought leaders.

To get probability on their side, leading thinkers usually have to choose to think about something that approvers already want to implement.

This certainly distresses the notion of "innovation", except within the sense of "infusing the accepted with newness". But that is not an outright knock on anything; it simply points to a reason for having the notion of "pragmatic innovation".

Much leading thought throughout history has been pretty rapidly dismissed as "impractical", which of course should have meant "unable to be put into practice"... But with 20/20 hindsight we are able to know at least that what is undoable for one outfit is merely inconvenient for another. And yet another may have no resistance to the idea at all and let it rip, wherefore the popular "disruptiveness" tag in the vocabulary of the betting pundits who track ersatz innovators.

Thought leadership is safe. It doesn't carry along with it the stockades, burnings-at-the-stake, smear campaigns, or other proven techniques used to enlighten leading thinkers about their impracticality. In fact, when you get right down to it, thought leaders are "voted into office", more or less like successful consultants, which means that they are the product of followers, not vice versa. This explains why the best-known thought leaders hardly ever have a hardluck story about finding followers...

In the other camp, leading thinkers sprout of their own accord and may carry on for quite some time with no followers at all. Some leading thinkers get lucky: they wind up being befriended either by a thought leader or by an influential producer who can spell "pragmatic" but isn't worried about it for the time being. But conventionally, the bridge between leading thinkers and thought leaders is the kind of engineering called "R&D".

The problem is that if R&D is not funded well enough, then the bridge may not reach all the way across. So the issue mainly comes down to who will sponsor the way that the R&D is adequately funded.

Leading thinkers really are often into fundraising, but a lot of fundraisers aren't any good at it. In a healthy organization that wants to be progressive as well, the case for funding thought leaders is not so hard to make, but the exceptional organization strategizes funding of its leading thinkers.

Posted by Malcolm Ryder at 9:28 AM

August 10, 2008

The Decisive Moment in the Garden of Good and Evil

My Strategy to win the Presidency

So, how do you get it going at such a late stage in the race?

The first part is to pick my Vice Precedent. Eventually, I’ll get caught for something, right? and why not just tell people what it is in advance, especially if it's something that's just more me? Thanks to the internet, people are confused... there’s no longer any sense of priorities amongst most of the self-indulgences that actually get us from Monday to Tuesday and from Tuesday to …

…. oh, you meant vice “president”… hmm, in that case, it would have to be the guy from truTV, Marc Juris, executive vice president and general manager, who showed me that if you can’t be the head, at least keep it on straight. For example, the other day he was saying, "Reality has a connotation of not being real, of being phony… We felt that because (our programming) was real, we couldn't call it reality." There aren’t that many people running around with that kind of clarity now.

The second part is I’m going to play the gender card.

How does that make sense? Wouldn’t you be running against two men?

Well, what difference does that make? The point is, I accuse them of being guys, and then they both screw up their responses to that more than I screw up mine. That’s what voters care about.

What’s the third part of your strategy?

It’s very simple, a call to action, but it might be hard because it calls for breaking a tough habit. When you’re president, you should have a limited number of Stupid Points to work with, not term limits. If you spend up all your Stupid Points too fast, you’re out! and someone with fewer Stupid Points should take over. This might not be the other person from your party who is hanging out in the other wing of your big white house. Think about it, if it’s your party at your house, and your party gets seriously boring, people need to be able to go to another party at somebody else’s house, right? Really, it’s not such a new idea, but we can’t be wimps about it.

Is that it? Any other parts?

Well, aside from the challenge of getting enough ME-dia attention, I’m working on getting an additional line added to the list of nominee names on the ballot, right below the third party candidates. If I’m successful, it should just say “Surprise Me: __________________”

(Happy Birthday Diana! xo - M)

Posted by Malcolm Ryder at 3:22 PM | Comments (0) | TrackBack

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 27, 2008

Do As I Do, Not As I Say

The McKinsey gang's ongoing interest in behavioral economics leads from time to time to email alerts about articles that lead off like this:
Hidden flaws in strategy

"Why do top managers, steeped in theories of good business strategy, still make bad decisions? While ignorance and hubris sometimes play a role, the brain itself—how we think—is also a culprit. Insights from behavioral economics help explain why we don't always think rationally and how our logical flaws can lead to bad strategic decisions."

On a day like today, when the stock market dropped over 300 points, the catchiness of that intro is in the contrast between the confidence we want to have in logic and the confidence we want to have in our ability to use it.

Getting strict, we might have to say that when strategy is based on logic, strategy is interpretive -- because in different hands, the same logic might lead to different strategy and/or different strategic outcomes.

But why doesn't it make just as much sense to place the first faith in the strategy and then find the logic to execute it? Well, it does; it's just that in this mode, the "strategy" is not a performance; instead it is a proposition that supplies the point of view to be used when managing functions.

McKinsey's discussion seems to be poised to warn us away from the problem of management personalities corrupting objectivity, and further, poised to argue that this should be the right warning because we can assume that there is usually going to be sufficient objectivity to correctly navigate to the correct destination. That is, the most prominent assumption that we can read into the McKinsey caution is that it's not cool to split from the plan. Logic shall bear decisions and decisions shall bear the plan and the plan shall be righteous.

But isn't that still letting the bad boys off the hook? Levity aside, coaches bring the game plan to the players knowing this: that the players actually have to play, which means that the players will improvise their way to the opportunity to comply, if they understand the strategy -- "strategy" which is again essentially a point of view and not a performance prescription.

Strategy is about belief in the value of your position. It is esentially about where you're going to be, and why you're going to be there. Because of that, any position within a hierarchy of operational dependencies can be a strategic position. In effect, a position represents the opportunity, so the most direct way for a leader or manager to damage the potential of a strategy is to make decisions that inhibit or prohibit the players' opportunity to align and coordinate their compliance to the strategy.

Because of that, we want a model of coaching to rely on, not just retraining (or re-straining) of senior staffers to the logic-decision-plan mode. We want an observation-design-motivation mode just as much if not more. We want the sideline clipboard.

Posted by Malcolm Ryder at 11:21 PM

April 29, 2008

Information Overdrive

Profitability through information management gets fresh illumination and color on Page 8 of the March 2008 issue of BPMStrategies, where Tom Dwyer, VP of research for the Brainstorm Group, walks us through a 21st-century operational blueprint in his article, "Using BPM, BDM, and SOA To Create A More Agile Supply Chain".

In the Brainstorm illustration on that page, the title of the Venn diagram (below) suggests that a blank area in the top center intersection would have been labelled "Actionable Insight".

The question we first posed to Dwyer was: shouldn't this intersection be titled "Policy Compliance" and stand as the third factor, instead of "actionable insight"? One can readily argue that a full reckoning of profit and advantage (the very central theme) must include this risk management dimension, and it proves to be so in actual practice but simply has (typically) more influence as a constraint than as a lever.

In a brief offline interview, Dwyer replied, noting how his system works:

"The point that I was making was to identify three elements that contribute to profitability by optimizing the management and execution of a supply chain... The three I chose were all meant to be levers or enablers to achieve higher profit... [Within those three] the combination – or intersection – of intelligent applications built on a responsive infrastructure and accurate, timely data is what enables 'actionable insight'... I would agree that achieving policy compliance at the lowest cost would definitely impact profits... but I would not choose the constraint of policy compliance over the enabler of actionable insight. "

Interpreted with lots of wiggle room, Dwyer's descriptions in the BPMStrategies article strongly suggest that the role of agile technologies is to generate transparency [largely internal] across the heterogeneous organization -- while the role of integrated real-time data is to generate transparency [largely external] across the organization's multichannel embrace of suppliers and customers. Respectively, albeit oversimplified, this amounts to an organization knowing what to do and how to do it, complemented by knowing what it should be acting on and why. In both cases, timeliness of correct information is critical. But to highlight the most important issue, it is the matter of being actionable that makes being insightful worthwhile.

Additional consideration of Dwyer's formula leads to this summarization: knowledge management, business intelligence and performance management may converge to drive sustainable competitive winning, if you know how to make them converge. We view this as a matter of management information systems being deployed strategically rather than just tactically.

Strategically deployed, the information must allow the enterprise to identify and leverage its positioning, capability, and internal alignment, so as to understand whether revised operational mechanics are appropriate to the actual environment of the organization's practice.

To put this back into the proper original context of Dwyer's discussion: the improved mechanics in question are driven by business process management (BPM), business decision management (BDM) and service oriented architecture (SOA). The strategy challenge is to realize and exploit the correspondence of these approaches with the management of information. For example:

Development: SOA : Process efficiency

Production : BPM : Performance Effectiveness

Research : BDM : Actionable Insight

In a follow-on to this discussion, we could consider the recently published arguments in The New Age of Innovation by C. K. Prahalad and M. S. Krishnan on how global resource networks represent the new supply chain mechanics and how the arguments express the information/mechanics correspondence. For example, in the coverage of the book provided by Information Week's Bob Evans, the key idea noted is that Darwinian forces of customer-centricity require transformation of a supply process into a service, causing the B2B (business-to-business) supply chain linkage to operate more in B2C (business-to-consumer) mode -- which changes the kind of information necessary to manage success. Says Evans: "resources must be shifted continually... " and "processes must be shifted from a focus on millions of customers to the individual."

Punchline: for many enterprises, the prospects of future success resemble hitting a moving target from a moving launchpad. To be able to execute that strategy, there will first need to be a strategy for enabling the execution.

Posted by Malcolm Ryder at 7:09 AM

April 26, 2008

Inciting Insight

In the big picture of purposefulness versus accidents, management accommodates a coincidence of things that ought to make a difference, such as designs, events, and states. Information systems grind on each of these, going both deep and wide. But what matters is whether management orchestrates a convergence of those things. Is such orchestration forcing the issue, or is it simply the way these things actually turn out to have meaning?

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 3, 2008

The Circumstantial Strategist

According to Edward Cone, in his CIO insight article CIO: The Accidental Strategist, most companies claim that information technology is strategic to their business.

This seems like a no brainer; competitive business is primarily a matter of matching a determined need with a defined opportunity to serve the need, and neither side of the equation can be handled at the necessary combined volume, speed and cost of sustained competition without IT.

But, says Cone, according to research by Diamond Management & Technology Consultants, IT executives say:
- just one-third of the execs play a significant role in the strategic planning process at their companies
- only about one-quarter of participating CIOs spend up to 50 percent of their time on strategic issues
- barely one in 10 spend more than half their time on strategy.

In other words, the average actual occasions of direct CIO influence on strategy amount to only about 1 out of every 16 CIO person/hours -- approximately one short morning a week.

Averages are good at promoting distorted mythologies, so having put that one out, let's immediately begin to ignore it rather than repeat it. But from the observations in Ed Cone's article -- in which several variants of "The CIO" are posed for inspection by actual CIOs and by industry management gurus -- a few other points jump to my mind:

- First: the article's title may have been more apt if it said, "The Circumstantial Strategist". The territory being covered is not so much about why CIOs should do strategy, but instead about how CIOs get to do it. Along those lines...

- Second: CIOs who report to CEOs have a fundamentally different "lay of the land" than do CIOs who report to CFOs or COOs.

- Third: A CIO doesn't have to see the whole company to be strategic; he or she has to see the whole information architecture on which relies a business operation that is directly accountable to a CxO. Certainly there are enterprise CIOs, but not all strategy is enterprise-wide. In fact, many companies have more than one CIO.

- Fourth: CIOs are often in a position to recognize an IT opportunity to alter the business model. But there is a huge difference between having (a.) both the responsibility and authority to do it, versus (b.) only the opportunity. The politics of the internal corporate governance effectively draw the boundary around the CIO's effective role. What's probably more interesting than the "CIO" title is what the other CxOs have agreed is the range of the so-called CIO role.

Posted by Malcolm Ryder at 2:47 PM

March 30, 2008

Careful What You Ask For...

Anyone who has visited Archestra more than once ( all nine people! ...well, ok, eight not couting myself) knows that a major point getting made is this: what looks like problems without solutions is often due to the romantic allegiance we have to a misleading vocabulary.

It's especially important to catch those times when strategy, management, execution, and other fundamentals are being wrestled by name. In that vein, one of the longest-standing friends of Archestra -- Bruce MacEwen at Adam Smith, Esquire -- caught the notice (again) of a somewhat newer friend -- Jack Vinson at Knowledge Jolt -- setting the stage for the commentary now here.

Bruce starts it off by reviewing ideas in the The Halo Effect, by Phil Rosenzweig. Rosenweig explores the historical ineffectiveness of management guru wisdom, and Bruce shortly comes to his own punchline: "In this unknowable world, what attitude and what approach grace us with the best odds of success? Only one: Critical thinking."

But as you read Bruce's fluid argument to the conclusion, you pass through the equally important question in his theme: "What do you have to know, to be the best performer?"

Jack, a seasoned spokesman for the Theory of Constraints (TOC), embraces Bruce's conclusion; but moreso he picks up that earlier question with his own followup, posing a perhaps ironic counterargument to Bruce's conclusion. With no pretense of being gurus, both men argue for the value of logic to management that would aspire to the top rung of performance. But Jack shines a light in the dark corner of logic's chronic problem with gaining broad acceptance. Case in point: Jack's observation that TOC works but still doesn't proliferate poses this question: "What does it take to get chosen as the management approach?" And our question, naturally, becomes "if you aren't chosen, then how can you be the key to success?"

Evidently, what it takes to be chosen is a combination of marketing and politics -- and the facts may be that the underlying genius of "success" is not the management approach used but instead the competitive approach employed by the executives. What Jack points out, intentionally or not, is beautifully brutal: that sometimes things work and sometimes they don't. And we must remember that winning ugly is still...winning. TOC companies may be winners, but most winners don't use TOC. (True, or false? Jack suggests, True.)

Consequently, when it comes to competition, we can't be sure that a great lot of companies should do anything in common; but instead we have to focus on why something works for the company that it works for.

In other words, there is a glaring difference between strategic management and competitive strategy, with the better competitors doing most of the winning, not foremost the better managed.

What executives must be responsible for is figuring out what strategy their company can win with; and what managers must do is figure out whether the company is doing what that appropriate competitive strategy calls for.

As both Bruce and Jack assert, critical thinking ought to be a key tool, and here we assert that it is a key tool in both competition and management. But what overrides both circumstances is the possibility that the thinking will be done about the wrong thing.

Eschewing mythologies and the emperor's new clothes, Jack quotes Bruce's counsel against that problem : "rigorous and unblinking analysis of reality as it is, not as you want it to be..." What we must take this to mean is not that some approach is inherently more competitively clairvoyant than another, but instead that executives and managers must not run the company based on a mythology (of an approach) that does not fit the company. To puncture the mythology, you have to be able to cut through the marketing and politics that surround it within the company.

New punchlines: as the top person in charge, you can't know what strategy will be your most successful against the competition before you know your organization; and when you reach an understanding of what your organization can do, you then have to either select a strategy that fits the organization, or you have to change your organization to fit a different strategy. What's tough is that you have to do this while the game is already underway.

Posted by Malcolm Ryder at 1:53 PM

March 23, 2008

I'ma Get Open Source on Yo' Ass

Yahoo joins Google and builds a nonprofit to run OpenSocial so that the OpenSocial developers can have a freezone for exchanging "intellectual property assets" without a moola market. As the Associated Press stated on the Yahoo website, "the idea behind the Google-initiated OpenSocial platform is to create a common coding standard for the ['social tools'] applications so they work on hundreds of Web sites."

We decided to look up the meaning of "tools" to be confident of the richness in the breaking story. Using Yahoo's search engine, we kept coming up with entries like this exemplary one from Dictionary.com:

tool - noun: a person manipulated by another for the latter's own ends

No avoiding the thought that Yahoo would now be Google's tool; so we used Google's "Web Definition" search functon to see what happened. The search on "define tool" ripped in under two seconds to the most appropriate place we can think of, the socially open Urban Dictionary:

1. tool 4455 votes up, 517 votes down

One who lacks the mental capacity to know he is being used. A fool. A cretin. Characterized by low intelligence and/or self-steem.

3. tool 1708 votes up, 443 votes down

someone who is a complete idiot/ one who is used by other people, and usually dosen't even realize it/ someone who can't think for themselves/ an asshat.

People who wear huge logos on their shirts are tools.

This would be a good moment to mention that Google has given up its rights to the OpenSocial branding, as part of the deal. No fools in Gtown central.

Clearly you can be a tool without being a social tool; so how wack it is that three of the most powerful companies in the free world are aggregating the tools. This might make them social, but a better question is this: does going social on a social network make you a tool if you weren't one already?

The sports pages of the conventional business press can be expected to focus on that, backhandedly, in their ongoing coverage of the market strategy smackdown between the G force and MondoSoft. But of course, that's hardly the key story.

The key story will be the one that inevitably will break on the non-profit NPR when someone looking for a job at Google tries to sue Google for using their social site residue as an excuse to not hire them -- residue found on hundreds of websites thanks to the easy proliferation path of OpenSocial.

"So, Mr. Lovitz; how do you explain your involvement in this August 2007... occasion... at the Omega Hip VIP room?"

"Uhh... Acting!"

Posted by Malcolm Ryder at 6:42 PM

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

March 21, 2008

Who Knows how to Manage Knowledge Management?

The initial impetus for practicing knowledge management as a discipline is to Effect a different outcome from what has already otherwise been obtained.

Best practices of knowledge management are meant to Affect the approaches to gaining the target outcome.

Question behind the outcome: "Why should knowledge be managed?"

Answer: knowledge has proved to be a resource that is critical to efficiently determining a two-part condition:
- when solution options exist and
- which options are optimal.
In the past, opportunity and quality have both suffered because effective knowledge was not available to be incorporated in a timely way during investigations and decision-making.

The goal of managing knowledge is to achieve timely discovery and acquisition of quality-checked knowledge for use during "live" investigation and decisioning.

It is important to recognize that investigation and decisioning are "constants" across a wide range of distinctive eforts:
- development (design, build)
- analysis (assess, interpret)
- auditing (measure, validate)

The management discipline provides people (roles), processes and tools to facilitate the following treatments of knowledge:
1 - discovery/generation
2 - QA
3 - acquisition/distribution
4 - lifecycle control (content versioning and retirement)

Practices within the discipline are "best" when they accomplish the following two things:
- they manage to align each of the four treatments individually with the operational environment that is meant to be sustained by executive influence (or group culture),
- but the practices align them in a way that allows each treatment to align with the other treatments (!) -- especially so that you get a chain linkage from 1 to 4 that allows 4 to also loop back as a "supplier" to 1.

With this overview, it is possible to understand where most of the phenomena that are now associated with KM should be able to fit in, and to simultaneously recognize that the various phenomena can be creatively "fitted in" to exploit special circumstances such as existing resources, emergencies, enthusiasm, or general curiosity and inventiveness. Those circumstances should be governed by a higher-level strategy. The typical phenomena include collaboration, multimedia (rich content), social networks, semantic search, library science, and games.

Posted by Malcolm Ryder at 9:51 AM

Who Knows how to Manage Knowledge Management?

The initial impetus for practicing knowledge management as a discipline is to Effect a different outcome from what has already otherwise been obtained.

Best practices of knowledge management are meant to Affect the approaches to gaining the target outcome.

Question behind the outcome: "Why should knowledge be managed?"

Answer: knowledge has proved to be a resource that is critical to efficiently determining a two-part condition:
- when solution options exist and
- which options are optimal.
In the past, opportunity and quality have both suffered because effective knowledge was not available to be incorporated in a timely way during investigations and decision-making.

The goal of managing knowledge is to achieve timely discovery and acquisition of quality-checked knowledge for use during "live" investigation and decisioning.

It is important to recognize that investigation and decisioning are "constants" across a wide range of distinctive eforts:
- development (design, build)
- analysis (assess, interpret)
- auditing (measure, validate)

The management discipline provides people (roles), processes and tools to facilitate the following treatments of knowledge:
1 - discovery/generation
2 - QA
3 - acquisition/distribution
4 - lifecycle control (content versioning and retirement)

Practices within the discipline are "best" when they accomplish the following two things:
- they manage to align each of the four treatments individually with the operational environment that is meant to be sustained by executive influence (or group culture),
- but the practices align them in a way that allows each treatment to align with the other treatments (!) -- especially so that you get a chain linkage from 1 to 4 that allows 4 to also loop back as a "supplier" to 1.

With this overview, it is possible to understand where most of the phenomena that are now associated with KM should be able to fit in, and to simultaneously recognize that the various phenomena can be creatively "fitted in" to exploit special circumstances such as existing resources, emergencies, enthusiasm, or general curiosity and inventiveness. Those circumstances should be governed by a higher-level strategy. The typical phenomena include collaboration, multimedia (rich content), social networks, semantic search, library science, and games.

Posted by Malcolm Ryder at 9:51 AM

March 18, 2008

The End of Irrational Execution

Faisal Hoque, Chairman of BTM, appeared in Baseline Magazine with a brief discussion on the three elements needed for "Transformation: Inertia to Agility" (BTM innovates new business models and enhances financial performance by converging business and technology.)

As usual, Faisal offers a wonderful summation of what levers to throw and why to throw them. Here, he observes innovation, efficiency and abandonment.

Sound familiar? Perhaps the most interesting aspect of his article's proof point -- Amazon -- is that it shows how far we have recovered from the dot com era assumptions, particularly when it comes to understanding that in a business we actually have to get paid for making people happy. What Hoque really pins down, though, like a refreshed road marker, is that the "making" part is not the business, but is instead the competency.

Amongst the problems in the mix, the inertia that Faisal details is arguably the description of how business frustrates competency (“We have to meet this quarter’s numbers or we’re toast.” ), while on the other side of the coin Hoque highlights how competency, through enterprise architecture, can drive a business ("the first step is to get a clear picture of the entire enterprise...").

Meanwhile, that flashback we easily have on older preached wisdom like "Fail Faster!" and "Destroy Creatively!" still seems to apply, but the difference is that we have actual history on that now. The history begs the question, "why are only the exceptions successful?" Hoque's answer looks to be a turnaround on the old saying "If you don't know where you're going, it doesn't matter how you get there..." The turnaround is, "If you don't know how to get there, it doesn't matter where you're going." But we can't make the mistake of joining the casual crowd exuberance for "execution": the point is that enterprise architecture is the competency enabler that then delivers execution for the business.

Posted by Malcolm Ryder at 9:01 AM | Comments (0) | TrackBack

March 16, 2008

Innovation by CIOs: the Same Old Same Old

Proposed: Business is built on IT, and CIOs know more about what IT could offer to innovation, so they should drive the innovation.

On the one hand, it looks good on paper. It's not new, but it seems to make sense.

On the other hand... wait, where IS the other hand?

The CIO Insight Discussion hosted some talk from industry analysts Forrester and kicked off followup commentary.

Reader Jon McAdams had left an earlier comment there that saved the rest of us some writing... So I'll segue from some of what he was pointing at.

CIO's who don't feel very "chiefly" should rightfully question whether their compensation is in line with how they'll actually be measured. But in the world of performance measurement, speaking truth to power is personally relatively expensive. How do you afford it? There's the dilemma.

Proposed: Any CIO who wants to use the word "Innovation" more than once a business quarter should be prepared to provide the definition of what innovation is, by distinguishing its flavors from each other: the planned, the authorized, and the actual. If the CIO is a decision maker in all three dimensions, then there is, fortunately, no dilemma; there's just execution.

But in execution, there are two tracks to follow: priority, and production. If the CIO is not being paid to decide and validate their alignment with each other, then again there is, unfortunately, no dilemma. There's just the matter of whether other people around the CIO want to know what's real or not before they take the actions they actually take.

Let's face it, giving action orders to the "head of IT" doesn't require having a CIO or being realistic. Meanwhile, getting orders can be done with one hand tied behind your back. But being held responsible for the consequences of someone else's higher up decisions is clearly not a prescription for being the chief.

Posted by Malcolm Ryder at 10:59 AM | Comments (0) | TrackBack

September 22, 2007

Being Steve Jobs

Oh well.
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(Image credit: not mine. Vidcap from the copyrighted commercial DVD.
On that note, how long before Jobs has it streaming to an iPod?
Consider this image use free pubilicity.)

Posted by Malcolm Ryder at 8:19 AM | Comments (0) | TrackBack

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

September 19, 2007

Make IT a Business Strategy

In the CIO Magazine article Let the Business Drive IT Strategy, the visibility of many views on strategy helps to paint the map so that people concerned with IT strategy management can see where their relative starting points are, not just their goals.

But in that map, how did we wind up in so many different starting places that we decided to call by the same name?

Here is a 50,000 foot high view to consider. What does "IT Strategy" mean? Strategy for what? The candidates are found in two dimensions.

First - what is used:
- Services
- Resources
- Information

Second - how it is organized for use:
- Provision
- Architecture
- Property (assets)

Make a 3x3 matrix of the above, identify what needs to happen in each cell and who needs to care (owner, operator, consumer), and then on the business side at least everyone can see what they are trying to talk about.

With that view, it then becomes meaningful to talk about the business's ideas of performance (goals), value (impacts), and risk (policy and culture) -- with the objective of assigning people to be responsible for them and then investing to make those people successful.

This isn't about "succeeding with a strategy"... it is about actually managing with a strategy.

Posted by Malcolm Ryder at 8:44 AM | 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

July 20, 2007

Strategy versus Execution

Senior managers are mainly charged with making politically correct decisions based on imperfect information. Subsequently, organizational success ultimately comes from navigation through calculated risks more than any other skill...

Discuss amongst yourselves.

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(Note: images found via Google search and at Shutterstock... and are not my original artwork.)

Posted by Malcolm Ryder at 8:48 AM | Comments (0) | TrackBack

March 24, 2007

Big Brass versus Crystal

Some balls are easier to juggle than others. But is that stance any way to run a company?

Something we certainly think we'll have to read is Michael Raynor's book The Strategy Paradox. Why? Because, as Deloitte puts it in their website's introduction to the book, "Management orthodoxy demands that strategies be built on commitments, which leaves no alternative to basing today’s decisions on assumptions about an unknowable future." This observation quickly drives down to the more important point they cite from Raynor: "The board should not evaluate the chief executive officer (CEO) based on the company’s performance but instead on the firm’s strategic risk profile..."

Since a review of the book is not where these paragraphs are going (yet), please visit Deloitte or even Raynor himself. What the heck: skip all that and read the book.

Before I read it, I'll turn my cards face up: if Raynor's book winds up telling me something other than that enterprise architecture, theory of constraints, and real options analysis is what's needed (and we assume it should), then I'll probably talk about it again. Maybe here, like, you know, in the next paragraph that could follow this one. Why not. While we're at it, let's go dust off our books about Royal Dutch Shell, do 'em again, and come back in a while.

For those of you with not that much time on your hands, a suitable companion piece is still available from Strategy+Business thanks to our buddies at Booz Allen, whose website offered this bit last year (as announced through emails to the faithful). I'm going to assume that advertising this for them will leave me in friendly territory vis-a-vis their copyright on what they sent, shown here for your convenience:

Sharpening Your Business Acumen
by Ram Charan

Dallas, March 30, 2006 -- The ability to see the big picture, anticipate external trends, and adapt accordingly requires plenty of practice, but can create unique moneymaking opportunities. It requires executives to transcend old rules of thumb and take strategic risks that don't follow precedent; to envision the effects of change before change happens. Here's a six-step thinking process to help anticipate external influences in the marketplace and craft smart strategies accordingly.To read the full article:

http://www.strategy-business.com/enewsarticle/enews033006

Posted by Malcolm Ryder at 4:34 PM | Comments (0) | TrackBack

The Rite(s) of Way

Today's coffee talk topic: performance improvement is neither performed nor improved. Talk amongst yourselves.

If you've been reading stuff around here before, you know that we always separate performance, competency and capability the same way we separate effects, causes and prerequisites. We even generally eschew pondering the catness of dogs and the appleness of oranges. But that doesn't mean we blow off the criss-crossings of ideas. This piece is about the intersection of Susan Conway in Optimize Magazine (January 2007, p. 50), and our everpresent mates at McKinsey.

Conway, driving north-south, describes her trip: "In my research over the past several years, I've found that measuring specific business challenges is possible using a productivity-impact framework (PIF) to understand what IT solutions are needed to increase productivity... PIF is a Lean Six Sigma (LSS)-compliant process that supports the correlation of ... variables ... to measure the impact of information and technology on an enterprise's productivity... Measuring, mapping, and understanding the right combination of technology and business processes, practices, and procedures let an organization achieve productivity gains...both capability and the efficiency or speed of delivery ... of products and services to customers."

McKinsey, driving East-West, routinely promotes the need to understand what kind of "productivity" would be most relevant by distinguishing and targeting the three essential strategic business needs: "Stay in the Race", "Win the Race", and "Change the Rules"... Their thought: when you come to the three-pronged fork in the road, chances are you need to pick one of the prongs before proceeding.

Conway's path is about using tools to speed up work that can also be procedurally optimized. We can call that "how to work" or "Do the Work Right". McKinsey's concern, on the other hand, is about heading in the right direction in the first place -- or let's call it "Do the Right Work".

This still allows us to see how they can -- and arguably should -- complement each other. There are lots of intersections. In drawing that up (below), a larger frame of reference emerges that starts to "organize" the ongoing 3-letter-hell blitz of "solutions" crowding our many fields of enterprise management.

We like the idea that Conway's three terms can represent what the enterprise ought to be worried about getting good at. Still, with that frame of reference, I took a second pass. In the second pass I stretched but not shifted what appears to be Conway's focus on IT per se. Why? Because: as tools, IT gets (from Conway) a specific kind of attention as an "enabler" bottom layer or element in a "productivity model" (north-south axis); but in effect, there are no managerial solutions listed in the framework here that are really practiceable without IT. As a result, we should revisit this "productivity" issue in Conway's north-south axis. What is shown below is a better version of the frame using some alternative terms. The new frame's north-south terms (or second dimension) -- information, communications/workflow, and governance/practices -- describe and stack the supporting roles of those solutions shown, in a model of "strategic" productivity. That is, the bottom row supports the middle row, which supports the top row. Meanwhile, this new frame assumes that all three of Conway's PIF terms are really a third dimension -- the PIF pertains to tactical productivity within each (and every) "solution" shown in the frame.

Corrected frame:

Glossary of solutions:
ITSM - IT Service Management
BSM - Business Service Management
PLM - Product Lifecycle Management

SOA - Service Oriented Architecture
BPM - Business Process Management
OPM - Operational Performance Management

KM / BI - Knowledge Management, and Business Intelligence
SCM - Supply Chain Management
CRM - Customer Relationship Management

Posted by Malcolm Ryder at 7:10 AM | Comments (0) | TrackBack

February 16, 2007

Mind Canary

For decades, as a precaution, miners have been reeling canary birds down into their mines to warn them of potential disaster -- as the canary is particularly sensitive to toxic gases such as carbon monoxide which is colorless, odorless and tasteless. If the canary dies, then the mine is dangerous.
A mind canary is very similar, with the word "mind" as a play off of the word "mine." If the "idea miner" sends an idea canary into the "mind" and it fails to return, then the mind may be lethal!

Thanks to marketing pro Alan Brooks at Mindcanary.com for memorializing this bit of Archestra legacy. He's adapted it a bit (as you'll see in the wording on his homepage) -- but to good purpose: he's guiding folks to safe mines. Hi Alan!

What do you do with a lethal mind? See "change management" and/or "knowledge management" -- at an Archestra location near you...

Posted by Malcolm Ryder at 6:28 AM | Comments (0) | TrackBack

October 18, 2006

A Beautiful Mind

Decision-making under uncertainty is the usual line item in the list of key management challenges, but the flip side is no less worth studying too. Our colleague Bruce MacEwen at Adam Smith, Esq. composed an excellent survey of the question, "How Do You Decide When To Decide?"

My immediate observation is a flashback on the old saying, "a work of art is never finished, rather only stopped..." This points directly at an underlying work dynamic of continuous consideration and reconstruction, in which potential components of "meaning" are arriving, examined, and accepted for their relevance to realizing an overall design. In art, the "stopping" question is, has enough of the design been realized to meet the purpose of the design?

In management, the two biggest fears about decisions are typically that they will be either counterproductive or inconsequential. Cutting right to the chase, being counterproductive devalues the investment of assets and resources, and being inconsequential devalues the credibility of the decision maker. This makes the manager's only "acceptable" output one in which there is a related effect that desirably differentiates the future conditions from the past. Here, the "design" at stake is this set of future conditions. But too often observers mistake the wrong thing as the design: decision-makers and their observers focus on some measurable "state" instead of on the new conditions that allow their desired state to occur. As a result, they too easily fail to determine whether the difference made by the decision is the "right" difference until they see the desired result (if they ever do). In looking for the ultimate desired after-effect of the decision, they fail to actually grasp the value of the decision itself. No wonder decisions remain mysterious to many observers.

What must instead be understood is that decisions don't create the target state; instead, decisions enable the conditions that allow or create the target state.

To be fair, a proven business approach to establishing this perspective is to require "justifications" as part of the decision-making process. The justifications call out the terms by which the desired ultimate outcome is reasonable to expect from the circumstances that will prevail if the proposed decision is made. This degree of foresight is wonderful if there is the time to develop it, and MacEwen's article points out the value of prior experience and rehearsal as a critical path to the competency for rapid envisioning.

That's a lesson every good football quarterback or basketball point guard has already learned -- and their practice is a great one to consider here. When using a pass to improve field position, what they are doing in their on-the-field work is envisioning multiple possible future states, setting certain events in motion towards those states, and in the heat of the subsequent flow of moments they examine incoming "data" and make reactive adjustments to raise the probability of the "still most feasible" desireable state to its maximum. The final pass, also presumably caught, locks in the conditions for that state.

How do they get that competency to an effective level? By having to do it again and again. But the bigger point is this: what causes them to decide is a moment at which they recognize a high correspondence of probable conditions to the prescribed conditions they expect will be necessary to their goal. Put simply, they compare "reality" to their design.

At this point, another major factor kicks in -- the issue of whether the correspondence seen is "as good as it will get"... Here, I'm always reminded of the the saying "perfect is the enemy of good enough" and it points to another common but correctable mistake. The mistake here is in failing to evaluate the design independently of evaluating the means of execution. To dramatize the fault in this, consider that perfect execution of a bad design is probably pointless. The exception to that is those occasions in which perfect execution is necessary for actually determining in the first place whether the design is even valid (i.e., "good") for its own purpose. A normal management scenario, however, recognizes the difference between "testing" and "live production", even if it sometimes has to be producing "live" but experimentally.

Even with that exception included, the most important point is that decisions are made in two different dimensions: one in which a design is accepted, and another in which execution of the design occurs. Some decisions may improve execution, but others may actually improve (and/or replace) the design. If execution is already good enough to realize a great design, then execution really is good enough -- and the decision to have that level of execution is probably a pretty good one. The real challenge here is to have great designs in the first place.

In science, Thomas Kuhn explained the phenomenon of "The Structure of Scientific Revolutions", an ongoing story of how a current theory holds sway until evidence (and politics!) forces it to change or be supplanted, sometimes over a span of decades. In another story, Malcolm Gladwell talks about "The Tipping Point" as an event in which the speed of applying evidence against theory is almost literally electric and instantaneously completed, thanks to the availability of previous experience stored in the mind.These interesting stories about decision-making are not intended to portray clairvoyance, yet they both directly describe the importance of having foresight in the form of a design. The practical lesson: commit to a design, and decisions will follow.

Posted by Malcolm Ryder at 9:13 AM | Comments (0) | TrackBack

September 29, 2006

The difference between Value and Valuable

In our management comfort zones, if we're not in the skeptic's cart, we'll usually associate "strategic" with "valuable" in an almost automatic reaction, with the additional thought of "higher" value coming along for the ride. It just feels like the enormous discipline required by strategy makes the higher value of strategy harder to come by than non-strategic value...

But the big news is that value doesn't come from strategy. Instead, value comes from execution. The essence of value is that it is a difference with a significance -- and that difference doesn't just pop up on its own.

Strategy might define what will be considered "significant" about a difference, and of course that's the real job of strategy: to identify and promote pursuit of what is most important. But literally making that difference occur is what execution is all about.

Thus, while the priorities and positions set by strategy are what we'd consider to be "valuable", that simply means that with them we have a reasonable hypothesis of the potential for value to be gained. The value is not actually there, however, until execution draws it out from real circumstances.

So what are we saying that is not already obvious? Strategy is not action. Strategy, as a plan or an idea, is the money hidden under the mattress while the markets swirl around. Everyone can guess at how valuable a strategy might be, but since real value comes from execution, the irony is that the promised value of strategy generally competes with the real value of execution.

Judging from recent popular management literature, it would seem that strategy loses this competition more often than not. But this is because we tend to discredit the importance of a strategy that must keep changing in order to stay competitive with the outcomes of execution. If the strategy "had it figured out" but then had to change, then wasn't the strategy wrong? And won't it be wrong again if it has to change again?

Think through this, however, and what surfaces is that strategy is not a static reference but instead a dynamic mentality. Like a blueprint, it is essentially a set of design principles iterated for a target moment and location of delivery. The moment and location can change, resulting in a new blueprint while the principles remain the same.

We accept that these days we usually must work against moving targets, but that simply means that we have to have means of deciding in advance what our positions and operations should probably be in the foreseable future. Charting these P's and O's, and then navigating according to the chart, covers a lot of the discipline and commitment in strategy, leaving execution with the job of producing the current movement while also protecting the opportunity for the subsequent ones.

So, while we should measure execution according to that "productivity", we should remember to measure strategy by the strength of the logic with which it identifies leverage in pursuit.

Posted by Malcolm Ryder at 7:31 PM | Comments (1) | TrackBack

August 20, 2006

How To Manage Strategy

This model for managing strategy abstracts the phases of a strategy's lifecycle and identifies the connections between the phases which bring about implementation and revision.

This management model offers two major areas of attention -- "Delivery" and "Support", borrowing the somewhat unusual British terminology for (respectively) production and maintenance that many people first encountered in the IT Infrastructure Library (ITIL). No other assumptions about the model's resemblance to ITIL should be drawn from this borrowing, as there is no other intentional resemblance.

Meanwhile, some observers may also get a sense of the Deming Cycle ("Plan, Do, Check, Act") from the illustration. That is not a particularly intentional resemblance either, but instead it just reflects that lifecycles are normally not difficult to lay out in a context of ongoing responsibility for quality or improvement.

The more important general observation is that a strategy is identified as a conceptual entity, so it is the life of the concept that is being managed. The distinction between delivery and support is to emphasize that one cluster of attention and activity is busy introducing and "staging" strategies while another cluster is busy aligning them to the realities of execution. Why is the distinction important?

The main reason is that we're so strongly tempted to see the lifecycle as a "pipeline" or "queue" -- and that might be a bad perspective. For example, one question that arises in that perspective is: how many different strategies are put into the "queue" by delivery, versus the capacity and rate of "support" to process them? If we imagine a "bottleneck" in processing, we imagine that we can explain failures of strategy that way. But this is not how strategies fail.

Strategies fail the same way a house falls apart. A cheap roof in a rainy season; a weak foundation on soft ground, and so forth. The house stands when all of its supports are good enough. They all need to be good enough at the same time. But you still don't put the roof on before the floor and the walls are there or at least framed.

The breakthrough observation is that while a new strategy may be adopted one phase after another, it doesn't leave behind the earlier phases as it progresses. Instead, it finally "lives" in all phases simultaneously, and all of its phases must be continually attended, if necessary rebuilt and/or reconnected, in the face of constant change.

Strategies fail due to incompatibilites that go unresolved -- at two levels of reckoning. At a high level akin to design, there is the issue of outright misfits, the square pegs against the round holes, things that just don't work together. At the low levels of operational detail, the problem is not like congestion in the pipe, but rather more like an erosion of structural integrity leading to fragility and a breakdown.

To make this issue more explicit, first consider the high level -- two points in the cycle that are major "reality checks" on the strategy.
- One is the decision on whether the strategy is important enough to develop in competition with other concerns. This is the matter of "optional" versus "must have", or as represented in the model, Portfolio vs. Requirement. Here, funders consider the investment versus the significance.
- The other most critical point is where the agreed concept has to be formally expressed (not just intended) as operations. In the model this is represented as Plan vs. Initiative. Here, people are concluding whether their effort has discernable impact of a valuable kind.

Why are these two points the most critical? Because a lot of the cycle is "thinking about" the strategy, and a lot of the cycle is "already using" the strategy -- but these two points represent where the strategy is accepted or rejected by the organization that must "realize" the strategy.

Also, they explain where a strategy not born of the organization can enter the organization, or where one born of the organization might have to exit. For example:
- Perhaps the strategy is actually delivered by a third party (including cases where a consultant or a new organizational leader brings it in, or where the example of some other organization's strategy is adopted).
- Perhaps the supporting organization exhibits a competency that indicates new options and probabilities, stimulating the conception and/or development of a new strategy. However, incompetency can signal the demise or retirement of an existing strategy.

Those two reality checks are prominent, but they are not effective on their own. The other points between lifecycle phases are also part of the decisiveness of the strategy's management in practice. They are required to move from one phase to another. The decisiveness comes from resolving the pairs, such as scenarios versus actors, or agreements versus policy.

Why do we say "versus" ? This refers to an aspect visible in an expanded view of the model (click here, then save or print landscape). Each of the pairs opposes two kinds of management resources -- an "artifact" resource against an "environment" resource.
- Artifacts (like scenarios and agreements) document the description of the concept in its current phase. These would be the items such as scenarios, agreements, initiatives, etc. (in blue). They communicate the strategy.
- Environments (like actors and policy) constrain the activity that the artifact indicates is necessary at each phase. These constraints in essence become the key ingredients of the strategy's workflow.

Realization of the strategy occurs mainly through synchronizing the communication of the strategy and the conduct of its activity appropriate to the communications. The synchronized pairs then become the "inputs" into their respective following lifecycle phases.

The expanded view of the model also reaches down to the low level of resolution detail. It points out that at each lifecycle phase, the processing of the synchronized input should be designed, and the model identifies what the phase design is like. For example, a key design parameter is "Fit to Organization"... at various phases shown in the model, "best practice" in this design aspect has the following features:
- Research is cross-disciplinary
- Modeling is iterative
- Publishing is cataloged
- Etc.

And as activities, each phase has a design with a "Functional Goal"; for example:
- Research is automated
- Modeling is synthetic (not organic)
- Publishing is networked
- Etc.

In terms of development, the model also maps to the conventional concerns of vision, mission and implementation:
- Vision is addressed through the span of the cycle from Adjusting (including its evaluation and measures inputs) through Research (including its scenarios and actors outputs).
- Mission is addressed likewise, from inputs to Modeling, through outputs from Publishing.
- Implementation sits between inputs to Tracking and outputs from Examining.

Given that arrangement, the most notable aspect is that Vision must stretch across strategy Delivery and strategy Support -- and while that span does not guarantee success, it's hard to think of a successful strategy that didn't span that way.

All that said, the model is a work in progress. As with most Archestra models, this one is intended to diagnostically expose points at which current efforts may have had a critical failure, or conversely where the development of efforts should prioritize attention.

For elaboration on the model's other design parameters of strategy management, or to provide your commentary on the model, contact me by email. Other commentary on the progress of process management is posted in the July 04, 2006 Archestra entry on "Managing the process of internal Business Change".

Posted by Malcolm Ryder at 9:05 AM | Comments (0) | TrackBack

June 26, 2006

Recognizing Progress: Effects versus Results

We know the old saying, "don't confuse activity with achievement." It warns us that making an effort doesn't necessarily mean we're making progress.

But one of the problems in recognizing progress is the need to know whether the conditions being generated by activity are beneficial or not.

To do that, there first must be an awareness that benefits may be unintentional as well as intentional. And meanwhile, we might get to the benefits in a planned or unplanned way.

This quickly catalogs four kinds of outcomes:
- intentional benefits from planned activity
- intentional benefits from unplanned activity
- unintentional benefits from planned activity
- unintentional benefits from unplanned activity

But along with activity and benefits, there's a third dimension too.

In management, we have to especially notice that planned or assigned activity is a mode of change, and that the circumstances (think "environment" or "context") of the activity can also change -- independently of the activity and especially during the activity.

With two sets of changes occurring -- activity and context -- the impact of each one on the other will shape the emergent conditions that are examined when we look for "progress".

When it comes to an assessment, history has shown that some combinations of conditions are far more associated with ultimate success than are others. This is why the "profile" of the conditions is so important to detect, not just a measure of an action or event.

This is a way of saying that success is relative to circumstances, so describing the circumstances adequately is more important than anything else in understanding whether an effort is being "effective" as opposed to its being ideally conclusive. For example, in a long race, the "patient tortoise" is more successful than the "impatient hare". The progress profile includes the awareness that the race is a long one... not just that the runner is fast or slow.

Here's another similar example. Imagine a motorized walkway running from point A to point B. If we decide that "progress" is to get from one point to the other, then the following problem occurs: walking on the walkway against the direction of its flow might "net out" to going nowhere. That seems to represent no progress.

But alternatively, if one must try to get to the opposite point even if walking against the flow, then going nowhere is better than going backwards -- so in making the effort, avoiding a likely loss of ground is a benefit to the cause and must be seen as making progress.

In the latter case, the benefit is clearly an "effect" -- meaning that it is an outcome contributing to the overall desired "result" although we don't yet have that final result. And we can see that the idea of "effectiveness" is most strongly associated with the way (and the fact) that we have predefined the requirement, not the goal.

Meanwhile, the effects of an effort are not always beneficial. We'll be getting effects from any effort, but they may not all make positive contributions to the desired result, and furthermore they may even be counter-productive.

The above perspective on things yields a description of the approach we need for understanding and communicating progress:
- We identify effects;
- We rate the impact of the effect(s); and...
- We measure the result

Thus there are three kinds of achievement to observe:
- producing the right kind of effects;
- gaining more beneficial impact from the effects; and...
- getting closer to the desired final state

Superficially, this mimics the structure of organizational responsibilities:
- operations (for the right effects)
- management (for the beneficial impacts)
- executive (for the target state)

But more importantly, there should be a strategy that guides the prioritization of efforts by telling what kind of progress is most critical, giving the most bang for the buck, at different times and places. Changing operational competencies is radically different from changing targets. Changing the wrong thing can be at minimum wasteful and at most catastrophic.

Postscript:
Extensive practical analysis of this issue -- including further distinctions between "activity", "achievement", and "progress" -- is available from Eliyahu Goldratt, who developed the Theory of Constraints.

Posted by Malcolm Ryder at 8:02 AM | Comments (0) | TrackBack

April 9, 2006

Uncertainty versus Execution

Understanding agility as the solution to executing versus uncertainty.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted by Malcolm Ryder at 12:21 PM | Comments (0) | TrackBack

April 2, 2006

Business-IT Alignment: Revisiting ActiveROI

By the time the Y2K threat got serious in the corporate mindset, IT innovation had already reached a point of viability where replacing old stuff had to be taken as a serious alternative to patching it.

But it wasn't just the technology that needed to be reconsidered. As it is almost automatically remarked in the business conversation about IT, related people and processes also were in the mix -- and here came the dot-com wave.

Among various other things that "e-business" did to reposition IT in the enterprise, it gave an old teaching instrument a new meaning.

You may remember the elementray school spelling aid "I before E except after C"... For it's new web-era use, I translated it to mean "infrastructure before engagement, except after customer." The problem new to the day was that the web was now allowing customers unprecedented aggressiveness in dis-intermediating the corporate mechanics that ordinarily actually provided services. Customers emerged who wanted "do it yourself" relationships, while others emerged who simply had no patience any more for companies that mired them in internal production technicalities.

Effectively, in both cases the customer's punchline was: "if your I.T. doesn't make me happy, change it or I'm gone."

The hugely superior economies of keeping existing customers versus gaining new ones made the most sense of my new translation. But the implications for IT organizations were not really so new. The point-of-view on IT's operational performance just shifted from I.T.'s "internal" customers (business units) to the company's "external" customers. Internal customers had already had this attitude for a while, and everybody knew it.

Still, despite external customers suddenly getting their hands directly on company infrastructure, it seemed brutally obvious that IT organizations should not be held responsible for managing external customers. (Otherwise, what were business units for?) So the message really needing to be drummed was that internal customers needed to be better empowered by IT.

By abstracting the basic management steps to that empowerment -- resources to operations to relationships -- the model I first proposed set a floor under a wide region of research, from which several key further items grew. Among those, a major one well-rehearsed by 2002 forecast the IT Organization agenda as in the article CIOs: Managing the business's IT Agency.

Then, what brought that agenda to the level of the full CxO group was the problem of linking IT performance to enterprise performance. This problem enjoyed a huge rise in importance due to the maturing acceptance of having enterprise applications automate essential operations cross-functionally, despite hair-raising complexity in integrations and change management. While I liked referring to the celebrity of the problem as "Enterprise Chance Management", it wasn't much of a joke since it was also becoming more obvious that business opportunity was relying more and more on IT-enabled responsiveness.

Given the huge level of investment recommended by Y2K, enterprise applications, and the internet, the business need to understand the value of its IT capacity hit a high point that called for a way to put the IT agenda into a model of being managed by the business. In reply, I created (and own) the ActiveROI model -- a construct signifying the generation of business value from IT resource optimization, achieved in a continuous and proactively matured discipline. Translating the model into practice methodology, the consulting firm Renovance, LLP went to market. Renovance's elaboration of methods for applying the ActiveROI model was indicated early on in the whitepaper, "ActiveROI: Achieving Business Processes and IT Infrastructure Alignment through Real-TIme Management". (As a consulting firm, Renovance developed and offered trademarked practice methodologies of my copyrighted model, in its lines of business.)

From a CIO's perspective, the ActiveROI model describes that the enterprise's engagement with the marketplace runs on an organizational platform created by architectural and portfolio management disciplines that can coordinate IT.

But overall, ActiveROI understands performance in terms of relationships and the services that maintain them, while it understands resources in terms of events and the investments that address them. The critical thing to note is that services and investments are the two most highly discretionary offerings of the executive management of the business -- effectively defining the identity of the business that will predispose its opportunity in the market. As explained by ActiveROI, this "drills down" to the IT agenda and its business alignment.

By way of ongoing explanations and by hosting comparisons and debate, Archestra will continue to elaborate the ActiveROI model and several of its already-in-progress successors or offshoots -- including Archestra Runtime by myself, and works that certain colleagues may finalize for presentation via Archestra in the future.

- Malcolm E. Ryder, April 2, 2006

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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

February 21, 2006

Culture as Brand

Here's a thought: large companies have the problem of peering into the crystal ball, while small companies have the problem of functioning in a fishbowl.

What does that mean? Large companies act like they are picking the market; small companies act like the market is picking them. Both cases, tough situations for them to handle.

Ironically, the lip-service in each case is usually reversed. At least when these companies are facing their funders, large companies talk about being picked, and small companies talk about doing the picking. Interesting how things switch when the issue is asking for money instead of taking it.

Thinking of the small start-ups and non-profits that I've worked with (not exclusively!) over the years, I'm reminded that both of them frequently struggle with another interesting choice. They might have multiple value propositions riding on the same competency, or they might have only one value prop that anyone cares about, and must shift amongst multiple competencies in order to continue delivering the goods. My experience with them is that the more the outfit needs money, the more it sends multiple competencies at one value prop -- whilst the more it already has money, the more it imagines that one competency is wonderfully fertile. This is related to the market targeting issue, but it's more directly concerned with competing after the targeting has been done.

Related to that, I notice that we usually try to imagine branding as being a cause versus being an effect. That is, if brand is what we want buyers to think we think we're about, how do we make the many things that we do cause them to see us one way? Or are we simply at the mercy of whatever random things they do to see us?

Mulling over branding a few years back, and thinking about companies that can't see themselves the way customers see them, I hit a point regarding the vast difference between "positioning" and "position" -- hardly a new topic. I suddenly had the thought that to close the gap, the real purpose of a business is to create customers, while the purpose of a customer is to create products.

The realization came from an imaginary dialogue:

Company: "I'm doing this *for You*
Prospect: "Yes, but are you doing it *this way* ?"
Company: "Well, what do I get if I do?"
Prospect: "You get *me*..."

Think about how persuasive it is to be able to tell an audience what kind of customer you make -- which is what we can think of as the "cause" aspect of branding. Prospects would say "I want to be like your other customers" and so the reputation helps you to make more customers. (Good positioning!)

The "effect" aspect is more about the product (or likewise service) that actually gets made. Although the catalyst for the product is the customer, the bottom line is that the company winds up making the product for itself and finding out later if it's good enough to sell. Prospects say "I require something of a certain type" and their scrutiny of your product/service ranks you (leaves you) somewhere in their consciousness. (Position, for better or worse.)

At any rate, those thoughts boil down to the idea that the prospect defines the opportunity by expressing their *preference*, so you market to the preference. Moreso, as savvy salespeople know, the preference reflects an "assumed identity", and the same prospect could turn into several different customers.

Putting it in the context of revenue growth through superior competition, such differences seem to point at segmentation. It's quite interesting to imagine that one given potential buyer might be a customer simultaneously in different segments, but this is something to think about especially in terms of what customer relationship management must address. Frankly, it must address culture -- which is the empirical evidence that the prospect's multiple personalities make sense to them...

Posted by Malcolm Ryder at 1:53 PM | Comments (0) | TrackBack

February 17, 2006

Executive Agenda for IT

In the diagram below, we have a bird's eye view on the major business initiatives reconfiguring the management of the enterprise's reliance on the IT infrastructure.

The view identifies that the key high-level motives of the organization are related in certain ways.

The enterprise wants to maximize the value of its autonomy and identity through decisions and actions that:
- differentiate itself in the market,
- optimize its modes of establishing impact and presence there,
- sustain the mechanisms that it uses to do so, and
- control the dynamics of its organization's internal makeup and external behaviors.

These possibilities are systemically related to each other. That is represented by the perspectives that are used to monitor the general states and conditions that presuppose the enterprise's health and/or growth. These perspectives -- governance, performance, architecture, and security -- collectively describe the approaches and models for monitoring the enterprise. The general understanding sought is of whether the way the the organization has chosen to structure itself and to act is viable for achieving its intended goals in the environment it has chosen to inhabit.

Also shown in the picture is the prominent place that stakeholders have between processes and performance.
Likewise, the key intermediary position between security and processes is typically occupied by policies.
The chain of influence formed by their inclusion explains how security is linked to performance -- meaning that the enterprise continually must balance the opportunities to which it commits against the constraints that it can recognize.

For the time being, though, this discussion focuses on the chain of influence that runs between the enterprise's two more overtly discretionary states. Governance and Architecture are both highly complex but they are also more fully synthetic designs than are security and performance, because they are less dependent on external forces to realize and maintain their intended design. As such, they are closer to the issue of the competency and maturity of the organization that can be established directly by management. The picture above expresses the target competency and maturity through identifying issues such as that standards mediate the dependency of processes on infrastructure, or that change mediates the production of infrastructure from architecture.

Taking this picture as a bird's-eye view on the top "surface" of the enterprise's structure, what lies underneath are layers of composition, for example such as "assets". The picture shown here allows us to consider enterprise assets in terms of each motive, perspective and linkage illustrated, detecting discontinuities and strengths of impact. While financial evaluations, functional evaluations (which include intangible assets), and physical evaluations of assets are already three ways to understand how assets become enterprise resources, we see more clearly in the picture here the circumstances in which any of that matters. Likewise, operations, relationships, and strategies are each layers to be interpreted.

The presumption of the different underlying layers highlights that the terms shown in the picture are necessarily abstract -- but it is that very abstractness that allows us to understand that they influence each other in an "essential" way, not just a circumstantial way. Understanding the enterprise from this model is mainly an act of interpretations. For example:
- From an organizational viewpoint, it's not hard to see the organization defining itself in terms of the linkages such as rules, systems, services, etc. by which it institutionalizes itself for attending to the primary motives.
- From a practices viewpoint, it's not difficult to understand from the picture things such as that compliance is a management responsibility that derives from the influence of rules, policies and requirements.
- From a disciplinary viewpoint, BI and BPM have evident locations and sensibly share influence on agreements or "contracts" by discovering and then formalizing the conditions for assuring appropriate deliveries.

While the abstractions and their interpretations cover a wide range of management phenomena and business objects, we'll always eventually wind up back at the huge reliance that the business has on information technology in order to just stay on the playing field. As a result, it is appropriate for IT executives to interpret IT plans, operations and impacts with this same picture of the enterprise, acknowledging that the portfolio of IT implementations can be evaluated for its completeness and effectiveness by considering how much support is being generated for the alignment and balancing of the items in the picture.

Posted by Malcolm Ryder at 3:49 PM | Comments (0) | TrackBack

February 11, 2006

The Beauty of Bias

It's said that in a service relationship, the worst kind of customer is the one that screams, "I don't know what I want, but I'm not gettin' it!"

We try to be good customers by at least getting advice beforehand to help us figure out what we want. Usually the focus is on getting an accurate fix on which products really do what they claim, and of those, which one is the best one.

That said, we go to industry analysts, and we expect them to help us avoid buyer's remorse.

So, industry anaysts have clients. What does this tell us? Mainly, that you should hire an analyst in the same spirit that you would hire a lawyer! When you are the client, advocacy is the essence of the analyst's effectiveness.

A great analyst is one that can both tell you what you ought to know and tell you what you want to hear. An analyst that can do that is only able to because they understand you and they understand what you're up against. As a client, you shouldn't demand less than that.

But the point of hearing both things is to be able to evaluate the gap between the two. Ultimately, that evaluation is the correct basis for your decision.

Logically, it's somewhat pointless to have only one side of the story or the other, since that doesn't leave you with much to evaluate.

And realistically, if you are not actually a client of the analyst but instead only an observer, then you are not entitled to any more "objectivity" than you are willing to diligently pursue yourself -- by developing great perspective through your own research.

Granted, research is difficult and time-consuming, so it makes sense to go get credible research from people who do that for a living. The trick, then, is to find research that really does what it says it does, and of that, pick the best research.

But what makes for the "best" research?

The typical answer points at the research that has the most accurate, reliable answers. But it's so easy to forget that the answers only make sense because the right questions were asked in the first place.

What are the right questions?

The right questions, to begin with, are the ones that investigate the reasons why you are the one having the problem that you think you have. That self-assessment, which perhaps gets done with the help of consultants, leads to ways of stating the problem (to the analysts) that are more specifically and rationally associated with known characteristics of known solutions. From there, the analyst can become your advocate, by screening out irrelevant options.

Posted by Malcolm Ryder at 9:05 AM | Comments (0) | TrackBack

February 4, 2006

Change How You Change

The overall session plan for the strategic planning retreat was conventional. It began with a period of discovery and investigation, and would follow up with some prioritizations and then finally some commitment-making. But now it's running late. Then the attendees hit the realization that they don't yet agree on how to agree...

This moment is likely to recur; we can expect it at least once during discovery/investigation; again during prioritizations; and yet again during the committing phase.

The way the sessions are currently formatted is supposed to get them past these points, but now that's being seriously tested. The particular instruments being used along the way -- collaborations, pop quizes or games, spreadsheets, anecdotes, humor, testimonials and others -- are important accelerators and steering wheels, but are they even the level on which this barrier needs to be tackled?

We can detect the heat of the moment by someone saying "How about, let's try this..." and not infrequently the group willpower to make progress will find something that seems to cure the moment. But what if this is really skirting the issue -- which is that not knowing how to agree is a symptom of not knowing how to change?

I.

Real change hasn't occurred until the party that must sustain the change has become an agent of the change. For this to happen, that party's consciousness has to be altered. When the party is an entire group, the timing might be more difficult to anticipate, but the rule remains the same.

The change of group consciousness is a pattern we come to recognize -- occurring in four main stages that will ultimately allow a strategy to be adopted.

To see this clearly, the three-stage session format must first be set aside, although it might later be brought back more clearly as a vehicle instead of as a driver.

Even then, though the direction is towards making strategy adoption allowable, the destination must be correctly understood. There will still not yet be a strategy plan to adopt; but this is appropriate and, more to the point, necessary.

Why is that more to the point? Because making strategy is inherently a creative process and the bulk of the value is in the process of making, not in the product (aka the strategy plan) made.

Once the product exists, the value of the product is not a function of strategy -- rather it is a function of applying the strategy plan, which really is the issue of execution. Execution accounts for the mandate "change how you succeed". Because everyone wants to focus on success, it's natural that almost everything gets seen through the filter of execution.

But Strategy accounts for the mandate "change how you change." The most significant transformation that the organization has to go through is not the difference between new directives versus old ones, or between certain new processes versus old ones, but instead between being routinely strategic versus not being routinely strategic. The key challenge for most organizations now is to generally and continuously behave strategically, instead of simply executing approvingly.

II.

Here's how, in these sessions, we get to the real "strategic goal", which is actually not a way of being new but instead a new way of being.

First, we learn or otherwise acknowledge that needs are not requirements. Too often groups go into "strategy sessions" believing that the reason they are there is to find solutions instead of finding themselves. The solutions of course are connected to perceived problems, which in turn are connected to ideas about intolerable current differences from a state that "should be". (Observe how much churning is associated just with the disparities in those perceptions...) This issue of what "should" be is most often set forth as a future state which is described as goals. Those goals are normally "felt" like requirements to meet. So what's wrong with this? Answer: the feeling is almost invariably interpreted through familiarity with the way things have already been done. That feeling is about what, and how much, of the familiar stuff has to change. Granted, it is sensible to think about "how do we get there from here" -- but this is not going to establish the reason or justification for adopting an emerging strategy. Actually, it's a source of wrangling over commitments to the past.

The one thing that must be clear before the next step in consciousness can emerge is instead a common awareness of what need must be met. Meeting the need will happen in the future, but the importance of the need is that it already exists. Yet the need will not be properly acknowledged until the stakeholders have been identified and ranked by their importance as target beneficiaries. Keeping in mind that we ourselves are stakeholders, too, our responsibility to the stakeholder(s) defines the need that must be addressed. We have to both acknowledge the primary stakeholder's mandate, and agree to cooperate with it. To round out the understanding of need, we also have to be able to relate our own interests as a stakeholder to the highest priority other stakeholder. It is necessary to ask, "What is our purpose", but it is insufficient; we must also ask "Why is that purpose ours?"

In the next step, that clarity of need sets the perspective that sorts out the discoveries from current-state investigations so that effective selection and organization of knowledgable inputs can occur. What should come here is visibility that allows us to identify the right problem to solve. This step is often deceptive because of the difficulty of defining problems in the way they need to be defined. In this phase, a "problem" is a necessary difference to be made, for which the significance is stated and agreed but the approach and means is not. In other words, the problem is the "value proposition". The working definition of value is "a distinction with a difference" -- and the essential task of this step is to decide what difference is necessary to satisfy the already affirmed need. In this stage, understanding difference involves recognizing that alternatives exist -- as opposed to just modifications. A modification means that the stakeholder can make something useful in a different (and presumably better) way, but an alternative means that they are free to simply use something else entirely. To eventually be responsible for an alternative, the providing party will take efforts that must be understood now yet need not be chosen until later, as in the next phase.

Consequently, some parties, at this point, understand for only the first time their true current position .

In the third step, the challenge is to choose your pain. This is a double-barrelled shot, because it calls for acknowledging that any choice has both positives and negatives, and because a choice must actually be made. Where do parties go wrong here? Their energy is highly charged and in large supply for trying to negotiate a consensus on which benefits and which risks should be accepted -- as if they were separated from each other in different aisles in the grocery store and only wind up in the same shopping basket by our discretion. But these invented match-ups will often be just fictions waiting to fail. Instead, some from of rigor must be applied to measuring opportunity costs, so that it is clearly understood that all value comes with risks, and that one cannot choose a value without choosing its already "built-in" risk as well.

When the logical associations of value and risk are frankly admitted across the board, the final step in the change of consciousness can develop in a way that can rationally affect agreed action. In this step, value and risk are both seen as aspects of opportunity, and the ability of the organization to leverage the risk of value becomes a foreground subject -- one that will point at logical material relationships of the expectations, structure and command of the organization. In effect, by emphasizing recreation instead of modification, this stage will change how we change.

Changing how we change does not necessarily produce a different outcome -- instead, the point of it is to be able to produce the needed outcomes in a different way. Developing a strategy is creating a way of being; and changing a strategy is changing a way of being. Being strategic is a competency, not an event.

III.

A design equation for the strategy forms: "why we should take this value" plus "how we should take this risk". Solving the equation will create the common vision of the way the organization should be. That provides the rationale for how strategy adoption on the personal level will link to and complement its adoption on the workgroup, departmental, division and finally enterprise level.

Many organizations will be able to approximately navigate the sequence of four phases by identifying and aligning such issues as:
- the purpose
- the value proposition related to the purpose
- the benefits and opportunity cost of realizing the value proposition
- the allowable and sustainable organizational structure given the above

In real life, all current states offer alternative futures but no guarantees. The part that we can control is the way that we will be. In picking a future, an alternative is proposed but until it is adopted it is just an idea. Adoption means that we have become an agent of the thing we adopted.

Here is a recipe for mistakes and posibly rejection:

- starting out with "requirements": requirements don't make sense until after priorities have been determined about committing to the value proposition. Essentially, requirements point at "allowable means". On the one hand, that makes them a huge source of debate, since different stakeholders have both different means and different allowances. On the other hand, starting from "allowable means" focuses attention away from purpose and onto opportunity. Justifying the opportunity is business planning, not strategy planning.

- mistaking "control" for value: control is a quality governor, which is an execution-driver, not a value-driver. Control means a proposed distinction may be sustainable; but it does not mean that the distinction is necessarily meaningful to the strategically primary stakeholder. Stakeholders see value as progress. Management should be dedicated to progress, and control is important only when it is an enabler of execution and thus of progress.

- not defining ROI in terms of the offered value to fulfill: doing this sends a message that the work and/or workers assigned to pursue objectives will not be evaluated based on impacts but instead on compliance. Consequently, it distances the worker's motivation from the strategic purpose.

Arriving at a strategic identity can get sidetracked at each of those three points, and an existing strategic identity can likewise be thrown off-track. In learning to change how we change, the learning is crucially dependent on visibility of the appropriate things, but no less so on the credibility of how they appear.

IV.

Visibility and credibility are two-thirds of the way that a changed consciousness can get to adoption. This is why the session format of discovery/investigation and prioritization is common.

The final element is constancy. Assuming a strategic identity becomes sensible because it shows signs of being sustainable for the period set out by the primary stakeholder's need. What naturally goes along with this is that successfully satisfying the need can change the stakeholder, so the strategy should expect to evolve as well. But for most parties, a pervasive plan of investment in the strategy must materialize and illustrate that the organization's impending coherence is predicated on the strategy. This will explicitly describe the reasons why participants can count on their involvement being supported consistently enough for them to realize the benefits that they need themselves.

V.

The biggest question in strategic transformation can easily be whether changes in consciousness allow visibility, credibility and constancy to be efficiently and effectively received and used by key participants. Said differently, while much data and information is evidently critical to the ability to formulate and describe the strategy, the more important issue is the perspectives in which such data or information are found and used. In order to get participants to agree on how to agree, they must have a shared perspective that is consistently appropriate to the subject of taking responsibility for realizing the primary purpose. The four stages in changing consciousness creates that perspective.

Posted by Malcolm Ryder at 7:03 PM | Comments (0) | TrackBack

January 31, 2006

Strategy doesn't win; Value-delivery wins

Scenario planning, which is really deep thinking about the future, is vital to good strategy.

Now, we don't want to blame the victim, but if you're Ford Motor Company or GM, getting crushed by Toyota in their home field has to be categorized as "foreseeable" (sp?), and Ford (as well as GM) simply fantasized dodging the hammer. Toyota is extremely effective, and Ford and GM are extremely ineffective.

Given how much money Ford and GM spend marketing their "strategy" on TV, this makes their management look pretty dumb. They've spent 20 years obsessing about "competitiveness", and are close to losing the home market (if not the whole company) because they didn't get the value right. They chronically solve the wrong problem.

Failed strategies at Ford or GM are now case study stuff for aficionados of the History of the Future. We don't doubt that the two companies were furiously busy going after things the way they figured made sense -- but now we have to wonder why they thought things made sense the way they pursued them.

Granted, the management "formula" that predicts effectiveness is, as always, somewhat illusory if not fantastical. As scholars and analysts always tell us, it's not worth much if people don't want to use it. If the people who came up with the formula are the ones who don't want to use it, that pretty much explains why the formula, despite its logic, finally doesn't make sense. The people not at the top who are trying to use it won't get much out of it.

Despite lipservice to the consultant's mantra, companies are rarely flexible, adaptive, responsive, and innovative at the same time. These four things don't matter if they are not integrated with each other -- and profit schemes and politics typically short-circuit the extended discipline required to integrate them.

For that integration, very few organizations have the necessary risk tolerance built into their profit schemes and politics. As a result, they don't really develop their business architecture and business infrastructure properly. Thus, Culture trumps Planning. (Presumably, both governance and "best practices" are going to help solve this conflict -- but not if executives are still told that they don't have to make "long-term value" Priority #1.)

The company's management formula for "effectiveness" has to string these three tricks together:

1. At a really high level, a company should understand whether it's current top need is to be in recovery mode, health maintenance mode, or growth mode. (Confusion about how to determine the top need is the ill-effect of the shortcuts I mentioned above. Any doubt? Consider the life-span and life-cycle of a CEO's tenure.) This shouldn't be fantasized; it should be based on what the environment is like.

2. Then, it needs to align to the mode. It needs to figure out things such as whether the necessary responsiveness for that mode requires innovation, and whether the necessary flexibility requires adaptation.

3. Finally, it has to figure out where to get the capability to do what is necessary to meet the requirement.

Absolutely nothing will affect that alignment as much as the decision about who the company is primarily working for. That decision provides the world-view that the company needs, and the company must then work on its "fitness" in that world, so it can compete there.

For example: if the company is working primarily to funnel money to investors, then it behaves one way.
If instead it works primarily to funnel capabilities to customers, then it behaves another way.
It might actually work primarily to funnel benefits to its community, which makes it behave yet another way.

Punchline: If it doesn't know what it is primarily trying to do, then
- it doesn't have a logical framework within which to do deep thinking about the future, and...
- it probably spends a huge amount of time trying to solve the wrong problem.

Posted by Malcolm Ryder at 5:14 PM | Comments (0) | TrackBack

January 22, 2006

What's So Smart About BI?

BI for most companies means implementing analyses. Analyses can be inward-facing, outward-facing, diagnostic or predictive.

Those four characteristics blend like this:
- Inward and diagnostic: improve production efficiency
- Outward and diagnostic: improve relationships
- Inward and predictive: reorganize processes
- Outward and predictive: reengineer position

The best reason to use BI is to answer "Why?" for each of those four things. It also makes a difference which one gets answered first, which second, and so on, because all businesses do not have the same current constraint or advantage.

If the various answers to "Why?" do not align in the near future, the organization is FAR less likely to get beyond quality control and into actual growth.

Naturally, if sustained competitiveness is critically dependent on growth, then not getting growth from BI means not getting ROI from BI.

Posted by Malcolm Ryder at 7:45 PM | Comments (0)

No Place To Hide

Wiretaps, viruses, and instant global lies. We're definitely in the Age of Insecurity. The hugely shrunken world we live in is not really shrunken at all, but instead the opposite -- it's zoomed in. As we find life increasingly attached and vulnerable to the microscopics of reality, the world and its complexity get incalculably bigger instead of smaller.

Our instinct to see ourselves at the center of reality is thus amazingly if not bafflingly persistent.

For example, when our personal "security" is breached, we say our secrecy is pierced , our privacy is invaded , or our anonymity is lost ... Ironically, customer relationship management (CRM) is perhaps the most aggressive abuser of our notion that being the center of things is secure. How so? Just set your PC volume low and watch this 2 minute demo from Adcritic.com.

I.

On a daily basis, whether online or on foot, when we employ anonymity, privacy or secrecy, we like to speculate that the environment around our effort will cooperate with our intention.

Over time, willful naievete about that is merely childish and yet potentially dangerous.

On the other hand, careful research beforehand can give us a shot at reducing the speculation to a well-founded assumption by guiding us to better preparation for contingencies.

Yet unless told otherwise by someone we're willing to believe, we stubbornly go into situations with the idea that we have a "right" to maximum invisibility and can just ramp it up or down as we happen to like.

We hate to have our motives questioned "unnecessarily" -- we feel that we shouldn't have to justify or "earn" the desired degree of invisibility by revealing what we might do with it before we actually have it.

Of course the big catch to that is in whether we agree that our own degree of privilege should be no more than anyone else's in the same circumstances.

And for the most part, we don't. No one expects that to happen anywhere except in a frontier. We want different people, with their different agendas, to have different privileges.

Stuck with where we are, we should at least start the negotiations with being sure that we know what we're really asking for.

Then, we start applying that clarity to the task of making a policy.

II.

In policy, we run up against the issue of entitlement, which means clearing up the confusion about freedoms, liberties, and rights.

We normally like to use them all at our convenience, as justifications for what we want. We use them as if they were our tools in our personal toolbox. But in that attitude, there is some degree of illusion.

We can detect this with a little vocabulary change. That is, in the environment that we target, we instead find our potential actions unrestricted, restricted or approved without regard to what we want. This trio of circumstances stretches, respectively, not only from the least specified situation to the most specified, and from passive allowance to active promotion, but also from the most autonomy to the least:

- Freedom refers to the absence of any restrictions.
- Liberties refers to the tolerances for what we are "allowed" to do.
- Rights refers to the postive confirmation of what we are "permitted" to do.

How do those experiences relate to our anonymity, privacy and secrecy?

What bothers us the most is if a party other than ourselves, at their discretion instead of ours, makes a decision that limits our range. (When we make a policy, we are the "other" party to those that we feel should comply.)

We might therefore instead be wary of:
- a loss of freedom,
- a contraction of liberties, and
- a refusal of rights.

When we don't get what we want, there are two different things being challenged: our authorityand our autonomy.

It's unpleasant to have either of them in debate; but, it is useful to know that sometimes we can have less of one and more of the other without necessarily sacrificing a satisfactory outcome. The issue is to predictably get what we really need, without it being at the unfair expense of others.

To see that this is true, we create policies as a set of understandings that identify the important combinations of autonomy and authority by which we want ourselves and others to abide.

Policies associate privileges and responsibilities, in a way that foretells what kind of influence we will have in a given environment. While not always the case, it is reasonable to usually expect that accepting responsibilities is a way to merit privileges. For that to work, the responsibilities need to be spelled out in a way that clearly describes the particular environment.

Restoring a sense of order and safety is something we want to do by rule rather than by force; but for that to work we have to agree on the rules and they have to be followed.

III.

Using the above generic table, we can envision a specific circumstance or environment such as an apartment building, in which the landlord is an owner , the manager is an agent, and the tenant is a guest. Most notably: these roles are designated with responsibility to the environment, not to each other. But the roles can inherit benefits from the environment because everyone is doing their part correctly.

The result of creating a policy is that we formalize security.

Our issues with personal security -- in terms of having protected anonymity, privacy or secrecy -- are actually particular to the stakeholder role that we assume in the environment. Other parties in the environment want to know if our mode of actions -- anonymous, private or secret -- is still supporting the responsibility that they assume we have taken on with our role. In the end, we don't have a blanket protection of anonymity, privacy or secrecy; instead, we need a contract with other parties that appropriate protection will be provided if we declare our roles and follow the rules. Although this contract needs to be negotiated, once there the biggest concern is about whether either party, us or them, will violate the terms of the contract. Suspected violators lose protection.

In sum, this points out four risks to security.
(1) Lack of explicit policy (either by design, or effectively through neglect)
(2) Uncertainty about what roles have been accepted
(3) Intentional disregard for responsibility
but also
(4) Abuse of authority.

Plenty to think about, but not much new, even in the outrageously expanded world.

Posted by Malcolm Ryder at 7:12 AM | Comments (0) | TrackBack

January 11, 2006

Why Strategists Must Think "IT" Through

Our big challenge with strategy is to tame it -- to translate the alchemies, voodoo and romance of intuitions and insights and intents, into something credible and practical; into capabilities and competencies that make a virtual opportunity real.

We took three shots at this.

(1) One translation is a thought experiment. Surveying the vast inventory of literature on strategy, we took a moment to try to parse its boundless advice into its typical themes -- with results such as: why to pursue execution for value; how to avoid a position of (poor) performance; and so on. Then we looked at the themes for their generic components. It gave us the following table of elements with which to reconstruct and predict themes:

This provides a hope that by mixing the building blocks (left to right) in different ways, we could derive the not-too-many worthwhile starting viewpoints, and thus throw a defensible practical fence around strategy! Each uniquely different combination of elements could be considered a certain known problem to solve -- addressed by strategy literature's various promotional and cautionary tales.

But such high-level problem definitions are mainly conceptual. To get them more specifically in focus, and get their corresponding solutions down to earth and in-house, we also need each element of a problem's definition to be detailed by the additional aspect of "management" vs. "infrastructure". Drilling down into the elements that way, we still "choose and add" the different elements to each other (left to right) to derive the problem statement. Connecting fine-grained elements to each other may actually give a more precise surface description of a particular organization's issue, but at the same time it accounts for how some problems leave us not being able to see the forest for the trees. Our table can help bring the forest into view.

(2) Another translation is already explicitly described in the literatures. Regardless of how many ways strategy stories begin, much of the discussion ultimately drives to the same counsel -- that decisions reshape the organization, after which the organization's operation must be motivated enough and funded enough to stay with the program.

This summary casts long political and cultural shadows over all discussions of any competency and capability that are to be acquired and committed.

(3) In a third and parallel translation, we note that all strategy refers to an opportunity (whether remedial or progressive) -- and opportunity always refers to the perceived characteristics of currently acknowledged conditions. In pursuing strategy, decisions follow the anticipation, observation and analysis of those conditions. Challenged by the conditions, much of this pursuit is competitive.

But the way we see those conditions increasingly finds them loaded with characteristics that exist only because of the impact of information technology. Because IT utilization dominates the shaping of the environment that strategy wants to exploit, strategists must always factor in IT. The way that IT changes things becomes the focus of concern, even moreso than the particular features that have been wrought.

Of special importance, "IT Innovation" means that people can know different things, in different ways, at different times than previously, and furthermore do different things than they have before about what they know. Put so bluntly, it is obvious why strategy cannot be well formulated without factoring in IT -- IT can be the thing that defines the competition -- whether the competition is an environment or another actor.

The question is, will the strategist's own organization manage IT utilization to virtually pick the competition that it wants to have?

Posted by Malcolm Ryder at 8:13 AM | Comments (0)

December 4, 2005

Making Advantage Sustainable

In competition, we might spend a lot of time operating without knowing if we have an advantage. We organize our activity around the idea that we need one, and so we look both for how to get it and keep it.

But it's the nature of competition that the opponent constantly tries to eliminate the apparent advantage that we have; so it's an unfortunate fact is that the advantage we have might not be the one that we need.

The true challenge of "sustainable advantage" is that what we really want is "recurring" advantage, crafted from the limits of our own versatility.

Competition exaggerates our sensitivity to the cause-and-effect relationships of actions and events. When we perform well, it comes from finding reliable ways to make the right things happen on time.

Following that thinking:
- Behavior patterns become the focus of attention for generating the desired difference again in the future.
- Management is expected to drive and institutionalize successful patterns.

We keep score of management's effectiveness by tracking the accumulated moments of advantage, and organizational behavior is generally managed towards constantly getting another such moment by doing something that worked before.

This makes advantage appear to be primarily the result of discretion and discipline -- what most people recognize as "execution".

It also leans on management's pattern identification to forecast the way to what we think of as "repeat successes".

But really, management's ability to repeatedly succeed is structural in a different way. Management might steer behaviors, shaping their intent; but the behaviors take their form from their underlying enablers or "support" mechanisms: culture, infrastructure, and demand.

Despite the current emphasis on standards and best practices, there isn't a unique set of ideal enablers for having an advantage over another organization. In action, organizations blend different kinds of enablement into a structure, to support the ability to affect conditions as desired. The issue is always whether the blend is functional or dysfunctional.

The overall functional structure is composed of layers of enablers. Versatility is the result of being able to successfully blend them for meeting the necessities of the particular moment and place at hand.

For advantage, the coherence of the structure must support an operation that has suitable impact.
For sustained advantage, what must be maintained is effectiveness in blending the structure.

The key enablers are in two large groups: Business, and Organization.

Business enablers:
- Market position
- Performance logic

Organization enablers:
- Competency
- Infrastructure
- Ownership

Naturally, the organization is subscribed to host or empower the actions of the business. But as described in the following details, the underlying architecture of each party makes their co-operation rational. Building from the bottom first to the the top, we see the meaning and implementation of "structure" progressively change -- that is, in ways that allow each successive layer to exploit the preceding one.

In Ownership: structure secures capacity for generating resources
In Infrastructure: structure aligns resources for utilization access
In Competency: structure defines assurance of procedural options

In Performance Logic: structure prioritizes support for value generation
In Market Position: structure distributes locations for value capture

Facing opportunity and demand, the business must be able to dynamically re-organize itself internally, to draw on the latent throughput of capability that is most pertinent at the time. It requires an intelligence similar to that used to determine ad hoc routing alternatives through networks, or designing collaborative systems on the OSI model.

By further analogy, the language and the grammar stay the same, but the expressions spontaneously conform to the needs of the communication event by exploiting the connections allowed in the language and the grammar.

The real advantage comes from the impact of the expression; sustaining advantage requires a capability to generate new expressions continually -- to continue making impact and to leverage impacts already made.

For a fuller elaboration of this functional architecture, see the Archestra Topical Framework.

Posted by Malcolm Ryder at 12:02 PM | Comments (0) | TrackBack

December 1, 2005

Swat versus Clobber: getting and using the Upper Hand

We track the ever-attending Bob Lewis of InfoWorld and IT Catalyst, Inc., because we can ask him anything and he'll figure out what it is in your question that is worth giving advice on. Clearly he should have been a doctor, but let's be selfish: he's here instead, so we win.

One of the best things he advised about is the strength/weakness/opportunity/threat analysis, or SWOT. Said Lewis, TOWS [not SWOT] is the logical order for a business that wants to win in the marketplace, for this simple reason: "Strength" and "Weakness" only have meaning in the context of what you're trying to accomplish in the marketplace. So for companies trying to win, looking first at threats and opportunities, then evaluating strengths and weaknesses in that context, provides a more intelligent way to decide what to focus on...

It's one of the key things in business, then, that winning means context and the idea of performance must not be separated from each other. As Bob's insight really points out, being pretty good at doing the wrong thing doesn't matter much.

So when you're measuring or managing your performance, doesn't it have to start with knowing what does matter? Then why do so many organizations try to define performance in ways that don't matter?

The classic example of this is the project that survives the pre-start justification phase by promising "ROI" but then generally gets operated only in terms of being "correctly" executed instead of "valuably" executed. Time and time again, projects get nailed by evaluators who conclude that the project didn't deliver the right thing at the right time and cost -- even though the management discipline applied to the conduct of the project has been able to fully account for its correctness, which of course it absolutely had to do. So the party in control of the project "ensured" that "performance" was good, but to no avail.

Having looked at things that way, it seems clear that there are two kinds of value to the organization. Usually, it's the question of how appropriately things were conducted (execution), versus how compatible the output (deliverable) is with the prevailing need (impact).

Indeed, using Bob's advice, we see impact (compatible output) in terms of Threats and Opportunities, with execution (appropriate conduct) in terms of Strengths and Weaknesses. But once we recognize that there are two ways to evaluate -- per effort and per result -- then it doesn't make sense to do the usual -- namely, evaluate one thing only one way and not the other way too -- for example, only execution per effort, and only impact per result.

Instead, execution has both an effort component and a result component; and likewise, impact has both components. This makes sense not in terms of actual functional tasks but rather in terms of operational context.

Keeping that in mind, here's how the work scenario lays out:

The quadrants of this picture identify the categories of terms needed for a complete evaluation, and the outer labels show how these terms were surmised and how the terms relate to each other. Execution and Impact represent the perspectives for the operations managers. But critical to this picture is the addition of the two ways that the business assigns responsibility for the business management of the conditions that the project involves.
- A "production" perspective attends to the business-appropriate conduct of the operation.
- A "product" perspective attends to the business-appropriate purpose of the operation.

The biggest problem with projects is not that the execution fails to generate significant impact, but rather that the production goes off track from the purpose that will be setting the final criteria for evaluation. If the top two quadrants are usually where Threats and Opportunities are assessed, and the bottom two where Strengths and Weaknesses are seen -- then given their alignment as we discussed earlier, this discussion now poses the problem differently: that production strengths and opportunities (as perceived by operators) don't preclude product threats and weaknesses (as perceived by customers).

Put in terms of management issues, this is really a difference between performance management (capability) and value management (competency). It is a failure to translate capablity into competency.

What clobbers capability on the way to competency? We take it for granted now that projects must have sponsors who are high enough in the food chain to provide the proper environment for project completion against other potential inhibitors from the ongoing (and competing) business concerns. These sponsors must be able to exercise value management as a way to provide the necessary "customer context" for the performance management of the production.

Value Management issues are not the SWOT we all study, but instead the CLBR -- credit, liability, benefits, and risks.

Arranged in the most effective way, risks and liabilities are considered first. The reason for this is that a new initiative, almost regardess of scale, is an attempt to produce something that will have to fit into a dynamic system of existing commitments and options. Risks and liabilities describe the potential of the current state to support the transformation to the future state. Usually, assessments should take the responsibility to account for risks and liabilities.

Credits and benefits further reflect the business's investment perspective on incorporating the initiative. Credits and benefits are more realistically defined and agreed when the risks and liabilities have already been set. This rationally divides responsibilities and authorities so that producers are not working against undefined expectations.

Production should be aware of needs and aim to satisfy them, but needs must be specfied. Specification defines expectations. The specification progressively translates needs into demand and then into requirements.

If "demand" is not treated this way, then expectations are actually left unmanaged. Meanwhile, if demand changes, requirements must be revisited. This problem pattern is already familiar, but the point is that if it is handled responsibly then the ultimate evaluation of the production effort will allow performance (capability) and value (competency) to remain linked.

In the Archestra collection of content, this link will be explored from numerous angles. Along the way, we'll make a general effort to describe the motives and behaviors that distinguish performance and value but that also suggest the linkages between them. As an example of the effort, the table below catalogs and contrasts concepts distinctively associated with performance and value. The distinctions intend to isolate the context and expectations that typify relevant evaluations.

Posted by Malcolm Ryder at 6:41 PM | Comments (0) | TrackBack

November 14, 2005

Game Theory and Alignment via Performance Logic

Susan Gilbert, an associate professor in the practice of finance and associate dean and director of the Evening MBA Program at Emory, gives this definition of game theory:

“Game theory at its simplest level is just a way of representing all possible outcomes of one or more different actions,” explains Gilbert. “Rather than ignoring what your competitor is going to do or making a single assumption of what they’re going to do, you’re going to show all possible reactions and then reason what the most likely action will be.”

"...we try and teach them to think ahead and then reason backwards to what their first move should be based on what their last move should be,” Gilbert says.

This technique is especially pertinent to competitive situations where the uncertainty lies in the approaches of other parties. But for situations where the goal is already defined and the uncertainty is about the relative tolerance multiple stakeholders have for the ways to proceed, something else might be more appropriate.

This entry will be extended over time to explore the difference between the two situations.

Posted by Malcolm Ryder at 7:15 PM | Comments (0) | TrackBack

November 8, 2005

Competency as Advantage

Competition brings parties together in a certain way. Each party assumes that getting what it wants means that the other party won't get what the other party wants. Yet if one party does not get what it wants, it doesn't mean that the other party will. This is why competition can always have three outcomes: victory, defeat, or stalemate.

What we musn't forget, though, is that regardless of which outcome is obtained, we still have to determine whether the actual outcome is a win or a loss for us. Why is this important? Because it keeps us focused on whether we are actually competing to win, and whether our competitive moves are actually advantages or not in terms of winning.

A similar refinement in our thinking separates "offense and defense" from "aggression and resistance"... As shown in the illustration below, they have a straightforward relationship to each other but not the simple one of being synonymous:

The basic level of competitive thinking is about deciding how to generate a gain and how to keep current holdings. We can gain and hold metaphorical ground as well as literal ground; the difference is simply a matter of how the adversaries define "territory" -- be it influence, locations, or whatever. As shown here, the two basic modes of action are aggression and resistance -- but those modes are then organized as offense and defense.

The purpose of offense is to work on the gain, while the purpose of defense is to work on keeping one's holdings. This gives, as shown within the picture's matrix, four different objectives to which activity is dedicated for pursuing advantage. As an example of the way the matrix can describe our activity, resistance might be pursued through using offense to recover lost ground. And from sports, we're already accustomed to the idea of an attacking defense, the value of which is mainly in its discouragement of the adversary.

An equally important observation about the organization of our competitive activity regards strategy. Strategy looks for the difference that generates an advantage, and rallies action around achieving the difference. If we understand that activity revolves around the broad competencies for aggression and resistance, then what we want to know is how strategy finds the leverage that it is looking for in those competencies.

Strategy basically has two places to look: in the rules of competition and in the vision or perspective that the competitors bring to the situation. As the picture below shows, leverage can be built on the behavior around the rules, or on the knowledge around the perspective. Typically, if one party can develop superiority in behavior and/or knowledge, an advantage is likely to come up. What we see in the picture here, though, is that another consideration plays into what advantage may arise. The aggression and resistance that underly the competitive action can be harnessed strategically through decisions that exploit either change or mastery in the behaviors and knowledge.

This second matrix coughs up eight more specific objectives -- points of leverage that express the general requirement appropriate to building advantage in either the aggressive or resistive mode.

Much of what we hear about these days in commentary on the critical success factors of competing companies turns out to reflect these points of leverage, and now we can see why. For example, nearly all companies are urged to develop "agility" - and here we can see that it is about exploiting change aggressively, and that disruptive innovation of course features positioning tied to invention. Likewise, all companies are urged to develop into "intelligent enterprises" - and here we can see perspective and especially surveillance covering the hope that their cousins knowledge management and business intelligence will somehow together bear the unique trade secret that boosts the company to a win.

In the end, competitors usually engage in a situation where they are each bringing advantages, but their respective advantages are different. Given all that, the best competitive effort will still be most likely to succeed because the other party unwittingly cooperates with the mode and flavor of action we decide upon. The toughest competitor simply doesn't cooperate.

What are the five key characteristics of the toughest possible competitor? Listed in order of what makes them progressively and increasingly dangerous:
1 - Competent
2 - Secure
3 - Committed
4 - Unpredictable, and...
5 - Aware.

Thus, having a net competitive advantage must always come at least in part from identifying the weakness in the opposition, and through understanding if the competitor is organized well enough to make their weakness irrelevant to the competition. Our job, of course, is to make it relevant.

Naturally, we have to understand the same things about ourselves, and that should naturally prioritize our opportunities to mount a competition. Strategy does a lot to determine how we win; but readiness determines whether the strategy can be effective.

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October 22, 2005

How to Solve Problems

This just in from the Henry J. Kaiser Kindergarten in Oakland California.

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October 12, 2005

The Four Breakthroughs for Creative Solutions

A long-standing story of mine is that there are only three kinds of problems in the world, so I kept three separately labelled baskets on the desk to put them in as they came into the office:
- Problems that won't go away;
- Other people's problems; and
- Problems that go away by themselves.

As a result, it's amazing how much time I found I would have, to work on non-problems.

Sadly, I haven't been to that office in a really long time.

The ones I still go to look pretty much like most offices, where it seems that problem-solving is spread about altogether too much on things that haven't earned the attention. Later those same things become the X percent that is eliminated when people say they've "increased" or "improved" performance. For the most part, improvement opportunities first arrive in the form of eliminating the unnecessary X percent of underachievement -- and that's relatively easy compared to improvements that consist of adding Y percent benefit above reasonable achievement. But going along with that, the stealth issue is that most activity attributable to underperformance is taking place because "it's supposed to be done." In other words, the underperformance is actually organized to take place. Naturally, this means that some re-organization is needed to eliminate the underperformance. As we know, resistance to reorganization is typically pretty high, which pushes "improvement" efforts back towards the status quo instead of towards the future.

So for the work places that are like most others, I've left my three in-baskets behind and settled instead on the following solution breakthroughs:

:::::::::::::::::::::::::::::::::::::::::
1. Needs are not requirements.
2. Solve the right problem.
3. Choose your pain.
4. Change how you change.
[Copyright M. Ryder / Archestra]
:::::::::::::::::::::::::::::::::::::::::

For the most part they are about getting off on the right foot -- or more specifically, about avoiding the reasons why so often we don't do so.

Heading off in the wrong direction is an act that usually evolves from influences we confidently account for but incorrectly understand. We see certain circumstances and motivations that lead to the decision to "respond" and we assume that the best response is always a "direct" one -- that is, one based on the characteristics of the problem we see.

When we are sometimes asked to "think outside of the box," what we are hearing is advice to not just "respond" but instead to "act". In this case, action is predicated not solely or even primarily on the features of the problem presented.
Along with this difference, we need to appreciate that many "problems" are symptoms and have deeper origins. It's smart and typical for us to emphasize the search for "root causes" of a problem -- but this should include an appreciation that a cause starts a series of consequences that might each themselves be a new cause of additonal branching problems and might have gotten boosts from more thinking of the same type that planted the root... Famously, Einstein said, "We cannot solve our problems with the same thinking we used when we created them."

A creative reaction to the awareness of a problem might be the only way to get past the problematic occasion or condition. But we have to let that creativity come into play. This often means things like the following, where each thing requires considering the thing below it:

- Distinguish the condition that needs to be changed from the steps that are designed to deliberately change it. There's more than one way to skin a cat. (Needs are not requirements.)

- Because there are likely to be interdependencies within the condition, prioritize the importance and timing of the multiple possible outcomes of changing the condition, and work first on the outcomes that are more urgent prerequisites to continuing work on the others. (Solve the right problem.)

- When more than one problem exists, decide whether working on one of them really well is "better than" working on two of them less well, because living with two kinds of pain that require continued attention may (or may not) be worse than living with one kind. (Choose your pain.)

- Don't confuse responsibility, opportunity and competency. No one of those things will assure that the problem will be solved; and realize that while a blend of them will be necessary to solve the problem, the Problem doesn't care where the blend comes from, and it won't go away until it gets what it needs. (Change how you change.)

Taken seriously and together, the four things above build up to a strategic approach. Because the approach calls for not taking anything for granted, it has the ability to reveal alternatives to conventional approaches already learned, expected or adopted. The point is to let the strategy motivate and guide the reaction, instead of just settling for responses guided by convention.

Posted by Malcolm Ryder at 9:16 PM | Comments (0) | TrackBack

September 26, 2005

Competency, Competing, and Strategic Behaviors

When we try to discuss organizational performance, it is often through the question of whether the organization's competencies prove to make its competitiveness effective. And these days, the problem of "competition" versus "competency" merits being called interesting especially because we've found out so much more about how being competent doesn't add up to being competitive despite the costs and lost sleep involved.

Sadly for the management teams of most large organizations, there seems to be no way to avoid spending a huge amount of money on the organization's becoming "more competent" -- because not spending the money almost guarantees that it won't happen. Meanwhile, becoming competent takes time and there's a risk of the competency being irrelevant by the time it matures.

What really helps, then, is to understand how investing in competency does begin adding up to being more successfully competitive.

I.

Ideally, it's possible to clearly state what makes up "competency", so that the necessary investments are well-exposed. Without being overly technical right away, most people would agree that in any given circumstance, competency generally means "effective behavior."

One especially intriguing look into the effective behavior issue is the Booz Allen & Hamilton model of organizational DNA, featured regularly in their publication strategy+business... Organizational DNA dwells on how organizational behavior springs from the internal "programming" of the organization, and suggests that reprogramming will invoke different behavior.

Back in the fourth quarter of 2000, Booz Allen stated, "What sets the top performers apart is the 'how' -- the way they organize and operate to realize their aspirations... The solution lies in changing the organizational environment to encourage decision-making that is aligned with the overall objectives of the company."

The Booz Allen model is aimed at producing solutions that improve organizational alignment with strategy. In this general vein, a typical presumption is that management decisions explicitly pursue an "optimal" prescribed behavior only approximated by real behavior awaiting improvement. Everyone is looking for the secret to improvement.

By 2005, extensive field testing of the DNA model allowed Booz Allen to confidently state:

"To change an organization effectively, concentrate on the deliberate design of four key organizational building blocks:

Decision Rights: the rules and mechanics that govern who makes which decisions -- and how.
Information: the metrics that measure performance, and the practices that transfer knowledge.
Motivators: the incentives, objectives, career alternatives, and other elements that drive people's behavior.
Structure: the overall organizational model, including the 'lines and boxes' of reporting relationships and job descriptions."

Naturally, there are many costs associated with the "before-and-after" reprogramming of each of those conditions... However, the focal point of the Booz Allen "DNA model" is more about the flow of what we often call "political capital". This initially appears in the emphasis on decision rights. But in fact, all of the DNA model's four building blocks have been included because they are (arguably) the factors most affecting decisions.

The DNA model points at the way that decisions (not just the rights) are distributed and made by everyone in the organization, with decisions being the driver of how the organization looks and behaves. While the changes the model supports are to affect the environment for decision-making, the point of the Booz Allen approach is to position and exploit decisions themselves as the generator of performance-critical behavior.

The big issue lurking under that idea is about the difference between how suggested corrective (.e., managed) changes to the environment affects performance and how "natural" changes do. Every day, a huge number of intentional but independently made decisions collectively and "naturally" alter the environment. In detailing that organizational environment, the Archestra view finds and describes a set of basic influences "accounting for" the organizational behavior as encountered by strategy. Since we describe that environment differently from the DNA model, the course of managing it could significantly differ as well.

II.

As does the Booz Allen DNA model, the Archestra account emphasizes that several essential functions underlie (i.e., both constrain and support) the organization's potential behavior at any point. And, when that potential behavior is realized, the behavior is the environment for what comes next. But our functions are different.

DNA says that this environment affects decision-making for better or worse. But the Archestra emphasis is that key performance decisions do not just wait for a friendly environment. Instead, strategic alignment means some decision-making -- not all -- has to work on how that behavior is realized from the underlying functions in the first place; while other decision-making is then critically responsible for whether the behavior executes strategy successfully.

To illustrate these two different layers of effects, first we directly call out the basic "modes" of organizational alignment that provide the environment in which strategy must survive.

Within these modes of alignment, there is a hierarchy of influence, with the most dominant at the top and the least at the bottom. In the interplay of these influences, "competency" leverages taxonomy and standards but is largely constrained by culture. Given that, one thing we can point out is that culture largely determines the competitiveness of a competency.

The alignment hierarchy also exposes an additional crucial dynamic. Namely, within the organization's overall functionality, external or exotic influences such as taxonomy or standards are more readily swapped in and out of the organization from one time to another than are more internal or intrinsic influences such as competency or culture. However, once in, external influences are significantly constrained by intrinsic ones.

In the picture, we see specifically what items the influences work on, noting that those items independently change all the time. Overall, the decisions that bring in and/or shape the four "alignment" influences produce the predisposition aspect of the behavioral environment.

III.

Meanwhile: another essential aspect of the organization's behavioral make-up consists of the way the organization responds to the circumstances that it believes it inhabits -- in short (and coining a term), its responsivity. Typically, this responsivity is what the alignment modes must work on, but when they arrive they find natural forces already at work.

The three key natural influencers of "responsivity" are:
- motivators which encourage certain action)
- generators (which enable and manage action)
- indicators (which suggest action)

More specifically, the interplay of those three influencers "maps" the intuitive dimension of responsivity as in the following picture:

Day to day the organization sees itself in a mirror, noticing key elements (of needs, options and requirements), and directly reacting to what it sees.

But the deeper issue is the way that those key elements are linked by the natural influencers, generating the overall intuitive responsivity -- so what are the origins of those influencers?

In the picture, those origins are awareness, execution, and assessment. The next step in discussing "effective behavior" examines those issues.

IV.

Our first illustration above details the underlying four parts of "predisposition". Likewise, the three underlying parts of "responsivity" shown in our second picture can be described more specifically. For that, one approach is to see the parts -- awareness, execution and assessment -- as tendencies or "characteristics" developed from particular organizational activities and observations.

Awareness is developed from the following factors:
- Decisioning
- Modeling
- Measuring
- Communication
The net effect of awareness is to create the "working image" that the enterprise will have of the circumstances within which it believes it operates. The working image presents options of varying attractiveness to the enterprise. The options are thus motivational. This four-tier hierarchy of "awareness factors" also features, from bottom to top, increasing complexity in the development of the working image.

Execution is developed from the following factors:
- innovation
- collaboration
- optimization
- change
The net effect of execution is to proceduralize activity in the cause of "recognized progress." Understandably, these tend to be the major issues on everyone's operational management agenda. The four factors are stacked relative to each other with the most reactive activity (towards progress) at the bottom and the most proactive at the top. All of the factors are about exploiting requirements, and all of them are at risk without "alignment". Arranged hierarchically, each of these four factors is critically dependent on the factor below it in order to be successful at generating maximum impact.

Assessment is developed from the following:
- Value
- Performance
- Quality
- Risk
The net effect of assessment is to establish the meaning of the "current state" and thus validate or challenge the existing perception of needs. In the context of progress (from execution), assessment tries to understand whether the difference achieved is important enough (or not) to defend the means by which it was gained or to change them. While each of the four factors is a kind of importance per se, they are hierarchically ordered with the issue on top being the most indicative of (i.e., directly relevant to) a specific strategy and the one at the bottom being least so (although perhaps more relevant in general to all strategies).

Summarized from the viewpoint of strategy, awareness must offer encouragement; execution must offer enablement; and assessment must offer clear ideas.

V.

The combination of a working image of circumstances, recognized progress, and an accepted meaning of the current state characterizes the intuitive dimension of responsivity. Again, day to day, the organization sees itself in a mirror made up of those aspects and reacts to what it sees.

But for a full appreciation of how that version of awareness, execution and assessment might really play out as behaviors, the following view gives another perspective crucially important to performance management:

As featured above, behavior is coordinated by approvals, assignments and accounting. Together, they make up the political dimension of responsivity, mediating the otherwise "intuitive" responsivity of the organization and intervening between predisposition and actual results.

The most prevalent characteristic of this coordination is that it is negotiated -- not once-and-for-all, but repeatedly and without guarantee of consistency, due to the continual and irregular influence of internal and external change on the organization. Yet the political formatting of responsivity is what most organizations believe will spawn "effectiveness"...

Since this means that the underpinning assumptions and conditions of the strategy might vary beyond expectations, the organization must grapple with how strongly a policy of adherence to strategy will be enforced. Successful enforcement means resolving the tension between the organization's predisposition and its politics. Even more importantly, since intuitive responsivity is continuously forceful at setting things in motion, the balance of predisposition and politics must "train" the intuition towards the strategy instead of away from it.

VI.

Given the above pictures of predisposition and responsivity, our full account of organizational behavior is based on how the two things affect each other.

From a management standpoint, effective Predisposition presents its influences with dependencies summarized as follows:
- Culture's function of granting permissions involves the relative strength of permission granted
- Competency's orchestration of abilities involves the maturity of the resulting combination
- Standards' presentation of rules involves the degree of adoption generated for those rules
- Taxonomy's offer of definitions involves the stability of those definitions across time and place.

Management can deliberately attend to those dependencies. The current predisposition constrains the likely effectiveness of the functions that make up intuitive responsivity -- by the way that strength, maturity, adoption and stablity are established for each function.

On the other hand, political responsivity will counter-offer different criteria of acceptability and importance to shape behavior, whic can pose a significant problem. If positions, assets or stakes are challenged in any combination, their owners may push for settlements, using approvals, assignments or accounting that either ignore effective predisposition or must attempt to change its underlying terms.

Consequently, if politics compromise the optimal predisposition, then the predisposition will compromise the intuitive responsivity that is the real environment for strategy.

As outlined by these worksheets for detailing intuitive responsivity, very many variables can be changed. Management's challenge is to know where, when and why changes occur -- and to control them by type and degree for benefit to supporting the strategy:
- Awareness details, which combine to envision current states
- Execution details, which combine to create future states
- Assessment details, which combine to determine overall status

VII.

In the intuitive responsivity arena, the awareness aspect's hierarchy of factors bears a superficial resemblance to the Booz Allen DNA model, especially in its inclusion of decisioning. But... the set of awareness factors does not Instead, it presupposes that most decisions have both traction and persistence only when the other three "awareness" factors support them, so if you want a new decision to succeed then you have to "tune" the other factors to support it.

Posted by Malcolm Ryder at 5:36 PM | Comments (0)

September 21, 2005

The Objective of Setting Objectives

Working through an approvals process?

"The gap between your personal culture and your corporate culture is what will keep you sane -- or drive you crazy." That's the caution that Steve Andriole from Villanova gives in a great January 24, 2005 article titled Politics, Culture & You.

By pointing out that approvals take place on terms that can as easily be philosophically-based as research-based, Andriole highlights the difference between appearance and reality when it comes to "objectivity". Objectives may make up the known framework for decision-making, but where did the objectives come from?

This is an important issue because an "objective" is, in the practical sense, a purposeful intent -- and the reasons behind that purpose may or may not agree with the motivation behind a new proposal. What's the difference here? Intent simply announces a type and direction of change; but real purpose is about "why" and may even be unannounced.

Now add to this that assessment and evaluation are also different. Evaluation will look for a rational decision based on fixed criteria; but assessment will weigh that decision in a context larger than the scope of the proposal. Approvals lean heavily on assessment.

That said, a proposal will be assessed not just by terms that measure alignment with intent, but also that measure compatibility with the purpose(s) of management objectives. This puts the sponsor of the proposal on the spot -- to understand whether the likely impact of the proposed change really aligns with the value system of the ultimate decision makers.

One way of pointing at this issue is through testing for "favorable demand" -- an approach used by experts such as Charles Chandler of the firm Assumption Analysis. Chandler outlines this amongst three keys to creating objectives that turn out to be reliable and actionable for both sponsors and approvers. He emphasizes that much of what is critical to an approval is "imbedded" in an organization and needs to be carefully exposed as part of shepherding new initiatives and proposals.

Along those same lines, Andriole shows that the implicit and explicit influences are at the personal level as well as the corporate level. By bringing this awareness to the foreground, Andriole and Chandler show why a change that would enable a strategy so often really needs a separate strategy for getting itself approved.

[Click here for a more extensive look into the culture around strategy...]

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September 19, 2005

My Enterprise, Right or Wrong

What's the difference between motivation and hype?

In both cases, the "supplier" could get the same showstopper response from the target audience: "Sorry pal,I'm not buyin' it!" -- so it's understandable that, as hopeful leaders, we might be willing to take whichever one we can get away with.

Telling the Oracle/Siebel story is a mini-industry all by itself. But what's more interesting, in comparison, is the Siebel/Siebel story -- the inner Siebel versus the outer Siebel; the issue of understanding Siebel's performance from the standpoint of what employees did and why. Wasn't Siebel run by some of the top managers in the industry? Wasn't it's performance rigorously "managed" in terms of both opportunity and execution? If so, then setting aside the profitability of what it made, what did Siebel actually "successfully make" with its strategy? Did the employees know that was what they were doing?

I.

You remember the story about the hen and the pig who got invited to breakfast by the farmer's wife? So starved for attention was the hen, that she overlooked the menu, exclaiming to the pig "this is wonderful! We're finally getting noticed around here!" But the pig knew that the house favorite was ham and eggs. Replied the pig, "Well for you, this is just going to take a contribution; but for me, it's going to take a commitment!"

And there you have it: you can always play along with the hype; but motivation takes something a bit more.

This all crossed my mind when the dinner conversations swirled around "industry leader" Siebel getting bought by "industry leader" Oracle. For one thing, it seemed too easy to say that it happened because of Siebel's "poor performance". So much for leadership. But on that count, what should we be thinking about Siebel? Did it have:
- a bad strategy?
- bad execution of a good strategy?
- good execution of a good strategy at a bad time?
- or what?
What do the Siebel employees think happened?

II.

For another thing, maybe Oracle and Siebel were not really "in the same business". How the heck can that be? And if so, what was the buyout for?

Well, in business, there are lucrative problems to solve, and there are less-lucrative ones. Our view of competition always casts players in the same game tackling the same problem. For example, some trade journalism immediately discussed the apparent folly of Oracle buying into "traditional CRM" when evidence exists that it's a losing proposition. But could this criticism be missing the point? Even new-look CRM users will have to crunch "CRM data" more and more, and guess where Oracle plans for them to manage that data... (Hint: not on DB2.)

Maybe the market is just speaking up. Maybe it's saying, "you know what? Vendor competition is not making things better for us! Implementations are so complicated, by the time we get through them we can't tell the difference between you guys anyway. Maybe our smartest move is to just be sure that a great alternative exists versus a great standard. Let's have kick-ass hunters, and kick-ass farmers, and not second-raters of either, you know? Let's have a great data-based player and a great process-based player, and we'll decide which one to use."

Does Oracle meanwhile have the capacity to carry legacy processes while pushing into the new? Uhh, yes. Does it have the expertise to create a single serious alternative to SAP and Salesforce.com? Uhh, yes. So maybe we're simply looking at a play for solving a longterm problem instead of a shortterm one.

III.

But as said at the start of this, the more interesting story is the one about understanding Siebel's performance from the standpoint of what employees did and why. Wasn't Siebel run by some of the top managers in the industry? Wasn't it's performance rigorously "managed" in terms of both opportunity and execution? If so, then what did Siebel actually "successfully make" with its strategy? Did the employees know that was what they were doing? Did Oracle? Did Siebel customers?

We're a lot more accustomed to hearing about "exit strategies" in connection with small startups. At one startup I was responsible for increasing the value of the existing customer base beyond the point where the technology architecture offered a chance to increase -- on time -- the competitive value of the product for new customer acquisitions. Down the stretch, we made great customers wanted by the company that acquired us. In such a case, having the executives on the same page across the board (sales, product, alliances, finance, etc.) has to happen, but what's in it for them?

Of course, in larger companies, a huge percentage of employees will have no more clues about an exit than they do about a layoff. During the lead-in period, with marketing still promoting the industry leader hype, what is happening to convert the hype into motivation, and does the motivation cause the organization to internally align around the "wrong" priorities? Or is it simply that we need to learn again to embrace the importance of being able to cut losses early enough to rebuild on time?

If you watch pro sports teams, you often get to see some team's management reach a point in the season when it actually becomes a lot more concerned about being viable next year than it is about winning more games this year. While each remaining game still requires a best effort in the game, the team that is sent in to play the game might not be the best currently possible team. The trade-off of now for later has already been determined by a strategy, and the resulting performance just is what it is from the remaining best effort. This really shines a light on the difference between the final responsibility of strategy versus what we should expect from performance management.

Posted by Malcolm Ryder at 6:46 AM | Comments (0) | TrackBack

September 4, 2005

Culture as Infrastructure for Strategy

Companies often refer to having and using a value system as the regular guiding influence of their culture on their operations.

We know that value systems are backgrounds for approvals, and it's easy to imagine a collection of associated approval processes representing the "system" of the values. In that case, regardless of the particular values targeted, the first purpose of the processes must be to manage the dynamics of approvals, dynamics that exist whether processes do or not. But how do processes get to know about those dynamics and thus recognize the inputs to use?

To identify and communicate about the dynamics, thus initially making them manageable, a value framework should already be in hand. But what does this framework look like?

I.

Creating the framework means taking a broad view of "approvals" -- we need to think in terms of what is accepted regarding the organization's actions and conditions. Naturally, this might involve a range of things like targets, standards and other definitions of desired states. In fact, determining those definitions is more important than the aspect of processes, because definitions must precede processes.

Nonetheless, the current surge of interest in performance management scorecards has everyone looking at a type of operational framework.

The good news is that performance is being talked about in terms of strategy being the value-definer for actions (operations). Seen by organizations as a driver of performance, strategy is wanted for its ability to define the difference that creates advantage -- the most high-level desired state.

But the bad news is that the actual results of actions -- which trigger followup decisions -- are often still not taken in a primarily strategic context but instead in a different (and strategically indifferent) way of defining value, such as cost control, timing, or compliance. The followup decisions -- especially about optimizing processes -- thus may not be aligned with the strategy although they are still reinforcing accepted notions of value.

Typically it's said that when strategy fails it is because of its execution, not because of its design. Organizations have plenty of hustle and flow, but evidently it's not enough. This makes us more deeply consider how it is that the execution would "make the difference" that strategy prescribes. What is it about the strategy and about the execution that makes their connection successful?

II.

This thought inspires us to consider the "quality" of the strategy in a certain way -- in terms of its effectiveness, its fit to its purpose, or in other words, its usability.

Since strategies don't just execute themselves, we have to examine the capabilities of the organization that is responsible for the execution -- both when we're planning before-the-fact and evaluating after-the-fact.

We can't take this notion of "capabilities" for granted: the most distinctive aspect of the word's meaning is "potential". What if the organization is not yet ready, or willing, or able?

Capability - A talent or ability that has potential for development or use... The capacity to be used, treated, or developed for a specific purpose. -- American Heritage Dictionary

Embracing this definition highlights an issue of compatibility between:
- the mechanism used to develop the ability -- namely, management;
and,
- the "raw material" to be shaped -- namely, the organization.

As a matter of strategy, managers direct the decisions and activity of their organizations according to objectives and policies. But even without a strategy, they manage that way as a matter of "best practices" in accountability. As a result, they not only exert a style but also formalize the operating environment in a way that we usually refer to as its "culture". The question is whether this culture results in appropriate organizational capability.

III.

Actual practice can easily fall short. Management style is usually expected to bringing energy, integrity and focus to execution. The natural focus is on maintaining a real-time match of requirements and abilities. And accountability for "performance" keeps the heat on management constantly. Unfortunately, accountability's concerns with "management style" can be counter-productive. Consider virtually any "Top Ten Management Issues" list from the last few years: too often it places heavy emphasis on the individual manager's activity inputs (awareness, decisions and intents) and hammers away on improvement there -- while comparatively neglecting the overall environmental outcomes also created (such as degrees of coordination, capacity, and complexity).

The complicated outcomes collectively called culture are so hard to grasp as a "whole" that we usually have to think of them the way we do a "climate". Climates require adaptation efforts, not control efforts. Through adaptation, some things are more likely to succeed in certain climates (or cultures) than in others. Here, the issue is the great extent to which management style (not the strategy) creates the climate -- through the way it handles objectives and policies.

IV.

Management intends to construct "effective" organizations. To count as a success, management style needs to make an organization that is compatible with the strategy but is also compatible with the climate that the management style itself creates.

We need to be able to discuss management's responsibility for adaptations -- for alignment -- as a counterpart to accountability for performance. Strategic compatibility -- a.k.a., alignment -- means that the culture must not inhibit the organization's approach to meeting objectives.

Pragmatically speaking, the "culture" is a description of how the management style has typically reconciled the opportunities to act and the approval of the actions.

Describing this reconciliation makes us consider both the nature of the organization's opportunities (in particular their sponsors, types, and locations) and the reasons for approving them (impact, importance, urgency). Here, the problem we encounter is that organizations have predispositions that are institutionalized largely through their managers, -- which creates potentialy high resistance to change. To illustrate that, the table below is a device for "mapping" the incumbent pragmatic culture, as typically under the control of managers.

Three aspects of approval make up the formula for describing, respectively, the sponsor, type and location of an opportunity. Each aspect represents a point of consideration and measurement, which may involve a precedent, a rule, a belief, a status, or some other quality that might function as a decisive criterion. Against the items in this mapping, both objectives and policies consider any potential change by asking the question "Why?" The terms shown within the table make it easy to see the many points at which existing objectives and policy could either frustrate or compete with new, different ones being introduced. Getting and sustaining "consensus" support across enough (much less all) of these points of precedent is never guaranteed. Where differences remain unresolved between the current and proposed circumstances, going ahead with the proposition carries risk. Therefore, to begin realizing the opportunity, someone must authorize and support the risk.

But this still leaves a gap to execution unless the organization is effectively mobilized.

V.

And to mobilize further across the gap to organizational effectiveness, management wants to deliberately rely on the culture as an "infrastructure".

Again, strategic compatibility -- a.k.a., alignment -- means that the culture must not inhibit the organization's approach to meeting objectives. That is, alignment needs management's combination of (reconciled) objectives and policies to provide a stable interface that the organization's members can use to consistently identify, anticipate and leverage opportunities and approvals for strategic action.

Strategy management -- through which execution is directed and linked to the difference that creates advantage -- faces the big question: Where does the consistency and stability come from?

"Architecture" is where we normally look to find a disciplined approach to building that compatibility. An architecture provides an integrated set of design and construction principles for developing a structure. Its principles guide the discovery and qualification of components needed to build a structure, and furthermore they guide support for the actual building effort. Those activities are commonly formulated into a production method.

When applied to making an environment conducive for (strategic) performance, the architecture's goal is to "produce" an infrastructure from that environment, which the organization will use as its interface for execution.

That's the hypothesis. Can the culture really be leveraged as a practical infrastructure, describing and guiding processes and agreements needed for desirable performance outcomes from the organization? If this is to happen, first the development of the interface must be managed.

VI.

An architecture in practical use is very often noted for, or even characterized by, both a style and method of construction that it generates. A challenge for managers is to use the architecture to find effective construction styles and methods, instead of imposing styles and methods exotically or incongruously on the organization.

One of the simplest forms of architecture is a framework, something that provides a neutral reference and gets its value from being that way. Arguably, a framework is most often used to guide a construction methodology, by providing all production participants with a common way to coordinate their different perspectives.

To provide guidance, a framework offers dimensions. A dimension is a perspective on the various different properties of something -- in this case on the various properties of that environment envisioned for executing the strategy. The purpose of the framework is to describe key dimensions in relation to each other -- which effectively evokes, classifies and arranges success factors for the properties, giving them higher recognition and attention.

That said, a dimension might be hypothetical (a "what-if"), or it might be discovered by trial and error. Accordingly, some of the framework might consist of theoretical factors; and some of it might feature empirically validated ones.

In the case of an organization's strategic alignment, the framework's job is to bring explicit consistency first to reconciling objectives withpolicies, and thereafter the various reconciliations with each other. In practice, a methodology exercizes this consistency, producing regularity (dynamic structure) in operations.

Managers work from that situation to develop the execution potential of the organization in that environment. Successful outcomes encourage repetition and reinforcement of their related management events; and the overall "learning" informs further progressive development.

VII.

The interpretation of the culture into an infrastructure provides the logical foundation needed for building execution that can focus on the differences that create advantage. Focused on making the difference, opportunities must be important, and approvals must be rational -- but they both must leverage the culture for sustained support.

That scenario depends on management's ability to associate opportunities and approvals with perspectives that coordinate the organization with the operational environment.

Guiding the construction of those associations, a framework offers dimensions for describing the terms of reconciliation that combine objectives and policies with each other. But the framework dimensions must account for the dynamics of the construction.

The diagram above highights the basic problem that management encounters in moving from opportunity to approval to action: - goals are the desired future conditions. They can represent the "why" of an idea, but they are constrained by the mandated support of the current state. - opportunities are the proposed "realization" of goals. They can represent the "how" of an idea, but the reality of opportunities is constrained by how the organization is allowed to function.

These realities of mandates and tolerances -- which come from various pressures including financial, political and intellectual ones -- complicate the (procedural) determination of just how "important" or "rational" things are.

The diagram above illustrates reconciliation -- showing the true direction of influences when the incumbent organization will be the resource for the execution of a strategy.

For strategic alignment, the picture raises the question of whether the objectives and policies initially in hand must be compromised or not on the way to execution. Although we intend to derive requirements from objectives and then execute on requirements, we can't get that done until incumbent policies and abilities have had their say.

VIII.

This multi-variable equation may go through many iterations of "if...then" before being resolved -- whereupon finally the resolution can be executed; but the question is whether the resolution is adequate to the task of realizing the strategy. Is the execution, as based on the resolution, capable of solving the right problem?

In that light, it's clear that the organizational ability finally offered to the strategy must be developed for the strategy in the intermediary stage.

In handling risks and priorities, a progressive development effort in "strategic capability" should incorporate four coordination practices:
- business analysis,
- change management,
- resource optimization, and
- assessment.

These each provide a perspective that is part of "framing the culture". Each of these steps brings the incumbent organization closer to alignment with the needs of the strategy, but all four of them must be directed at the particular strategy instead of merely at the desire to come up with something approved to do.

Meanwhile, each step also tries to coordinate the organization with the operational properties of the environment:
- rules,
- knowledge,
- events, and
- communication.

As part of the framework, the properties will complete the stable reference picture of the "cultural" dynamics.

Management can use the framework to research and specify expectations, preferences, responsibilities and roles that directly address the elements of the strategy. This provides an opportunity to formally communicate the value system that the strategy needs for getting organizational alignment.

Posted by Malcolm Ryder at 8:38 AM | Comments (0)

September 1, 2005

The Cost of Value

Walk into a meeting, say the word "value", and tally up the other words that people thought you meant.

If your results look like this:
- profit
- performance
- ROI
- economy (as in economical)
- impact

then you already know why the next thing you say about value might easily split the audience into different groups. This split readily occurs based on how much their concerns are:

- goal-oriented
- process oriented
- resource oriented

The interesting thing to note here, though, is that each group at the meeting actually blends together some level of sensitivity to each of those three concerns, and it's the blend that makes the difference in how they understand you when you say "value".

I.

As articulated by the picture below, the blending shows up in the form of three main questions or "attitudes" that people bring to discussions of value. Essentially, what happens is that new ideas that claim to have value are considered in light of what related changes to current affairs are thought to be requested. The three questions are mental placeholders for the assessment of the current affairs:

1. What should we be doing? This looks at the list of current obligations and questions things in terms of priorities.

2. How are we doing? This looks at the way things get done and questions whether those ways -- capabilities -- are effective enough (successful and appropriate).

3. What could we be doing? This looks at whether the assumptions that have driven current choices for engineering benefits are still more logical and exclusively relevant than other credible assumptions that would also represent opportunity.

From the picture, we can also understand how discussions can quickly focus on certain "levers" such as:
- how costly is a resource?
- how risky is a process?
- how beneficial is a goal?

These levers typically show up as hot-buttons -- "justifications", "success factors", and/or "criteria" -- in the consideration of a proposal. Our picture also shows that each lever (such as "cost") easily gets a shared audience (in the case of cost, both the "commitments" and the "progress" crowd). It is not always the case, though, that the audience identifies its shared concerns as readily as its differences.

II.

Addressing multiple stakeholders with a single proposition means investigating shared concerns as much as possible; having a logical approach to doing that should make the problem easier to solve.

But if we go back to the list of those synonyms provoked by saying the word "value", things initially seem to be all over the map.

To sort this out, we can use simple working definitions of each synonym, and use the definitions to map the synonyms to our picture.

- performance: a measured level of achievement towards a target outcome

- impact: the measured difference between the quality of the current state and the quality of the proposed future state

- profit: a net gain in assets beyond the total allocated cost of effort.

- ROI: the difference in resulting assets between the proposed consumption of a resource and the current consumption of that resource.

- economy (as in economical): the efficiency of converting a given level of assets into a given level of resources.

As we now see, some of the terms -- profit, ROI and economy -- are actually types of the other terms -- performance and impact.

Furthermore, performance and impact both refer to the change that has occurred between the current circumstances and the projected or forecast circumstances. They are generally similar. But we can see that performance is really a context-specific description of impact.

In the typical Archestra terminology, "value" is identified as "the importance of the difference". The point is to determine whether the proposed value will test "positive" for being not just "different" but "better" than what is already in hand. The different audience perspectives explore the idea of "important" or "better" in respectively different ways:

What type of "resource" is consumed or created?
- does it increase conformity to obligations?
- does it decrease obligations that are liabilities?

What is the significance of having the new kind of resource versus the old, OR of having the new mode of resource consumption versus the old?
- is it more manageable for the current efforts needing resources?
- does it enable a new or alternative effort

How does that significance logically support the desired future state?
- does it make the path to the future state easier or safer?
- does it provide a path where previously there was not one or where in the future there will need to be an alternative?

III.

Now it is more apparent that the range of issues under the topic of "value" covers a lot of ground that is not crossed by counting money.

But because so much of business is predicated on having the assets necessary to fuel future effort, the overall sense of value typically "rolls up" to an estimation of the change of assets. In fact, it is usually the case that the shareholders of a business will tolerate a wide range of goals and even frequent change of goals as long as the change of assets is "profitable". Perhaps unscientifically, both economy and ROI are assumed to always be underpinnings of profit unless proved otherwise. This finance perspective is in high contrast to the main issue for stakeholders, which is that the way the business does things should be consistent with protecting the operational effectiveness towards the goal.*

Consequently, it seems that shareholders are much more tolerant of change than are stakeholders.

The generalized implication is that when "value" is proposed in terms of effectiveness, stakeholders perk up to catch clues about capability; when "value" is proposed in terms of "advantage", shareholders perk up to catch clues about opportunity.

Although distinct, the points-of-view are not mutually exclusive. In fact, as our earlier picture shows, the factor in common across those two groups is "risk". Although everyone knows that it takes money to get anything done, when the subject is "value" the sense of a related cost is not so much about dollars as it is about the tolerance of uncertainty.

In short, the "cost" of value is risk.

* See an outstanding discussion on stakeholder versus shareholder orientation, in an article about "social enterprises" called
How Organizations Create Social Value, by Manda Salls.

Posted by Malcolm Ryder at 6:27 AM | Comments (0) | TrackBack

August 30, 2005

Solution Strategies: Solving the Right Problem

Strategic capability is always critically significant, but critical capability is not always strategically significant.

We know that a square is always a rectangle, but a rectangle is not always a square. When we must have a square, the need is what makes the requirements more strict. Understanding that, we can appreciate the idea that "special" solutions are all about the fit to the problem. If a solution is constructed that does not fit the problem, it doesn't matter how elaborate or simpe the solution is.

In an elaborate solution, it is often the case that tremendous amounts of energy are spent on being precisely or accurately elaborate; but in the end, what really matters is only what is relevant.

Taking relevancy as the major guidepost provides an interesting context in which to consider the three dominant modes of solution construction (i.e., change justification) that management usually offers today as having business value:

- Standards compliance
- Continuous Improvement
- Optimization

In the context of relevancy, we get to ask what these efforts "fit" that accounts for why they should be considered "valuable". How do we know that these well-intentioned efforts, usually initiated with a sense of both importance and urgency, are not solving the wrong problem?

I.

The idea of "solutions" makes sense primarily because there is a preconceived "problem". Where the essential problem is that we need something that we don't already have, we can take the basic idea of value as starting with the initial acquisition of something appropriate to our need -- that is, simply marking the difference between having something significant versus having nothing. Typically, organizations think in terms of needing capabilities, so the initial or baseline value is "enablement".

With enablement as the target value proposition, we can think about how each solution mode "fits" or contributes. Each one has a potentially distinctive affect on the objective -- but moreso each one is likely to be requested to address a certain aspect of enablement.

For example, implementation is a baseline concern or aspect of "enablement". In this concern, standards compliance readily exerts huge influence.

Then, for the sake of making the implementation as secure and stable as possible under demand, continuous improvement takes the initial implementation "up a level" from its basic compatibility to greater utility.

That higher value to enablement is not hard to appreciate. But enablement might not be the priority! It is not so unusual that we have a realization of a problem and at that same time see that the solution must not merely enable. Our terms of acceptance, or of what makes the solution "appropriate", virtually begin with a need that is more special than basic enablement will fit. Here, we need an enhanced solution. This asks us to consider how the three solution modes fit enhancement.

In the following diagram, a framework of highly typical solution issues completes this kind of consideration. It shows that the organization's managers can move from basic standards-oriented enablement through a wide range of options that represent "fit-to-need" -- ultimately reaching optimization-oriented innovation.

II.

The main management challenge is to ensure that the solution mode chosen is being applied to the right problem or need.

In the framework, Optimization is identified more specifically as "Effective Optimization". Here, effective means that the optimization being pursued is willing to "break the rules" that may have already been established by standards and continuous improvement in order to adapt the solution to the particular requirements of the current operating environment. Optimization involves real-world trade-offs that allow the solution to actually work.

In the right side of the framework, Innovation identifies a need in which the calculated opportunity to succeed is based on capability that lies outside of the previously established boundaries of expectation.

Generally, the contents of the framework cells name the "justification" or "goal" that is to be addressed by the solution. While no issue within the framework cells is exclusive to its shown location , each represents a point where the application of the solution mode to the business need reaches a threshold of criticality not expected anywhere to its left or lower.

Posted by Malcolm Ryder at 4:33 PM | Comments (0) | TrackBack

August 26, 2005

The Structure is the Strategy

Years ago, Sun Microsystems launched the thought-campaign called The Network is the Computer. This idea absolutely flouresced with the charge it took from an elegant certainty about what "computing" was -- a state of continuous interactive processing of information resources. But implicit in the message was that the interactivity within a single processing unit or node could not deliver the real value of computing. Anyone who agreed with this idea of value essentially designated themselves as a target audience for the campaign's value proposition. With the ambition we have about computing, who would disagree?

So it is that the fantastic Marakon Commentary paper written by Richard Kibble and Neal H. Kissel proposes value of similar sexiness, but in another flavor: "Structure is Strategy". Scanning the main parallel, strategy would be, for us, an activity whose minimum threshold of value is reached only by the grace of the nature of the environment that breeds it.

To embrace the parallel, we have to agree on a concept of "strategy" that highlights its dependency on its host's organization instead of the inherent autonomy of its insight.

I.
Famously, Marshall McLuhan had already pronounced that the medium is the message before the Sun campaign began -- pounding the originally popular sign in the ground that semed to warn we cannot get anything from what we make other than what it allows us to get. But the flip side of the pronouncement was that the message always talks about the medium -- or in our case the strategy is always "about" the organization.

Echoing that in terms of business operations, Kibble and Kissel in effect identify strategy as the connection needed between (on the one hand) business issues that need to be resolved and (on the other hand) the way that an organization deploys the opportunity and authority to make the decisions that address and resolve those issues. In their view, that deployment, which is an organizational design (or structure), predetermines the prospects for successful resolutions -- in pretty much the same way that a language predetermines what kind of concepts can be transmitted between people. Essentially, this influence of language is what we refer to in some instances as programming, and in other instances as architecture -- with the general sense that the former's influence is active and the latter's is passive.

But does this mean that "strategy" can only shop around within the programing or architecture to find things to do?

II.
Programming an organization and running that program will produce directed behaviors and outcomes, which Kibble and Kissel synonymously call "strategy" -- but what we know about programming is that it, too, exists in an architecture, and that a given architecture can host more than one kind of program. So it seems that there is an important ellipsis in "structure is strategy"... and that there is wiggle-room for variety.

How, then, do we finally reach strategy from the structural point of view?

If structure really means organization, and organization really means enabled behaviors and outcomes -- then the threshold of what we would consider to be "strategy" is the point where begins the management of the specification and direction of those behaviors and outcomes.

This contrasts interestingly with what we might consider to be "governance", defined by Peter Weill and Jeanne Ross in their book IT Governance (Harvard Business School Press) as "specifying the decision rights and accountability framework to encourage desirable behavior in" an objective (page 2). Their definition, aside Kibble and Kissel's, clearly positions governance in a role supporting strategy: governance provides the mechanism for managing the behaviors that strategy has identified as desirable.

III.
Logically, this means that governance provides organizing principles that maintain the structure as a base from which strategy is addressed. At the least, that should let us avoid the dreaded circumstances in which, eyeing a target, we realize that "we can't get there from here..."

But if in that sense strategy "comes from" structure, then to parse that value proposition are we really saying that performance come from governance?

Using the term "performance" to signify the success of executing the strategy, the answer should be "yes" because we give governance the assignment to make behaviors align with strategy.

But there's a catch. To understand things in terms of performance, we have to agree that the phenomenon we call strategy is always, both essentially and in effect, responsivity, and that responsivity might be intentional OR unintentional.

We have no habit of calling unintentional responsivity "strategy" but this is exactly the intellectual challenge posed to us by Kipple and Kissel (whether they intended to or not!) when in their paper they cast the understanding of "strategy" as "the ability to tackle strategic issues"...

IV.
Using responsivity as the underlying focal point, the key idea that links strategy and governance is that when governance is exercised, strategy can be intentional instead of inadvertent. This is an important understanding because the deliberateness with which an organization pursues objectives (i.e., problem solutions and opportunities) may be a matter of strategic impact whether the deliberateness follows the officially desired strategy or instead follows an "other" strategy. If the other strategy is inadvertent (that is, proceeding outside of the attention of designated authorities), there may still be value generated and captured -- but the measurement of that value might be based on other kinds of expectations, and therefore that measurement may not reflect "good performance".

What we really want here, then, is to clarify the relationship between responsivity and structure -- and then complete the picture with the relationship between goals and responsivity.

Enterprise Architecture solutions vendor Troux defines [IT] governance as "a framework that delivers strategic alignment, performance measurement, risk management, value delivery and resource management."

What's most interesting about that definition is its set of multiple "deliverables": it doesn't say that the framework is exclusively responsible for any of them; so the real importance is that it shares, with other things, responsibility for all of them. The implication is that they are inherently related to each other and that the framework can make this relationship explicit and help the relationship.

V.
In a scenario of multiple related parts, we can show the space between structure and strategy, and see that a more precise claim would be "Structure is Competency"-- where competency is the abilities to willfully respond.

Further, we can see that:
- Strategy, using the terms of competency, translates goals into responsivity.
- Meanwhile, governance, using the terms of objectives, translates structure into responsivity -- in the same way that a model translates (i.e., organizes) functions into a program.

Thus strategy is moderated by governance. Performance ultimately measures the value of the responsivity -- the link established between competency and objectives.

This set of relations shows that structure might change very significantly without necessarily altering the purpose, activity or effect of strategy. If there's more than one way to skin a cat, the cat is Responsivity. That said, the specific implementation of a particular strategy is clearly beholden to the available underlying structure. But the common issue, or general one, is whether or not the structure provides strategy with something good enough to attain high performance and meet objectives. This is the value proposition of alignment.

VI.
If in fact governance is the lever for making structure enable strategic performance, a governance framework has the responsibility for relating tactics and priorities across the range of issues such as those we saw in the Troux definition. For a discussion on how management addresses the issue of alignment, see the article Managing Strategy versus Managing Performance here in the Archestra archives.

Posted by Malcolm Ryder at 10:00 AM | Comments (0) | TrackBack

August 18, 2005

Renovation as Innovation

Oftentimes, we arbitrarily restrict the working notion of innovation to a certain idea about what matters. This is a bit of myopia that fuels hype, and past the point of raising awareness, hype is not especially a good thing. Hype discourages looking at a problem from more than one perspective, which increases the chance that a related decision will have more risk than is perceived.

For example, a recent article on Doug Kaye's great weblog Blogorithms talked about how podcasting is allowing music lovers to get more of what they really prefer at a hugely increased level of convenience, which threatens the traditional radio broadcasting companies. This is a heavy-duty general warning for businesses pondering the industrial changes underlying their futures.

But too often in the coverage of pod-vs.-broad, the suggested counsel -- change or die -- is cast very two-dimensionally as "innovation in distribution", leaving out several other factors that distinguish the potential of broadcasting and might account for a positive future of broadcasting.

Note that Doug's article does not have that problem; and meanwhile, there is no prediction right here that broadcasting (including TV and radio) has a rosy future. As a TV guy, I'm way more interested in what TiVO will cause than I am in what podcasting will cause, but I think that good cheap digital video cameras combined with streaming files and RSS over the internet is far more important than TiVo or iPods.

So does broadcasting need innovation? Or maybe just renovation? It's easy to call any new change "innovation", but it's more important to get a grip on where the change is coming from, than it is to automatically indulge the mystique of innovation. I'm looking at the way that we could segment and rearrange the factors important to broadcasting that could make it financially viable on a continuing basis.

Here are a number of touchpoints where, hypothetically, change can occur.

It's probably safe to say that broadcasting needs to find new consumers; it is not necessarily the case that the new consumers should be like the old ones, although they need not necessarily replace them.

Broadcasting is expensive. The reason why broadcasting's expense was tolerated is because it delivered something of equal-to-greater value. But what made its content valuable was a business partner. In radio, the partner created a lot of the buying interest in the product, selecting and positioning it. In the future, new partners might be needed. It's not necessarily the case that the new partners should be the same type as the old ones, although they need not necessarily replace them.

To consumers, the role of broadcasting has been not merely "distribution" but "discovery". In the United States, discovery during the 1960s and '70s culture had radically different performance requirements than it does in the current culture. It's role was always to promote and reflect popular awareness -- and now the question is really one of what awarenesses are most valuable when they are popular (i.e. widespread).

And broadcasting has not been an interactive mode, often held now to be a fatal flaw; the flip side of the coin is that content is more secure in a non-interactive environment. If secure content is "reliable" and in that way more credible, then this is a major value point, although I make no attempt to put a dollar amount on it. Instead, note that news organizations suffer more from their credibility failures than from other competitive media.

Finally, also note that "quality" is not the same thing as "taste". Gathering content according to taste may indeed be more convenient that ever now, thanks to media other than broadcasting. However, transcending one's current taste requires exposure and research. There, the idea of quality is represented by objective insights. Delivering objective insights confidently, under widespread scrutiny, can be the basis of offering a trust relationship that supercedes mere willingness to immediately gratify personal taste. This is really about the producers who put content into the channel. Future producers need not be like those of the past, although they need not necessarily replace them.

Yet what's interesting about that last point is that it is not even a new value proposition, but instead one of the oldest ones of broadcasting. Let's talk about TV: expertise has always been a differentiating key ingredient of produced content -- whether it was authentic or just staged -- and whether the show was Masterpiece Theatre with Alistaire Crowley, the Evening News with Walter Cronkite, Monday Night Football with Howard Cossell, or early veejays at MTV. Where there is no explicit host, the expertise may still be implicit in the production values, the credits, the sponsor, and/or the branding.

However, the broadcasting landscape has morphed to where there are several different camps, and the issue posed in that is one of where consumers should expect their desired kind of value, not just the desired kind of content, to be delivered. For example:

- Non-profit Alternative: this is the camp usually thought of as "public broadcasting", but that label is confusing. PBS was seen as a non-profit station presenting alternative content, with "alternative" contrasting the content typically subscribed by commercial advertisers. But public subscription of content does not necessarily result in different content. And government-supported advertiser-free stations, including local "public access" channels, are in this category as well. This category changes as much as people or commercial advertisers are willing to directly pay for currently perceived alternatives instead of getting them "for free".

- For-Profit Alternative: HBO is now cited as a good example of this.

- For-Profit Conventional: this would be the advertiser-sponsored networks like ABC, CBS, etc.

- Non-profit Conventional: this is what some critics are accusing PBS of becoming.

Currently, each of these different channels actually has a range of content types that offer a range of types of value. Meanwhile, branding is usually the device used to try to herd the cats within any given channel. But when these channels are having problems, it has little to do with being broadcast channels per se.

Is there any reason to believe that changing producers at a channel, regardless of its category, could not all by itself suffice to make the broadcast channel viable? Making that happen would be plenty of hard, complicated work -- but my point is that it would be a renovation, not an innovation, and that broadcasting per se would not be a flaw. Look at what ABC has done in the last 24 months. It is simply not being held back in any significant way by being broadcast-based.

What goes along with this is that broadcasting can change its audience, in the sense that the content it delivers can actually alters their expectations. Break-through content is not prohibited by broadcasting; it is perhaps deterred by management.

So this points to what is likely the most important issue of all concerning innovation, and that issue is risk. Innovation can be an answer, but it is not necesarily THE answer, and a lack of innovation is not necessarily a sign of impending doom. Renovation may generate all the "new" that is necessary.

Posted by Malcolm Ryder at 10:40 AM | Comments (0) | TrackBack

August 17, 2005

Systems thinking: Thought for the Month

Milan Kundera invokes Nietzsche to caution us against "an act put on by system-makers: in their desire to fill in their system and round off the horizon that encloses it, they must try to present their weak points in the same style as their strong points."

Caveat emptor.

Posted by Malcolm Ryder at 4:39 PM | Comments (0) | TrackBack

August 11, 2005

Discovering and Defending Competitive Advantage with Technology

Bob Evans at InformationWeek posed a conference theme of "Business Process Innovation: Using Technology To Redefine and Reinvigorate Competitive Advantage." As Evans reflects, the current resurgence of business attention to managing business process improvement points to breakthrough champions such as Wal-Mart (and Dell), who present the prospect that IT-based superiority is the killer strategy of the day. By describing "what they do with IT" as business process, the call goes out to get business process innovation underway. Bob asks his readers for a reality check on this theme.

Taking him up on his offer, I wonder and ask might this theme be the right incentive pointing at the wrong problem?

Let's look at a company's business processes -- using the analogy that companies are like athletes. Speaking candidly, when we say "a company" we are talking about its leaders and managers. By analogy, leaders represent the athlete's knowledge of the possibilities of how to play the game, and managers are like the trained muscles of the athlete. Processes are simply ideas conceived and enacted in the heat of the moment of play, but rarely are they sustainably effective except when they originate in *both* the concept and the training of how to play. In other words, business processes are a company's "technique"... Yes, it can be memorized, rehearsed, reused and optimized, but technique is not automatically the same as advantage.

Actual competitive advantage originates in having the competency to exploit opportunities anticipated by the understanding of how the game can be played. Otherwise, advantage is just a theory.

Athletes who rely on competency win more often and longer than those who rely on something else. And competent athletes with a better understanding of the game realize that they have to keep refreshing and expanding their competency, to exploit the opportunity that can be envisioned in, and that can develop during, the game. By implication, at least, one's competitive advantage exists because your competitors have an inferior understanding of the game, an inferior preparation for the game's opportunities, or a mix of the two defects.

Unless your technique forces your opponent into those deficiencies, it is rather not likely that you have advantage simply because you have better technique. So, changing technique is not particularly useful unless there is already an expansion or shift in one's understanding of the game. (This understanding is what Brad Gilbert gives Nick Bolleteri's tennis geniuses to make them better than they already were.)

If all things other than technique were already equal between competitors, my claim about technique's limitation might be false. But since all other things are usually NOT equal, most companies do not have to rely on innovation of technique to establish or renew competitive advantage. Instead, technique for most companies is about survival, not advantage, and to get an advantage they need a privileged opportunity. The question for them is how to get that opportunity.

More likely, technique creates that opportunity when the opponent makes a mistake. But whenever it's too difficult to make the business opponent make a mistake, we need something else to "create" the opportunity -- such as vision or fitness. In this light, we want technology to increase our understanding of how the game can be played and/or increase our effectiveness in exploiting opportunities born of that understanding. But that is not business process innovation -- that's architecture.

So, to directly explain-- not by analogy -- this view of competitive advantage through technology , let's look at the details, beginning with the idea of "competitive".

By definition, the occasion of "competition" exists because there is a limitation on the availability of an opportunity. This still allows two different perspectives on the competition: one, who gets the greatest availability; and two, who gets the most out of the effort. This duality is why "agility" and "performance" are so strongly linked in the innovation of management itself, where formerly "strength" and performance were the focus. But let's assume that we're always talking about the condition of being competitive, not the results of the competition. Here, we'd want technology to support our new focus on agility.

Next let's work with the idea of "advantage". This idea has to mean "having the higher probability of gaining a decisive slice of the opportunity's availability." There are various ways that this might occur. And let's say that "a higher probability" is a relative position: then there are various interesting positions. Using technology to approach them makes sense mainly to the extent that those ways have already been identified. But the additional question is, how might technology help us to discover positions that give us an advantage?

Next there is the understanding of the "opportunity" itself and what it depends on. For example:

- If the opportunity originates in being "the timeliest provider of the most urgent value",

- and if the hold on that opportunity is sustained by being the most capable renovator of the value provision,

- and if technology is the dominant critical success factor in both cases,

then a company's key assumption about the technology is that it "actualizes" the business opportunity by enabling dynamic functional alignment with the opportunity.

In sum, this shows technology contributing to "realizing" the availability of business opportunity (i.e., getting competitive advantage) in four ways or levels, which logically progress (from bottom to top) as:

- persistence
- alignment
- enablement
- discovery
These levels, which are objectives of technology utilization, respectively reflect (bottom up) a company's options, capabilities, relevance and presence in the game.

Any given company may be weaker or stronger at particular levels in this setup, but without significant episodes wherein current-state accomplishment is satisfactory at all levels simultaneously, there is little reason to expect that competitive advantage will materialize long enough to take advantage of it. The secret to the success of the Wal-Marts and the Dells is not the use of technology per se but the awareness of the competency needed to make the difference.

Posted by Malcolm Ryder at 9:18 AM | Comments (0) | TrackBack

August 8, 2005

Strategy vs. Governance vs. Alignment

When is a solution not a solution? When it solves the wrong problem!

Hunting for solutions is so complicated because it is a multidimensional issue.

First, solution approaches vary:
- re-engineering, or "designing the problem out"
- innovating, or defining a new relationship of a technique to a task
- renovating, or correcting mismatches of current configurations to current requirements

Additionally, a choice must be made between pursuing the root cause of the problem or pursuing something less (such as symptoms). This choice is affected by:
- timing
- execution risk
- cost
- agreements

And not least of all, stakeholders affect the prioritization of the solution effort. In general, stakeholder concerns include:
- solution scope
- benefits and liabilities
- safety

These issues of approach, range and priority are almost invariably brought up in discussions about strategy, governance and alignment. Relying on the guidance of these discussions, a very substantial checklist of action items can easily be built. This level of awareness is a critically useful shot of clarity, but how do you decide which action items are the "right ones" to put at the top of the list?

First, defining the list's "top" region should follow the technique of rating alternatives according to both importance (the need for a certain impact) and urgency (the starting time needed to ensure likely achievement of the impact). Items that rate highly on both counts go to the top.

This won't prevent high-priority issues from competing with each other. And the competition doesn't mean that something big should be dropped... But the different items should be distinguished by their purpose.

This is where most of the confusion reigns in the literature about strategy, governance and alignment. There is no debate that most of the concerns in any of those articles and studies are vital to preserving and improving business opportunity, but that doesn't automatically communicate how to incorporate the advice at the appropriate times and levels of the organization's operations. Such incorporation is a critical success factor to the solution really being a solution.

Too often it seems that every concern is trumpeted as an item essential to every cause, whether the cause is strategy, governance or alignment. But if there is any importance to the different names for these causes, then how can the most effective distinctions between their respective basic concerns be drawn out?

The quickest way may also be the most reliable and comprehensive. Often the difference between the causes is mainly a difference of "perspective" -- and perspective is something that by definition is generated by looking around from a certain point of view. It is possible to see the same item in more than one perspective (or literally, from more than one point-of-view), and this is how the same item comes up in different stories. But the item's meaning can and often does vary with the perspective. The trick is to detect that difference, and this relies on point-of-view.

We can describe the key organizational management perspectives called strategy, governance and alignment, as follows:

- Strategy: addresses needs; needs are about the values of the organization, which reflect its idea about where it is in the scheme of things and what importance is attached to that position.

- Governance: addresses requirements; requirements are about the critical dependencies that exist amongst interactions that define the organization's functioning.

- Alignment: addresses specification; specification is about the particular definition of deliverables that are measured for their level of impact (whether benefit, neutral, or liability).

How confident can we be that these distinctions are correct?

The first way to test that confidence is to simply imagine if there is any importance to the initiatives for strategy, governance or alignment if they did not focus on the key components in these descriptions. Strategy that does not organize things around needs is pointless. Governance that does not organize things around requirements is pointless. And so on.

The second way, in case the first is not decisive enough, is to look at what the three perspectives respectively show us about the organization's current state and therefore what kind of problem is at hand. Generally:
- Failures of strategy pertain to the way an organization became disassociated from the basis of the opportunity that it pursued. It lost relevance.
- Failures of governance pertain to the way it became unable to control the dynamics of the opportunity pursuit. It lost viability.
- Failures of alignment pertain to the way it misunderstood the importance of its output versus the way its stakeholders did. It lost value.

As a result, we can finally understand the differences in an even more rudimentary way:

Is it time to change directions? -- Strategy
Is it time to change the rules? -- Governance
Is it time to change measures? -- Alignment

In order to follow up on any of those three things, certain actions prove to be constructive, and some of those actions prove to be constructive in two or even all three of the areas.

This further explains the recurrence of certain points and advice across all the various topics. But the key to their being "successful" solution components is to understand why it is important to achieve the difference that they make, set expectations accordingly, and then use them explicitly for that reason.

Posted by Malcolm Ryder at 11:08 AM | Comments (0)

August 6, 2005

When your Objective is to define Objectives

One of the best sets of definitions I've seen to distinguish goals, objectives and actions is a Planner's Guide having nothing to do with IT or business strategy but simply with organization. Getting to the point immediately, the guide states, "Objectives are more concrete than goals. They represent results we want to achieve within a specific time-frame."

It's seemingly a simple, efficient definition, but looking into it carefully, there are several points worth elaboration.

For one, the idea that "we want" means agreement amongst all parties. It is assumed, furthermore, that the relevant parties have some form of authority. The interesting question to ask here is, which came first -- the relevance, or the authority?

For another, the idea of "results" must be defined. This is most often where things get really confusing unless some standard or categorization is in use. For example, either of the following could be seen as the path to results we want to achieve:

- meet a specified requirement (would be "agreed", but could still be arbitrary)

- satisfy a critical dependency (would be logically mandated by a model, but the model might be hypothetical)

Although those two paths can account for virtually all instances of "results" we might consider, they both typically leave plenty of room for debate or negotiation amongst stakeholders about how important the result is to each stakeholder's perspective on fulfilling the ultimate purpose. Why is this the case? Because the truth is that depending on the active perspective, all "requirements" are not necessary, and many "dependencies" may be unknown or overlooked.
This points to the need for first reaching agreement on what the meaning is of the stated ultimate goal or purpose. From there, defining objectives is a step that begins to build a model of fulfillment for that purpose.

The general experience of practical science is that many phenomena are observed before they are understood. When a mechanism has been observed that succeeds at fulfillment, it tends to be adopted as the model until something else appears to do the job better. Comparing the dynamics of the two different approaches can yield an explanation of why one works better than the other. If obtained, that explanation typically becomes adopted as an "objective" of the fulfillment effort.

Modeling fulfillment is an exercise that runs in two directions -- analytic (diagnostic) and synthetic (inventive). But in management, based on the example above, more objectives are likely to be iteratively discovered than theoretically conceived -- because in management, "good enough" is largely dictated by "on time." In business, this means further that it is typically less expensive in the end to do trial-and-error based on known precedents.

Analysis is a method of attempting to discover precedents in order to make them known; this is generally called "business intelligence". In this way we can see that defined objectives may be the result.

A famous example of this is the original "Chaos Report" from the Standish Group in 1994, which studied the performance of project management in fulfilling the goal of "successful project". A standardized working definition of the goal -- "success" -- was applied for all projects studied. Projects were evaluated for success or failure. Then, reasons for failure were catalogued. Since the moment that the information was published, the "failure-reasons" have been dealt with as project management "success factors" -- where avoidance of failure is predicated on meeting the requirements of eliminating those errors that lead to failure. The Chaos Report ranked these success factors in order of highest criticality to lowest:

Project Success Factors
1. User Involvement
2. Executive Management Support
3. Clear Statement of Requirements
4. Proper Planning
5. Realistic Expectations
6. Smaller Project Milestones
7. Competent Staff
8. Ownership
9. Clear Vision & Objectives
10. Hard-Working, Focused Staff

So -- are those ten items "objectives"?

As an experiment, let's group those items into a smaller number of categories.
- Buy-in: items 1, 2, 8, 10
- Stakeholder Communications: items 1, 3, 5, 9
- Technical competency: items 4, 6, 7, 10

It's not difficult to imagine that timely, persistent buy-in would result from successful communications about relevant capabilities. Since that logical interaction is a way of modeling support of projects and thus adding assurance to the project's potential fulfillment success, then are the three categories "objectives" ?

The answer is Yes, from the perspective of "project support"...

But how about from the perspectives of "project control" and "project development"? Those are two equally important aspects of project management. Each aspect may need a respectively different group and grouping of success factors, which might lead to differing higher-level requirements or dependencies being identified.

But in any case, this generally suggests that a diagnostic approach to performance will yield success factors that roll up into objectives, with objectives being categories of desired effects.

In quickly surveying (via Google and Teoma) a history of related terminologies, the term CSF (Critical success factor) is generally synonymous with "Objective", while the measurable execution of action and events underlying the CSF is typically referred to with the concept of KPI (Key Performance Indicator).

Yet the problem persists that a logical distinction of underlying issues largely depends on what "goal" is considered to be the top-level starting point and who sets that point. How do we bring a standardized discipline to branching or cascading from the starting point, regardless of where it is?

An important related observation fitting the bulk of those here in Archestra's content is a simple one: acts and events underlie execution, and execution underlies performance. Said another way: behaviors have effects, and effects change states. Objectives are typically concerned with important states. In parallel to that:
- the ten sins of project chaos that Standish uncovered would be seen first as execution items (KPIs, effects) needing better underlying behavior (operational success factors);
- and the three derived categories of effects are performance-level success-factors (Objectives) representing positive states or conditions needed for success.

For another extended discussion of this issue, visit BPMMag.net

Posted by Malcolm Ryder at 12:37 PM | Comments (0) | TrackBack

July 30, 2005

Why Strategy Execution begins with Portfolios

Everybody has a strategy.

But it's not a commodity; and if strategy was easy, everybody would have one that works.

The science of "strategy failures" is intensive. Discounting 20/20 hindsight, the main factors in the failures are predictable -- they are the same ones that would have led to success:
- goals (that are clear),
- priorities (that are shared and supported),
- requirements (that are validated and adopted)
- and methods (that are instituted and controlled)

But how does the failure develop?

Strategy starts out as an idea that becomes a plan. When the strategy plan is not being realized, the holdups or breakdowns occur at one or more of the four points above, making their interdependencies untenable. Underlying that, the most critical missing ingredient is stakeholder commitment to generate the needed interactions.

Usually a failed realization is discussed in terms of an execution failure. Although that might be the punchline that people seem to care about the most, it might be missing the point.

By analogy, imagine an application that is installed on a network. It depends on the network components to establish the links between its various parts and its users. But as we have all heard, and as nearly every experienced consultant can confirm, an application will not achieve its aim if the network is not configured OR if the users are not trained. Just because the application is "installed" doesn't mean that it is going to "run" -- it has to be implemented before it can effectively execute.

To implement a strategy, appropriate commitments must be made to ensure that the key factors (goals, priorities, requirements and methods) are addressed in ways that allow them to successfully interact.

The traditional view of these commitments involves three key resources managed to the need: people, processes, and technologies. The main problem to solve is to resolve "competition" for the availability of these resources while verifying that the quality of the resources is sufficient.

The source of the competition for resources is where implementation must be prepared; in most companies, most resources are not at-large, and the deployment of resources may be following a plan driven by legacy jurisdictions, budget allocations, or disparate perceived needs not aligned with the support needs of the strategy.

But if managed as a portfolio, the various resources can be deployed as investments in the objectives of the strategy. In that way they constitute the "infrastructure" needed for the dynamics of the strategy's realization. Without this level of resource control, the implementation of the strategy is far less assured.

Posted by Malcolm Ryder at 9:31 PM | Comments (0) | TrackBack

July 28, 2005

Managing without Metrics?

Metrics mania is for real, and not having it could be more of a problem than the problem we have with surviving the mania. Why? Most managers would not be able to communicate effectively without metrics, and with the pace of change in business, new metrics are necessary. The intense community-wide pursuit of more metrics means that there is always a better chance that the new ones you need are already discovered and available.

But management didn't grow from metrics; management adopted metrics. There is something deeper than metrics that characterises true management.

What is it?

Here is the really big notion that always drives my own sense of what "management" means.

Start with the idea that there is initially an item of some kind (an organism, process, object, etc.) going through changes and/or behaving in various ways, independently of your influence on it. Then, as soon as you have a particular objective for the behavior or changes of that item, you begin attempting to exert some logical influence on the changes or behavior to cause it to conform to your objective.

But you don't just take your best shot at that and see what happens.

You sustain attention and influence on the item's changes or behavior as much as is necessary to maintain and/or improve its conformity to your objective. This effort includes the possibility that you will at some point change your objective but attach it to the same item as before. Practically speaking, that may cause you to change the specifics of how you influence that item's changes and/or behavior.

As a result, you'll be busy with determining why things you've been doing are working well or why they are not -- and that is a two-way street: how manageable is something, and just how is it manageable?

The key to succeeding in your influence is to identify the characteristics, attributes, properties, etc. of the item that you can "engage" with the characteristics, attributes, properties, etc. of your mode of influence, such that your influence is *at least virtually* causal towards your objective.

I say "virtually" only because in practice the success of "the influence" is sometimes hard to confirm as being a coincidence versus a direct effect. I usually define that more precisely -- as confirming whether something is a prerequisite (exhibited by correlation) versus a cause (exhibited by testing). A prerequisite allows something else but does not necessarily cause it.

But here you can see why management is essentially dependent on a logic. The whole idea of management assumes that your influence on something is effective because it is "logical".

This means, furthermore, that obsessively measuring stuff outside of a logic of action to influence progress towards a designated objective (other than measurement itself) is NOT "management".

At the same time, the notion of "measurement" needs to be understood broadly. Here, the working definition of measurement is:

the determination of a significant distinction,
with the type of distinction being already named so that
comparison is straightforward.

That is, measurement determines that:
something is, to a discernable degree, of given state X,
and is therefore not of some other degree or some other state.

In the practices and measurements of a particular field, what becomes really crucial to management is to decide the reasons and standards for using the "degrees" and "states" being researched, referenced or communicated. From that, a logic of influence can be agreed and developed, and measurements appropriate to the logic can be cultivated.

Posted by Malcolm Ryder at 6:46 PM | Comments (0) | TrackBack

July 19, 2005

Fast, Pretty, and Cheap

Bob Evans over at Information Week wrote up the importance of HP's new CIO Randy Mott to its strategic needs. Mott is the mastermind behind Wal-Mart and Dell superiority in IT enablement of business performance.

Is strategic success portable? Evans points out that, "During the five years Mott was CIO at Dell, the company's revenue grew more than 60%... among Mott's biggest contributions were helping the IT team set strategic priorities and putting in place global standards... At Wal-Mart, Mott specialized in cutting latency out of the supply chain and ultimately increasing customer intimacy by helping to ensure that the seller was offering what the buyer wanted, when the buyer wanted it, and at a price the buyer accepted. As a result, in the six years that Mott was Wal-Mart's CIO, the company's sales almost tripled..."

Clearly Mott is a guy who knows how to get things done. But let's recap that: Mott focused his (IT) operations on three things:
- speeding up the runtime throughput of operational processes
- aligning IT's support of the business to its clarity about buyer's requirements
- making that sustainable and affordable in a way that allowed continuous progress over several years.

In a nutshell, he made operations fast, pretty and cheap.

The official joke about fast-pretty-cheap is that you can pick any two of them but you can't have all three. But evidently, getting all three really is possible, and when it happens you become Number One in your niche.

So, what's interesting to think about is how those three impacts rely on each other. In general, we're looking at how the operation establishes a fit with (a.) its environment, (b.) with the prospective customer/beneficiary, and (c.) with the market. When productivity feeds quality and quality feeds acceptance, you get a winner.

Faster operational throughput presumes that the chain of inputs and outputs that link functions and processes together is "streamlined". That is, the functions and processes all know what is the right direction to go in, and they offer little resistance to the environment they are moving through. "Efficiency" is an easy way to refer to minimizing resistance while strengthening direction, but policies and standards actually go directly to the problem in a more profound way. By reducing the number of operational variations that will be attempted in the first place, policies and standards reduce the volume of necessary downstream corrections and distractions, while making it easier to recognize when recurring activities are actually generating benefits or risks.

Clarity about the impacts of activity underlies operational quality, and quality is pretty. Impact clarity means that the downstream benefits and risks of most importance can be targeted more accurately and confidently. As a result, quality promises can be made more rationally and certainly, which increases the customer's interest and attraction.

Customer requirements come from the perspective of the customer's needs, and the greater the need is, the more valuable it is to satisfy the need. But meanwhile, the usual laws of supply and demand apply. The availability (supply) of that satisfaction is a strong lever in prices. But the customer's need (demand) can also range in two ways: from critical to merely discretionary, and from few people to many. So, the smart business wants to focus on the most valuable "sets" of requirements. By tailoring the fulfillment operation to quality for a particular importance and volume of need, economy of operational scale is easier to determine, and improvement there allows more attractive pricing and coverage for customers. Then, of course, what finally makes quality inexpensive to produce is better sales that readily pay off the investment in quality.

So the fast-pretty-cheap trick is not about which one of them to leave out. Instead, it is about how to order and align them. This also reflects CIO Mott's approach when he first arrived at Dell. His first steps were to reduce the number of planned projects by 90%, leaving only those most important to business capability for making products more marketable and sellable. Recognizing that cost is always a critical issue, his initial emphasis was actually on prioritization and focus, not on cost. As Bob Evans quoted him saying, "once we got our priorities set, we were able to be a lot more effective." And we know that both Dell and Wal-Mart are price leaders as a result of their effectiveness. It looks like the best way to reach "cheap" is to stop wasting effort, and do the right work.

Posted by Malcolm Ryder at 7:55 AM | Comments (0) | TrackBack

June 25, 2005

Architecture and Strategy

Architecture designs spaces for functions.
Strategy designs functions for spaces.
OK, on with the show.

Posted by Malcolm Ryder at 11:33 PM | Comments (0) | TrackBack

June 24, 2005

A Purpose Driving a Performance

The triple-take I did today when reading through InformationWeek might have come from not paying enough attention to the headline of Stephanie Stahl's Editor's Note on CIO priorities, Customer Focus Promotes Growth; but on fourth thought, I think not!

A lot of us are accustomed to hearing that customer focus is a strategy. And although the idea that strategy promotes growth has lost some cache in the age of Execution, there are those who still believe it. Certainly there's momentum still behind thinking of growth as "good performance". Thus, the argument that strategy stokes good performance.

But according to the article, Michael Treacy of Gen3 Partners had recently warned the audience at the Optimize CIO Summit that "The best management team beats the best strategy every single time." And the followup advice: commit everything you do to customer value.

Take One: okay. When is a "strategy" not a strategy? What Treacy seems to be doing is drawing a competition between commitment (organization? action?) and planning (ideas?)... By saying the Best this or that, he hasn't given any company a leg up on any other, since every company must be managed. So instead, how about great management beats not-so-great management -- and the real question is, what makes management great? Is it the guidance received from a strategy, or is it the guidance from something else?

Take Two: What if the purpose of strategy is actually NOT to drive "performance" ?? One thing we know about strategy is that when you do have one, you have a consistent, goal-oriented perspective from which the running states and events of the business are evaluated. But the perspective is a hypothesis, essentially, about how things work to your benefit, and the point of the strategy is to encourage a pervasively consistent logic in decision-making. Reality keeps testing that hypothesis, though, and eventually you find out if the hypothesis was "correct"... Is Treacy saying that management is about doing something that connects with a reality that is more influential than strategy? (Sidebar: I'm reminded that Columbus had a theory about how to find what he was looking for. His theory was wrong, the world's not flat; but he "managed" reality, and wow, look what he found. The question is, what's the chance he could count on a payoff like that twice in a row, using a bad theory? Let's just say, with our excellent 20/20 hindsight, that we'd let him cruise a small planet, but we wouldn't put him in charge of the space station rendezvous...)

Take Three: If pervasively consistent logic can be had from something other than strategy, is it the management team that is the source? If yes, maybe what's being put up front is Leadership, which is not the same thing as strategy. Meanwhile, I can't help but notice that strategy and leadership are both forces of Alignment.

But being customer-focussed does not magically "turn managers into leaders" -- and if growth comes from customer focus, maybe it's because (and only when) leadership is strong enough to draw growth from customer focus...

Which leaves me with three thoughts:

First, what the heck would make a strategy a "best" strategy if there was not correspondingly great management available to back it up?

Second, certainly there are leaders who mainly try to draw growth from strategy. For those who see customer-focus as a strategy, they're also likely engaged in using great management to draw growth from the strategy. Maybe a "contest" between strategy and management is only happening when the leader feels it and feels like one of the two must change.

And third, once again, what makes great management great? Well, just try to find a great management team that doesn't have great communication. And what do they talk about? The same things that a strategy would ask them to talk about... Why is this so interesting? Because one of the top reasons that senior managers and executives voluntarily leave their positions is that they feel their views are not being taken seriously. And what is the focal point of reconciliation of divergent executive views? Strategy.

Posted by Malcolm Ryder at 4:04 PM | Comments (0) | TrackBack

June 18, 2005

Strategy and the ROI in Change

Strategy moves from being an intellectual awareness to a progressive practice when strategists describe strategy in a way that describes manageable processes of the business.

However, this does not simply mean translating strategy into operations.

Instead, "strategy" is the model for the ROI in Change.

By definition, all "change" involves a comparison of states.

In strategy, Change is a difference (of states) described in two dimensions: impact and risk.

Regarding impact: the difference in states is between the currently expected state and the future actual.
Regarding risk: the difference in states is between the preferred normal and the allowed incidental.

Strategy acknowledges that you have a stake in changes, and it expresses a theory of how you structure and leverage your stake for benefit.

This commitment to change is essentially an investment, and strategy models the return on that investment.

The model for the ROI in Change cannot be reliable if "ROI" itself is misunderstood. The essential observation to make about ROI is that the "return" comes as an asset that is a potentially more valuable resource than was the resource consumed to produce it. Famously tired and dry arriving at a roadside hotel in a strange town after midnight, I was desperate for a soft drink from what incredibly was the only nearby source - a vending machine that took only coins, of which I had none! The sixty-five cents in coins that I bought from another late traveller for a dollar bill was worth far more to me than the dollar bill.

Strategy models an ROI by coordinating highly plausible differences into a pattern that is manageable.

To do that, strategy must find a way to identify differences as resources and design a process that converts them. This is basically what is meant by "seeing change as opportunity".

Strategy research takes responsibility for formulating the terms that identify the differences -- including current expectations, future actuals, preferred norms and allowed incidentals.

In the language of forecasts, targets, standards, and exceptions, strategy recruits management practices to critically intervene in the course of events and relationships, making them resources.

Much of this intervention is seen in practice as discipline, for which numerous aids are employed including methodology, processes and automation to improve execution.

But the emphasis on discipline too easily makes the strategy seem to be the product of the discipline, instead of the discipline being a service for the strategy.

Creative interventions, focused on the findings of strategy research about change, are an ideal goal of operations but too often current operations are a protected resource themselves, unavailable for "unusual" strategic deployments.

This puts pressure on the quality of the strategy in its role as the model for ROI. Operations must become available on demand to strategies, and this means that the constraining presumptions of conventional discipline must be overcome by the logic of returns from change.

Posted by Malcolm Ryder at 8:29 PM | Comments (0) | TrackBack

May 16, 2005

Making space for Strategy

The distinguishing feature of strategy is its key topic: "Where you're going to be, and why you're going to be there."

This topic's key idea is that strategy always seeks an advantageous position allowing some following action to accomplish an objective.

A strategy-in-progress might seek a group or succession of positions, allowing an accumulation of impacts that finally, pressing past the tipping point, realizes a singular higher-level goal.

But one essential difficulty of strategy is that it usually must be cultivated in an environment whose own dynamics tend to diverge from the positions of the strategy and are busy enough in some other way that (worst case) leaves little room for strategy. Just as farming or gardening creates a productive order by leveraging conditions driven by autonomous natural "forces", organizations must be induced to support progress towards the positions of the strategy.

The idea of cultivation gives a way to describe organizational requirements for enabling strategy. What are the levels of preparation that characterise the development of an organization's state of hospitality to strategy?

For example, an initial "groundwork" level is involved in the form of tending the quality of assets (like the fertility of the soil)... this creates one supporting "base" layer of readiness.

Strategic readiness can be built up progressively through various supporting layers, each layer logically contributing to the overall capacity to capture, leverage and resolve strategic positions. For example, the top to bottom order of layers might be identified and managed as follows:

- engagement (fit with environment)
- policy
- administration
- process
- assets

Strategic readiness is enhanced by increasing the coherence of each layer's capacity and by synchronizing the different capacities across the layers.

"Capacity", for any given layer, means the distinguishing volume and type of impacts generated on that layer's intrinsic terms. This might be most easily promoted through a management framework for each respective layer, ensuring the quality and availability of the output of the layer.

Coherence of the layers means that they "stick together" by virtue of the practical strength of their interrelationships (and interdependencies) -- both internally amongst their components, and externally across layers.

Synchronization means that the production "rhythms" of each layer are beneficially coincident across the layers.

The design, maintenance and interlinking of the layers creates the space for strategy...

Posted by Malcolm Ryder at 10:54 PM | Comments (0)

May 2, 2005

Driving Strategy to Success

Executives and business experts are generally agreeing that improvement in profitable competitiveness must now come from taking measures beyond cost-cutting. Profitable competitiveness is their basic idea of good performance. It reinforces the idea that the business should organize how it competes according to the chance of profit; so, changes in the perceived sources of profit should change the competitive strategy.

What should stay under very close examination, naturally, is the idea of these "profit sources". In one view, the strategy should actually create and/or secure the sources; this is a fundamental part of understanding the quality of the strategy. Another part concerns how usable the strategy is by the organization, for the purpose of creating and securing profit sources.

Accordingly, as the conventional idea of performance management goes increasingly mainstream, what we see talked about is that companies are increasingly concerned with the ability to "execute" the strategy. Naming the problem in that way intuitively makes sense, given the outlook described above. But to solve the problem, it first needs to be defined in a different way.

To begin the redefinition, let's dump the word "execute" and use the word "drive". To illustrate why this makes sense, let's imagine that we're competing in a autorace on a difficult closed-loop track. One of the key things we need for success is a car that "handles" well enough for us to actually make each section of the track "conform" to what we need to get out of it. For example, a steeply banked curve is an area where a poor-handling car will fail to keep us positioned the way we need to be throughout the curve, and we may fly off the curve against the crashwall or at least lose crucial time recovering from poor position in the curve. But in an excellent example of relativity, a great-handling car is said to "flatten" the curve because it can hold us in the optimal position throughout the entire curve, for least risk and highest speed (combined). The great thing to see about this is that although the actual physical curve of the track does not change shape in either case, the effective shape of the curve does change along with how we can handle it. Our great-handling car re-shapes the curve to our needs.

Strategy is like that great-handling car. With it, we can reshape the entire "track" into an optimum competitive environment. But that assumes our own compatibility with the car, which in turn assumes that we are ourselves capable of operating the car appropriately.

If performance is a measure of profitable competitiveness, and we rely on strategy to establish that performance, then the strategy's reliance on our operational compatibility and capability is clearly 50% of the "source" of the competitiveness. The strategy is designed to reshape the environment (so there's the other 50%), but that effect won't occur if we, the driver, do not or cannot use the strategy in accordance with its design.

So, let's use that conventional working definition of "performance", in which managing performance improvement means increasing profitable competitiveness. That means doing something that might best be called co-opting the strategy. Literally, to co-opt means "to take or assume for one's own use; to appropriate..."

This idea includes a couple of great things that are useful to us. For one, it immediately suggests that a good strategy can be built, bought or borrowed; naturally it can be home grown but it doesn't have to be.

The other thing is even more interesting: think of "co-opt" as relating to the strategy through a combination of "co-operating" with it and "adopting" it. To co-opt a strategy, you cooperate with its intent and you adopt the strategy's attitude towards the environment that it wants to reshape.

Now we see the issue of strategy in light of a more tangible performance management agenda. When the organization's behavior shows that the organization wants to do what the strategy wants to do, the organization is driving the strategy, and the profitable competitiveness premised (if not promised) by the strategy is more likely to be demonstrated.

For managers, seeing that the organization drives the strategy is probably a much more important perspective on things than is the evangelical idea that "strategy drives the organization."

In co-opting the strategy, cooperation with the strategy's intent must be a desire of the organization, and this is likely cultivated through incentives or there will be much less persistence to it. However, adopting the strategy's attitude towards the business's operating environment is even more essential, since this attitude is what reshapes the environment to the business's purpose. The reshaping is where strategy actually creates and secures the sources of profit. Without adoption, no strategy can take credit for any success. Thus, strategy adoption is something that must be at or near the top of a manager's agenda, and we must develop clarity on how the particular and various managers should actively and practically repond to that priority.

Posted by Malcolm Ryder at 7:56 AM | Comments (0)

April 25, 2005

The ROI of Management

The essential function of a business is to process resources to generate value in a targeted market. Generally, the profit results from exchanging the delivery of specific benefits of that processing for something else more valuable.

To sustain this ability over time, the business must be able to regenerate and refocus resources in accordance with the changing requirements of competitive demand in the market.

This means that the capability to execute is the result of an ongoing investment, and the capability itself is a return on that investment. Let's call this the capability return on investment, or CROI.

Because market demand forms competitively, the business must anticipate the conditions in which the exchange of benefits for reward is probable. Organizing around the probability is the concern of strategy.

For the purpose of instituting practice of this organizational effort, Strategy is formulated in Plans.

The business goal is then to have execution of the plans generate a profit return on the investment -- or PROI.

Shifting markets mean that PROI relies on CROI. But the likelihood that execution will drive profits rests on the likelihood that the underlying resource-processing will have the characteristics needed to establish -- on demand -- appropriate delivery of benefits for the current opportunity presented by the market.

This makes capacity and coordination the key characteristics of execution, while strategy directs the execution.
- Capacity provides immediate breathing and maneuvering room in the set of options for resource allocation and application. Growth is the increase in capacity that is effectively applied to opportunity.
- Coordination provides constructive throughput of the impacts of resource deployment, from the initial decision through runtime activity. Alignment is the increase in coordination that ensures operations meet requirements.

Those key characteristics of execution mean that PROI from execution mandates a use of resources that both results in and leverages growth and alignment.

In turn, the criticality of appropriate usage mandates direct management of utilization to comply with strategic direction. The degree of compliance realized is called "performance."

Thus, in order for CROI to drive PROI on a long-term basis, performance must support strategy by establishing compliance through growth and alignment.

This understanding is the basis of the Archestra Management Framework.

Posted by Malcolm Ryder at 6:50 AM | Comments (0) | TrackBack

April 22, 2005

Managing Strategy versus managing Performance

For the most part, recent consensus on the state of business health includes two interesting headlines. One is that business competitiveness now requires "growth", which in turn requires moves that go beyond cost-cutting. Another is that effectiveness requires "alignment", which in turn requires moves that go beyond efficiency.

In the new era of growth and alignment, the old business platform of economy and efficiency is now mainly a staging area in which processes are designed, or repaired, or re-designed. There can be no doubt that every business must design there, but as we also see in the current consensus, the new criterion thrown into the mix is change. This ingredient pushes all resource management (whether of processes, people or technology) up against the challenges of agility and renewal -- both challenges pressed upon the business by operating environments that are increasingly independent of any given business.

In fact, to secure the business's ability to be responsive to the right things at the right times and thereby consistently exchange value offered for more value gained, the business now must concentrate more than ever on relationship management. Through collaborations and partnerships (both internal and external to the company), relationships bring the business earlier alerts, economies of scope, and a broader range of available resources -- on demand. Thus the business has greater means to assure itself the right positions, on time.

However, exploiting the positions is what causes a payoff -- and another current general consensus is that companies do not so much fail to have viable positions as they do fail to execute from them.

This notion, which argues that most companies have a strategy but fail to execute it well, points us at the idea that performance should be seen mainly as successful execution of strategy.

Ironically, the other big story that managers are hearing is about how companies that successfully execute poor strategies would actually "outperform" companies that have great strategies poorly executed. This story clearly equates performance with results. But it does not usually drill down into whether the sustainability of that output is likely or is even relevant to the foreseable future. In effect, it is a disposal definition of performance.

As a kind of advice, the story is appealing in a comforting, common sense way, as if to say "perfect is the enemy of good enough!" This advice is just great, as long as whatever strategy is being used really will likely tap into significant levels of opportunity even if it is poorly conceived. Executives who are betting your careers on that, please raise your hands.

So how does the idea of "successful execution" of strategy actually net out? Is the point of strategy simply to get organizations on a productive path but then step aside? Or does strategy just "pan filter" the range of execution's results for the results that it wants? Or is it that the competitors that really matter are just not different enough to require a strategy above and beyond superior execution?

Our problem is to understand what strategy really has to do with results, and how that connection works. The underwhelming answers just described above can be reached by at least three paths of confusion, each of which should be avoided...

#1 - "Execution" is thought of as just a synonym for operation (i.e., thought of as procedure, instead of as actions continuously negotiated between options and risks).
#2 - No distinction is understood between tactics (securing opportunity)and strategy (creating opportunity).
#3 - Short term results are not examined in the context of long-term value, so they are not asked to contribute to it.

The Management Framework
To dispel this confusion, a couple of "management" definitions of strategy and performance allow a better perspective on the issue and provide consistent connections of strategy and performance to growth and alignment.

- Strategy is about the value of the direction chosen. Essentially, strategy selects positions oriented towards a selected goal.
- Performance is about the quality of the effort made to go that direction. Essentially, performance selects ways to get and use the positions established by strategy.

The key to this vocabulary and point of view is recognition that both strategy and performance start out in management's mind as projections, as models of possible futures, not as assessments of the past. From the models, plans are developed to link the models to the specific organization. Then the plans are used to both steer and evaluate the ongoing "actuals" versus the models.

Again, strategy and performance are both aspects on a planning axis; typically, given the usual level of internal and external business complexities, most organizations will not approach projected strategy or performance targets except by working to realize the plan.

On another axis, growth and alignment are both aspects of execution.
- How is growth pertinent? Primarily, growth is meaningful when it is increased capacity that is effectively applied to opportunity.
- How is alignment pertinent? Alignment is meaningful when it is increased coordination that raises the certainty of operations meeting requirements.

Given that, it's fair to assume that all companies want to enhance growth and alignment -- in other words, they want to accomplish both growth and alignment in a way that makes the two things valuable. But even if they don't immediately accompish those things, they want valuable results from their ongoing efforts, which means organizing activity for meaningful, incremental deliveries of value.

This brings us to a clarified distinction of what it means to manage strategy and to manage performance.

By understanding that execution must be concerned with supporting growth and alignment as success factors and not just with outputs, we see that the manager's primary responsibility is not simple procedural adherence to plans, but rather that "realizing" the plan should be continuously pursued in terms of whether intermittent activity and outcomes are consistent with the goal of growth and alignment.

In both the cases of strategy and performance, managers need to bring execution capabilities to the plans. Synchronizing those capabilities with the needs of the current plan is a manager's highest priority. By making change more manageable and therefore increasing the organization's accommodation of new plans, capacity and coordination (respectively, elements of growth and alignment) characterize the key approach to optimizing the potential of strategies and performance. Because capacity and coordination are literally provided through the makeup of the organization, this point of view explains the connection between organizational development and results.

Consistent with the working definitions established so far, we can now use typical management terms to map out the synchronization described above...

STRATEGY:
- growth intersects strategy in objectives.
- Similarly, alignment intersects strategy in priorities.

Strategy management primarily attends to objectives and priorities -- conceiving, communicating, tracking, supporting, evaluating and adjusting them -- such that they nurture and leverage growth and alignment, respectively.

Applying that same cycle of attention (i.e.,conception through adjustment), performance management addresses performance's intersection points with growth and alignment.

PERFORMANCE:
- initiatives nurture and leverage growth; while
- tactics nurture and leverage alignment.

Thereafter, with initiatives and tactics supporting objectives and priorities, management negotiates results. This understanding replaces the ambiguous notion of "executing strategy" with something that all managers can directly and rationally engage.

Posted by Malcolm Ryder at 1:45 PM | Comments (0) | TrackBack

April 20, 2005

When is governance Governance?

Any cursory cruise around the 'net shows a typical, even classic, debate about what is included in "governance". On the one side, people are afraid to leave anything out, because a governance failure is felt to be too dangerous. On the other side, people are afraid to put too much in, because otherwise the resulting complexity makes it seem less attainable.

This raises the question: if governance is something that everyone must subscribe to, is there a common-sense definition that points at a generally portable and evolutionary approach?

Let's try this: you know you're doing governance when you routinely exercise
(a.) proactive management of...
(b.) execution compliance to...
(c.) standardized quality requirements for...
(d.) risk accountability

The italics indicate the points where other available definitions can either grab on or argue. We can imagine a few kinds of arguments, testing whether this definition links the right ingredients together in the right scope. But common sense just might prevail: if this is not an appropriate and portable definition of governance, then let's imagine scenarios that do not have these exact characteristics; why then would we say that those scenarios are "governed"?

Meanwhile, the four parts of the proposed definition intentionally contrast with a number of other vital organizational responsibilities, while not excluding them:
- proactivity versus remediation
- execution versus planning or strategy
- quality versus efficiency
- accountability versus management

In trying to make the definition a reality of operations, many big questions pop up:
- how do we get to a sustainable proactive state?
- what is needed to establish sufficient execution controls?
- how do we embed requirements into systemic operational rules and policies?
- can we eliminate the gap between the objectives and the methods, of auditing and of forecasts?

This diversity of concerns poses challenges to any organization, ones that may be tackled by solution providers on several levels including:
- cultural,
- methodological, or
- technological.

For most companies, developing and applying a governance discipline within the organization will be driven by the usual two suspects: low-hanging fruit (the quick wins), and raging fires. So we'll see governance over here, and governance over there, and in time it can make sense to have the various efforts support each other.

Realizing that, we know that coordination of effort across the issues and levels will be the real reason why governance will evolve in any given company and in that way earn a capital "G".

Posted by Malcolm Ryder at 12:42 PM | Comments (0) | TrackBack

April 13, 2005

Strategy, Architecture, and Performance

A business is an organization that exists to convert resources into assets at a pace faster than the assets lose superior value to the resources.

Meanwhile, markets define the value of the asset. Move the asset to a different market, and its value gets regenerated from scratch by the new market, with a likely (but not necessarily) different result.

If that is true, then against that backdrop all businesses have the same deep questions about driving business performance.
- Market model: how do I get a position to capture the value that a market can generate?
- Business model: how do I optimize the resource-conversion potential, for delivering assets into that value-making market?
- Process model: how do I build and maximize the resource-conversion capability?

Let's step towards some answers.

Position: Most business strategists initially address the problem of decoding the way a market can generate value around an asset. This results in a market model of various dynamics to be leveraged. Then, the business looks for (i.e., conceives) a "fulcrum" (one or more of them) that enables the leverage.

Optimization: Actually making and sustaining that fulcrum is the next issue. Specifically, the organization must engineer certain conditions that create the leverage. This engineering becomes the primary purpose of the business's operations (yet is often unrecognized as such because people are accustomed to thinking of operational outputs as goals instead of as causes.) To engineer the conditions necessary for market leverage, the organization must implement and exercise a business model for the market, respecting the ongoing changes occurring within the market. For that, the essential elements that make up the business's structure -- resources, services and relationships -- must be continually re-aligned to ensure that the business's effects stay within accepted tolerances for the target market. Naturally, this ongoing reconstruction is constrained by the known characteristics of those basic business elements. To ensure that strategic reconstruction is successful with the constraints, management relies on an architecture (a pragmatic systems design framework) to provide principles for alignment, and relies on change management (a governance framework) to defend the architecture.(For some reason, people tend to not take credit as the "architect" of the setup unless it acquires some celebrity as a success. Regardless...)

Development: As said above, the business organization that is derived from the business alignment must generate the events needed to exploit the market position.

This occurs as "production", through organizing activities in a sustainable balance with supplies and skills. That balance point within production usually tries to simultaneously maximize economies of scale and economies of scope (a blending that is again an "architect's" natural domain).

In that effort, the actual provision and consumption of supplies and skills are quite variable and therefore take up a lot of management attention. This variability is often assumed to be covered by ERP systems. But increasingly, establishing real cross-functional manageability requires process modeling.

The process model orchestrates events around strategic objectives. Those events are what mostly occupy the awareness of the parties who "use" the business through their own roles within the conversion chain and/or as market-makers. The orchestration predictively arranges or promises these events, and the participants execute to make them occur. Keeping those promises is what operational performance is about.

So the hierarchy of interdependencies, from market model to business model to process model, respectively links strategy, architecture and performance.

Posted by Malcolm Ryder at 12:38 AM | Comments (0) | TrackBack

February 25, 2005

About Strategy

Strategy is the art and science of continuously determining, in pursuit of a goal, where you need to be and why you need to be there.

There are two kinds of strategists: Leaders and Analysts. Leaders try to prove what they believe, and Analysts try to believe what they can prove.

However, these two approaches are far from contradictory. Instead, they are dynamically complementary, and it is typical, not unusual, that a strategist will capitalize on the products of one approach by using the other approach. This "dialog" has no speed limits or prerequisite schedules, and a strategist collaborates with himself or herself as often as with others.

Posted by Malcolm Ryder at 1:07 PM | Comments (0) | TrackBack

February 23, 2005

Change and Management

Managing change is always a critical capability, yet is it always an important practice? Consider the idea that things can have a distinction without a difference. For example, if moving to a point two steps to the left gives no "better" point of view, then a distinction without a difference has been achieved. This helps to point out that if there is no point to the difference, then there may be no need to manage the change that creates the difference.

The punchline is that managing difference , as opposed to just managing distinctions, is the essential purpose of managing change. Put differently, change management manages for value -- meaning, the significance of the difference.

For example, pursuit of an opportunity or avoidance of a risk represents basic motives for change management. In practice, when "significant" transformations of a current state can be consistently anticipated and purposefully controlled, Change itself becomes "manageable".

In management terms, the value represented by the significance may be positive or negative, since the value is determined by comparing the result of the transformation to either the prior current state or a currently desired state. Generically, this value assessment identifies positions along three dimensions:
(a.) the intended/unintended;
(b.) the expected/unexpected; and
(c.) the planned/unplanned.

According to the locations foreseen or detectable within that 3-D space for any event, the practical roles of anticipation and control are defined, scoped and scheduled (thereby spawning requirements for related policies, processes, tools, and so on). But this organization of roles happens only because the various locations in that 3-D space are seen as being
(x.) preferable to some degree,
(y.) tolerable to some degree, or
(z.) inevitable to some degree.

Consequently, in acknowledging this second 3-D space that characterizes or "measures" the locations within the first space, we can see that change management is where value and risk are managed together -- making change management always essentially strategic -- whether it is being practiced at the level of operational commitments, or tactical selections, or strategic planning.

Posted by Malcolm Ryder at 8:42 AM | Comments (0) | TrackBack

September 26, 2004

Framework for implementing Strategy

Most strategies are not well-adopted by the organization that must host them in order for them to take effect.

Implementing a strategy requires that key characteristics of the organization are integrated with each other as well as individually supported.

The following chart identifies the coordination and support of those characteristics.

Posted by Malcolm Ryder at 2:32 PM | Comments (0) | TrackBack