Slamet Hendry

learningorg

Sep 2010

Reasons to use open source software

In early days of open source movement, fear mongers created the perception that open source software is not fit for large organisations. Despite the costs, commercially licensed software was seen as a safer alternative to open source and many arguments were brought forward to claim the hidden cost of open source software. Some corporate IT managers still think like this. And they are doing their companies a great disservice.

The open source software movement has matured to become a strategic enabler for corporate IT. Corporate IT needs to assess where open source software can help accomplish the company's business objectives. Here are top reasons why open source software, correctly managed, can be a strategic enabler.

Faster time from idea conception to proof of concept

A properly skilled IT department can often go from idea conception to proof of concept in as much time as their centralised purchasing department setting up and completing request for information / proposal process with commercial software vendors. Open source software is available at large for anyone to download and implement whenever and wherever. There is no need to wait for the software DVD or license key to arrive from any vendor. The software is ready to be implemented at once.

And since there is no external cost involved in doing the proof of concept, there is less political pressure to abandon the idea and move on to the next open source software or to the next idea. Open source software can bring about agility and efficiency.

Faster time from problem identification to resolution

Open source software is available complete with source code (i.e. human readable program). A properly skilled IT department can leverage the source code to troubleshoot a problem that arises within the software because they can investigate what went through the program. They can know where the problem is and what causes it.

And then there is the open source community. It is a community where knowledge sharing is treasured. And in strong open source community, help can come from the community in ways that are sometimes faster and more relevant than support coming from a vendor's hep desk.

Even better, once the solution is known the IT department can fix it themselves and rebuild the software, if needed. There is no need to wait for the software vendor to figure out what the problem is and come up with a fix. (Depending on service level agreement, the wait can be longer than when the fix is needed.) Open source software can lead to less dependence on external vendors.

Faster time from improvement availability to it being implemented

Commercial software vendors try to please all their customers, but unfortunately not all customers will get the improvements they want when they want them. Sometimes the commercial vendors will delay some new feature due to limited development resources (no matter how big they are). Sometimes they release them when there is no IT budget for software upgrade. Which means the users must wait for budget to be made available while making do with less efficient work-around.

This again is where the open source community shines. Development of the “new” or “improved” functionality can be done by any member of the community. People can develop it themselves and use it internally. Better yet, the development can be submitted back to the open source community for the entire community to adopt. In a thriving open source software community, feature growth is as fast as how active the members are at contributing back new development to the community. This can lead to faster access to more functionality.

Flexibility in choosing when to upgrade

This one is the other side of the coin from the point above. More often than not, it is better to upgrade software in line with its current release cycle. However, it is a fact of life that some software cannot be upgraded in timely fashion consistently, whether it is due to budgetary reason nor technical reason nor whatever reason. The issue with commercially licensed software is that they always terminate support for older versions which leaves corporate IT managers to decide whether to pay extra for the extended support (if it is even an option at all) or upgrade (not free either). If neither really is possible, then the company is operating the software at risk, because if there is a critical problem, it cannot get support from the vendor and it does not have the source code to fix it (see above).

This does not happen on a daily basis, but when it happens, it can be headache nonetheless. With open source software, there is a greater degree of control to upgrade when it makes sense to internal timetable as opposed to someone else's. Open source software can lead to more control over maintenance timetable.

Focus on software merits

Companies who avoid open source software are limited to evaluate commercial software during their software selection process. They might be missing a great opportunity to compare commercial software against equivalent open source alternatives. In many situations, open source alternative can be technically as good as the commercial software. Increasingly, more and more critical corporate IT capability runs on open source software. Open source software adds options to software selection.

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Caveat emptor. Open source software is not a miracle cure. It does what it does best, but it is not to be used without proper assessment.

Here are some things to watch out for.

Know thy total cost of ownership

From the perspective of total cost of ownership, open source software is never free. And poorly managed, it can be as expensive as commercially licensed software. The key consideration is between fit of internal capability to do the work versus cost of hiring external skill to do the work. If neither of them is attractive compared to commercially licensed software (inclusive of all the external skill that often has to be hired too), then cost obviously is not a selling factor. Unless there is a real strategic advantage, then skip it for some other software projects.

There is also a danger that corporate IT function starts building every skill internally, instead of hiring external services, which eventually will lead to larger and larger internal IT headcounts. Eventually, this will be detrimental. So there is a fine balance that must be watched with discipline.

Know thy open source software

Not every piece of open source software is created equal. Barrier of entry is almost none, so there is a bewildering array of open source software out there varying in quality from mediocre to best-in-class. And the community behind the open source software is equally an important consideration. Without a good community behind it, long term maintenance cost may creep up over time.

Know thy legal constraints

Open source software comes in a number of license flavours. If the use of the software is not purely internal, then pick one that will fit the intended use. Open source license vary from liberal to restrictive. Legal departments are usually hung up by the restrictive licensed open source software, but there are many superb open source software with liberal license for the picking. Some are also offered with dual license, open source or commercial with commercial support. It really depends on a case by case, depending on the open source software choices in a given segment at a given time. It does change from time to time. If nothing fits, go commercial software. In short, license is a tactical consideration, but not a strategic show stopper.

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Corporate IT strategy should be about focusing on long term business strategy and ways to execute it with speed, effectiveness and efficiency. Open source software has helped many companies deliver on those and it can help many more companies.

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Jun 2010

Talent mismanagement

If one searches for “talent management” on the internet, the results that come back are typically dominated by recruiting-oriented or human resource management search results. This probably reflects current prevalent practices in many organisations around the globe. However it seems to obfuscate one critical factor in any talent management i.e. the proactive involvement of senior leadership and anybody who manages employees. Anything less than proactive talent management can end up being talent mismanagement.

Corporate hallways are rife with stories where talented employees leave to the despair of their managers. Sometimes, team performance may suffer (sometimes significantly) for a prolonged period after the departure of a talented staff. And managers are often befuddled when this happens. They will give various reasons and many will fall into some predictable patterns.

I did not see it coming

In some very specific situations, this can indeed be the case, but it is very rare. For example when mandatory resignation notice period is very short and an employee literally out of the blue gets is compelled to quit, be it due to positive or negative reason. Aside from such rare cases, more often than not a manager should have sensed something. When this does not happen, this can be a symptom that no real dialogue is happening between the manager and the staff, or not frequently enough. If there is no real dialogue in between annual performance reviews, then a manager will not sense anything coming, even when the staff has given hints or clues to his/her dissatisfaction. (This is no excuse either for virtual teams, because just like in a face-to-face meeting, a manager need to be as effective in maintaining open dialogue and in sensing subtle messages from the employees.)

I knew but there was nothing I could do

Why? What is meant by “could do”? There is usually several ways to address an issue; zero (“nothing”) that can be done could be a symptom of ignorance, incompetence, laziness, or structural organisational dysfunction. Ignorance, incompetence or laziness may mean that the manager is not that good, so it is possible that the talented employee will quit anyway someday. This is an issue that the manager's manager must address. Structural organisational dysfunction, on the other hand, may mean that the manager's manager, or even higher up, is dysfunctional (could be due to ignorance, incompetence, or laziness also). For example refusing to hire an extra headcount when the workload justifies the need or refusing to invest in better tools to make the team more efficient, etc, etc. There is always something that someone can do. If it is important enough, then the manager needs to either do it or find that someone who can do it.

He/she is irreplaceable

Every staff is unique in what he/she brings to the organisation, but every job comes with job specification and competency requirements that an employee must meet. Any extra performance beyond that is bonus, whereby the employee deserves the recognition that he/she merits. But when the manager or the team relies on this “bonus” above and beyond the job specification and competency requirements, then something is wrong with the organisation. Maybe everybody is expected to give something extra so an extra headcount is not needed. (And the manager wonders why the star employee is not happy.) Maybe this causes the lazy team members (or manager) to not give their 100% and the manager neglects to address it. Et cetera, et cetera. It is the manager's job to build the entire team and to help everyone improve so someone else can step in to perform the job. Even when resignation is not involved, this is a common situation, such as long vacation, maternity / paternity leave, etc.

I do not have time to recruit someone new

Everybody is working at their maximum capacity these days, so an additional effort to recruit a replacement is usually unplanned burden. This is a symptom that separates those companies with solid human resources business processes and those without. HR processes need to be transparent, smooth and fast. And there needs to be solid integration between operations and HR. For example, is the detailed job specification and competency requirements up-to-date all the time? Does HR know what questions to ask potential recruits for the job? Et cetera.

When HR processes are solid all the way through and HR department is properly staffed, the additional burden would center around interviewing promising candidates – internal or external – and not much more. Hiring managers usually complains about recruiting effort because the prerequisites above do not happen. Obviously, HR needs to step up, but managers should also cooperate with HR even when they do not have any urgent need for HR services, i.e. do not wait until a staff quits.

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Talent mismanagement is easy to do and, in organisations or teams that let this happen, talented employees would not want to stay. And without capable employees, execution does not happen well, no matter how good the company strategy is.

Talent management is only one side of the coin, where on the other side is succession planning. Contrary to common perceptions, succession planning ought to be understood literally just that, when any employee moves on, what is the succession plan to replace that employee – no matter what his/her seniority in the organisation is. No organisation should under-estimate the challenges and impact when “lower pay-grade” or “less talented” employee leaves; it may not be high-profile but the impact can be surprisingly high nonetheless. As the saying goes, “a chain is only as strong as the weakest link”.

It is imperative that every organisation strengthens every link in its chains, i.e. its teams. The following list provides some proactive actionable recommendations.

  • Knowledge sharing: Everyone in the team needs to share their knowledge and make it a point also that it is one of the annual performance objectives. Do not intentionally let key knowledge to build up in just one person.
  • Investment in supportive tools: Record the team knowledge; it can be written, audio, video, etc. And make it easily recordable and accessible via easy-to-use tools.
  • Shadowing: Assign a second person as a backup throughout an assignment, not just during vacation periods. A designated backup is essentially the immediate successor in case an employee is sick or on vacation or leaves the organisation. This concept is the most difficult to swallow because it requires extra bandwidth usage, but management team who is willing to pay this insurance premium would be the one who are well positioned.
  • Rotation: Rotate the team members to do each others' roles from time to time. This builds up knowledge among the team members and can be a rewarding experience for the team.
  • Career path planing: Not everybody is able to be promoted, but for those who are talented and ambitious, they may not be happy to keep doing the same thing year in and year out. Understand their talent, track their progress and proactively plan their career path. If the managers will not do it, they will do it themselves and when this is the case, the path may lead to them joining other companies.
  • Competency development: Formal training programs are the norm, but often relegated to low priority status. Above average employees, as much as the average employees, would benefit from continuing education programs. Sometimes it also involves giving the employees a personal development goal (and the time to do it at work) by doing self-study or research toward their competency development.
  • Employee satisfaction survey: Conduct anonymous satisfaction survey regularly. The survey can be brief but it needs to be complete enough to cover 360 degree aspect of one's job, including colleagues, boss, customers, direct reports, etc. The survey helps give a snapshot of potential dissatisfaction and, over time, trends of their job satisfaction.

Talent management (in combination with succession planning), arguably, is the most important job of a CEO and every managers in the organisation. It has strategic importance and it should not be relegated to a low priority HR initiative. Do not wait until key talents leave the organisation to act on it.

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Apr 2010

Myths of early technology adoption

Being an early adopter for new technology is not for the faint of hearts. True. But often decision makers are subjected to fear mongering tactics that make it seems far riskier than it needs to be. Despite the best intention to measure return on investment, technology investment is wrought with political manoeuvres and myths, especially when the new technology is placed face-to-face against established technology. At the same time, it is unwise to dismiss the opportunities that can be made possible by new technology.

The latest technology is historically referred to as leading edge or cutting edge. Sometimes it is referred as bleeding edge, cynically referring to the pain and “bleeding” that the early adopters endure when implementing the latest technology. The phrase sticks, further reinforcing the perception that it is very risky to be an early adopter. What got lost in the message is: what did those “bleeding” companies do that made them “bleed”. Was it purely due to the technology or was it exacerbated by their mis-management of the technology adoption project?

Technology is a tool; it cannot perform or fail on its own. There is always the people factor that influenced the outcome – good or bad. And yet people misunderstand this factor and generalise away. This eventually creates a fog of myths.

Myth #1: Leading edge technology is unproven

When a technology is so new, leading edge implies that not very many companies or users would have bought and used it. However to state it is unproven, the statement needs to be understood in context. The burden of proof rests on both the vendor and the consumer. The vendor always have to back up their claim about their new technology and for that they will claim it in as narrow a scope as they can get away to avoid extra liability, while at the same time aggressively promising benefits to lure the consumer. Which means that most of the burden of proof needs to be born by the consumer, i.e. the consumer must prove that their intended use can indeed be performed to specification by the technology.

This is where many companies fail. Often, they do not have specification of their intended use or if they do, not good enough. Sometimes they do not even know or agree among themselves what the intended use is supposed to be. In the occasion that they have good specification, they may not have good and repeatable ways to test the technology against the specification. In other words, they themselves cannot prove if the technology can perform to their intended use or not.

In these cases, it is actually irrelevant whether the technology is new (i.e. leading edge) or widely used (i.e. established). If the technology implementation does not live up to expectation, they would blame the technology anyway. When the technology is new, they would claim the reason is because it is “unproven” and when the technology is not new, they would come up with other excuse.

Opportunities await companies or consumers who have the discipline in understanding and specifying their intended use of any technology and proving the fit methodically before actual use. These companies or consumers have the ability to try out any leading edge technologies that may benefit them ahead of their competitors, whether the pundits think it is proven or not.

Myth #2: Leading edge technology is for start-ups

The perception is that start-ups are more willing to take risks than larger companies. Out of necessity, this is often true. Ironically, it is actually the larger companies who usually have better means and resources to “prove”, prior to use, any promising new technology against their need or intended use – as discussed above. And this is the exact opposite of risky, because the fit for purpose can be assessed beforehand. Companies or consumers who think leading edge technology are not for larger companies are generally the same ones who were misled by myth #1 above.

Once any company or consumer can get over the provability complaint, it all comes down to standard portfolio risk management. Start small, start with non mission-critical use, start with change-ready users, or any combination of these. Then learn from the pilot project before enlarging the scope in order to make corrective actions. If the pilot project proves the new technology does not work for them, they can move on and use the knowledge for the next new technology evaluation.

Many large companies rely on analysts to help them “understand” new technologies and wait until it is in widespread use before they start trying them out. This approach is actually riskier than trying the technology hands-on when they are still new. First, analysts are blind to the nuances and complexity of a large company. They can only make generalisations of what large companies need and how a given technology will or will not fit their needs. Second, waiting means that other companies who successfully use the new technology will get the competitive edge over those who wait.

From the perspective of portfolio risk management, large companies have more cushion than small companies to take on the calculated risk of doing a pilot project on the new technology.

Myth #3: Leading edge technology gives less ROI than established technology

If the intended use is merely to maintain the status quo, then there is a lot of weight in this statement. But maintaining the status quo is the wrong objective. The objective should be about acquiring competitive advantage. And when observed in light of this objective, the ROI (return on investment) calculation takes on a different nuance and the time horizon extends longer.

When a technology is new, the market size is still relatively small and there is not enough economy of scale. So cost tends to be higher than established technology. And even with technology where economy of scale does not necessarily reduce price (e.g. computer programs), there are still the secondary services (e.g. availability of programmers) that are directly or indirectly affected by the market size and priced accordingly. This is basic supply and demand.

Therefore, new technology – due to relatively higher cost on the outset – its ROI needs to be assessed from the perspective of benefit in giving competitive advantage over the medium to long term. On its own, a new technology may not generate enough ROI. But when looked in the context of what it potentially brings to the company's competitive advantage, the medium or long term ROI will shift favourably.

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The opportunity cost from the failure to use a relevant new technology for competitive advantage can be hard to recoup. At the same time, this does not mean that every new technology is relevant and needs to be implemented widely and immediately – far from it.

Leading edge technology brings an opportunity, not a promise. If it works as intended, does it have the potential to give competitive advantage?

  • Understand first the business need and how it affects competitive advantage.
  • Assess whether or not the new technology can satisfy the intended use.
  • Plan and execute a pilot project within the context of portfolio risk management.
  • Assess the ROI using medium to long-term perspective and adjust based on the learning from the pilot project.

Every decision maker needs to be curiously open minded and cautiously pragmatic at the same time.

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Jun 2009

The inertia of fear

“Fear” is not a much-used word in the workplace, for whatever reason, although in bad times, people are more open to talk about it, e.g. “fear of losing a job”, etc. Nonetheless, fear is one of human being's basic emotions. It is ever present in the workplace, consciously or unconsciously, bad times or good times. Managing people, in one way or another, requires managers to understand how fear can affect corporate performance.

Both in personal and corporate life, “fear” can either be an incentive or a disincentive for change. It affects people's propensity to upset or maintain the status quo.

Fear in the workplace

Managers are responsible for many many bad decisions, including the decision to not decide in timely manner. “Bad” decisions can be due to lack of understanding (e.g. cluelessness) or due to ego or due to, commonly enough, fear. Ironically, fear of making bad decisions (either for the company or for oneself) can lead to indecisions which in many cases is a bad thing itself. It is a vicious circle.

Fear is often used to drive employee performance, too. Some companies openly tell their employees that the bottom performers are candidates for layoffs. This tactic drives employee behaviours. Employees find out what “perform” means and they do whatever it takes to get high marks on those measurements. This can be good and at the same time, this can lead to unexpected consequences.

Fear inhibits change

Employee behaviour that is driven by fear are difficult to change. There is an inertia that builds up and then takes on a path of its own. Many times, this path diverges from a strategic direction that senior management wants to pursue. Deservedly, many strategic corporate initiatives fail due to poor change management that fail to address the fear factor properly.

As an example, take a company who is disciplined in meeting their budgets and financial goals. In this company, managers can get fired if they miss their budget. Then the CEO gets religion on “innovation” and tells his managers to take risks and invest in new projects that can potentially yield innovative products (or services). Guess what? If investing in new projects involves the risk of missing the budget, and if missing the budget still means they can get fired, there is only a small chance the managers will change. If the managers do not change, the staffs are unlikely to change either. And the CEO wonders why the company is not responding to the strategic initiative to be innovative.

To reiterate, fear can build up inertia against change. And lack of change, in turn, can build up even more inertia against change.

The elephant in the room

To state the obvious, a normal human being always has fear in him / her. And fear is not, in itself, bad. It is part of human being's survival strategy. What makes it good or bad is how it is managed within corporate settings.

The goal is not to eliminate all fear; the goal is to align fear to the “right” framework and context according to corporate strategy. Management needs to look at the pre-existing “carrot and stick” and ensure that they do not inhibit the change which is being pursued by the corporate strategy. If they do, then they need to be pre-empted with a new set of “carrot and stick” that fits the strategy.

For companies that operate globally, cultural and socio-political differences have an obvious impact to what will work as “carrot and stick”. What works in one country may not work in another. For example, fear of unemployment is not the same between countries that have strong unemployment benefit versus countries that have none.

Also, different industries face different challenges when it comes to managing staffs and fear. Industries that are growing fast, or where the job market is dynamic, have a different set of challenges from industries where the industry is slowing down.

Another important point is that a strategy needs to be balanced. It ought not eliminate fear completely such that it encourages one-sided behaviour and disregard everything else. To revisit the above example, the CEO ought not encourage risk taking without putting in place suitable check and balances to identify reckless or irresponsible risk taking.

It is about managing people

Managers' attitude toward staffs needs to be kept in check; fear should not be misused. There is a trust relationship between staffs and managers that needs to be respected. Company reputations, and often performance, depends on managers respecting this sometimes invisible social contract.

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Mar 2009

KPI conundrum

What organisational metrics measure must not be confused with what the organisation needs to do about the metrics. Metrics are data points; they are not the goal. Confuse the two, and an organisation can loose track of the real goal.

Most, if not all, large organisations track various organisational metrics internally. And they designate some of the metrics to be key metrics, also known as key performance indicators (KPIs).

KPI is a double-edged sword

One story goes that, a few years ago, a chief information officer (CIO) of a large global company set a long term goal. The goal was that the ratio of information technology (IT) cost to sales, year over year, will be held relatively constant or lower. A very laudable goal, but the implications have proven to frustrate the organisation in the past few years.

One example is in the area of new IT projects, among others. Whenever “business” wants to implement a new enterprise software, IT would push back and scale down the scope of features. And then when implementation options or vendors are being considered, IT would push hard to select certain “standard” technologies or “strategic” IT vendors instead of the solution that appeals most to the “business” users. Arguably, there are valid points to this particular approach, from the perspective of cost management, but that is not the point.

The point is that when the above is motivated by the goal of controlling “IT costs” to the expense of “business cost”, then it harms the entire organisation. There are cases where this caused business process efficiency to suffer in this particular organisation which turns out to be more expensive than the supposed cost saving that was sold by IT. In other words, “IT costs” looks good, but the total cost for the organisation does not.

Senior management's first instinct (and this has become common practice) is to compare their KPIs against industry average or direct competitors' KPIs. Then a benchmark goal is set for the organisation to pursue as performance goal without solid understanding of what causes their metrics to be different from the benchmark. And this is when tensions can arise. A proactive effort to change the KPIs can potentially trigger a win-loose relationship within the organisation. Managers look out for their own interests, sometimes openly and sometimes subversively.

Does that mean that it is wrong to benchmark KPIs? No. Benchmarking is a legitimate management practice and it is a good starting place for investigating improvement opportunities. The conundrum lies in how they are implemented.

KPI is an indicator – not a goal

Many organisations are fixated on the KPI as a performance goal / objective. The root of such practice, probably, comes from one interpretation of the axiom: “You cannot control what you cannot measure.” (1982, Tom DeMarco) Thus many in management think they have to measure and set goals against business performance that they measure.

And there are caveats to this thinking. First, when KPI is “fixed” by means of performance goal, it creates a superficial trend. The real trends are obscured or disguised or “faked”, because when bonus depends on it, organisations may justify the means to make the number. And this misses the more interesting question: what do the (real) trends tell?

Second, rarely is a KPI an island unto itself. Often, it consists of a hierarchy of other metrics that collectively aggregate into one KPI. And each metric is usually interdependent with other business metric(s) which may have either reinforcing effect or counter effect.

Third, there is a danger that people starts to believe that the converse of what DeMarco posited is always true, but it is not necessarily so. Just because you can measure something, it does not always mean you can control it. Measurability does not guarantee controllability or manageability.

Lessons learned from KPI implementations

Although metrics appear on the surface to be an easy number crunching exercise, effective use of KPIs require thorough analysis and planning.

  • Understand the trends using the appropriate context. Trends in the metrics are the real story behind the indicators, not the metrics isolated by themselves. Trends can be leading or trailing indicators, depending on the circumstances. And they help an organisation track if it is moving in the “right” direction and at what speed.
  • Understand the interdependent “system” dynamics behind the KPIs. Honest numbers do not come out of thin air – there are processes and people behind the metrics.
  • Reward performance based on end-to-end or wholistic metrics. What really counts is the success of the entire organisation, not just that of a single department.
  • Prioritise the KPIs. Crystal clear guidelines enables organisations to proactively resolve conflicts among various business processes that track different KPIs.
  • Review performance result collaboratively. Interdependencies imply that making or missing the numbers involves other groups delivering, or not, on what they are depended upon. And be constructive; finger-pointing after the fact cannot fix the past.

KPI is a highly useful management tool, but the implication of poor KPI implementation can be detrimental to the organisation. It pays to give it the attention that is due for it.

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Nov 2008

Innovation beyond the buzzword

Although it is true that not all innovations come out of innovative companies, innovative companies consistently innovate. And they are able to consistently innovate due to their innovation culture.

Many companies market themselves as being innovative, and in many cases, that is all there is, a marketing claim. Innovation has become a popular buzzword. Being called innovative is fashionable. Read many companies' marketing brochures and annual reports, and it is not too hard to find references to self-proclaimed innovation.

But being truly innovative is in the eye of the beholder, as evidenced by result. An “innovative” product or service that does not meet customers' need is hardly innovative. It is either the wrong time, the wrong interpretation, the wrong market, or any combination of the above. For example, a scientist discovers a new compound to treat an incurable disease, but the side effect of the treatment is so adverse that the drug would never get approved. Or an engineer invents a new super cool gadget, but the manufacturing cost is too prohibitively expensive. In both examples, the innovations do not materialise.

Innovative product or service comes from the practice of innovation. To produce innovations consistently, companies need to pervasively embed the practice of innovation in every day life of the organisation. In other words, they need to make it into an innovation culture.

The following discussion explores some key aspects of innovation culture.

Unified leadership

At the heart of every corporate culture is the culture of the leadership team — they greatly influence how their corporate culture shapes over time. Leadership team that is passionately unified in their attitude toward innovation behaviours will foster middle management that behaves likewise. And in turn, the middle managers will manage their teams accordingly. And in tough times, leadership team needs to fight off the tendency to halt or cut back innovation initiatives.

Big picture view

Innovation culture is about the whole company, not just the Research and Development department or the Marketing department, etc, etc. Innovation is sustainable when the company as a whole thinks and breathes innovation. Heroic effort from some people may be able to to produce an innovative product or service, but if the rest of the company does not live the innovation culture, they will slow down the rate of further innovations.

Continuous learning

The world does not stand still and competition does not disappear in the face of innovation. Competitors respond to each other and will try to out-innovate the last innovation. Once a company shakes the industry with its innovation, the rest of the industry responds, and the cycle does not stop. The question is, who is going to come out and remain on top?

Listening mindset

Given the true measure of innovation is in the eye of the beholder, so to speak, sensitivity to “listen” to the customer is imperative. Listen to what the customers say and do not say, and what they do and do not do. “Listening” is a discipline that everyone in the organisation need to engage in.

Execution

At the heart of a consistently-innovative company is the ability to execute well. A brilliant idea alone does not make an awesome product or service. What good is a product that wins accolades from critics, but despised by customers due to poor quality? What good is a unique service if it cannot be replicated or scaled up to satisfy clients? This is indeed the ingredient that is often missing: being innovative to execute well.

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Aug 2008

Best practice can be wrong

The phrase “best practice” is so popular in management circles and consultants that they are sometimes mis-applied by well-meaning individuals.

By definition, “best” implies that a comparative analysis has been completed, whose conclusion is that the “practice” in discussion is deemed to be better than any other known alternatives. Naturally, if someone claims “best practice”, then he or she is expected to be able to supply the comparative analysis to support such claim. More often than not, such comparative analysis is non-existent or, at best, flawed.

Even in scenario where such comparative analysis exists, “best” needs to be put within context. Some business practices are not applicable across industries. For example, some practices in the defense industry do not make sense to be copied by a paper clip manufacturer. And vice versa, a defense contractor cannot adopt some practices that produce “best” result for a paper clip manufacturer if it is to meet the minimum government requirement on defense contracting.

Another potential mis-application is in the word “practice”. A common story goes: Company C did “best practice” X, and got performance Y. So it is assumed that if X is copied, then Y should be repeatable outside of company C. That is a big assumption that undermines many differences among companies. More often than not, other companies cannot duplicate X due to many variables (even company C may not be able to repeat X and Y consistently year after year). It is not that X must be done, but the desired net effect is performance Y (or better). Thus the intended use of “best practice” is actually not the “practice” itself, but the result.

The difference is not just semantics; it is real enough that chasing the wrong “best practice” can yield a negative return on investments. The following gives some ideas on what to look for before implementing an improvement initiative based on “best practice”.

Metrics Analysis: If the performance of the business practice is not measurable, then it is difficult to factually justify why it needs to be improved in the first place. Also, the ability to measure the performance, before and after, provides the confirmation that the improvement initiative works.

Root Cause Analysis: Before too much is invested, it is wise to know what the current performance level is and why it is not where it should be. Adopting a “best practice” that will not address the root cause of poor performance is wasteful.

Impact Analysis: Even when a “best practice” can address the root cause and can demonstrably improve a performance metric, the impact to the overall organisation needs to be understood. It may affect more than one metric, and more importantly, it may affect the other metric in the wrong way. Putting more money to the left pocket with money that comes from the right pocket, does not increase the total amount of money.

Continuous Improvement: Nothing stands still – business environment changes all the time, and companies change too. A business practice that is good for a company in one year, may lead to negative impact in another year. A common mistake is to say, “we have always done it this way and we will continue to do it this way.”

In closing, what is “best practice” for one company at a given time may not be the right one for another company.

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Aug 2008

Reinventing the wheel can be good

Whoever popularised the phrase “do not reinvent the wheel” obviously did not work in the tyre / tire industry, nor raced professionally. In these cases, “reinventing the wheel” is a key ingredient to success. And yet, the phrase is so ingrained in everyday corporate language, that people say it without thinking it through.

Many would argue that it is just semantics. In the case of the tyre / tire or auto industry, that is product improvement, and the “wheel” is the product, so of course it needs to be “reinvented”. Maybe, but that is not the point. As is typical with other idiomatic metaphor, the point is not in the literal, but in the implied. The need for “reinvention” is valid.

To differentiate between a valid “reinvention”, metaphorically, versus an unnecessary one, one needs to analyse the circumstance: is it ignorant or is it intentional? When “reinvention” is conducted without prior understanding that “the wheel” already exists, and thus “reinvention” is incorrectly assumed to be needed, then it is ignorant “reinvention”. On the other hand, when there is a clear end in mind and “reinvention” is decided as a means to the end, then it is intentional reinvention.

When department X needs to track some data, and department Y of the same company already has a good-enough spreadsheet to do the job, is it known to department X that the spreadsheet can be re-used? Or does department X thinks, unknowingly, that they need to create the spreadsheet?

When a disease already has a drug that treats it, does it make business sense to develop another drug to treat the same disease? If the new drug has less side effects while being at least as effective, then yes. Even between groups or departments in the same company, if there is a clear need for a better “wheel”, then yes, please “reinvent” it.

The pitfall to this, clearly, is the “not invented here” syndrome. And to minimise this, the keyword is “prior understanding”. Is it properly understood that “the wheel” truly does not exist? And if it exists, is it properly understood that it is not good enough? If “the wheel” exists and is good enough, then “reinventing” it is a waste of time and resources. Whereas not knowing the answer is simply ignorant.

So, the next time someone utters he or she does not want to “reinvent the wheel”, take a moment to reflect and evaluate the circumstance. Is it because the existing “wheel” is properly understood to be good enough, or is it because of ignorance or, God forbids, laziness?

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08 Aug 2008

My 'Observe – Strategise – Do' Methodology

Observe

  • Master both in-depth subject matter expertise and clear understanding of related factors within the big picture.
  • Observe continuously with open mind.
  • Consult others to eliminate blind spots.
  • Learn from the past and identify potential trends before they become forces to reckon.

Strategise

  • Avoid being put in reactive mode; be proactive and “expect the unexpected.”
  • Aim high and yet stay grounded.
  • Be open and promote shared understanding.
  • Prevent the strategy from collecting dust; keep observing that it stays relevant.

Do

  • Live the strategy; avoid empty words and lead by example.
  • Delegate and empower, but do not loose touch.
  • Balance asking for result with giving resources to produce the result.
  • Strive for excellence and, at the same time, be patient.
  • And while doing, be observant.

“Expect the unexpected” is quoted from Star Trek: The Next Generation

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12 Mar 1998

Diversity

I think diversity can enhance the bottom line for team based organisation, in general. The keyword here is “team based.” I have two assumptions.

  1. “Together Everyone Achieves More,” i.e. 1+1+1+1=5.

  2. The best performing team consists of diverse members whose diversity complements each other.

Therefore, when they manage the organisation in ways that most of the teams consists of complimentarily-diverse-team members, then they will get the best possible output that their talent pool can give. Thus in this case, diversity adds to the bottom line, and not just numbers.

Non team based organisation can still benefit from diversity, but probably less since they have less means to tap into the potential.

www.learning-org.com/98.03/0148.html

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