learningorg

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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Dec 2008

Buying IT investment advice

It may be interesting to survey CEOs and CFOs on how much they truly understand IT analysts' influence on their IT spending. IT analysts are often CIOs best friends (figuratively speaking). When asked by the CEO / CFO, “why implement such and such information technology that costs so much money?” The CIOs can usually point to their teams' analysis that is backed by some industry report from some IT analyst to justify the reason.

In the financial industry, people are familiar with the important roles that credit analysts and stock analysts play in the health of the industry. At the same time, abuse of responsibility by either of them can have major impact to the fortune of many people.

How is this relevant to IT? IT analysts like Yankee Group, Gartner, Forrester, Ovum, etc (see IIAR for more), are very different than credit analysts or stock analysts. Indeed, they are different, but IT analysts have only been in existence for a brief period of time compared to credit or stock analysts. If things stay the course for the long term, IT analysts, directly or indirectly, can potentially have similar impact as the analysts in the financial industry. This is not a story out of a science fiction movie; this is real life, particularly in large companies. (IT analyst costs often price out small companies.)

Value added services

IT analysts reports save time and, in some cases, fill in the competency holes that exist in some organisations. Many CIOs and their teams typically use them in several areas, among others are the following.

Strategy planning: IT analysts scan the industry for technology trends which are used by CIOs and their teams to propose which technology area to invest and develop.
Vendor and product assessment: IT analysts regularly issue reports on vendors and products to document their assessments and, sometimes, their recommendations. These reports are often used during IT purchasing planning.
Benchmarking: IT analysts periodically conduct survey and analysis on IT costs which are used to rationalise cost cutting measure, or in rare cases, obtain approval for budget increases. In other cases, surveys are done to inventorise the areas where IT investments are being made.

These value added services are very useful in the right context, but they can create powerful influencing forces. Technology trend reports can influence corporate spending on technology types that are favoured or disfavoured by the IT analysts. Vendors and product assessment reports directly influence visibility for corporate spending. Some enterprise software vendors have seen improved business due to no small part on being favoured by IT analysts. Cost benchmark reports can affect the fate of IT employees, to the benefit of outsourcing companies, and also the fate of IT spending policies, which often has hidden cost implications.

Wrong IT investments can affect the entire company, both short and long term, which can have direct financial impact to the bottom line.

Caveat emptor. There is very minimal, if any, check and balance in the IT advisory industry. IT analysts are not accountable to any governing body. So let the buyer beware and take notice when buying and reading IT analyst reports.

Some key pointers to pay attention to

Full disclosure

Technology trend reports and vendor / product assessment reports can have financial impact to IT vendors whose offerings are mentioned in the reports, either favourably or otherwise. But there is a lack of disclosure by IT analysts in their reports. Do their companies accept business from any of the vendors? Do they own any share in such companies? Different companies have different policies.

Practical experience

IT analysts are not overpaid reporters; they are analysts first and foremost, and then they write up reports. For these analysis to be worth the cost they charge, the IT analysts not only need to have good analytical and writing skills, but more importantly, they need to have true understanding of the topic at hand and how it applies. Clients need to ensure IT analysts have the practical experience. Many IT analysts (not all) have long track record as IT analysts, but not necessarily as IT practitioners. So if they lack the experience as practitioners, do they explain their process of ensuring their recommendations do not just look good in theory?

Global and local context

IT analyst reports would contain general recommendations on certain areas, areas that have global impact to their clients. Yet in most cases, an IT analyst client is larger, and operates in more geographical areas, than all of the IT analysts combined. Do they demonstrate experience in the complexity of a large global operations and the sensitivity of local cultural and geopolitical issues?

Range of coverage

Having limited resources, most IT analysts focus only on medium-to-large IT vendors and, even then usually, on specific sets of technology only. They cover the mainstream, but not the fringes of technology trends. Unfortunately, this can lead to missed opportunities for innovative solutions that may be just what are needed at some companies.

Track record

Many IT analysts come up with some sort of trends or prediction or forecast on certain topics, quantitatively or qualitatively. Nobody, officially, keeps track how accurate they are from year to year. To draw an analogy from the financial industry again, all mutual fund investment advisors regularly publish their performance, i.e. how they compare against their target performance benchmark. So if there is no performance tracking, what criteria would companies use to choose one IT analyst company over another?

Balanced approach is needed

IT is becoming more and more intertwined within business processes in the organisation. IT is not just a tool; it is slowly (or depending on industry – quickly, if not already) becoming the core component in many companies' business processes. The right IT investments, done right, can give the competitive edge needed in today's business environment.

External IT analysts – the good ones – have a role to help make sense of where to invest in the fast changing world of IT. At the same time, intimate knowledge of practical internal needs is mandatory before deciding on what, where and how much IT investment should be done.

#learningorg #obxerve

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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Sep 2008

Building relationships daily

Lessons learned and introspection are two sides of the same coin. Lessons learned is used more in an organisational setting (often called other names) and introspection is used more in a personal setting. The process hinges on the observation along two dimensions: the visible (what happened) versus the non-visible (what did not happen), and the task versus the people. People are about relationships.

Companies cannot exist if not for the people in it – from the smallest to the largest of companies. Machineries and computers are operated by people. Information is analysed and synthesised by people. Business relationships happen among groups of people from various companies. Jay Ball from Banner wrote in his eBook, Cracked – A small guide to big ideas :

“We are, at the end of the day, always talking to people. Yes they may be IT-director-people or CEO-people or plasma-TV-buying people, but they are first and foremost people.” #quotes

People are not numbers; they have warm blood, free will, and feeling. Relationships among people are nurtured through understanding and trust. People can be complicated and relationships take time and effort. At the same time, their positions in the organisation do not make the relationships any easier, or more difficult, to nurture. Relationships are uniquely influenced by the “chemistry” of the people involved combined with the circumstances around them.

The “humblest” team members or stakeholders, the ones that are thought of as “least important”, they also deserve the investment of time and effort worthy of any relationship, irrespective of positions. And when time is short and to-do list is long, it seems like a natural decision to prioritise investment of time and effort on the “more important” stakeholders over the “less important” ones, with importance dynamically adjusted based on a given circumstance.

But there is a saying, “A chain is only as strong as its weakest link.” ... The implication is that the “less important” stakeholders can be as critical as the “more important” ones at a given circumstance. And there is no telling in advance when and which circumstance it would be.

Nurturing relationships with team members and stakeholders – all of them – needs to be a daily goal, one relationship at a time. And more importantly, relationships with people in personal life must be nurtured too. Colleagues and business partners come and go as people move on in their careers, but families and friends whose relationships are well nurtured — they stay around.

The following poem is applicable for personal introspection as well as for organisational lessons learned. It speaks of relationships and more. The poetic language should not be dismissed as irrelevant, but, instead, it should be taken as an intellectual challenge to decipher and translate into both personal and corporate life. One would be wise to reflect on it often.

At the end of the day – a mirror of questions

What dreams did I create last night? Where did my eyes linger today? Where was I blind? Where was I hurt without anyone noticing? What did I learn today? What did I read? What new thoughts visited me? What differences did I notice in those closest to me? Who did I neglect? Where did I neglect myself? What did I begin today that might endure? How were my conversations? What did I do today for the poor and the excluded? Did I remember the dead today? Where could I have exposed myself to the risk of something different? Where did I allow myself to receive love? With whom today did I feel most myself? What reached me today? How deep did it imprint? Who saw me today? What visitations had I from the past and from the future? What did I avoid today? From the evidence – why was I given this day?

This poem is quoted from the book Benedictus (European version), or also called To Bless The Space Between Us (North American version), authored by the late John O'Donohue .

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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

OSD Methodology: 'Observe – Strategise – Do'

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.

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.

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Note: “Expect the unexpected” is a quote from Captain Jean-Luc Picard in Star Trek: The Next Generation

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.

“Together Everyone Achieves More,” i.e. 1+1+1+1=5.
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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05 Feb 1998

It’s a lifetime assignment

A kid watched the TV news and found out there are wars, hungers, robbery, and so many crisis in the world. In despair, the kid asked God: “Why didn't you send help?”

God replied: “I did. I sent you.”

God sends each of us to help in making the world a better place to live. It's not a two weeks or a six month project. It's a lifetime assignment that we often forget.

www.learning-org.com/98.02/0076.html

#quotes #learningorg