Thursday, February 19, 2009

In our practice, it is common that an organization at some point embarks on the visioning journey. Depending upon the company and its history, this journey can take a variety of paths. But in almost all cases, it involves the creation of one or more artifacts: Mission, vision, principles, values, strategy, and the like.

The world has learned several important points about these efforts:
  • It is not about documents, but about the thinking. In particular, the need for pervasive strategic thinking. These documents are of course necessary. It is simply that the artifacts themselves are not the goal, or where the true value lies.
  • All these artifacts should collectively tell essentially the same story, just from a different perspective and with a different focus. They must all reinforce the same central themes and describe the same entity. Otherwise, what gets communicated is confusion and irrelevance, regardless of the actual content. In general, the fewer artifacts the better. The simpler the message the better. The more focused the better.
  • The essential value and power of all these artifacts lies in the degree to which the leadership actually lives and breathes these principles and continually reinforces their essential ideas through frequent and direct interaction with all constituencies—customers, employees, partners, and shareholders. These interactions represent opportunities for the leadership to highlight practical examples where these ideas have worked or where gaps are found. It is through this pervasive personal dialogue (not a speech, or presentation), and only this—the documents (or, posters, web pages, etc.) themselves will always be weak vessels—can the essence of the ideas come alive and mean anything. Consequently, in addition to the creation of any new visioning documents, the organization must include how it should be communicated and used as a tool for increasing dialogue and actively and continually promoting its key messages.
  • Finally, when the leadership thinks about this type of new vision or strategy effort, they need to answer a few questions: What is our goal? Why are we changing what we have now? What exactly does success look like? How will we know whether the new "vision" made any difference?
We use the phrase that "everyone has a piece of the truth".

If the goal is simply a new document (or, paragraph) that does a better job of describing who the organization is now and why they exist and then gets published somewhere, then it is a fairly straightforward PR or marketing piece. In other words, the skills needed are good writing skills to achieve this document re-write goal.

But, if the goal is change, then that needs to start with some alignment on what is not working now, as well as what the future-state should look like. This requires intensive, inclusive (and safe) dialogue among all constituencies, where the leadership can see who they are (their "truth") through their constituents' varied lenses.

For this goal, the writing is the easy part.

POSTED BY WAYNE SMITH AT 09:48 PM  |  1 COMMENT

Monday, January 05, 2009

Earned Value Management has been around for years as a tool for improving insight into the status of technology projects, especially for DoD, NASA, DoE, DoT, and other large-scale federal efforts.

Unfortunately, its entire premise, namely that the work done has “value” equal to its budget, is (it would seem quite obviously) fundamentally and completely flawed.

There is no useful correlation between cost and value.

Further, for these terms to have any sensible meaning, they must be interpreted in the eyes of the customer. This is the entity paying the bills (incurring the cost), and who only receives value from their investment when the resulting solution begins to deliver tangible business value to that customer—increased revenue, market share, productivity, quality, responsiveness, or lower costs, delays, and waste. The fact that x% of the budget has been consumed is a useful cost accounting metric (burn rates, variances, etc.), but has nothing to do with any value received by the customer. In fact, often no real tangible business value can legitimately be booked until huge chunks (or, even all) of the budget has been spent.

This fatal disconnect from reality has been highlighted in an earlier posting, "Earned Value" has nothing to do with value, nor with "earning" anything except more cost., and a related posting Value, not Cost, Accounting: The Only True Window of Progress.

When you examine EVM you see that its principal judgment is the %-complete judgment. This is an often arbitrary and certainly highly subjective assessment of how much “real work” has been done to-date when compared with how much was “planned” to be completed by now. In the topsy-turvy EVM world where cost=value, this is used as a proxy for progress.

For those of you who feel that EVM is a helpful tool, our solution is that you simply define %-complete to be the percentage of the requirements that have been validated, accepted by the customer, and delivered to production.

This is simple. Everything else stays the same. All the existing EVM formulae remain unchanged. The only change is that the proxy for value and progress is not how much of the budget has been spent, but how much of the requirements have been delivered.

Of course, this does not address the fundamental flaw. But, this simple change not only radically simplifies a key EVM black box (the %-complete judgment), but also begins to subtly shift the project planning and management to think more in terms of exactly how do we deliver requirements to our customers more quickly, more frequently, and much earlier in the life-cycle.

In other words, how can we actually earn real value.

POSTED BY WAYNE SMITH AT 08:34 PM  |  25 COMMENTS

Thursday, August 09, 2007

The sole purpose of measurement is learning. It is one of the highest forms of inquiry. Measurement offers reliable and often unexpected insights into the true nature of things. Further, this knowledge (true knowledge, if you will) is the key to improvement. Trying to improve something (a process, a product, yourself, …) when you lack true knowledge only makes things worse, not better. It is meddling, not managing.

Measurement is a process, of course, and as such requires all the necessary constituents of any process, namely method, tools, talent, etc.  In addition, for the measurement process to yield reliable insights, rather than distortions and “noise”, this process must itself be stable.

A common obstacle to effective measurement is the complexity of the financial and statistical concepts and in the understanding of how and when to apply these ideas for optimum  return to the enterprise. This ability to coalesce and distill the multitude of ideas, formulae, and tools into a simple pragmatic approach for inquiring into the dynamics and operational behavior of a process or operation is a hallmark of effective management and governance.

We have implemented many such measurement and governance approaches for our clients, in a variety of settings and contexts. We have found that Doug Hubbard’s new book, How To Measure Anything, is an important step in providing a window into many of these complexities and offers a variety of straightforward approaches to measurement that we feel preserves its fundamental role as a vital instrument of inquiry and knowledge.

Finally, when we refer to measurement as a form of inquiry, we mean a very special type of inquiry, namely inquiry into variation and its root causes. It turns out that isolating the underlying drivers of variation is the first step to any sustainable, predictable improvement program. Without an effective measurement process, management lacks the knowledge necessary to successfully guide the enterprise from where it is now, to where it desires to be.


POSTED BY WAYNE SMITH AT 05:30 PM  |  0 COMMENTS

Thursday, June 08, 2006

“…self deception, the root of all evil” – Lazarus Long

 

Does this apply to organizations as well as individuals?

An individual can do any number of things while deluding himself as to his motives. This can be very destructive to the individual, but the damage is usually limited to that person. In extreme cases many lives may be affected. This type of self-delusional behavior, when indulged in by an organization, can be far more destructive.

The ability of management/leadership to militantly seek and destroy these delusions is crucial if any lasting change to an organization is to be accomplished.

While most management will agree that their mission is to create an organization that values and seeks the right changes, they may have inadvertently created (or, more likely, let stand) an environment / culture that values exactly the opposite. The causes can be manifold, but all boil down to, at some level, lack of leadership. Everyone knows that a good leadership must do what it says. A leader who values change must also create a culture that values truth. Change must be undertaken in response to facts. The real facts. An organization that makes changes on any other basis is just twisting dials, hoping that things will get better. This leads to the situation where changes are attempted, effectively at random, with the clear potential to do more harm than good. Many organizations, unfortunately, will make decisions based, not on the actual facts of the situation, but only on the facts that they permit. A management style that does not allow truth (facts) to bubble up to the decision-makers always creates an environment where change is not only undervalued, but is deliberately eschewed. Facts, even (especially?) the ugly ones, must be reported up the management chain deliberately and forthrightly.

What could cause employees and managers to deliver or elevate data that is incorrect? The obvious answer is to hide shortfalls in performance. Weaknesses in planning, forecasting and execution can all lead to underperformance that has the potential to be masked. Of course, underperformance must be properly identified before it can be addressed. Masking this underperformance, either in toto, or by attributing it to the wrong underlying causes, may stimulate a change that is both wrong and potentially harmful. Envision a doctor prescribing medicine that makes an affliction worse because of a misdiagnosis. Do that often enough and a patient will either find another doctor, or ignore the one he has. If he doesn’t take any of the medicine that the doctor prescribes, he knows he won’t get sicker, and might even get better on his own. So it goes with the organization. Management ‘prescriptions’ are ignored in favor of the status quo, because the changes prescribed in the past made things worse. Ignore the change directives, and work a little harder, and maybe things will get better on their own.

The leadership issue to address here is the performance ethos that failure is not tolerated. Like any other process in life, what you measure is what you get. If failure is punished, than all efforts will be made to avoid failure. Not only does this create a culture that is afraid to innovate; the culture learns to undervalue and/or fear facts, as they can only betray the failure that will not be tolerated to all and sundry. Response: the failure to uncover and address problems is the behavior that should not be tolerated. Management must create an environment that militantly pursues, discovers and values facts, as they are the true indicators of problems. Tolerance of lack of response to reality is the behavior that should be eschewed by an organization. Dogged pursuit of the facts as a window into the true operational state of the organization should be the example set by leaders, indoctrinated by management and exemplified by line personnel. The culture that values facts as being the real and correct precursors for change will embrace the changes that result.

Another cause of myth-based decision making is that the real data is inaccessible or unknown. The data may be buried in multiple systems and not available for discovery, or the managers may not know how to assemble the data pieces they have into a cogent set of facts that represent reality. This, much more mechanical topic, will be addressed in future posts.


POSTED BY MICHAEL WALDMANN AT 03:23 PM  |  0 COMMENTS

Thursday, April 06, 2006

Several things have become clearer over the years.

One is that the CIO role is not a technology job, it is a business value job. In this way, of course, it is really no different than any other executive leadership position. This requires the manager to both manage the performance of their vertical unit---their operational area, whether it is an SBU or a functional department like IT---while at the same time operate horizontally across the enterprise to optimize the company's total performance and thus maximize the aggregate value of the business. (The exact vertical-horizontal mix depends on the particular role and current operational challenges.)

Another is that organizations are the way they are because of their leaders. In other words, culture is not some magic all-pervasive "ether" that mysteriously infuses the workforce. Culture is simply the collection of habits, customs, stories, assumptions, and aspirations that the leadership has promoted, supported, and sustained. It is the way it is precisely because that is what leadership wants and expects, whether consciously or not. For example, ineffective leaders are often totally unaware of the effect they have on their colleagues, and are amazed to learn that what they think is positive behavior actually is viewed negatively.

Accordingly, high performance organizations are, in fact, high performance precisely because they have high performance leadership. In other words, you get what you are. Companies perform at a high level only because (and until) the leadership performs at a high level.

As a result, high performance is not about advanced technologies, or best practices, or the latest sound-bites.

It is about leadership.

This is because if the process infrastructure, governance practices, and process maturity are not up-to-snuff, then they will fix it. They will solve those problems in an optimal manner precisely because they are high performance individuals themselves. That's what they do. That's who they are.

A corollary to this second point is that high performance leaders tend to share several important characteristics. Characteristics that can help locate this talent in your company. The most central of these characteristics is the preeminence of values over behavior. That is, their leadership approach fixates on a few fundamental principles---sometimes articulated, sometimes implied---that define a collection of preferences for what is important, for what the organization stands for (and against). This is in opposition to the much more prevalent approach that is behavior based, that is, focusing on control, micro-management, and on altering the way people actually do their work, changing their methods, practices, tools, etc.---with the idea that this will make them better.

The problem with the behavior based approach is that it forces a set of "solutions" that presuppose a shared understanding of the "problem". And if the populace does not share that same sense of the problem, and they often don't, then, to them, the prescribed "solution" is not really an answer for them. In fact, it is a burden, another unwanted administrative intrusion into their world.

On the other hand, people with a sense of shared values will naturally seek out the tools and methods that are consistent with their common value system.

A second characteristic of high performance leaders is their emphasis on learning. This comes from their insatiable curiosity about how things work and don't work, why things are the way they are. This tends to also include a strong desire for challenging long-held assumptions and for fact-based decision making. This characteristic also shows up in their desire for a collaborative workforce---an environment where ideas matter more than rank or title, and where everyone has a piece of the truth.

Thirdly, these individuals have a very tight, almost laser-like, focus on customers and how best to deliver value to them, whether these are the external enterprise customers or the many internal customers. This customer centric bias informs much of their thinking about priorities, and in particular sharpens the dialogue about what really adds value, since in this world the customer defines value, quality, and completeness, not the supplier. This external focus has a remarkably refreshing, simplifying, and cleansing effect on the entire organization.

Another characteristic that appears common is their sense of personal accountability, both for themselves and for their workers. This idea that we must absolutely honor all commitments becomes a reverence for doing exactly what we say we are going to do, without excuses, without surprises, starting with top management. This is a very powerful and compelling example for the whole organization. Further, these leaders provide safety and support for the workers so that everyone can constructively hold each other accountable for the decisions they make, including (and especially) top management. This characteristic also tends to promote an environment of ownership where responsibility (and authority) is delegated to the lowest level practical, and closest to the customer. This ownership generates strong feelings of personal responsibility for performance, continuous improvement, and getting better every day. A pride in workmanship naturally emerges.

Finally, high performance leaders, create sustainable high performance organizations because when they think about solutions they first think about strategy. They have a need to understand exactly where the company is going and what success will look like when they get there. This vision of a future state, while largely conceptual, is a powerful communication and motivation tool. Once the vision comes into focus, they turn their attention to the business and technology architecture that serves as the framework for realizing that strategy. This framework is a picture of a possible implementation of the strategy. Further, the architecture provides the organization with a blueprint for success. It shows how all the business pieces fit together and how they interact. In other words, this architecture defines the future business model that will deliver on the chosen strategy. But, even more, it becomes a road map for defining and prioritizing investment and actions. As such it serves as the overall strategic plan for the enterprise since the journey to the desired future state involves incrementally adding or replacing each architectural element with its improved solution. In this way, solutions are never simply tactical, short term disconnected fragments, but are integrated components of a unified whole that are always aligned with the business as they simultaneously advance the company, step by step, towards its goals.


POSTED BY WAYNE SMITH AT 06:07 PM  |  1 COMMENT

Monday, April 03, 2006

What do we do now? What are the next steps? ….

We see it all the time in our jobs and professions. This insatiable need to take action. This desire for "progress". We seem to be forever in various stages of defining action plans, setting targets, organizing teams---all focused on "making something happen"?

And, of course, they do create action. Things will "happen". After all, the very nature of these efforts is activity, putting things in motion.

But, are they the right things? And, even if they may be, are they sustainable? In other words, will what we are doing lead to sustainably improved business performance?

Unfortunately, history has not been kind. These efforts often lead nowhere, or if they do create positive results, they are frequently illusory and unsustainable. Interestingly, the problem typically lies not with the work itself. Most organizations can do a credible job of carrying out action plans if properly nourished (capital, talent) and motivated (leadership). The issue isn't necessarily one of management, or the inability to do the work.

Rather, more often than not, the organization is simply working on the wrong things, in the wrong order. They are doing a good job, even an excellent job at times, of simply delivering the wrong solutions faster.

What is needed is to make sure, as leaders, that the enterprise is focusing its limited talent and capital on the right topics. So, when they do their good job of execution, it results in impacts that really matter to the performance of the company.

This relentless focus on the right topics defines the crucial gap between mediocre organizations and high performance organizations.

And, it all starts with the right questions.

We believe that nothing influences high performance and sustainable success more than making sure that the leadership of the enterprise remains focused on the right questions. The answers to these questions---the solutions---will at times be tricky, but more often than not, if you make sure you are answering the right questions, then it is much more likely that the results you get, even if suboptimal, will have a far greater impact on success than an excellent execution towards the wrong goals.

Consequently, a key issue for an organization is to ensure that the leadership is mercilessly focusing on the right questions. And, we mean focus with laser-like intensity. This means two things: There should only be a handful of questions (a small number concentrates the mind and the organization) and, these questions need to be continually reviewed to ensure they remain the most relevant issues for where the organization is at that moment.

Because alignment of the leadership is central for sustainable success, these questions must necessarily arise within this group. Moreover, the most compelling questions for the leadership team tend to be a variant of "who, exactly, are we?". The questions below can be a useful starting point for getting to this answer:

  • How do we add the most value? What is our most compelling value proposition?
  • What customer segments have the greatest need?
  • What is our future business model? How do we serve those needs?
  • What business and technology capabilities best deliver that model?
  • How are those capabilities best provisioned?
  • What does success look like, exactly?
  • What is the case for change: Why do we need to do anything materially different than we do now?
  • How have we agreed to hold each other accountable for the decisions we have made?
  • What are the highest return, lowest risk actions for addressing these questions?

In many companies, unfortunately, it still remains difficult to explore these very existential issues. They are often viewed as too soft a topic, or as not being relevant, or actionable, but in our view an organization that has a deep connection to its roots, to its sense of who it is, and how it chooses to deliver value to its customers is an enterprise that knows where it is heading. This is an organization that has the confidence to make the tough choices about where and how to compete, and to do it in ways that preserve its integrity and authenticity. And, an organization that acts authentically, is naturally sustainable.


POSTED BY WAYNE SMITH AT 10:59 PM  |  0 COMMENTS

Tuesday, February 14, 2006

Organizational transformations are among the most difficult undertakings that leaders face. Whether the organization is a nation or a department, history is replete with false starts, ugly outcomes, unintended consequences, and abandoned efforts.

There are, of course, many reasons why these efforts are so intractable. Probably the most striking is that they are not "projects" in the traditional sense. They resemble more an organic adaptation. That is, less an activity that can be centrally planned, prioritized, scheduled, and controlled, and more like an activity in which one carefully observes various stimulus-response behaviors in order to better grasp the underlying, often hidden, survival mechanism that ultimately drives the decisions that the organism makes to persist and succeed in its chosen competitive landscape, and then to apply this knowledge to influence the organism to evolve in the desired way.

Moreover, just focusing on changing behaviors is doomed if those behavior changes are at odds with this underlying survival mechanism. As we have seen all too often, the organism may appear to comply for some period of time---constrained as is often the case by focused, determined external forces and coercion (i.e., management), or sometimes inadvertently compliant through its own internal lapses which periodically distract every organism. But, soon, through attrition and the daily grinding away at these artificial fetters by the organism's unrelenting survival mechanism, it breaks free. Further, the organism's own survival reflexes react in unpredictable ways to these crude assaults resulting in the expensive, time-consuming, and ultimately unsatisfactory outcomes of these behavior-based transformations that we now come to expect.

A more successful perspective lies in recognizing that these transformations are an act of war.

A war, not of territory, or of behaviors, but a war of values.

In other words, organizational transformations (regardless of how they may be spun) essentially seek to replace the current set of values with a different set of values. Since the values of an organization essentially define its foundational principles---mission, purpose, and meaning---transformations, if they are to succeed, must necessarily attack this survival mechanism directly by focusing explicitly on the underlying values that shape its actions.

It should be pointed out that the issues at stake are typically not as clear cut as simply replacing one set of values with another completely new set. What is often found is that the desired set of values are not really new, but can be found among the ideas that the current organization deems important, it is rather more a question of priority, emphasis, and interpretation. Regardless, the fight is over whose values and interpretations will prevail as the governing principles for the organization.

This declaration of war concept is vital because it unambiguously communicates to the organization the existential import of the undertaking. If an organization fools itself into thinking that all that is needed is a bit of behavior modification, then disaster lies this way. Expectations, risk-reward assessments, investment decisions, priorities, are all quite different depending upon which path you choose.

Consequently it is vital to clearly characterize transformations as significant "bet the organization" or "burning platform" style decisions.

Behaviors are the only reliable windows into values---what you stand for is most clearly revealed by the decisions you make and the actions you take. Accordingly, an organization that can quickly read the signs in its behavior, identify the misalignment in values driving that behavior, and then respond with leadership actions focused on restoring the proper values are on the path towards long-term, sustainable success. On the other hand, simply treating the behavior itself as the problem and merely correcting the behavior without addressing the underlying value system is a recipe for disaster and low morale.


POSTED BY WAYNE SMITH AT 06:28 PM  |  0 COMMENTS

Tuesday, January 31, 2006

“…self deception, the root of all evil” – Lazarus Long

Does this idea apply to organizations as well as individuals?
 
An individual can do any number of things while deluding himself as to his motives. This can be very destructive to the individual, but the damage is usually limited to that person. In extreme cases many lives may be affected. This type of self-delusional behavior, when indulged in by an organization, can be far more destructive.

Obvious examples of an organizations self-delusions include the proficiency of a company at their core capabilities (i.e. ability to deliver software well), their ability to manage and comply with internal processes, their ability to provide services both internally and externally (although providing services externally usually involves a much more effective, and not so easily ignored/disillusioned set of feed back i.e. your customers stop paying you), their ability to adapt to changing market conditions etc.

An individual can seek therapy for their self-delusions, and perhaps learn to be more truthful with their self. What kind of therapy exists for an entire organization that indulges in this kind of behavior?

Over the coming weeks I will explore particular types of this deception, the manifestations of, and consequences to, this type of behavior (both short and long term) for an organization and what organizations of all sizes can do to eliminate this destructive thinking and improve their performance.


POSTED BY MICHAEL WALDMANN AT 04:46 PM  |  1 COMMENT