Management Mythbusters

Great Doubt

2009-07-05T05:08:00.000-07:00

The other week my lecturer wrote three words up on the board;

Great

Small

No

He followed these three words with three more;

Great Doubt

Small Doubt

No Doubt

And then borrowing from Buddhism he wrote;

Great Doubt, Great Enlightenment

Small Doubt, Small Enlightenment

No doubt, No Enlightenment

If you have no doubt, if you know that you have the answer, there is little chance you will see any other answer but your own. The filters in your mind are turned up to high blocking out any answers but your own. And you believe this to be good because you have "no doubt".

You may have no doubt, but you also have no enlightenment, you are blind to the many alternatives being expressed in the world.

Lately I have been feeling much more "doubt" in my mind than I did several years ago and it is wonderful. My mind is opening up to so many more possibilities. I can feel my filters coming down. More and more I am able to look beyond my own worldview and it is amazing what you see. You can see what people are trying to tell you if only you are open to hearing.

A long way for me to go yet but I am enjoying having great doubt.

A thought has just popped in, how do you think that would look on your resume? "Excellent at great doubt". Hmmm maybe not but "Excellent at seeing a broad range of possibilities" does sound good.

give it a try,

Rob

McKinsey falls into the trap of the efficiency myth

2007-06-17T03:31:00.000-07:00

[If you are looking for Mackenzie Falls on the Disney Channel try clicking here]

Well, well, well, even the great McKinsey is fallible to the efficiency myth.

In Roger Martin's Business Week article, "Scientific Management is Past its Peek", he points out the fallacy of one of McKinsey's future business prediction and that is the return of popularity of Scientific Management. I think he hits it on the head when he writes:

"While executives think they are doing the right thing by managing the numbers for the sole purpose of 'maximizing shareholder value,' they are perplexed that employees don't find that to be a particularly inspiring reason for coming to work each day, and customers find the thought rather revolting."

A good read!

Mackenzie Falls

2009-06-28T04:21:00.000-07:00

The number of hits on my blog has gone through the roof lately. The searches are looking for "mckinsey falls" or "mckinseyfalls.com" and my listing comes up first on google, hence the hits.

Obviously these people are not looking for my blog but I am thinking at least any traffic could lead to good traffic.

After a few attempts I think I have discovered what they are looking for "Mackenzie Falls" a Disney Channel show for teenagers. I doubt any of the searchers will find my blog interesting but if you do please leave me a comment.

For the site you are looking for click here.

Cheers,

Rob

One more book...

2009-05-23T23:58:00.000-07:00

Robert Coram wrote the acclaimed biography of Colonel John Boyd, Fighter Pilot, well worth a read if you have ever heard of OODA loops. Boyd died of Prostate Cancer in1997 and now Coram is fighting against the same foe.

Coram writes a compelling account of his fight on his web site. It concludes;

“In the meantime I am keeping my eyes upon the barricade.
And I am writing as fast as I can.”

Faced with a very uncertain future he wants to make sure that he writes at least one more book.

I am not sure, but I think Boyd would have approved.

The GFC is a myth, or it seems so to some.

2009-05-01T23:06:00.001-07:00

I have been asking friends about what impact has the Global Financial Crisis, GFC, had on budgeting within their companies for the next financial year. Amazingly the responses I have been getting are that their companies are continuing to build growth into their plans as if there is no GFC. To them it appears to be a myth.

Now I will admit that my sample size is no where near a global representation but there does seem to be this head in the sand attitude. Or there is at least at the top line revenue level. I suspect that there is double budgeting going on. On one hand we all can't get off this growth kick we have been on so we are forecasting revenue growth. On the other hand it is batten down the hatches on cost control. The disconnect between revenue and cost will create some interesting dynamics going forward.

Is this happening at your company?

Is anyone out there planning how to ride out the GFC and come out stronger into whatever the new world brings?

Just some idol curiosity,

Cheers,

Rob

More on my train ticket saga, they weren't as clever as I thought...

2009-01-17T15:11:00.001-08:00

If you want to read from the start of this story then please go to the original post by clicking here. You probably won't understand what I am talking about if you haven't read it, sorry.

Two weeks ago, back again at my favourite airport train line, I arrived to find that not only was the ticket machine displaying "Exact Change Only", but this time the clever people were not as clever as I thought in my last post and had put the train fare up to $20.20. Luckily I had the extra 20 cents as well as my usual twenty dollar note and could catch the train coming in four minutes instead of joining the long queue at the ticket booth.

Returning this week I find they have installed specific ticket machines that are connected for credit card or ATM transactions, but only tickets to the City not anywhere else on the train network.

I wonder if the extra 20 cents was to;

pay for the Credit Card machines
because the ticket machines kept running out of change
because they had outsourced their operation,
because they were trying to save money,

possibly 20 cents a customer?

Meanwhile I had my $20:20 cents ready and was on my way.

Riveting stuff I know :-),

Rob

CEOs need to understand their employee's time horizon

2009-01-10T14:40:00.000-08:00

Much has been written about getting "buy-in" from the employees when senior executives want to create change. Yet often the new CEO falls into the trap of "telling" the employees the new direction for the organization. As opposed to working with their employees; listening, talking, brainstorming in order to form a joint view of the new way forward.

An understandable reason for this is that the new CEO is under time pressure to get things done. Wall Street wants results as soon as possible. Taking the time upfront to formulate a collective view is either seen as taking too long or the result of the CEO not being a decision maker or both.

But here is the rub. The time horizon of the new CEO is one to five years. They need tangible results within twelve to eighteen months and their overall tenure is likely to be around five years. The time horizon for the employees is actually longer than this, they see themselves working for the same organization for at least five, ten, fifteen years or more. So when the new CEO starts 'telling" them about the new direction they either agree with what the CEO is saying and get on board or if they disagree they simply decide to "wait this one out" and see what the next CEO brings.

I wonder how many CEOs out there have the majority of their employees "waiting this one out" while they are puzzled because real change isn't taking place?

Regards,

Rob

A Global Village of 100 People looks like...

2008-12-31T15:41:00.000-08:00

Ken Wilber in his book, "A Theory of Everything" (2001) uses the work of Dr. Phillip Harter of Standford University School of Medicine to show this interesting example.

"If we could shrink the earth's population to a village of only 100 people, it would look something like this:

57 Asians
21 Europeans
14 North and South Americans
8 Africans
30 White, 70 Non-white
6 people would possess 59% of the world's wealth, and all 6 would be from the United States
80 would live in substandard housing
70 would be unable to read
50 would suffer malnutrition
1 would have a college education
1 would own a computer

Not sure if this would vary much for 2009 but as we enter this new year it is an interesting view of our world. I feel a growing global awareness that we do all live on the one planet and that maybe we should get along a bit better than we do today. Both with each other and with our world.

Happy New Year, and to paraphrase Lennon, "let's make it a good one"

Cheers,

Rob

You have to laugh...

2008-12-12T14:46:00.001-08:00

As you probably know I went back to Uni this year. Well today is the day that the final results come out. 8am 13th December 2008 (my time, not blogger post time). It has been giving me this time and date every time I have logged on to "Blackboard" the Uni Intranet.

So guess what?

I log on this morning with great anticipation only to receive a message saying "sorry but the site is closed for system maintenance." Now I am staring at the screen wondering if the IT Department can be that uncoordinated with the academic faculty to bring the site down on the day results are to be posted or has there been some glitch with posting the results or overload from traffic etc.

My vote is lack of coordination because we see it all the time in companies, the old "left hand doesn't know what the right hand is doing".

I have sent a note to the webmaster and will let you know what the reply is in a comment to this post,

If I don't blog again until next year Happy Holidays!

Cheers,

Rob

Gaming the Gamers - a great quote from Hoverstadt

2008-12-01T02:29:00.001-08:00

Just had to post this quote from Patrick Hoverstadt’s book, “The Fractal Organization” on performance related pay. I think it is so true, especially who he says will win.

“In any performance related pay system, gaming is inevitable. PRP systems are explicitly attempts to manipulate behaviour, attempts by managers to manipulate the behaviour of staff. From a Game theory perspective, this is gaming; it is management playing a game with staff. So in PRP gaming is inevitable, the question is which game is going to be played, or rather, whose game is going to be played, the manager’s or the staff’s? Setting up a PRP system that is explicitly designed to manipulate staff behaviour is an open invitation to staff to game the system. If it is OK for managers to manipulate staff, it has to be OK for staff to manipulate managers by using the PRP system. Ashby’s Law tells us who is likely to win this contest, and of course it is the staff.”

Cheers,

Rob

Supporting Movember

2008-11-16T20:54:00.001-08:00

Future Scenarios, well worth the read.

2008-11-04T22:37:00.000-08:00

As part of my Uni course we had a visit by permaculture pioneer David Holmgren who took us three his four possible scenarios for the future. His scenarios are based on the cross swords method and look at the two forces of Peak Oil and Climate Change. The four scenarios are titled Brown Tech, GreenTech, Earth Steward and Lifeboats. They are well worth a read, even if they are a bit scary because there is more than a fair chance we will end up in one of them.

You can find the details at www.futurescenario.org or if you want to go straight to the scenarios themselves click here.

Regards,

Rob

Call Center breaks through the Efficiency Myth

2008-09-19T19:01:00.000-07:00

A year ago this Insurance Company call center made a radical change. They moved away from the approach that focused on “efficiency”, well at least what conventional wisdom thinks is efficiency (see post “The Efficiency Myth”), to one based on “effectiveness”. Previously they were organised around the company’s product lines, a.k.a. “skills based routing”. There were approximately 7 to 9 teams a customer could be directed to depending upon the product area of their inquiry. The averaging call handling time, a key performance measure for call centers, was 360 seconds and their customer satisfaction survey results were coming in between “needs improvement” to “just meets needs”. They had an intense training program for new agents that went for six weeks and covered everything they needed to know across the call center. However these agents were then placed into a particular skill area and had no experience to handle the first call that came in with an in-depth question.

The change that was made was aligned to looking at the effectiveness of handling the customer calls and not the misconception of focusing on the efficiency of processing them. With help from an outside consultancy firm the Insurance Company realised that customer enquiries could be grouped into two types of call, simple and complex. They organised their call center around these two groups. All inbound calls first go to a group of agents that are there to handle the simple enquiries. If the customer has a more complex question these are passed on to a second group who are more experienced. The groups are not organised by products and handle all calls coming in.

Now according to “the efficient myth” efficiency is an outcome not an input. It is the measure of effectiveness (efficiency = actual effectiveness, divided by, ideal effectiveness). Therefore if these changes increased the actual effectiveness of handling customer enquiries we should see the efficiency measure improve.

This is exactly what happened. Remembering that the average call handling time of all calls was previously 360 seconds what the Insurance Company found was that the average call handling time of the simple calls dropped to 180 seconds while the average handling time of the complex calls remained at 360 seconds. This freed up agents to do outbound calls for customer retention activities. In addition the customer satisfaction survey has now improved from “just meets needs” to “excellent”.

The training program has been changed as well. Agents now undertake a more iterative training program. They learn the basic information required to handle simple calls and experience those types of calls immediately, before learning how handle more complicated calls. Therefore instead of being thrown into the deep end of handling “skills based” calls of any level of complexity there is a skills progression path for the agents. This had led to an overall career path for the agents. They can start in the simple calls group, move through to the complex calls group and many are now moving into other parts of the business where they can leverage their coalface knowledge to benefit the company in its product development, marketing, sales and operational areas. Another benefit has been the simplification of the technology supporting the call center. Routing rules, voice announcement options and even work force management has been simplified which all leads to lower cost.

Therefore not only did the efficiency measures improve (i.e. average call handling time) but customer and employee satisfaction has increased as well and support costs have been lowered.

The Efficiency Myth can be defeated!

Efficient Governments, Dictatorships and Resilience

2008-08-29T16:14:00.000-07:00

“Whenever you have an efficient government you have a dictatorship”, Harry S Truman.

This quote came up in my daily quote section on my iGoogle homepage. It reminded me of a conversation I was having with some of my colleagues about leaders like Steve Jobs and Bill Gates, that is, dominant CEO figures. It is their absolute authority that allows them to turn their companies in a new direction. For Steve Jobs that was iPods, iTunes and iPhones. For Bill Gates it was retracing his steps and getting on board the Internet.

The only problem with this style of leadership is that they better be right. If the direction they take their company is over a cliff, they will all go there together, very efficiently. It also breaks down any upward communication. “Hey boss, is that a cliff coming up?” CEO’s reply, “Are you with me or not?”

Bill Gates wasn’t always right but was able to back track on his earlier views of the Internet and switch Microsoft in that direction (no comment on tactics). He has now moved on from Microsoft and I wonder how the leadership works there now?

One day Steve Jobs will move on from Apple (again) and I wonder how resilient the company will be with his departure.

We are told to build resilience into our children so they can face the ups and downs of the world. What are we doing to build resilience in our organizations? I believe that dictatorships break down resilience therefore sorry Mr President Truman but I don’t like your quote.

A Framework to Forecast the Future of Working

2008-07-27T01:57:00.000-07:00

Abstract

The increased access and sharing of information via mediums like the Internet are continuing to have a profound impact on how we work and socialise. The question is how will these change over the next five to ten years. This paper provides obervations of these changes, analysis of what is actually happening and uses Joseph Voros’s Future Cones to illustrate a broader range of potential futures than simply more of the same only faster. The next stage of working out what to do about these potential futures is not covered in this post and any suggestions would be welcome.

Gutenberg Take Two

It started with Gutenberg’s printing press, the ability to mass communicate information in the form of books and newspapers, a changing of people’s view of the world. Gutenberg is credited with enabling the Renaissance, the Scientific Revolution, and the Protestant Reformation (Harry Ransom Centre, 2008). Once again the availability of information has taken on a new level fuelled by the Internet. It is providing mass communication between everyone on the plant. Today we are going through the same quantum of change as the world did starting in the 1400s with the advent of the printing press. Kevin Kelly predicted back in 1997 that this level of change will be “momentous” and explained how the underlying driver of this was communication;

“The great irony of our times is that the era of computers is over. All the major consequences of stand-alone computers have already taken place. Computers have speeded up our lives a bit, and that is it. In contrast all the most promising technologies making their debut now are chiefly due to communications between computers - that is, to connections rather than to computations. And since communications is the basis of culture, fiddling at this level is indeed momentous.” (Kelly, 1997, page 140)

So what is happening?

On the physical front we see;

Broadband telecommunications, both wired and wireless, dramatically increasing the speed and number of data connections
Social Networking Websites - MySpace, FaceBook
Business Networking websites – LinkedIn, Plaxo, Xing
Business Collaboration Tools – 37Signal’s Basecamp, WebEx Connects
New Information Repositories – Wikis, Blogs, Podcasts, YouTube
New transaction processing systems – eBay, PayPal
Intelligent information retrieval – Google’s adsense, Amazon’s book suggestions

Observing changes in behaviour we see;

The recognition of Digital Natives as an emerging group where “today’s students think and process information fundamentally differently from their predecessors”. (Prensky, 2001, page 1)
People around the globe are putting their details up on social networking sites and seeking out connections with current and former friends and colleagues. Donath and boyd join Kelly in commenting on how cheaper and easier to use communication technology leads to an “increase in available information and opportunities”;
“We hypothesise that the number of strong ties an individual can maintain may not be greatly increased by communication technology… but that the number of weak ties one can form and maintain may be able to increase substantially, because the type of communication that can be done more cheaply and easily with new technology is well suited for these ties. If this is true, it implies that the technologies that expand one’s social network will primarily result is an increase in available information and opportunities – the benefits of a large, heterogeneous network” (Donath and boyd, 2004)
Business network sites like LinkedIn and Plaxo not only provide an online contact list but are tracking the behaviour of people as they add contacts, update their profiles and post information. Plaxo’s calls this feature “Pulse”.

At the society, economy and cultural levels we see;

New Rules for the New Economy – Kelly wrote about the changes we are now experiencing back in 1997;
“The advent of the new economy was first noticed as far back as 1969, when Peter Drucker perceived the arrival of knowledge workers. The new economy is often referred to as the information economy… I prefer the term the Network Economy because information isn’t enough to explain the discontinuities we see.” (Kelly, 1997, page 140)
Drucker called them “knowledge workers” working in the “information economy” therefore following Kelly’s adaptation of Drucker’s terminology to create the label the “Network Economy” within this economy we may now be seeing the emergence of “Collaboration Workers”.
Crowdsourcing – this is the phrase being used to describe open collaboration with anyone who wants to contribute. It’s best known example is Wikipedia. Tapscott and Williams in “Wikinomics” provides examples of this being applied to the commercial world, one of which is Goldcorp Inc;
“In March 2000, the ‘Goldcorp Challenge’ was launched with a total of $575,000 in prize money… Within weeks, submissions from around the world came flooding in… entries came from surprising sources, including graduate students, consultants, mathematicians, and military officers… Over 80 percent of the new targets yielded substantial quantities of gold… McEwan [CEO Goldcorp Inc] estimates the collaborative process shaved two to three years off their exploration time.” (Tapscott and Williams, Page 9]
Wikis in the Corporate World – Law firm Gilbert & Tonkin are using Wikis to share information in a new way. Bernadette Jew’s trip report on her overseas travel to China is an excellent example;
“When Jew travelled to Shanghai earlier this year, notes from her meetings were typed directly into a wiki and G&T partners in Sydney read them and provided feedback directly onto the wiki. This saved them having to respond to multiple emails, or take phone calls. At the end of the trip Jew’s report on the trip was simply a link to the wiki.” (AFR, 2008)

At the personal level we see;

Shift of Control – Rupert Murdoch spoke of a shift in control that young people want moving from the “god-like figure... above” to themselves;
“What is happening is, in short, a revolution in the way young people are accessing news. They don’t want to rely on the morning paper for their up-to-date information. They don’t want to rely on a god-like figure from above to tell them what’s important. And to carry the religion analogy a bit further, they certainly don’t want news presented as gospel. Instead, they want their news on demand, when it works for them. They want control over their media, instead of being controlled by it.” (Murdoch, 2005)
As an aside, Murdoch’s understanding of these changes could have been part of the reason why NewsCorp moved quickly to acquire social network website MySpace. (NewsCorp, 2005)
Personal Satisfaction and Fulfilment – Malone in The Future of Work highlights that the “real impetus” for change will also come from our noneconomic, personal goals;
“New information technologies make this revolution possible. Dispersed physically but connected by technology, workers are now able, on a scale never before even imaginable, to make their own decisions using information gathered from many other people and places. The real impetus for the transformation in business will not come from the new technologies, however.” It will come from our innate desires – for economic efficiency and flexibility, certainly, but also from noneconomic goals like freedom, personal satisfaction, and fulfilment.” (Malone, 2004, page 4).

What is really happening? Analysis.

A Layered View

The observations above, across the four groupings of Physical, Behavioural, Cultural and Personal, provide examples of “events” that are taking place. To understand what is really happening we need to look at the layers below these “events” to decipher the underlying causes. These layers are;

events (an occurrence)
patterns (events over time),
structures or systems and
worldview or our “view of the world”

Our worldview influences how we think and respond to the layers above and it is by uncovering what our worldview is that allows us to get to the heart of what is really going on, how our worldview might change and therefore what range of futures could unfold.

A simple example of this analysis is found by looking at traffic in a city, as detailed in the diagram below: Traffic – Underlying Causes. Observing just the traffic, “events”, at any point of time is not enough. Observing traffic over time, “patterns” reveals that during the commuting peak times of morning and late afternoon traffic jams occur. The structure that causes this is the fact that we have similar working hours and therefore we all need to arrive and leave around the same time. Trying to managing the volume of traffic at these times creates another set of structures such as; freeways, traffic lights and restrictions on turning into side streets. The view of the world that motivates many people to battle through traffic jams on their daily commute is that city jobs are worth this effort because they offer more opportunity for pay, career or personal fulfilment; otherwise they would find work closer to home.

Today’s Work Processes – A layered View

If we apply this layered framework to how we believe today’s work processes, like meetings and appointments, operate we find the following layers in the diagram: Meetings, Appointments – A Layered View.

Today our view of the world on how we work is that people get together to share information and make decisions in real time; that is at the same time. When they get together the main form of communication is voice, talking to each other.

The Future of Working a Layered View

A common view of the future of working in the connected world is that meetings and appointments can occur in scattered locations; on the road, at home, in meeting rooms, or in different countries, using different devices; mobile video phones, web cameras, or high definition telepresence video conferencing. Voice is still the main communication method and the technology is used to try and make a distant meeting look and feel as close to being in the same room as possible. The assumption is that human interaction will still be based on “voice” and occur at the same time. These examples include being able to conquer the tyranny of distance and connect people at the same time either from their home, car, office, hospital bed, meeting room, or conference centre.

Another example of this “same time” thinking is how the use of the technology capability “presence” is discussed. “Presence” is the ability to display on your screen what a person is doing right now. It provides a status of the person based on whether they are logged onto the Internet or corporate network, on their phone or if their calendar is free at that moment. IBM even call their software for this function SameTime (IBM, 2008). From this view the use of “presence” is to be able to ascertain the status of people in order to be able to connect them now, in real time to have a discussion at the same time.

The underlying view of the world hasn’t changed therefore the forecast of the future is made based on technology enhancing the structure layer as depicted in the diagram: A “same time” Future - Layered View.

This forecast of the future is what Joseph Voros (Voros, 2003) describes as a “projected” view of the future. It takes the current patterns and extrapolates them into the future as seen in the diagram: "Same Time" Future – The “Projected” Future, where the cone depicts that there is the potential for a range of “Probable” futures around the projected future.

A Changing Worldview

In addition to the “projected” future there are a broader range of “plausible” futures. Futures that “could happen” (Voros, 2003) this is depicted by the wider cone in the diagram below;

To understand what these “plausible” futures might be we need to look at the changes occurring at the worldview layer of our analysis. In the observations above we notice that new behaviours are emerging. People are using the new information repositories of social networking sites, blogs, podcasts and wikis to share information with each other. This sharing of information is occurring on a many to many basis.

The example of Bernadette Jew (AFR, 2008) shows the use of a corporate Wiki to share information with her colleagues, who in return provided feedback which they could all see. And as was noted “This saved them having to respond to multiple emails, or take phone calls.” (AFR, 2008) There were no meetings or voice communications to discuss aspects of the trip or to gain information from her colleagues. It was all done by typing online into a new information repository structure, a wiki. In this example the new way of sharing information replaced emails and voice conversations.

What the Bernadette Jew example demonstrates is the growing pattern of online collaboration. On a broader scale this is enabling the emergence of the concept of crowdsoucing. When Goldcorp needed to work out where to find more gold in their fifty year old mine at Red Lake, Ontario the CEO, Rob McEwen, turned to the world;

“I’d like to take all of our geology, all the data we have that goes back to1948, and put it into a file and share it with the world,” he said, “Then we’ll ask the world to tell us where we’re going to find the next six million ounces of gold” (McEwen in Tapscott and Williams, 2006, page 8)
GoldCorp didn’t call a series of meetings for people to join and talk about the launch of the “GoldCorp” challenge they simply put the information online for the world to see and act upon. The result was that “an astounding eight million ounces of gold have been found” (Tapscott and Williams, 2006, Page 9).

If we were able to ask Bernadette Jew and Rob McEwen if their worldview was that;
“people had to meet at the same time and use voice as the method of communication to share information and make decisions”
we can confidently suggest that their answer would be a definite no. Their worldview has shifted to one of;

“sharing information and making decisions can be independent of people being together at the same time.”

Building on this we can see how the “events” and “patterns” that we observed above play out in our layered model in the diagram, A Changing Worldview.

Our “plausible” future is one that contains the concepts of online collaboration and crowdsourcing or “mass collaboration”. The emergence of “collaboration” workers and not just “knowledge” workers is indeed plausible.

There is yet another range of futures that may occur and Voros calls these the “Possible” futures (Voros, 2003). This is a view of a future that might happen, something we can imagine as possible. The “Possible” futures are beyond the projected, probable and plausible futures. For these to happen, future developments have to take place to provide the stepping stones to move from what is possible, to what is plausible, to what becomes probable. The range of “possible” futures is depicted in the following diagram;

A New Way of Conducting Business – Decentralised

While we have observed new forms of information repositories we are seeing new forms of transaction processing systems being built on top of this ability to share information online. A well known one is PayPal who describes themselves as;

“PayPal is the safer, easier way to pay and get paid online. The service allows anyone to pay in any way they prefer, including through credit cards, bank accounts, buyer credit or account balances, without sharing financial information” (PayPal, 2008)

PayPal facilitates a peer-to-peer exchange of money without actually being a bank or credit card provider. PayPal was acquired by eBay which is another example of a new transaction processing system based on the peer-to-peer model. According to eBay;

“eBay brings together millions of people every day on a local, national and international basis through an array of websites that focus on commerce, payments and communications.” (eBay, 2008)

Malone sees this trend occurring inside organisations like BP were they set up there own carbon trading marketplace across business units. BP set itself a target in 1998 to “reduce company’s greenhouse gas emissions by 10 percent, from the 1990 levels, by the year 2010. (Malone, 2004, page 91). By using this new form of peer to peer transaction processing, as opposed to top down ordered targets, BP were able to meet their target a staggering nine years ahead of schedule. Malone goes on to describe this new way of working;

“There are many buzzwords for describing the kinds of organizations this revolution will make more common. Self Organizing, self-managed, empowered, emergent, democratic, participative, people-centred, swarming, peer-to-peer are just a few of them. The word I’ll use most… to encapsulate all these different terms is a simple and timeless one: decentralized.
…Let’s define decentralization as the participation of people in making decisions that matter to them. In this sense decentralization means roughly the same as freedom. From this point of view, decentralization offers a much wider range of possibilities.” (Malone, 2004, page 5)

Murdoch supports Malone’s view of people gaining freedom in his comment,
“they want their news on demand, when it works for them. They want control over their media, instead of being controlled by it.” (Murdoch, 2005)

Adding to our previous description of a changing worldview the people in these “possible” futures may word their view of the world as;

“sharing information and making decisions can be independent of people being together at the same time and without being controlled by a hierarchy.”

Applying this to our layered approach we might see in the future the following events, patterns, structure and worldview as shown in the diagram; A “Possible” Future Worldview;

Depicting all of our future options using Voros’s cones diagrams we can summarise the potential futures in the diagram: Projected, Plausible and Possible Futures;

When viewed in this way our “same time” future is really more of the same, as the worldview doesn’t change while the structure layer is doing the same things only going faster and further due to the new technologies. Any new ways of working are more likely be found in the “Plausible” and “Possible” futures of collaboration workers and decentralised organisations.

This leaves one last set of futures for us to contemplate and that is our “preferable” future. Given the observations above and the analysis using the layered technique it is highly unlikely that the single “projected” view of the “same time” future will be the only one to happen. Therefore we need to broaden our thinking about what other futures may occur and how might we take advantage of the future ways of working for;

“collaboration” workers,
decentralised organisations, and
new transactional processing systems

Which oarts of the projected, plausible or possible futures do we prefer?

For all of us the future will come, we just need to decide what role we want to play in creating it. We can either just let it happen or by understanding the above concepts start to shape our “preferable” future. Hopefully this post will help you determine what that can be.

References

Donath, J and boyd, d. 2004, Public Display of Connections, BT Technology Journal, Volume 22, number 4, October 2004 available from http://www.danah.org/papers/PublicDisplays.pdf [accessed 3rd May 2008]

eBay, 2008, eBay ‘The Company’ Section available from
http://pages.ebay.com/aboutebay/thecompany/companyoverview.html [accessed 1st June 2008]

Harry Ransom Centre, 2008, University of Texas, available from
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Don't blame me it's not my fault

2008-07-20T04:11:00.000-07:00

Sorry for not writing for a while, I have gone back to Uni part-time and that has been sapping my writing energy. The course is a Masters in Management - Strategic Foresight and I am finding it really, really good. We have covered some great work like Clare Graves' - Spiral Dynamics, Ken Wilber's Theory of Everything, Joe Voros's Generic Foresight Framework with his "Futures Cones" model - Projected, Probable, Possible, Impossible and Preferable futures.

Anyway, back to this post.

I was sitting next to an IT guy at a breakfast presentation the other day. He was explaining to me that he had just been told of a solution to a problem he had a couple of months back. He wished he had had that answer back when he needed it. What made my ears prick up was when he said, "if I had of known the solution and "they" hadn't of used it at least I could have said, "don't blame me, it's not my fault".

What strikes me with this example, and the many more we come across in our lives, is that instead of being worried about not achieving the desired outcome we seem okay if the end result fails as long as the blame is placed elsewhere.

I believe that this culture of feeling okay, as long as the blame is elsewhere, starts with the way we structure our organisations along functional lines and not along end outcomes. As long as I am performing my function it doesn't matter whether the total result is achieved or not. We seemed to have developed all sorts of ways to enforce this culture; silo measurements, departmental budgets, limited information sharing, etc. Just try to implement an end to end measurement system from the start of the value chain to the end and see what resistance you get.

A line I quote a fair bit is "success does not equal failure plus a story". Failure is failure no matter how much of a story we add to it to be able to say "don't blame me, it's not my fault".

Cheers,

Rob

Travel Post 2 - Are you a terrorist?

2008-02-16T17:41:00.000-08:00

It is was interesting to observe the different amounts of paperwork required when going through immigration at the various countries we travelled through.

Arriving in Paris I dutifully filled out a short list of questions that were pretty straight forward and seemed fairly reasonable. How long are you staying in France? Where are you staying? etc. Going through immigration the only thing we were asked for was our passports. I still have the filled out forms. Our passports were processed without any questions and off we went to collect our luggage. Having collected our luggage we walked straight out of the airport not seeing any hint of customs personnel.

The next test was America. One immigration form for each family member and one customs form for the whole family. A question on the form was, "Have you ever been or are you now involved in espionage or sabotage; or in terrorist activities; or genocide; or between 1933 and 1945 were involved, in any way, in persecutions associated with Nazi Germany or its allies?" I wonder how many yes answers they get to this question?

Another question starts 'Have you ever been arrested or convicted for an offence or crime involving moral turpitude..." (this question is referred to in Wikipedia's explanation of moral turpitude)

Upon arrival we were all photographed and fingerprinted. The camera looked like a web cam bought at circuit city, blu-tacked to the glass divider. To help take our fingerprints we had to first place them on a wet towel which was sitting on the bench. All in all it looked like a pretty make shift job. The immigration officer was much friendlier than we remembered and processed us without fuss. The feeling I got was that they were a bit more relaxed because they were relying on the technology to do their job. I wasn't sure that was such a good idea. As a security friend once told me that if you are relying on technology as a gate keeper, like a logon password, and it is broken, the intruder suddenly gains a higher level of trust because they are assumed to know the password and therefore are trustworthy.

Japan also photographed and fingerprinted us but this time the technology looked purposed built. A combined camera and fingerprint device with a screen so that you could see what the camera saw.

Having filled in all these forms I couldn't help but think about the waste of the whole exercise. I wondered what happened to the filled in forms. What poor keyboard operator was sitting there typing them in. Or do they sit in a giant warehouse waiting for someone to break the law, you know like committing genocide, and their answers can be and will be used in a court of law against them. "Ah ha, you wrote that you have never committed genocide therefore you are even more guilty...."

What do customers really want and train tickets.

2008-02-17T01:48:00.000-08:00

If you are ever wondering why your customers are becoming harder and harder to deal with, before you start to blame them, maybe the reason is because you are not delivering to them what they really want.

This came up in a workshop I was in last week. I used the humorous comparison between buying paint with buying airlines tickets to show how complicated we can make things. As well I explained another classic example which happened to me just that same morning...

This workshop was in a city I travel to on a regular basis and I always use the train from the airport to the city center. The day return train ticket for the city costs $17.80. I have the choice of queuing up at the ticket booth which usually takes 10 to 15 minutes or using the ticket machines. As the ticket machines are quicker I try to have a $20 note on me so I can be on my way and catch the train which the monitor shows me is only 3 minutes away.

The problem is that sometimes the ticket machines run out of change and displays the words "Exact Change Only". When this happens a large queue forms behind the remaining machines until they also run out of change. There I am with my $20 in my hand, a train coming in 3 minutes and the ticket machine won't give me a ticket because it can't give me my $2.20 change.

What do I really want? To catch the train coming in 3 minutes.

How can we fix this? Many would think of more regular services on the ticket machines, but almost certainly the rail company has outsourced this task and the service levels are now based on cost savings and not customer service - see "outsourced luggage handling". Some might look to the technology answer and hook the machines up to credit card services. My thought was to add the option which said "Exact Change Only or Give us a Tip". This way I had a choice to forgo my change in order to make the train arriving in 3 minutes and the rail company makes a 10% premium. If anyone was worried about their change they could always queue up at the window and catch the next train or the one after that depending on the queue.

Well that morning they had come up with a different answer. I am not sure whether it was an intentional fix to the problem of ticket machines running out of change or just a happy coincidence.

That morning I didn't have to worry about my change as they had put the ticket price up to $20!

And yes I caught the train that was arriving in 3 minutes.

Wisdom of Crowds exercise with our Fund Raiser

2008-02-17T01:40:00.000-08:00

Ok, ok, before you read this and say this guy needs to get a life, I already know.

We had a fund rasier at work were people had to guess the number of candies in a jar. After it was over, just like in James Surowiecki's book the "Wisdom of Crowds", I took all the guesses and did some analysis. The results;

total number of estimations 104 (so it wasn't a big fund raiser)
the correct number 567
the average of all estimations (the crowds estimate) 515
number of people better than the crowd 12
number of people worse than the crowd 92

The crowd was better than 88% of all the estimates.

Travel Post 1 - It's hard getting it right end to end

2008-01-01T09:57:00.000-08:00

I am currently travelling on a family holiday doing an around the world trip. On the first leg we left Australia travelling to Paris via Singapore. After going through customs I bought a nice bottle of red wine for a friend we were catching up with for dinner. I bought this after customs because as you probably know you can only bring 100ml of liquid with you. As I was only transiting in Singapore and not going through customs and back again I figured it would be fine.

Unfortunately this wasn't the case. Going to the boarding gate at Singapore we had to go through another metal detector and at this point they took the bottle off me. Apprently you can buy duty free drink at Singapore airport and they put it into a sealed plastic bag but because our plastic bag wasn't selaed we had to hand it in. The bottle itself was sealed but somehow a sealed plastic bag was considered the level of protection required.

It is still early in the days of this liquid restrictions on flights and I think over time more reasonable rules will apply but for now there is no end to end thinking. For example Singapore do not trust the Australian process to make sure the bottle of wine was brought onto the plane after customers. And Australia hasn't checked the requirements of travellers going through other airports so that they would also provide a sealed plastic bag.

Then again it is hard enough getting end to end processes right within a single compnay let alone across multiple countries.

Next time I won't be buying any more wine in duty free!

Wirearchy, an antidote to many management myths

2007-11-10T23:05:00.000-08:00

In an interview with Jon Husband, a techno-anthropologist and strategy and organizational change consultant, he describes the growing phenomena of the wirearchy.

"Husband defines wirearchy as 'a dynamic two-way flow of power and authority based on knowledge, trust and credibility, which is enabled by interconnected people and technology'. A wirearchy isn't a technology or a product. You can't buy it off the shelf. In corporations, wirearchies evolve as company executives, employees, consultants, suppliers and clients, connected by the Internet, freely share information and opinions using a variety of tools from simple email to blogs or wikis."

In the interview he goes on to say;

"People will spontaneously organise for their mutual benefit or a specific purpose, and they'll route around the system if the system doesn't let them do it inside he structure it provides."

This is along the lines that I was wondering in the post "maybe why computer implementations usually fail". If people "route around the system if the system doesn't let them do it inside" then when it comes to implementing a new computer system do we do it the formal system or the way people actually work?

Shocks like "Sub Prime" do happen and how to be ready for them

2007-11-02T16:48:00.000-07:00

Back in April I wrote about Citigroup's announcement of laying off 17,000 people, "Are Citigroup displaying the Efficiency Myth". Charles Prince the CEO said the company was going to be more efficient and more tightly managed company.

With Citigroup's share price dropping over 6% and Charles Prince under threat you would be right in questioning these predictions. But we might claim that it isn't Charles Prince's fault, instead the fault of the sub prime mortgage market fall out? In an interesting article by David Hirst, "Adventures of a Vulture Capitalists, Selling Short on Citi" he explains how he predicted the sub prime market collapse and singled out Citigroup as one of two companies to short. Hirst also lays out the fact that with these large financial companies relying heavily on their "models" to ply their trade. It has become "model" versus "model" instead of "model" versus "market". That is, the reality of what was happening in the real world has been lost within the virtual world of financiers playing with each other.

The fallout has already claimed the CEO of Merrill Lynch, Stanley O'Neal, described in one article as someone who has "never gone out of his way to win friends. Just six months after he completed his meteoric rise to the top of Merrill Lynch he ousted two of the broker's most senior executives – including his right-hand man. His brutal cost-cutting regime has seen tens of thousands of jobs axed all over the world." Sounds familiar!

What is happening here is that these CEOs and many more like them are falling into the trap of the efficiency myth, the myth of control and trying to achieve the mythical benefits of shared services. The impact of actions which centralise control and create shared services structures is to remove decision making from the people interacting with the real world. When you centralise decision making in this way it is impossible to handle the volume of all the decisions therefore you have to create rules so that they can be processed quickly. These rules become models under which the company operates. (I know Hirst meant financial models not operating models) As time goes by the world changes and adapts much faster than the internal models of how a company operates. Getting out of sync with the real world eventually catches up with you and artificial attempts to stem the change end up in even bigger disasters. Hirst's refers to a secret government group called the Plunge Protection Team that tries to prop the markets up by artificial means, without success. There is a blog called Plungeprotectionteam.

These centralising actions are like removing the feeling from a person's hands; as the cup you are holding gets hotter you are powerless to let go, you are waiting for the memo from headquarters telling you to put the cup down, meanwhile the pain intensifies. It is also like disrupting the connections between the eyes, ears, nose and the brain. You can see, hear and smell the change coming but trying to warn the central brain is slow, disconnected and sometimes fraught with danger because you are accused of being a maverick or at least not a team player.

If a financial reporter in David Hirst can see the train wreck coming from half way around the world why couldn't Stanley O'Neal or Charles Prince? What are CEOs doing to lead an organization that has every nerve ending tingling and communicating when the slightest hint of change occurs. Who do they have as receptors of that information helping the people at the extremities share information and constantly adapt to the change? The fact that we end up with deaf, dumb, blind and numb organizations is why we never see, or react in time to, a shock such as the sub prime meltdown coming.

What if there was one financial institute that did operate in a decentralized, highly connected, locally empowered way? What would their returns be like? Consistently better than their competitors I bet. Of course the CEO of that company would have to convince their shareholders that the short term profits Merrill Lynch and Citigroup chased in the sub prime market were not real and not sustainable. Hopefully the shareholders would listen.

Cash Conversion Efficiency - a great outcome measure

2007-10-28T03:46:00.000-07:00

A good article in CFO.com on the 2007 Cash Masters Scoreboard titled "Go with the Flow" talks about the rate at which companies can turn sales into revenue.

Why this is important is because the effectiveness of your end to end processes (order processing, manufacturing, delivery, billing, etc) can be measured by how efficient you convert sales into cash. If you read the post the efficiency myth the measure of efficiency is "Actual Effectiveness" divided by "Ideal Effectiveness". Applying this to converting sales into cash, think about the ideal amount of time we should be able to convert sales into cash. Let's say;

one week for order processing,
two weeks for manufacturing and delivery
and a final week for invoicing,

four weeks in total.

If we have 30 day terms we ideally should be able to convert sales to cash in about 8 weeks.

If this in reality is 16 weeks our efficiency is 50%, 8 weeks divided by 16 weeks. Efficiency is a measure of how effective our processes are.

The 2007 Cash Masters Survey of 1,000 companies in Europe used a metric called "Cash Conversion Efficiency which was calculated as cash flow from operations divided by sales. The amount of cash that comes out divided by the size of the sales contracts.

The good thing about this type of measure is that it is outcome based. How often do you get into finger pointing meetings where people say it is not our department's fault we are hitting our targets. And when you look across all the departments that make up the end to end value stream you notice that everyone is hitting "their" target, but you are still running at an efficiency level of half what it should be. The focus switches from who is right and who is wrong to how do we deliver a better outcome. This helps internal silos come down as people can make decisions around achieving the outcome instead of defending their turf.

This is noted in one of the better performers Telenor, a Norwegian Telecom, with the interesting observation that they are reversing the problems of the myth of control and the internal silo problems of the mythical benefits of shared services in the following example from the article;

"And rather than launching cost cuts dictated by rigid financial timetables, employees across all functions are asked to manage a "delicate balance" of short-term financial targets and long-term customer relationship goals. These shared, wide-ranging incentives encourage "a common understanding of each other's jobs," says Westlie. "Everyone contributes to decisions, and there is a lot of local autonomy."
Another important step in "tearing down silos," he explains, is to abandon the budgeting process. Next year Telenor will introduce a rolling five-quarter forecast covering both financial and non-financial metrics updated each quarter, in addition to a three-year outlook that's revised annually. Doing so, he predicts, will bolster the company's agility and shorten time-to-market. By "going dynamic" — the term used around Telenor — employees will be able to react faster to changes in the market, both in terms of chasing new opportunities and adjusting spending and other costs in response to business conditions."

How good is your cash conversion efficiency?

Maybe why computer implementations usually fail

2007-10-15T03:35:00.000-07:00

When unions want to put pressure on management they say that they are going to "work to rule". They are going to follow the processes that the managers have put in place, and this is a threat!

This got me thinking about why so many computer application implementation fail to deliver the benefits that they promise.

As stated above "working to rule" is a threat to slow and disrupt company operations but guess what happens when we implement a new computer system? We hard code these same rules into our new computer system.

Now if companies operate better by people working around the "work to rule" using their personal networks to make things happen what happens when these rules become hard coded into how people operate? Things do not work as effectively.

What we are now seeing is another layer of computer applications that sit on top of these hard coded systems. This layer starts as a spreadsheet enabling someone to produce their own ad hoc program to do their work. Maybe we witness a smart new hire setting up an Access database system. Before long a countless number of little programs and systems are in place to work around the "work to rule" hard coded computer application.

Try as they might companies can't stamp these systems out. And just as well because if they did they would probably come to a screaming halt!

Of course the managers could take a look at how people really operate and put in systems that help them as opposed to hinder them. To do this they would need to understand the Efficiency Myth and to operate in way as not to fall fowl of the Myth of Control.

Just a thought.

Free Markets, Female Family Planning Rights and BP Oil

2007-10-12T22:39:00.000-07:00

Driving home from the airport last night I was listening to a discussion on the radio about the issues of family planning in underdeveloped countries. The issue centered around women in poor countries having six, seven or more children even when they didn't want to. But without proper family planning education or methods they were caught in a reproduction trap. Experts from around the globe were talking about the merits of different recommendations. One suggestion was whether it should just be left to a free market environment and let natural forces play out. The experts didn't agree with this as a stand alone solution but said it was a combination of things. A main theme was that women will decide by themselves to have less children if they are given the necessary education and access to things like the pill and condoms. They don't need to be told to have less children, they need to be helped in the ways of having less children. Collectively they will respond to the environment and decide on how many children they want and should have, in this way a sustainable population level for each village will be achieved. What they were advocating was don't fall the for the myth of control and please provide education and development akin to the sporting team analogy.

Further on in my journey I passed a billboard by BP Oil. The billboard read "In 1998 we said we would reduce our carbon emissions to our 1990 level by 2010, we did it by 2001." Tom Malone in his book, The Future of Work, describes what BP did;

"British Petroleum didn't use the this kind of centralized, hierarchical approach at all [a setting of top down reductions targets for each business unit, with the ensuring bickering of who had a fair target and who didn't]. Instead, it set up an internal market to coordinate the efforts of different business units. Here is how it works: First, managers assign targets to business units by handing out a certain number of "permits". Each permit gives the holder the right to make one ton of carbon dioxide equivalent emissions a year. Then, the business units buy and sell permits among themselves, using a specially designed electronic trading system. for instance, if one unit head sees a way to exceed his or her reduction target, the manager could sell the extra permits to other business units having trouble making their targets. In 2001, BP business units traded more than 4.5 million tons of emissions rights using this system, at an average internal price of about $40 per ton.
In this way; all the business unit managers within BP can make their own decisions about the level of emissions reduction that make sense for them. And BP as a whole gains an efficient way of finding the most cost-effective methods of reducing emissions throughout the entire company. The approach has been so successful that by 2001, BP had already met its original goal of reducing emissions by 10 percent - nine years ahead of schedule!"

[Six years later the BP marketing department have realised the PR benefit of this!]

Free markets work but to help them along we need effective trading systems, education and communication. In James Surowiecki's book, "The Wisdom of Crowds" he points out that to harness the wisdom of crowds you need diversity and communication without overt influence. That is you need people who think differently to share their knowledge but without being able to apply external pressure. BP's internal market provided this structure.

But in companies around the world this is a very different approach. More likely decision making is carried out by a non-diverse group of men sitting at the top of a corporation, all coming from similar backgrounds, with the ability to apply external pressure though hierarchical positions. The chances of getting to a target nine years ahead of schedule or determining the right population level for every village in the world with this form of decision making can never be achieved.

In the post "Global Warming, Future Summit and the E-Myth" I talk about who is in the best position to solve the worldwide global warming problem and the conclusion I draw is that it is not the politicians for the same reasons as outlined above.

Does your company have an internal market structure in action? It would be great to hear of other examples.