♟️Strategic Management: Operations (Just the Quotes)

"Strategy, or the art of properly directing masses upon the theater of war, either for defense or for invasion. […] Strategy is the art of making war upon the map, and comprehends the whole theater of operations. Grand Tactics is the art of posting troops upon the battle-field according to the accidents of the ground, of bringing them into action, and the art of fighting upon the ground, in contradistinction to planning upon a map. Its operations may extend over a field of ten or twelve miles in extent. Logistics comprises the means and arrangements which work out the plans of strategy and tactics. Strategy decides where to act; logistics brings the troops to this point; grand tactics decides the manner of execution and the employment of the troops." (Antoine-Henri Jomini, "The Art of War", 1838)

"A policy therefore might be likened to strategy, the broad, overall, long term conception which gives direction and purpose to the tactics of immediately daily operations and decisions." (Lawrence K. Frank, "National Policy for the Family", 1948)

"Essential to organization planning, then, is the search for an ideal form of organization to reflect the basic goals of the enterprise. This entails not only charting the main lines of organization and reflecting the organizational philosophy of the enterprise leaders (e.g., shall authority be as centralized as possible, or should the company try to break its operations down into semiautonomous product or territorial divisions?), but also a sketching out of authority relationships throughout the structure." (Harold Koontz & Cyril O Donnell, "Principles of Management", 1955)

"The concern of OR with finding an optimum decision, policy, or design is one of its essential characteristics. It does not seek merely to define a better solution to a problem than the one in use; it seeks the best solution... [It] can be characterized as the application of scientific methods, techniques, and tools to problems involving the operations of systems so as to provide those in control of the operations with optimum solutions to the problems." (C West Churchman et al, "Introduction to Operations Research", 1957)

"The essential task of management is to arrange organizational conditions and methods of operations so that people can achieve their own goals best by directing their own efforts toward organizational objectives." (Douglas McGregor, "The Human Side of Enterprise", 1960)

"Now we are looking for another basic outlook on the world - the world as organization. Such a conception - if it can be substantiated - would indeed change the basic categories upon which scientific thought rests, and profoundly influence practical attitudes. This trend is marked by the emergence of a bundle of new disciplines such as cybernetics, information theory, general system theory, theories of games, of decisions, of queuing and others; in practical applications, systems analysis, systems engineering, operations research, etc. They are different in basic assumptions, mathematical techniques and aims, and they are often unsatisfactory and sometimes contradictory. They agree, however, in being concerned, in one way or another, with ‘systems’, ‘wholes’ or ‘organizations’; and in their totality, they herald a new approach." (Ludwig von Bertalanffy, "General System Theory", 1968)

"The dogma of delegation is simple - the Sixth Truth of Management again: either the delegatee is capable of running the operation successfully by himself or he isn't. This handy formula relieves the top executive of any responsibility except that of finding, supervising, and (at the appropriate time) moving the men who are doing all the work. He Can then truly manage by exception: he does not get worked up over operations that are going well, but concentrates on the plague spots, where everything, including the management, is going badly." (Robert Heller, "The Naked Manager: Games Executives Play", 1972)

"Perhaps the fault [for the poor implementation record for models] lies in the origins of managerial model-making - the translation of methods and principles of the physical sciences into wartime operations research. [...] If hypothesis, data, and analysis lead to proof and new knowledge in science, shouldn’t similar processes lead to change in organizations? The answer is obvious-NO! Organizational changes (or decisions or policies) do not instantly pow from evidence, deductive logic, and mathematical optimization." (Edward B Roberts, "Interface", 1977)

"Management science [operations research] also involves the philosophy of approaching a problem in a logical manner (i.e., a scientific approach). The logical, consistent, and systematic approach to problem solving can be as useful (and valuable) as the knowledge of the mechanics of the mathematical techniques themselves." (Bernard W. Taylor III, "Introduction to Management Science, 1986)

"Strategy means abstract thinking and planning, as opposed to tactics, which are the individual operations used to implement strategy. Tactics are specific; strategy is general. Tactics tend to be immediate, strategy long-term." (Bruce Pandolfini, "Weapons of Chess: An omnibus of chess strategy", 1989)

"At the heart of reengineering is the notion of discontinuous thinking - of recognizing and breaking away from the outdated rules and fundamental assumptions that underlie operations. Unless we change these rules, we are merely rearranging the deck chairs on the Titanic. We cannot achieve breakthroughs in performance by cutting fat or automating existing processes. Rather, we must challenge old assumptions and shed the old rules that made the business underperform in the first place." (Michael M Hammer, "Reengineering Work: Don't Automate, Obliterate", Magazine, 1990)

"Even with simple and usable models, most organizations will need to upgrade their analytical skills and literacy. Managers must come to view analytics as central to solving problems and identifying opportunities - to make it part of the fabric of daily operations." (Dominic Barton & David Court, "Making Advanced Analytics Work for You", 2012)

"DevOps recognizes the importance of culture. The acronym CAMS (culture, automation, measurement, and sharing) is used to encapsulate its key themes. Culture is acknowledged as all important in making development and IT operations work together effectively. But what is culture in this context? It is not so much about an informal dress code, flexible hours, or a free in-house cafeteria as it is about how decisions are taken, norms of behavior, protocols of communication, and the ways of navigating hierarchy and bureaucracy to get things done." (Sriram Narayan, "Agile IT Organization Design: For Digital Transformation and Continuous Delivery", 2015)

𖣯Strategic Management: Strategic Perspectives (Part II: The Elephant in the Room)

Strategic Management Perspectives

There’s an ancient parable about several blind people who touch a shape they had never met before, an elephant, and try to identify what it is. The elephant is big, more than each person can sense through direct experience, and people’s experiences don’t correlate to the degree that they don’t trust each other, the situation escalating upon case. The moral of the parable is that we tend to claim (absolute) truths based on limited, subjective experience [1], and this can easily happen in business scenarios in which each of us has a limited view of the challenges we are facing individually and as a collective. 

The situation from the parable can be met in business scenarios, when we try to make sense of the challenges we are faced with, and we get only a limited perspective from the whole picture. Only open dialog and working together can get us closer to the solution! Even then, the accurate depiction might not be in sight, and we need to extrapolate the unknown further.  

A third-party consultant with experience might be the right answer, at least in theory, though experience and solutions are relative. The consultant might lead us in a direction, though from this to finding the answer can be a long way that requires experimentation, a mix of tactics and strategies that change over time, more sense-making and more challenges lying ahead. 

We would like a clear answer and a set of steps that lead us to the solution, though the answer is as usual, it depends! It depends on the various forces/drivers that have the biggest impact on the organization, on the context, on the organization’s goals, on the resources available directly or indirectly, on people’s capabilities, the occurrences of external factors, etc. 

In many situations the smartest thing to do is to gather information, respectively perspectives from all the parties. Tools like brainstorming, SWOT/PESTLE analysis or scenario planning can help in sense-making to identify the overall picture and where the gravity point lies. For some organizations the solution will be probably a new ERP system, or the redesign of some processes, introduction of additional systems to track quality, flow of material, etc. 

A new ERP system will not necessarily solve all the issues (even if that’s the expectation), and some organizations just try to design the old processes into a new context. Process redesign in some areas can be upon case a better approach, at least as primary measure. Otherwise, general initiatives focused on quality, data/information management, customer/vendor management, integrations, and the list remains open, can provide the binder/vehicle an organization needs to overcome the current challenges.

Conversely, if the ERP or other strategical systems are 10-20 years old, then there’s indeed an elephant in the room! Moreover, the elephant might be bigger than we can chew, and other challenges might lurk in its shadow(s). Everything is a matter of perspective with no apparent unique answer. Thus, finding an acceptable solution might lurk in the shadow of the broader perspective, in the cumulated knowledge of the people experiencing the issues, respectively in some external guidance. Unfortunately, the guides can be as blind as we are, making limited or no important impact. 

Sometimes, all it’s needed is a leap of faith corroborated with a set of tactics or strategies kept continuously in check, redirected as they seem fit based on the knowledge accumulated and the challenges ahead. It helps to be aware of how others approached the same issues. Unfortunately, there’s no answer that works for all! In this lies the challenge, in identifying what works and makes sense for us!

Previous Post <<||>> Next Post

Resources:
[1] Wikipedia (2024) Blind men and an elephant [link]

𖣯Strategic Management: Inflection Points and the Data Mesh (Quote of the Day)

Strategic Management Series

"Data mesh is what comes after an inflection point, shifting our approach, attitude, and technology toward data. Mathematically, an inflection point is a magic moment at which a curve stops bending one way and starts curving in the other direction. It’s a point that the old picture dissolves, giving way to a new one. [...] The impacts affect business agility, the ability to get value from data, and resilience to change. In the center is the inflection point, where we have a choice to make: to continue with our existing approach and, at best, reach a plateau of impact or take the data mesh approach with the promise of reaching new heights." [1]

I tried to understand the "metaphor" behind the quote. As the author through another quote pinpoints, the metaphor is borrowed from Andrew Groove:

"An inflection point occurs where the old strategic picture dissolves and gives way to the new, allowing the business to ascend to new heights. However, if you don’t navigate your way through an inflection point, you go through a peak and after the peak the business declines. [...] Put another way, a strategic inflection point is when the balance of forces shifts from the old structure, from the old ways of doing business and the old ways of competing, to the new. Before" [2]

The second part of the quote clarifies the role of the inflection point - the shift from a structure, respectively organization or system to a new one. The inflection point is not when we take a decision, but when the decision we took, and the impact shifts the balance. If the data mesh comes after the inflection point (see A), then there must be some kind of causality that converges uniquely toward the data mesh, which is questionable, if not illogical. A data mesh eventually makes sense after organizations reached a certain scale and thus is likely improbable to be adopted by small to medium businesses. Even for large organizations the data mesh may not be a viable solution if it doesn't have a proven record of success. 

I could understand if the author would have said that the data mesh will lead to an inflection point after its adoption, as is the case of transformative/disruptive technologies. Unfortunately, the tracking record of BI and Data Analytics projects doesn't give many hopes for such a magical moment to happen. Probably, becoming a data-driven organization could have such an effect, though for many organizations the effects are still far from expectations. 

There's another point to consider. A curve with inflection points can contain up and down concavities (see B) or there can be multiple curves passing through an inflection point (see C) and the continuation can be on any of the curves.

Examples of Inflection Points [3]

The change can be fast or slow (see D), and in the latter it may take a long time for change to be perceived. Also [2] notes that the perception that something changed can happen in stages. Moreover, the inflection point can be only local and doesn't describe the future evolution of the curve, which to say that the curve can change the trajectory shortly after that. It happens in business processes and policy implementations that after a change was made in extremis to alleviate an issue a slight improvement is recognized after which the performance decays sharply. It's the case of situations in which the symptoms and not the root causes were addressed. 

More appropriate to describe the change would be a tipping point, which can be defined as a critical threshold beyond which a system (the organization) reorganizes/changes, often abruptly and/or irreversible.

Previous Post <<||>> Next Post

References:
[1] Zhamak Dehghani (2021) Data Mesh: Delivering Data-Driven Value at Scale (book review)
[2] Andrew S Grove (1988) "Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every Company and Career"
[3] SQL Troubles (2024) R Language: Drawing Function Plots (Part II - Basic Curves & Inflection Points) (link)

♟️Strategic Management: Strategy [Notes]

Disclaimer: This is work in progress intended to consolidate information from various sources. 
Last updated: 18-Mar-2024

Strategy

• {definition} "the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals" [4]
• {goal} bring all tools and insights together to create an integrative narrative about what the  organization should do moving forward [1]
• a good strategy emerges out of the values, opportunities and capabilities of the organization [1]
• {characteristic} robust
• {characteristic} flexible
• {characteristic} needs to embrace the uncertainty and complexity of the world
• {characteristic} fact-based and informed by research and analytics
• {characteristic} testable
• {concept} strategy analysis 
• {definition} the assessment of an organization's current competitive position and the identification of future valuable competitive positions and how the firm plans to achieve them [1]
• done from a general perspective
• in terms of different functional elements within the organization [1]
• in terms of being integrated across different concepts and tools and frameworks [1]
• a good strategic analysis integrates various tools and frameworks that are in our strategist toolkit [1]
• approachable in terms of 
• dynamics
• complexity
• competition
• {step} identify the mission and values of the organization
• critical for understanding what the firm values and how it may influence where opportunities they look for and what actions they might be willing to take
• {step} analyze the competitive environment
• looking at what opportunities the environment provides, how are competitors likely to react
• {step} analyze competitive positions
• think about  own capabilities are and how they might relate to the opportunities that are available
• {step} analyze and recommend strategic actions 
• actions for future improvement
• {question} how do we create more value?
• {question} how can we improve our current competitive position?
• {question} how can we in essence, create more value in our competitive environment
• alternatives
• scaling the business
• entering new markets
• innovating
• acquiring a competitor/another player within a market segment of interest
• recommendations
• {question} what do we recommend doing going forward?
• {question} what are the underlying assumptions of these recommendations?
• {question} do they meet our tests that we might have for providing value?
• move from analysis to action
• actions come from asking a series of questions about what opportunities, what actions can we take moving forward
• {step} strategy formulation
• {step} strategy implementation
• {tool} competitor analysis
• {question} what market is the firm in, and who are the players in these markets? 
• {tool} environmental analysis
• {benefit} provides a picture on the broader competitive environment
• {question} what are the major trends impacting this industry?
• {question} are there changes in the sociopolitical environment that are going to have important implications for this industry?
• {question} is this an attractive market or the barrier to competition?
• {tool} five forces analysis
• {benefit} provides an overview of the market structure/industry structure
• {benefit} helps understand the nature of the competitive game that we are playing as we then devise future strategies [1]
• provides a dynamic perspective in our understanding of a competitive market
• {question} how's the competitive structure in a market likely to evolve?
• {tool} competitive lifestyle analysis
• {tool} SWOT (strengths, weaknesses, opportunities, threats) analysis
• {tool} stakeholder analysis
• {benefit} valuable in trying to understand those mission and values and then the others expectations of a firm
• {tool} capabilities analysis
• {question} what are the firm's unique resources and capabilities?
• {question} how sustainable as any advantage that these assets provide?
• {tool} portfolio planning matrix
• {benefit} helps us now understand how they might leverage these assets across markets, so as to improve their position in any given market here
• {question} how should we position ourselves in the market relative to our rivals?
• {tool} capability analysis
• {benefit} understand what the firm does well and see what opportunities they might ultimately want to attack and go after in terms of these valuable competitive positions
• via Strategy Maps and Portfolio Planning matrices
• {tool} hypothesis testing
• {question} how competitors are likely to react to these actions?
• {question} does it make sense in the future worlds we envision?
• [game theory] pay off matrices can be useful to understand what actions taken by various competitors within an industry
• {tool} scenario planning
• {benefit} helps us envision future scenarios and then work back to understand what are the actions we might need to take in those various scenarios if they play out.
• {question} does it provide strategic flexibility?
• {tool} real options analysis 
• highlights the desire to have strategic flexibility or at least the value of strategic flexibility provides
• {tool} acquisition analysis
• {benefit} helps understand the value of certain action versus others
• {benefit} useful as an understanding of opportunity costs for other strategic investments one might make
• focused on mergers and acquisitions
• {tool} If-Then thinking
• sequential in nature
• different from causal logic
• commonly used in network diagrams, flow charts, Gannt charts, and computer programming
• {tool} Balanced Scorecard
• {definition} a framework to look at the strategy used for value creation from four different perspectives [5]
• {perspective} financial 
• {scope} the strategy for growth, profitability, and risk viewed from the perspective of the shareholder [5]
• {question} what are the financial objectives for growth and productivity? [5]
• {question} what are the major sources of growth? [5]
• {question} If we succeed, how will we look to our shareholders? [5]
• {perspective} customer
• {scope} the strategy for creating value and differentiation from the perspective of the customer [5]
• {question} who are the target customers that will generate revenue growth and a more profitable mix of products and services? [5]
• {question} what are their objectives, and how do we measure success with them? [5]
• {perspective} internal business processes
• {scope} the strategic priorities for various business processes, which create customer and shareholder satisfaction [5] 
• {perspective} learning and growth 
• {scope} defines the skills, technologies, and corporate culture needed to support the strategy. 
• enable a company to align its human resources and IT with its strategy
• {benefit} enables the strategic hypotheses to be described as a set of cause-and-effect relationships that are explicit and testable [5]
• require identifying the activities that are the drivers (or lead indicators) of the desired outcomes (lag indicators)  [5]
• everyone in the organization must clearly understand the underlying hypotheses, to align resources with the hypotheses, to test the hypotheses continually, and to adapt as required in real time [5]
• {tool} strategy map
• {definition} a visual representation of a company’s critical objectives and the crucial relationships that drive organizational performance [2]
• shows the cause-and effect links by which specific improvements create desired outcomes [2]
• {benefit} shows how an organization will convert its initiatives and resources–including intangible assets such as corporate culture and employee knowledge into tangible outcomes [2]
• {component} mission
• {question} why we exist?
• {component} core values
• {question} what we believe in?
• ⇐ mission and the core values  remain fairly stable over time [5]
• {component} vision
• {question} what we want to be?
• paints a picture of the future that clarifies the direction of the organization [5]
• helps-individuals to understand why and how they should support the organization [5]

Previous Post <<||>> Next Post

References:
[1] University of Virginia (2022) Strategic Planning and Execution (MOOC, Coursera)
[2] Robert S Kaplan & David P Norton (2000) Having Trouble with Your Strategy? Then Map It (link)
[3] Harold Kerzner (2001) Strategic planning for project management using a project management maturity model
[4] Alfred D Chandler Jr. (1962) "Strategy and Structure"
[5] Robert S Kaplan & David P Norton (2000) The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment

𖣯Strategic Management: The Impact of New Technologies (Part III: Checking the Vital Signs)

An organization which went through a major change, like the replacement of a strategic system (e.g. ERP/BI implementations), needs to go through a period of attentive supervision to address the inherent issues that ideally need to be handled as they arise, to minimize their future effects. Some organizations might even go through a convalescence period, which risks to prolong itself if the appropriate remedies aren’t found. Therefore, one needs an entity, who/which has the skills to recognize the symptoms, understand what’s happening and why, respectively of identifying the appropriate actions.

Given technologies’ multi-layered complexity and the volume of knowledge for understanding them, the role of the doctor can be seldom taken by one person. Moreover, the patient is an organization, each person in the organization having usually local knowledge about the patient. The needed knowledge is dispersed trough the organization, and one needs to tap into that knowledge, identify the people close to technologies and business area, respectively allow such people exchange information on a regular basis.

The people who should know the best the organization are in theory the management, however they are usually too far away from technologies and often too busy with management topics. IT professionals are close to technologies, though sometimes too far away from the patient. The users have a too narrow overview, while from logistical and economic reasons the number of people involved should be kept to a minimum. A compromise is to designate one person from each business area who works with any of the strategic systems, and assure that they have the technical and business knowledge required. It’s nothing but the key-user concept, though for it to work the key-users need not only knowledge but also the empowerment to act when the symptoms appear.

Big organizations have also a product owner for each application who supervises the application through its entire lifecycle, and who needs to coordinate with the IT, business and service providers. This is probably a good idea in order to assure that the ROI is reached over time, respectively that the needs of the system are considered within the IT operation context. In small organizations, the role can be taken by a technical or a business resource with deeper skills then the average user, usually a key-user. However, unless joined with the key-user role, the product owner’s focus will be the product and seldom the business themes.

The issues that need to be overcome after major changes are usually cross-functional, being imperative for people to work together and find solutions. Unfortunately, it’s also in human nature to wait until the issues are big enough to get the proper attention. Unless the key-users have the time allocated already for such topics, the issues will be lost in the heap of operational and tactical activities. This time must be allocated for all key-users and the technical resources needed to support them.

Some organizations build temporary working parties (groups of experts working together to achieve specific goals) or similar groups. However, the statute of such group needs to be permanent if the organization wants to continuously have its health in check, to build the needed expertize and awareness about occurred or potential issues. Centers of excellence/expertize (CoE) or competency centers (CC) are such working groups with permanent statute, having defined roles, responsibilities, and processes for supporting and promoting the effective use of technologies within the organization, respectively of monitoring and systematically addressing the risks and opportunities associated with them.

There’s also the null hypothesis, doing nothing, relying solely on employees’ professionalism, though without defined responsibility, accountability and empowerment, it can get messy.

Previous Post <<||>> Next Post

𖣯Strategic Management: The Impact of New Technologies (Part II - The Technology-oriented Patient)

Looking at the way data, information and knowledge flow through an organization, with a little imagination one can see the resemblance between an organization and the human body, in which the networks created by the respective flows spread through organization as nervous, circulatory or lymphatic braids do, each with its own role in the good functioning of the organization. Each technology adopted by an organization taps into these flows creating a structure that can be compared with the nerve plexus, as the various flows intersect in such points creating an agglomeration of nerves and braids.

The size of each plexus can be considered as proportional to the importance of the technology in respect to the overall structure. Strategic technologies like ERP, BI or planning systems, given their importance (gravity), resemble with the organs from the human body, with complex networks of braids in their vicinity. Maybe the metaphor is too far-off, though it allows stressing the importance of each technology in respect to its role and the good functioning of the organization. Moreover, each such structure functions as pressure points that can in extremis block any of the flows considered, a long-term block having important effects.

The human organism is a marvelous piece of work reflecting the grand design, however in time, especially when neglected or driven by external agents, diseases can clutch around any of the parts of the human body, with all the consequences deriving from this. On the other side, an organization is a hand-made structure found in continuous expansion as new technologies or resources are added. Even if the technologies are at peripheral side of the system, their good or bad functioning can have a ripple effect trough the various networks.

Replacing any of the above-mentioned strategic systems can be compared with the replacement of an organ in the human body, having a high degree of failure compared with other operations, being complex in nature, the organism needing long periods to recover, while in extreme situations the convalescence prolongs till the end. Fortunately, organizations seem to be more resilient to such operations, though that’s not necessarily a rule. Sometimes all it takes is just a small mistake for making the operation fail.

The general feeling is that ERP and BI implementations are taken too lightly by management, employees and implementers. During the replacement operation one must make sure not only that the organ fits and functions as expected, but also that the vital networks regained their vitality and function as expected, and the latter is a process that spans over the years to come. One needs to check the important (health) signs regularly and take the appropriate countermeasures. There must be an entity having the role of the doctor, who/which has the skills to address adequately the issues.

Moreover, when the physical structure of an organization is affected, a series of micro-operations might be needed to address the deformities. Unfortunately, these areas are seldom seen in time, and can require a sustained effort for fixing, while a total reconstruction might apply. One works also with an amorphous and ever-changing structure that require many attempts until a remedy is found, if a remedy is possible after all.

Even if such operations are pretty well documented, often what organizations lack are the skilled resources needed during and post-implementation, resources that must know as well the patient, and ideally its historical and further health preconditions. Each patient is different and quite often needs its own treatment/medication. With such changes, the organization lands itself on a discovery journey in which the appropriate path can easily deviate from the well-trodden paths.

Previous Post <<||>> Next Post

𖣯Strategic Management: The Impact of New Technologies (Part I: A Nail Keeps the Shoe)

Probably one of the most misunderstood aspects for businesses is the implications the adoption of a new technology have in terms of effort, resources, infrastructure and changes, these considered before, during and post-implementation. Unfortunately, getting a new BI tool or ERP system is not like buying a new car, even if customers’ desires might revolve around such expectations. After all, the customer has been using a BI tool or ERP system for ages, the employees should be able to do the same job as before, right?

In theory adopting a new system is supposed to bring organizations a competitive advantage or other advantages - allow them reduce costs, improve their agility and decision-making, etc. However, the advantages brought by new technologies remain only as potentials unless their capabilities aren’t harnessed adequately. Keeping the car metaphor, besides looking good in the car, having a better mileage or having x years of service, buying a highly technologically-advanced car more likely will bring little benefit for the customer unless he needs, is able to use, and uses the additional features.

Both types of systems mentioned above can be quite expensive when considering the benefits associated with them. Therefore, looking at the features and the further requirements is critical for better understanding the fit. In the end one doesn’t need to buy a luxurious or sport car when one just needs to move from point A to B on small distances. In some occasions a bike or a rental car might do as well. Moreover, besides the acquisition costs, the additional features might involve considerable investments as long the warranty is broken and something needs to be fixed. In extremis, after a few years it might be even cheaper to 'replace' the whole car. Unfortunately, one can’t change systems yet, as if they were cars.

Implementing a new BI tool can take a few weeks if it doesn’t involve architecture changes within the BI infrastructure. Otherwise replacing a BI infrastructure can take from months to one year until having a stable environment. Similarly, an ERP solution can take from six months to years to implement and typically this has impact also on the BI infrastructure. Moreover, the implementation is only the top of the iceberg as further optimizations and changes are needed. It can take even more time until seeing the benefits for the investment.

A new technology can easily have the impact of dominoes within the organization. This effect is best reflected in sayings of the type: 'the wise tell us that a nail keeps a shoe, a shoe a horse, a horse a man, a man a castle, that can fight' and which reflect the impact tools technologies have within organizations when regarded within the broader context. Buying a big car, might involve extending the garage or eventually buying a new house with a bigger garage, or of replacing other devices just for the sake of using them with the new car. Even if not always perceptible, such dependencies are there, and even if the further investments might be acceptable and make sense, the implications can be a bigger shoe that one can wear. Then, the reversed saying can hold: 'for want of a nail, the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost'.

For IT technologies the impact is multidimensional as the change of a technology has impact on the IT infrastructure, on the processes associated with them, on the resources required and their skillset, respectively on the various types of flows (data, information, knowledge, materials, money).

Previous Post <<||>> Next Post

🤝Governance: Responsibility (Just the Quotes)

"Weak character coupled with honored place, meager knowledge with large plans, limited powers with heavy responsibility, will seldom escape disaster." ("I Ching" ["Book of Changes"], cca. 600 BC)

"The only way for a large organization to function is to decentralize, to delegate real authority and responsibility to the man on the job. But be certain you have the right man on the job." (Robert E Wood, 1951)

"[...] authority - the right by which superiors are able to require conformity of subordinates to decisions - is the basis for responsibility and the force that binds organization together. The process of organizing encompasses grouping of activities for purposes of management and specification of authority relationships between superiors and subordinates and horizontally between managers. Consequently, authority and responsibility relationships come into being in all associative undertakings where the superior-subordinate link exists. It is these relationships that create the basic character of the managerial job." (Harold Koontz & Cyril O Donnell, "Principles of Management", 1955)

"[...] authority for given tasks is limited to that for which an individual may properly held responsible." (Harold Koontz & Cyril O Donnell, "Principles of Management", 1955)

"If charts do not reflect actual organization and if the organization is intended to be as charted, it is the job of effective management to see that actual organization conforms with that desired. Organization charts cannot supplant good organizing, nor can a chart take the place of spelling out authority relationships clearly and completely, of outlining duties of managers and their subordinates, and of defining responsibilities." (Harold Koontz & Cyril O Donnell, "Principles of Management", 1955)

"Responsibility cannot be delegated. While a manager may delegate to a subordinate authority to accomplish a service and the subordinate in turn delegate a portion of the authority received, none of these superiors delegates any of his responsibility. Responsibility, being an obligation to perform, is owed to one's superior, and no subordinate reduces his responsibility by assigning the duty to another. Authority may be delegated, but responsibility is created by the subordinate's acceptance of his assignment." (Harold Koontz & Cyril O Donnell, "Principles of Management", 1955)

"Viewed internally with respect to the enterprise, responsibility may be defined as the obligation of a subordinate, to whom a superior has assigned a duty, to perform the service required. The essence of responsibility is, then, obligation. It has no meaning except as it is applied to a person." (Harold Koontz & Cyril O Donnell, "Principles of Management", 1955)

"You can delegate authority, but you can never delegate responsibility by delegating a task to someone else. If you picked the right man, fine, but if you picked the wrong man, the responsibility is yours - not his." (Richard E Krafve, The Boston Sunday Globe, 1960)

"Modern organization makes demands on the individual to learn something he has never been able to do before: to use organization intelligently, purposefully, deliberately, responsibly [...] to manage organization [...] to make [...] his job in it serve his ends, his values, his desire to achieve." (Peter F Drucker, The Age of Discontinuity, 1968)

"[Management by objectives is] a process whereby the superior and the subordinate managers of an enterprise jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members." (Robert House, "Administrative Science Quarterly", 1971)

"'Management' means, in the last analysis, the substitution of thought for brawn and muscle, of knowledge for folkways and superstition, and of cooperation for force. It means the substitution of responsibility for obedience to rank, and of authority of performance for authority of rank. (Peter F Drucker, "People and Performance", 1977)

"[...] the first criterion in identifying those people within an organization who have management responsibility is not command over people. It is responsibility for contribution. Function rather than power has to be the distinctive criterion and the organizing principle." (Peter F Drucker, "People and Performance", 1977)

"The productivity of work is not the responsibility of the worker but of the manager." (Peter F Drucker, "Management in Turbulent Times", 1980)

"By assuming sole responsibility for their departments, managers produce the very narrowness and self-interest they deplore in subordinates. When subordinates are relegated to their narrow specialties, they tend to promote their own practical interests, which then forces other subordinates into counter-advocacy. The manager is thereby thrust into the roles of arbitrator, judge, and referee. Not only do priorities become distorted, but decisions become loaded with win/lose dynamics. So, try as the manager might, decisions inevitably lead to disgruntlement and plotting for the next battle." (David L Bradford & Allan R Cohen, "Managing for Excellence", 1984)

"The man who delegates responsibilities for running the company, without knowing the intimate details of what is involved, runs the enormous risk of rendering himself superfluous." (Harold Geneen, "Managing", 1984)

"Leadership is the total effect you have on the people and events around you. This effect is your influence. Effective leading is being consciously responsible for your organizational influence. [...] The essence of leadership is knowing that YOU CAN NEVER NOT LEAD. You lead by acts of commission and acts of omission." (Kenneth Schatz & Linda Schatz, "Managing by Influence", 1986)

"Looking for differences between the more productive and less productive organizations, we found that the most striking difference is the number of people who are involved and feel responsibility for solving problems." (Michael McTague, "Personnel Journal", 1986)

"Management has a responsibility to explain to the employee how the routine job contributes to the business's objectives. If management cannot explain the value of the job, then it should be eliminated and the employee reassigned." (Douglas M Reid, Harvard Business Review, 1986)

"A systematic effort must be made to emphasize the group instead of the individual. [...] Group goals and responsibilities can usually overcome any negative reactions to the individual and enforce a standard of cooperation that is attainable by persuasion or exhortation." (Eugene Raudsepp, MTS Digest, 1987)

"An individual without information cannot take responsibility; an individual who is given information cannot help but take responsibility." (Jan Carlzon, "Moments of Truth", 1987)

"Executives have to start understanding that they have certain legal and ethical responsibilities for information under their control." (Jim Leeke, PC Week, 1987)

"If responsibility - and particularly accountability - is most obviously upwards, moral responsibility also reaches downwards. The commander has a responsibility to those whom he commands. To forget this is to vitiate personal integrity and the ethical validity of the system." (Roger L Shinn, "Military Ethics", 1987)

[...] quality assurance is the job of the managers responsible for the product. A separate group can't 'assure' much if the responsible managers have not done their jobs properly. [...] Managers should be held responsible for quality and not allowed to slough off part of their responsibility to a group whose name sounds right but which cannot be guaranteed quality if the responsible managers have not been able to do so." (Philip W. Metzger, "Managing Programming People", 1987)

"Responsibility is a unique concept [...] You may share it with others, but your portion is not diminished. You may delegate it, but it is still with you. [...] If responsibility is rightfully yours, no evasion, or ignorance or passing the blame can shift the burden to someone else. Unless you can point your finger at the man who is responsible when something goes wrong, then you have never had anyone really responsible." (Hyman G Rickover, "The Rickover Effect", 1992)

"If you treat people as though they are responsible, they tend to behave that way." (James P Lewis, "Project Planning, Scheduling, and Control" 3rd Ed., 2001)

"You can’t delegate responsibility without giving a person authority commensurate with it." (James P Lewis, "Project Planning, Scheduling, and Control" 3rd Ed., 2001)

"What do people do today when they don’t understand 'the system'? They try to assign responsibility to someone to fix the problem, to oversee 'the system', to coordinate and control what is happening. It is time we recognized that 'the system' is how we work together. When we don’t work together effectively putting someone in charge by its very nature often makes things worse, rather than better, because no one person can understand 'the system' well enough to be responsible. We need to learn how to improve the way we work together, to improve 'the system' without putting someone in charge, in order to make things work." (Yaneer Bar-Yam, "Making Things Work: Solving Complex Problems in a Complex World", 2004)

"In order to cultivate a culture of accountability, first it is essential to assign it clearly. People ought to clearly know what they are accountable for before they can be held to it. This goes beyond assigning key responsibility areas (KRAs). To be accountable for an outcome, we need authority for making decisions, not just responsibility for execution. It is tempting to refrain from the tricky exercise of explicitly assigning accountability. Executives often hope that their reports will figure it out. Unfortunately, this is easier said than done." (Sriram Narayan, "Agile IT Organization Design: For Digital Transformation and Continuous Delivery", 2015)

"Any software project must have a technical leader, who is responsible for all technical decisions made by the team and have enough authority to make them. Responsibility and authority are two mandatory components that must be present in order to make it possible to call such a person an architect." (Yegor Bugayenko, "Code Ahead", 2018)

"Responsibility means an inevitable punishment for mistakes; authority means full power to make them." (Yegor Bugayenko, "Code Ahead", 2018)

𖣯🧮Strategic Management: Simplicity VI (ERP Implementations' Story II)

Besides the witty sayings and theories advanced in defining what simplicity is about, life shows that there’s a considerable gap between theory and praxis. In the attempt at a definition, one is forced to pull more concepts like harmony, robustness, variety, balance, economy, or proportion, which can be grouped under organic unity or similar concepts. However, intuitionally one can advance the idea that from a cybernetic perspective simplicity is achieved when the information flows are not disrupted and don’t meet unnecessary resistance. By information here are considered the various data aggregations – data, information, knowledge, and eventually wisdom (aka DIKW pyramid) – though it can be extended to encompass materials, cash and vital energy.

One can go further and say that an organization is healthy when the various flows mentioned above run smoothly through the organization nourishing it. The comparison with the human body can go further and say that a blockage in the flow can cause minor headaches or states that can take a period of convalescence to recover from them. Moreover, the sustained effort applied by an organization can result in fatigue or more complex ailments or even diseases if the state is prolonged. 

For example, big projects like ERP implementations tend to suck the vital energy of an organization to the degree that it will take months to recover from the effort, while the changes in the other types of flow can lead to disruptions, especially when the change is not properly managed. Even if ERP implementations provide standard solutions for the value-added processes, they represent vendors’ perspective into the respective processes, which don’t necessarily fit an organization’s needs. One is forced then to make compromises either by keeping close to the standard or by expanding the standard processes to close the gap. Either way processual changes are implied, which affect the information flow, especially for the steps where further coordination is needed, respectively the data flow in respect to implementation or integration with the further systems. A new integration as well as a missing integration have the potential of disrupting the data and information flows.

The processual changes can imply changes in the material flow as the handling of the materials can change, however the most important impact is caused maybe by the processual bottlenecks, which can cause serious disruptions (e.g. late deliveries, production is stopped), and upon case also in the cash-flow (e.g. penalties for late deliveries, higher inventory costs). The two flows can be impacted by the data and information flows independently of the processual changes (e.g. when they have poor quality, when not available, respectively when don’t reach the consumer in timely manner). 

With a new ERP solution, the organization needs to integrate the new data sources into the existing BI infrastructure, or when not possible, to design and implement a new one by taking advantage of the technological advancements. Failing to exploit this potential will impact the other flows, however the major disruptions appear when the needed knowledge about business processes is not available in-house, in explicit and/or implicit form, before, during and after the implementation. 

Independently on how they are organized – in center of excellence or ad-hoc form – is needed a group of people who can manage the various flows and ideally, they should have the appropriate level of empowerment. Typically, the responsibility resides with key users, IT and one or two people from the management. Without a form of ‘organization’ to manage the flows, the organization will reside only on individual effort, which seldom helps reaching the potential. Independently of the number of resources involved, simplicity is achieved when the activities flow naturally. 

Previous Post <<||>> Next Post

Written: Sep-2020, Last Reviewed: Mar-2024

𖣯🧮Strategic Management: Simplicity V (ERP Implementations' Story I)

Strategic Management

Probably ERP Implementations are one of the most complex type of projects one deals with in the IT world, however their complexity seldom resides in technologies themselves, but in the effort that needs to be made by organizations before, during and post-implementations. Through their transformative nature ERP implementations have the potential of changing the whole organization if their potential is exploited accordingly, which is unfortunately not always the case. Therefore, the challenges don’t resume only to managing a project or implementing a technology, but also in managing change, and that usually happens or needs to happen at several levels. 

Typically, the change is considered mainly at IT infrastructure and processual level, because at these levels most of the visible changes happen – that’s what steals the show. For the whole project duration is about replacing one or more legacy systems, making sure that the new infrastructure works as expected. The more an organization deviates from the standard the more effort is needed, and this effort can exhaust an organization’s resources to the degree that will need some time to recover after that, financially, but maybe more important from a vital point of view.

Even if the technological and processual layers are important, as they form the foundation on which an organization builds upon, besides the financial and material flow there are also the data, informational and knowledge flows, which seems to be neglected. Quite often that’s where the transformational potential resides. If an organization is not able to change positively these flows, on the long term the implementation will deal with problems people wished to be addressed much earlier, when the effort and effect would have met the lowest resistance, respectively the highest impact. 

An ERP implementation involves the migration of data between source(s) and target(s), the data requirements, including the one of appropriate quality, being regarded in respect to the target system(s). As within the data migration steps the data are extracted from the various sources, enriched, and prepared for import into the target system(s), there is the potential of bringing data quality to a level which would help the organization further. It’s probably simpler to imagine the process of taking the data from one place, cleaning and enriching the data to bring it to the needed form, and then putting the data into the new system. It’s a unique chance of improving data quality without touching the source or target system(s) while getting a considerable value.

Unfortunately, many organizations’ efforts to improve the quality of their data stop after the implementation. If there’s no focus and there are no structures in place to continue the effort, sooner or later data’s quality will decrease despite the earlier made efforts. Investing for example in a long-term data quality improvement or even a data management initiative might prove to be an exploratory and iterative process in which mistakes are maybe made, the direction might need to be changed, though, as long learning is involved, in this often resides the power of changing for the better.

When one talks about information there are two aspects to it: how an organization arrives from data to actionable information that reach timely the people who need it, respectively how information is further aggregated, recombined, shared, and harnessed into knowledge. These are the first three layers of knowledge (aka DIKW) pyramid, and an organization’s real success story is in how can manage these flows together, while increasing the value they provide for the organization. It’s an effort that must start with the implementation itself, or even earlier, and continue after the implementation, as an organization seems fit.

Previous Post <<||>> Next Post

Written: Sep-2020, Last Reviewed: Mar-2024

𖣯Strategic Management: Strategy Design (Part IV: Designing for Simplicity)

More than two centuries ago, in his course on the importance of Style in Literature, George Lewes wisely remarked that 'the first obligation of Simplicity is that of using the simplest means to secure the fullest effect' [1]. This is probably the most important aspect the adopters of the KISS mantra seem to ignore – solutions need to be simple while covering all or most important aspects to assure the maximum benefit. The challenge for many resides in defining what the maximum benefit is about. This state of art is typically poorly understood, especially when people don’t understand what’s possible, respectively of what’s necessary to make things work smoothly. 

To make the simplicity principle work, one must envision the desired state of a product or solution and trace back what’s needed to achieve that vision. One can aim for the maximum or for the minimum possible, respectively for anything in between. That’s at least true in theory, in praxis there are constraints that limit the range of achievement, constraints ranging from the availability of resources, their maturity or the available time, respectively to the limits for growth - the learning capacity of individuals and organization as a whole. 

On the other side following the 80/20 principle, one could achieve in theory 80% of a working solution with 20% of the effort needed in achieving the full 100%. This principle comes with a trick too because one needs to focus on the important components or aspects of the solution for this to work. Otherwise, one is forced to do exploratory work in which the learning is gradually assimilated into the solution. This implies continuous feedback, respectively changing the targets as one progresses in multiple iterations. The approach is typically common to ERP implementations, BI and Data Management initiatives, or similar transformative projects which attempt changing an organization’s data, information, or knowledge flows - the backbones organizations are built upon.     

These two principles can be used together to shape an organization. While simplicity sets a target or compass for quality, the 80/20 principle provides the means of splitting the roadmap and effort into manageable targets while allowing to identify and prioritize the critical components, and they seldom resume only to technology. While technologies provide a potential for transformation, in the end is an organization’s setup that has the transformative role. 

For transformational synergies to happen, each person involved in the process must have a minimum of necessary skillset, knowledge and awareness of what’s required and how a solution can be harnessed. This minimum can be initially addressed through training and self-learning, however without certain mechanisms in place, the magic will not happen by itself. Change needs to be managed from within as part of an organization’s culture, by the people close to the flow, and when necessary, also from the outside, by the ones who can provide guiding direction. Ideally, a strategic approach is needed the vision, mission, goals, objectives, and roadmap are sketched, where intermediary targets are adequately mapped and pursued, and the progress is adequately tracked.

Thus, besides the technological components is needed to consider the required organizational components to support and manage change. These components form a structure which needs to adhere by design to the same principle of simplicity. According to Lewes, the 'simplicity of structure means organic unity' [1], which can imply harmony, robustness, variety, balance, economy or proportion. Without these qualities the structure of the resulting edifice can break under its own weight. Moreover, paraphrasing Eric Hoffer, simplicity marks the end of a continuous process of designing, building, and refining, while complexity marks a primitive stage.

Previous Post <<||>> Next Post

Written: Sep-2020, Last Reviewed: Mar-2024

References:
[1] George H Lewes (1865) "The Principles of Success in Literature"

Considered quotes:
"Simplicity of structure means organic unity, whether the organism be simple or complex; and hence in all times the emphasis which critics have laid upon Simplicity, though they have not unfrequently confounded it with narrowness of range." (George H Lewes, "The Principles of Success in Literature", 1865)
"The first obligation of Simplicity is that of using the simplest means to secure the fullest effect. But although the mind instinctively rejects all needless complexity, we shall greatly err if we fail to recognise the fact, that what the mind recoils from is not the complexity, but the needlessness." (George H Lewes, "The Principles of Success in Literature", 1865)
"In products of the human mind, simplicity marks the end of a process of refining, while complexity marks a primitive stage." (Eric Hoffer, 1954)

𖣯Strategic Management: Strategy Design (Part I: Simple, but not that Simple)

Strategic Management Series

Simplicity of design has been for centuries the wholly grail of architects, while software designers seem to situate themselves in opposition with the trend, as they aim using a mix of technologies that usually increase architecture’s complexity (sometimes the many, the newer and fancier, the better). Unfortunately, despite the implied but not necessarily reachable potential, each component added to an information system or infrastructure has the potential of increasing the overall complexity by a factor proportional to the degree of interactions it creates, respectively by the number of issues it creates or allows to propagate through these interactions.

Conversely, one talks about simplicity in IT without stating what is intended by it, and it can mean many things. Quite often the aim is packed within the ‘keep it simple stupid’ (aka KISS) mantra, a modern and pejorative alternative of Occam’s razor. KISS became a principle in software architecture design, and it can mean that a simple solution works better than a complex one, or that pursuing something in the simplest manner possible is usually better. The nuances are wide enough to cover a wide spectrum of solutions, arriving at statements that the simplest choice to make is the most appropriate one to make, thing that’s not necessarily true in IT, where complexity finds itself home.

Starting with the important number of technologies coexisting in integrations and ending with the exceptions existing in processes or the quality of data, things are almost never as simple as one may wish. An IT infrastructure’s complexity is dependent on the number of existing components, on whether they come from different generations or come from different vendor, on whether are deployed on different operating systems or are supported by different service providers, on the number of customizations made, on the degree of overlapping of the data and integrations needed to keep the data in synch, respectively of the differences existing in data models, quality and use. In general, the more variance, randomness, and challenges one has, the higher the overall complexity.

Paraphrasing Saint Exupéry, in IT simplicity is reached when there is no longer anything to add or anything to take away, or in Hans Hofmann’s words, simplicity is reflected in ‘the ability to simplify means to eliminate the unnecessary so that the necessary may speak’. This refers to the features, what a piece of software can do, respectively the functionality, how a certain outcome is reached, which arrive to be packed in various logical aggregations (function point, functional requirement, story, epic, model, product, etc.) or physical aggregations (classes, components, packages, services, models, etc.). These are the levels at which one needs to address simplicity adequately.

To make something simple one must be able either to design a solution up to the detail that there’s nothing to add or remove, or to start with something and remove or things to reach simplicity. Both approaches involve a considerable effort, time, and multiple iterations, however the first approach can easily become utopian as some architectures are so complex that sooner or later the second approach comes into play. Therefore, one needs in general to focus on what seems an optimal solution and optimize it continuously in further iterations. Aiming for perfection from the beginning or also later in the improvement process is a foolhardy wish.

Even if simplicity is hard to achieve, one can still talk about the elegance of a solution, scenarios in which the various components fit together like the pieces of a puzzle, or about robustness, reliability, correctness, maintainability, (re)usability, or learnability. These latter characteristics are known in Software Engineering as (software) quality attributes.

𖣯Strategic Management: Strategy Design (Part VIII: Quality Acceptance Criteria for Strategies and Concepts)

Quality acceptance criteria for concept documents in general, and for strategies in particular, are not straightforward for all, behind the typical request of completeness hiding other criteria like flexibility, robustness, predictability, implementable, specificity, fact-based, time-boundedness, clearness, comprehensibility or measurability.

Flexible: once the strategy approved, one must be able to change the strategy as may seem fit, especially to address changes in risks, opportunities, goals and objectives, respectively the identification of new facts. A strategy implies a roadmap on how to arrive from the starting point to destination. As the intermediary or final destinations change, the strategy must reflect these changes (and it’s useful to document these changes accordingly). This also implies that the strategy must be periodically reviewed, the new facts accordingly analyzed and decided whether they must be part of the strategy.
Robust: a strategy must handle variability (aka changes) and remain effective (producing the desired/intended results).

Predictable: the strategy needs to embrace the uncertainty and complexity of the world. Even if one can’t predict the future, the strategy must consider the changes foreseen in the industry and technologies. Is not necessarily about imagining the future, even if this would be ideal, but to consider the current trends in the industry.

Implementable: starting with the goals and ending with the roadmap, the strategy must be realistic and address organization’s current, respectively future capabilities. If the organization need to acquire further capabilities, they need to be considered as well.

Specific: the strategy must address the issues, goals and objectives specific for the organization. As long these are not reflected in it, the strategy is more likely to fail. It is true that many of the issues and goals considered can be met in other organizations, however there are always important aspects that need to be made explicit.

Fact-based: the strategy must be based on facts rooted in internal or market analysis, however the strategy is not a research paper to treat in detail the various concepts and findings – definitions, summaries of the findings with their implications, and references to further literature are enough, if needed.

Time-bound:  in contrast to other concepts, the strategy must specify the timeframe considered for its implementation. Typically a strategy addresses a time interval of 3 to 5 years, though upon case, the interval may be contracted or dilated to consider business specifics. The strategy can further break down the roadmap per year or biannually.

Complete: the strategy must be complete in respect to the important topics it needs to address. It’s not only about filing out a template with information, the reader must get a good understanding of what the strategy is about. Complete doesn’t mean perfect, but providing a good enough description of the intent.

Clear: especially when there are competing interests, the strategy must describe what is in scope and what was left out. What was left out is as important as what is considered, including the various presumptions. A test of clearness is whether the why, how, who, when and by what means were adequately considered.

Comprehensible: the targeted audience must be able to read and understand the strategy at the appropriate level of detail or scope.

Measurable: the progress of a strategy must be measurable, and there are two aspects to consider. On one side the goals and objectives considered must be measurable by definition (see SMART criteria), while on the other, one must be able to track the progress and various factors related to it (e.g. implementation costs, impact of the changes made, etc.). Therefore, a strategy must include a set of metrics that will allow quantifying the mentioned aspects.

𖣯Strategic Management: Strategic Perspectives (Part I: Agile vs. Lean Organizations)

Agile and lean are two important concepts that pervaded the organizations in the past 20-30 years, though they continue to have little effect on organizations’ operations.

Agile is rooted in the need to respond promptly to the changing needs of an organization. The agile philosophy was primarily groomed in Software Development to reconcile the changing customer requirements with disciplined project execution, however it can be applied to an organization’s processes as well. An agile process is in general a process designed to deliver the intended results in an effective and efficient manner by addressing promptly the changing requirements in customers’ needs.

Lean is a systematic method for the minimization of waste, rooted as philosophy in manufacturing. The lean mindset attempts removing the non-value-added activities from processes because they bring no value for the customers. Thus a lean process is a process designed to deliver the intended results in an effective and efficient manner by focusing on the immediate needs of the customers, what customers want and value (when they want it). 

Effective means being successful in producing a desired or intended result, while efficient means achieving maximum productivity with minimum wasted effort or expense. The requirement for a process to be effective and efficient is translated in delivering what’s intended by using a minimum of steps designed in such a way that the quality of the end results is not affected, at least not for the essential characteristics. Efficiency is translated also in the fact that the information, material and resources’ flow suffer minimal delays.

Agile focuses in answering promptly the changing requirements in customers’ needs, while lean focuses on what customers wants and value while eliminating waste. Both mindsets seem to imply iterative and adaptive approaches in which the improvement happens gradually. Through their nature the two mindsets seem to complete each other. Some even equate agile with lean however an agile process is not necessarily lean and vice-versa.

To improve the effectiveness and efficiency of its operations an organization should aim developing processes that are agile and lean to optimize the information and material flows, while focusing on its users’ changing needs, and while eliminating continuously the activities that lead to waste. And waste can take so many forms – the unnecessary bureaucracy reflected in multiple and repetitive sign-offs and approvals, the lack of empowerment, not knowing what to do, etc.

There’s important time wasted just because the users don’t know or don’t understand an organization’s processes. If an organization can’t find rules that everyone understands then a process is doomed, independently of the key area the process belongs to. There’s also the tendency of attempting to address each exception within a process to the degree that multiple processes result. There’s no perfect process, however one can define the basic flow and document the main exceptions, while providing users some guidelines in navigating the unknown and unpredictable.

As part of same tendency it makes sense to move requests that respect a standard procedure on the list of standard requests instead of following futile steps just for the sake of it. It’s the case of requests that can be fulfilled with internal resources, e.g. the development of reports or extraction of data, provisioning of SharePoint websites, some performance optimizations, etc. In addition, one can unify processes that seem to be disconnected, e.g. the handling of changes as part of the Change Management respectively Project Management as they involve almost the same steps.

Probably it's in each organization’s interest to discover and explore the benefits of applying the agile and lean mindsets to its operation and integrate them in its culture

Previous Post <<||>> Next Post

𖣯Strategic Management: Strategy Definition (Part II: Defining the Strategy)

In a previous post an organization’s strategy was defined as a set of coordinated and sustainable actions following a set of well-defined goals, actions devised into a plan and designed to create value and overcome an organization’s challenges. In what follows are described succinctly the components of the strategy.

A strategy’s definition should start with the identification of organization’s vision, where the organization wants to be in the future, its mission statement, a precise description of what an organization does in turning the vision from concept to reality, its values - traits and qualities that are considered as representative, and its principles – the guiding laws and truths for action. All these components have the purpose at defining at high-level the where (the vision), the why (the mission), the what (the core values) and by which means (the principles) of the strategy.

One of the next steps that can be followed in parallel is to take inventory of the available infrastructure: systems, processes, procedures, practices, policies, documentation, resources, roles and their responsibilities, KPIs and other metrics, ongoing projects and initiatives. Another step resumes in identifying the problems (challenges), risks and opportunities existing in the organization as part of a SWOT analysis adjusted to organization’s internal needs. One can extend the analysis to the market and geopolitical conditions and trends to identify further opportunities and risks. Within another step but not necessarily disconnected from the previous steps is devised where the organization could be once the problems, risks, threats and opportunities were addressed.

Then the gathered facts are divided into two perspectives – the “IS” perspective encompasses the problems together with the opportunities and threats existing in organization that define the status quo, while the “TO BE” perspective encompasses the wished state. A capability maturity model can be used to benchmark an organization’s current maturity in respect to industry practices, and, based on the wished capabilities, to identify organization’s future maturity.

Based on these the organization can start formulating its strategic goals – a set of long-range aims for a specific time-frame, from which are derived a (hierarchical) set of objectives, measurable steps an organization takes in order to achieve the goals. Each objective carries with it a rational, why the objective exists, an impact, how will the objective change the organization once achieved, and a target, how much of the objective needs to be achieved. In addition, one can link the objectives to form a set of hypothesis - predictive statements of cause and effect that involve approaches of dealing with the uncertainty. In order to pursue each objective are devised methods and means – the tactics (lines of action) that will be used to approach the various themes. It’s important to prioritize the tactics and differentiate between quick winners and long-term tactics, as well to define alternative lines of actions.

Then the tactics are augmented in a strategy plan (roadmap) that typically covers a minimum of 3 to 5 years with intermediate milestones. Following the financial cycles the strategy is split in yearly units for each objective being assigned intermediate targets. Linked to the plan are estimated the costs, effort and resources needed. Last but not the least are defined the roles, management and competency structures, with their responsibilities, competencies and proper level of authority, needed to support strategy’s implementation. Based on the set objectives are devised the KPIs used to measure the progress (success) and stir the strategy over its lifecycle.

By addressing all these aspects is created thus a first draft of the strategy that will need several iterations to mature, further changes deriving from the contact with the reality.

𖣯Strategic Management: Strategy Definition (Part I: The Reason behind a Strategy)

Many of the efforts that go on in organizations are just castles built into the thin air, and even if some of the architectures are wonderful, without a foundation they tend to crash under their own weight. For example, the investment in a modern BI solution, in an ERP or CRM system, seldom meets an organization’s expectations, and what’s even more unfortunate is that the potential introduced by the investments is only to a small degree harnessed, while the same old problems continue to exist, typically in new contexts.

An architect more likely would ask himself: What would be that foundation needed to support a castle or the whole settlement the castle belongs to? From what needs to be made? How should it be structured? How often needs to be reconsolidated and when? Who will participate in its building and its maintenance? What it still needed to make the infrastructure self-reliant? What other architects do? What’s best practice in the field? Many questions for which the architect needs to find optimal answers.

The strength of an edifice lies in its foundation. Its main purpose is to provide a solid, durable, self-reliant and maintainable structure on which the edifice can be anchored, that can support the current and future load of the edifice, and that keeps the edifice standing in face of calamities. It must therefore address the core challenges faced by the edifice during its lifetime. When one has a group of edifices holding together as a settlement, there’s needed a foundation to support the whole settlement and not only one edifice. Moreover, the foundation needs to be customized to address environment’s characteristics and owners’ plans for further development.

The foundation on which modern organizations build their edifice is a strategy rooted in organizations’ reason of existence (the mission), wishes of becoming (the vision), beliefs (the core values) and fundamental truths (the principles). A strategy, a term borrowed from military, is a set of coordinated and sustainable actions following a set of well-defined goals, actions devised into a plan and designed to create value and overcome an organization’s challenges. Through its character a strategy is the perfect tool for addressing holistically the problems, opportunities, strengths and weaknesses existing in an organization, of aligning the objectives toward the same goals, of providing transparency and common understanding into the status quo and the road ahead.

Having defined a strategy will not make things happen by themselves, one needs also the capabilities of executing the strategy as a whole, one needs clear roles with responsibilities and proper authority. In addition, the strategy needs to be adapted in time to serve its purpose. This might mean changing the level of detail, changing the strategy when opportunities or threats were identified, when goals become obsolete. To make this possible is needed to define several processes to support the strategy through its whole lifecycle and a set of metrics to make the progress visible.

There are organizations that make it without having a written strategy, some go with the inertia provided by the adoption of tools, with the experience of individual workers that through their cooperation provide the improvement needed. In a higher or lower degree there’s a strategy fragmented in each individual or group, however the strategies don’t necessarily converge. The problem with such approaches is that the results are often suboptimal, especially because they are fragmented efforts, more likely with different contradictory goals.

As any other tool a strategy has a potential power that when adequately harnessed can help organizations achieve their (strategic) goals, though it depends on each organization to harness that potential.