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Alignment, Iteration and Business Intelligence

For most of the last two decades, LÛCRUM has participated in creating over 100 solutions for some of the most prominent organizations in business and education.  In 1998, LÛCRUM published its first full Business Intelligence Methodology, iStream.   The word “stream” was used to symbolize the continuous aspect of the software development lifecycle versus traditional “waterfall” SDLC’s.  This post is intended to conceptually explain how LÛCRUM’s iStream is a differentiated and unique approach to the development of successful Enterprise Business Intelligence Solutions. After years of focus on the delivery of Data oriented projects, LÛCRUM has continued to refine its methodology, leveraging the continuous learning from each new engagement to benefit the next, and to enrich the iStream process itself.

The first and probably most important non-technical differentiated aspect of iStream is the concept of Alignment.  Many consulting organizations and internal IT organizations have some type of design or planning step often called “Envisioning” as an initial step in their development process.  This is for good reason:  understanding the customer’s end goal or picture of success is critical to the success of the project.  At the same time, this does not procedurally support the fact that many individuals are involved in determining the success of a project, and further, in most cases these individuals are not in detailed agreement in regards to what that success looks like, or how it is defined.  Alignment takes this into account, and is a prescribed process to ensure a common understanding of the success criteria by the key stakeholders involved in any enterprise project, including department heads and/or the Information Technology department.  This includes a focus on ensuring that a miscommunication cannot occur where language is not specific enough, for example in clarifying the accepted definition of the term “Sales” in a company.  To explore this a bit, is “Sales” the number of transactions? The dollar volume closed?  Over what timeframe? By what channel? (sales people, resellers, distributors, telesales, etc.) As simple as this concept may sound – misunderstandings or assumptions in areas as simple as this are generally a key reason for project failure.  In this area, LÛCRUM is unique and differentiated in its development approach.

Another key differentiation of LÛCRUM’s approach, particularly as it relates to Business Intelligence, is in the concept of the iteration of a project.  The iStream methodology allows for iteration in the development of the end result, particularly through the recognition that many pieces may make up the whole.  For example, related to Business Intelligence; we may begin by working with an individual decision maker, say the VP of Marketing.  In working with this person we may offer to them the YourView Instant Analytics solution, allowing them to rapidly see their information in a new way through the combination of several different reports or sources into a single view.  Per the YourView solution, this can take place in a matter of days; however by definition it follows the iStream process – however abbreviated – as it is focused on only a single user.  When that VP is prepared to create a complete solution for the Marketing department, the initial work now functions as a pilot/proof of concept rolling into the Alignment, Discover and Architect components of iStream for the larger YourView 360 (Data Mart) project.  In this fashion, we are “iterating” our development of the data mart through one or more “Instant Analytics” projects.  Both projects follow iStream; however the smaller engagements feed into the larger.  When that organization is prepared to roll out an Enterprise Data Warehouse – the same holds true, the work that had been completed at the Data Mart level for the Marketing department will now be employed in the Alignment, Discover and Architect phases of the Enterprise Data Warehouse project.  In this fashion the work that we accomplish at any level of the Business Intelligence Solution chain is applicable for the next, and all would be accomplished using iStream.

While the items above are not descriptive of the entirety of iStream, nor of the entire list of benefits of the LÛCRUM approach, they are absolutely two of the components of iStream which differentiate it from the plethora of SDLC approaches available in the market, and another aspect of what makes LÛCRUM a unique Business Intelligence Consultancy.

Using OLAP to Improve Organizational Effectiveness – Part 3

This is the third and final post in my series on using OLAP tools to improve the effectiveness of organizations.  In Part 1 I discussed some background concepts and terminology.  In Part 2, I talked about some specific examples of how OLAP can have an impact in this area.  In this post, I’ll talk about a specific application: utilizing OLAP software to provide improved performance feedback to employees.

OLAP and Performance Feedback

Improvements to organizational effectiveness can also be realized by utilizing OLAP tools to provide performance feedback to individual employees.  Improved performance feedback will help employees achieve group and individual performance objectives.  Increased attainment of these individual and group performance objectives will, with proper alignment of these objectives and organizational objectives, improve organizational effectiveness.

There are several advantages to providing performance feedback with an OLAP tool.  If the situation is right, feedback can be provided:

• At an individual level
• On a larger sample of employee activity
• Quickly
• In a meaningful manner.

Common Problems with Performance Feedback

Organizations often make attempts to improve the provision of feedback to employees.  Newsletters with departmental performance numbers, posters in gathering places displaying performance charts, and managerial reports with quantitative measures of performance are all attempts to improve the distribution of feedback to employees throughout the organization.  One problem with such efforts is that they are usually not provided at an individual level.  Feedback on departmental, team, or group performance is certainly helpful but depending on the size of the group, its effect will be limited.  Individual performance feedback has its own problem in that it is often time prohibitive to provide extensive individual performance feedback.  The result is often weekly or monthly group performance feedback with individual feedback coming only during annual or quarterly reviews.

Individual performance reviews often suffer from another problem: small sample sizes for review.  If an insurance company is reviewing the performance of claims adjusters using manually prepared data, it may be impossible to review more than a small sample of the adjuster’s work over what is typically a long review period.  Small samples may, of course, result in a flawed appraisal of an employee’s overall performance.

The elapsed time between events reviewed and performance appraisals is also a problem with traditional feedback provision.  Consider the timing of typical reviews: an employee makes a mistake in handling a situation in January, the incident turns up in a sample taken in May, and a review is finally conducted in June.  If a review had been conducted immediately following the incident, the chance of the employee repeating the mistake will obviously be lower.

Traditional feedback provision often suffers from poor presentation of the message.  An interview conducted by a busy manager attempting to perform a number of appraisals in addition to other work may not be optimally effective.

Performance Feedback Improvements with OLAP

Utilizing an OLAP tool may remedy some of the traditional problems with employee feedback.  Imagine again the situation of an insurance company reviewing the performance of claims adjusters.  As a solution to the problems listed above, an OLAP cube could be developed and made available to adjusters on a daily basis.  Adjusters could be presented with individual performance feedback delivered via the web.  They could see at a glance how their activity the previous day compared to group averages and organizational objectives.  Exceptions could be noted immediately by the individual employee, rather than organizational objectives.  Exceptions could be noted immediately by the individual employee, rather than a manager, and quickly corrected.  Feedback could be provided on all activity from the previous day or week rather than on a small, dated sample.  Finally, feedback could be presented in easy to understand charts which, in addition, roll-up to display departmental and organizational performance as well.

Improved performance feedback gives employees the ability to monitor their own performance and to take corrective action quickly.  By improving the ability of individual employees to meet their performance objectives, the ability of the organization to meet its objectives and fulfill its mission is improved as well.

Conclusion

OLAP technology can improve organizational effectiveness by:

• Improving management’s knowledge of progress on objectives
• Improving employee coordination on efforts to achieve these objectives
• Communicating the link between employee effort and performance
• Communicating the link between employee performance and reward
• Improving employee performance feedback.

Although OLAP tools can provide assistance in these areas, their impact is obviously limited by factors specific to each organization.  An OLAP tool cannot compensate for poor development of objectives, poor performance reward systems, or any of the other organizational factors discussed.  Utilizing an OLAP tool as I’ve described in this series with no attention given to the underlying systems it is trying to address will, at best, have no effect.

In an organization that has clearly defined its objectives and has implemented well-designed reward systems, utilizing an OLAP tool as we’ve discussed can offer a tremendous payoff.  The ability to provide employees with improved performance feedback and to demonstrate the link between individual performance and organizational performance is extremely valuable.  By helping an organization align individual goals with corporate goals, an OLAP tool can help an organization become more effective.

Good enough?

When is good enough, well,  good enough?  I suppose that depends, one old argument says that close only works in horseshoes and hand grenades.  Can it work with decision making?  How about decision support systems?  Is good enough the manually created spreadsheets that over 90% of organizations use for decision support?  I would argue that while it’s not good enough, most business decision makers work that way. 

To get at the data that most executives feel they need to make accurate decisions, many turn to the manual modification of existing reports, or the creation of their own “Pet” spreadsheet they use almost daily, or certainly many times a week. 

 In an update to a report cited last spring on this site, a September, 2009 Dartmouth University study suggests that the error rates in formulas on spreadsheets in their study were only .087% of all formulas they audited.  HOWEVER, these were in cases where the formula produced the WRONG RESULT, and actually resulted in 87% OF THE SPREADSHEETS REVIEWED having errors in which the spreadsheet then produced the wrong result. 

How good is good enough?  What if you could reproduce the “Pet” spreadsheet in a true Business Intelligence solution which would ensure that the data and results in the sheet were as solid as the data in your transactional systems in the first place?  How much does the wrong data or the wrong decision cost you, or your company?  I would argue that “good enough” might just be good enough, if you could ensure that the data was accurate, and mitigated the possibility of error, while increasing the timeliness of the information to the decision maker.  We have deployed such systems in a couple weeks’ time leveraging tools like SharePoint, Excel, and other software products that our customers already owned, and quickly delivered a system to our customer where we dramatically increased the accuracy of their information.  These solutions form the basis of our iterative approach to Business Intelligence.

The Title is Information Officer … Chief Information Officer

Love that title!  Ha ha ha!  What a great way to end John Bostick week here at thefuturevalueofbusiness.com.  I hope you’ve enjoyed the look back.  This last post comes to us from InfoManagement 09.2007.  Enjoy!

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Say the name Sean Connery, and virtually everyone who enjoys movies will think of his most famous line: “The name is Bond, James Bond.” Ian Fleming’s spy novels made the Bond character popular before Connery first played him onscreen in 1962. And five other actors have played Bond during the last 45 years. But it is Connery most of us see in our heads when we hear the famous musical riff from every film’s opening sequence. And Connery is the standard against which all other would-be Bonds – perhaps even all other secret-agent characters – are measured. Does the name George Lazenby mean anything to you?

Yet, of the 28 nominations and 12 awards recognizing his acting prowess, none were for his role as James Bond. Not only has he starred in dozens of films other than Bond flicks, he defied the bane of the acting world – typecasting. In fact, he won an Oscar not for playing a super-spy, but for his turn as Jim Malone, the aging, street-weary Irish cop in The Untouchables.

Connery’s secret? Transformation. He captured our collective imagination as the dashing British Bond, but he realized the role was ultimate a dead end. He made the tough decision to abandon the old role in his comfort zone at the height of its popularity in order to improve his long-term career prospects. He then used his box office appeal as leverage with the studios to give him the broader roles he knew were critical to his professional survival.

Today’s senior IT execs, and those who aspire to move up the ladder, can take a few pointers from Connery.

During the late ’90s, IT executives were the stars of many businesses, capturing the imagination of their companies and customers by leading them in new directions for information technology. E-commerce. Web services. Name a tech trend; the CIO and his/her senior staff were in the lead. But as the world moved from seeing technology on its own as a strategic advantage, and began making technology decisions based on the business value they were supposed to bring instead, the CIO and senior IT execs went from stars to bit players in their organizations. They were typecast as the tech geeks with no business sense.

New priorities have replaced the corporate IT “space race” of the last century in the minds of C-level executives: compliance, mergers and acquisitions, corporate governance and outsourcing. No longer impressed with IT’s nuts and bolts, CEOs, CFOs and COOs are more concerned with IT’s cost and its contribution to generating value. With little more to offer than gripes about interoperability and the shortage of IT workers, many CIOs risk losing their seats at the executive table.

Like Connery using Bond as leverage, today’s CIOs and other senior IT executives need to branch out from their traditional roles in order to become true information officers – the type who understand how technology applies to the financial, operational and competitive sides of the enterprise. Based on my experience of talking to CIO’s, IT executives and aspiring IT executives everyday, here are a few suggestions on how to fight the technology typecast.

Business First

Actors call this “sharpening their craft.” Business pundits call it “business/IT alignment.” What it means is understand the basics of your industry and your organization first. Know your company’s customers, suppliers, and competitors. Read broadly and deeply about business, to be perceptive about management, markets, global culture and accelerating change that technology is in large part driving. Know before your executive peers can blink that – the world is flat – the tail is long – the ocean is blue – and – the implications that the truth can be terribly inconvenient. Insert perceptive IT questions into your company’s customer satisfaction surveys and champion the insights. Try to get a seat at Board meetings as a participant, advisor, observer or guest. Develop IT buy-in with your executive peers make sure you have a clear IT governance strategy that the CFO and/or general counsel helped develop. This is the first step toward an IT vision that ties into business objectives, strategies and measurements.

Refocus Your IT Organization Away from Commodity Activities and Toward Business Value

If you want to increase your standing in the enterprise, you have to show more than mere competence at what’s expected. Here’s an example. Ben Stiller gets a lot of work in Hollywood. But he doesn’t command Connery money. That’s because he’s essentially playing one of the three Ben Stiller types in every movie.

CIOs and their organizations should emulate Connery’s ability to evolve with the times and changing needs of the “audience.” Departmental time management is an excellent example of adapting to dynamic conditions. Time and resources will always be finite. What will change is how those hours and resources are deployed. Identify IT activities that have been commoditized. Some may be critical and require world-class performance. But, they will still be commodities that offer no differentiating value to your company. Treat them as such. Outsource those activities to specialized providers, and then stack internal time and resources against objectives dictated by business strategy.

Remember that the definition of an IT commodity will change over time and in response to market conditions. So, stay agile and flexible with staff and budget deployment. But also stay focused on the brainwork instead of the mechanical work, and you will provide greater value.

Want to know what practices work best? Keep in touch with your peers – their careers and their organizations. Outsiders have no political stake in the game and can provide insight and honest feedback.

Measure Results

Much like distribution doesn’t measure a film’s success – the box-office take does -activity in IT doesn’t equal results. Your staff may be busy doing something. But that something may not be moving the business forward.

IT managers focus on activities. CIOs and senior IT executives must focus on leadership, goals and results. Tie your department’s results to business objectives anchored by the business’ front-line results. For example, if the business missed its numbers for the quarter, you should consider IT’s role in that deficit and how IT can help put revenue back on track. Keep measurements simple and keep them aligned with executive priorities and operational plans. Measure IT in a business context rather than an IT-focused one and you will increase your prestige with other executives.

Nurture and Grow Business and IT Strategy Together

Some of the actors who followed Connery followed his successful strategy and parlayed a stint as 007 into more lucrative work. Some did not. You should expect the same experience with your IT staff. As you transform your role in the business, it’s important that your people follow that path as well. Encourage them to pursue the same kind of new education and awareness you are. Do what you can to provide growth opportunities for them. After all, you are a team, and you will only go as far as the team can take you.

For example, you can provide your team members with an “MBA career roadmap” instead of an IT-centric employee development plan. Get their buy-in that their careers have to be aligned with the business and not just tethered to IT. The more they understand how business works, the better prepared they’ll be to make valuable contributions to the organization.

Accept that not all of the team will follow this path. Some will – and should – remain focused on the nuts and bolts of IT. In fact, it’s your job as a leader to help individuals discover when this role fits and what value it delivers.

The rapid pace of change in technology and the dynamic nature of global business put CIOs and senior IT execs of all kinds, from midsized company to major corporation at risk of being typecast as a one-role actor. If you aspire to the executive suite, you need to ask yourself: Am I Connery? Or am I Lazenby?

Bond fans know what I mean.

– JB

Give Yourself Some Wiggle Room to Drive Innovation and Change

Originally shared in InfoManagement Direct on 12.21.2007, John share’s his thoughts on how Managed Services can drive innovation.

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Recently I came across a quote by the legendary Chicago Sun-Times journalist Sydney Harris who observed, “Our dilemma is that we hate change and love it at the same time; what we really want is for things to remain the same, but get better.” Nothing like a little paradox to reboot the brain and inspire a new look at the same landscape.

We want things to stay the same – only get better. Ain’t that the truth? There’s a lot of comfort in things remaining the same. We know what to expect, we can predict our reactions, nothing is going to catch us off guard and cause us pain or make us look bad.

We gain a sense of security in things remaining the same, especially over a long period of time. It’s like a baseball hitter who spends hours hitting off a pitching machine. The speed and location of the ball are predictable, so eventually, no matter how fast the pitch comes in, the hitter can whack it. He starts feeling good about himself. Then he gets into a game where the pitcher is changing speeds and location, and suddenly those hard line drives turn into soft pop-ups and groundouts. Without the predictability of the machine, hitting becomes a much tougher job.

Change by definition upsets the status quo. Sometimes that’s good. Sometimes it’s not. If it makes things better, then we love it. But because we only know the outcome after the change occurs, we hate the prospect of it, mostly because we’re afraid of losing what we already have. That’s human nature.

While I was in the process of wrapping my brain around this concept I was given a copy of a recent article by Geoffrey Moore from the Harvard Business Review.¹ The article has proved very helpful in understanding the power of this paradox – stay the same only better.

The always-insightful Moore pointed out that there are three terms or time horizons we work in. Normally we deal in the short-term horizon and the long-term horizon. But according to Moore, there is also the overlooked, often borrowed from and always-misunderstood middle-term horizon, which ironically is the only place where innovative ideas can gain traction.

Eureka! Paradox solved – or at least given clarity.

We are very comfortable in the short term, getting instant gratification for our immediate needs – be it food (hence the proliferation of quick-service restaurants), receiving a thumbs-up for doing a good job, making a quick sale, or achieving our quarterly quota, etc. Hitting a short-term objective is satisfying, although getting there can be difficult. Still, the shorter the term we’re dealing with, the fewer chances there are for the rules, the environment or the assumptions we’re working under to change. As Harris points out, we would prefer it if it were a bit easier.

We are comfortable in long-term thinking about the future, designing new products and services, opening new geographic markets and starting new businesses because we apparently enjoy a degree of accountability that is, shall we say, more fluid at the edges. The future is ripe with possibility, riches and romance; or as they say in baseball – all teams look good in spring training.

The other comfort with the long term is that if changes do sneak up on us, we will have time to react to them. Changes that face a long-term outcome aren’t nearly as traumatic, giving us the opportunity to try different things, regain our equilibrium and return to a state of nonchange before we reach the day of reckoning. Things may have changed in truth, but they don’t feel like they did as much because we have time to assimilate the changes.

“Our dilemma is that we hate change and love it at the same time; what we really want is for things to remain the same, but get better.”

What Moore gets right in his essay and that the Harris quote misses is that innovation is not actually a dilemma. A dilemma is a choice between two painful alternatives. Moore demonstrates that there is a third alternative, a middle horizon or a middle term, that incorporates the best of the other two. He says that in order to implement change, we need to create a space in this middle horizon that is free from the pain and rewards of the short-term horizon and also free from the open-ended “explore all options” thinking of the long-term horizon.
 
What’s needed, then, in order to implement innovation and alignment in the middle horizon, is a little wiggle room. I realize the term “wiggle room” isn’t listed in the glossary of the latest MBA textbooks – but it works for me. Wiggle room means there is flexibility in the business expectations of ROI and market share for new product and service innovations, making the prospect of change a less fearsome one; but it also means there are needed restraints that sharpen the focus. There is less of a tendency to push off concerns about the consequences of your actions on “future you” when the future is not as far off. Flexibility with restraint is the ideal environment to nurture innovation.

One of the ways to create an innovative middle horizon is to build both flexibility and structure into an IT organization through the use of managed services. On the flexibility front, managed services give companies two critical advantages – flexibility of capital resources and flexibility of human resources.

Innovation by its nature requires a large investment in human resources in particular. In most cases, it helps to have many minds brainstorming a variety of concepts from different points of view to nurture innovation. It also takes a fair amount of freedom from the restraints of day-to-day work in order to envision what does not already exist or is not already a part of the corporate culture. Yet it is difficult to achieve that free-thinking mindset when your best resources are bogged down in the day-to-day tasks involved in keeping the current business operating. Offloading the mundane tasks onto a managed services provider frees your experts to think in an innovative way. Reducing current cost and avoiding future costs also enables new products and services to attain more realistic maturity cycles.

Managed services address the structure part of the equation by making the costs of ideas real. In a typical organization, the cost of the day-to-day running of IT tends to be loosely defined, coming out of a central budget that can be applied conveniently. When working with a managed services provider costs are much more tightly controlled, with greater accountability across the board. Knowing this level of detail helps place a practical focus onto innovation, assuring that it is being driven by the needs of the business, not just innovation for its own sake.
In the end, business survival is about bringing innovation to market. Managed services are an often-overlooked yet critical tool in a CIOs portfolio for creating that little bit of wiggle room in the mid-term horizon for new products and services to find their potential. They can help take some of the fear and pain out of change by redefining roles in order to encourage it. While the individuals may not learn to love change unequivocally, they may at least learn to embrace it as a necessary step on the road to success. And that’s definitely movement in the right direction.

Reference:

1. Geoffrey Moore. “To Succeed in the Long Term, Focus on the Middle Term.” Harvard Business Review. July/August 2007.

– JB

The Reality We Can All Agree On

This post was originally shared on InfoManagementon 4.11.08.  Although JB focused on Wiki’s at the time (Twitter wasn’t much of a tool 2 years ago), his wisdom is spot on!

– Jodie

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For centuries, the encyclopedia was viewed as the single most reliable reference source for just about everything. Encyclopedia articles were written, edited, vetted and edited some more, until finally an article appeared that was as close to absolute truth as humans could make it. 

Then came the Internet, and shortly thereafter sites such as Wikipedia. Now, instead of content on a given topic being determined by the elite few, anyone can contribute their thoughts, ideas and points of view. How egalitarian. The other side to it is all of this collaboration has created what comedian Stephen Colbert refers to as “the reality we can all agree on.”

That may be bad for pure academic research. Not to mention students trying to write their term papers with as little effort as possible. But it could be the way of the world for IT executives in the future. Forty-four percent of those surveyed by CIO Insight in November 2007 agreed that technologies that “gather and present the wisdom of crowds” will be among the most important technological developments in 2012 to 2017.¹ So perhaps the “wiki way” will not be so bad for the business world.

For years, when organizations would outsource applications or services, they pretty much had to take whatever the supplier offered. And just as with the politics Colbert skewers on a regular basis, sometimes the choice wasn’t that you wanted option A so much as you really didn’t like option B, and wouldn’t use it/vote for it in a million years.

The wiki mentality has the chance to change that. Rather than settling for a hard set of capabilities based on the knowledge and abilities of the supplier’s internal development team, taking a wiki-like approach means using a much larger set of brains to create an application or service that is more flexible than in the past. This flexibility gives it the ability to satisfy a much larger set of demands, and to do it without waiting for the next major revision.

Take infrastructure management services, for example. A decade ago outsourcing the management of the data infrastructure at all was considered heretical. It was an organization’s strategic advantage, and thus not to be trusted to outsiders. Today, we’ve come to realize that the data (and our ability to analyze it) is the strategic advantage. The infrastructure is merely the vessel that holds it. It’s just like the difference between gold bars and a vault. One has intrinsic value, and the other is merely there to contain and protect that value.

Because of that, organizations are finding less and less reason to keep (and manage) the infrastructure inside their own walls. Perhaps the one thing holding them back is finding an infrastructure management partner that will do things the way they want them done.

With a wiki-style approach, that will change. The suppliers will become used to taking and incorporating customer input not only to satisfy the needs of a particular customer, but also to benefit their entire customer base. In other words, the ideas/improvements that Company A wants to implement are seen by other customers, and together the customer base helps drive the way the infrastructure is managed. The business model then becomes the reality the customers can all agree on.

This wiki mentality is also being used in areas such as product development. Open source software is doubtless the best-known example. Open source applications are constantly being improved upon by the people who use them; more importantly, as users develop improvements they are morally and contractually obligated to share their innovations with all other users. It doesn’t take long before one person’s great idea becomes the reality all users can agree on.

This idea is now being expanded into other product areas. Communities are springing up to help organizations tap into a much wider range of brain power than they’ve had access to in the past. Here’s how they work:

Suppose Company A has an idea for a product or service, but isn’t quite sure how to make it work. They can go to a community site and look for individuals or other organizations that may have the expertise they need, or they can post a notice of their needs on the community site. Company A and interested members of the community can then brainstorm the concept, divide up the work and ultimately share in the rewards.

One of the advantages of this community-based approach is that it removes many of the old limitations of business, such as geography and budget. Organizations are free to seek out talent wherever it happens to live and can review solutions from several providers – while only paying for the one they ultimately accept. The end result is the sum of the knowledge of all who contribute to it, which is certain to be greater than the knowledge of any single individual or organization.

Therein lays the opportunity. Rather than relying solely on our own knowledge and experience the way the old encyclopedia-makers did, the wiki approach allows organizations to leverage a much broader range of knowledge and experiences than they could ever afford to develop internally. Sure, some of that “knowledge” might elicit a smirk from Stephen Colbert. But it won’t take long before the cream rises to the top, as it always does. And at that point, the business reality truly will be one we can all agree on.

Reference:

1. CIO Insight. “The Technologies of Tomorrow.” CIOInsight.com, December 12, 2007.

-  JB

Hire Specialize Suppliers to Ensure Best Performance

Originally published in the August 2008 edition of Database Trends and Applications, I think it’s still relevant today.

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Psychologist Philip Zimbardo once said, “Situational variables can exert powerful influences over human behavior, more so than we recognize or acknowledge.” That certainly appears to be true when we look at how we work with people who provide services to us in our personal lives versus those who do it in the business world. In our personal lives, we tend to hire specialists. We look for people who have an expertise in a particular area, and count on them to do that one thing. You wouldn’t ask the company that takes care of your lawn to provide daycare services for your children. You don’t ask the plumber to build custom kitchen cabinets. You wouldn’t think to ask the person who fixes your car to tailor your suit or clean your house. Yet, in the business world we always seem to want to take the “holistic” route, i.e., find that one supplier who can do everything for us. We’re hoping that a company will come in, get to know our business, and then start solving problems and/or removing burdens for us.

At first, bringing in that big company works because they’re hired to perform a specific task or function. When we initially hire an outside supplier, we carefully vet several contenders until we finally select the one we believe has the greatest expertise in whatever it is we need done.

Once the supplier is on board and solving the problem we hired it to solve, either we start asking the team to do other things for us, or the team starts looking for other things to do for us to expand their “web of influence.” Or both. It doesn’t take long before we’ve strayed far from their core area of expertise and are now settling for less than optimum solutions – often merely for the sake of convenience. Proximity, or already being on the approved vendor list, becomes one of those “situational variables” Zimbardo mentioned. And that’s just not right.

In today’s business world with all its complexities and nuances, specialization in operational tasks is really the better way to go. Every operation requires so much specific knowledge that it’s impossible for any one person or even one organization to possess it. While taking a holistic approach may sound good in theory, in practice it tends to lead more to frustration and disappointment than success. When that happens, the business almost always suffers – and often a very good supplier for certain things winds up getting judged more for what it can’t do very well than what it can.

The other negative that comes out of trying to adopt a holistic approach in an era that requires specialization is that organizations become fatigued trying to get more out of a supplier than that supplier is capable of providing. The result is the enterprise gives up on demanding excellence and instead ultimately settles for mediocrity.

Hiring specialized suppliers of operational tasks and services avoids putting organizations in a state of “supplier fatigue.” The specialists tend to yield a higher level of performance across the board, because their knowledge is an inch wide and a mile deep rather than the other way around. Specialized suppliers have the time, interest and resources to become experts in their specific area, and as long as they stay within that area they can provide a higher level of continuous service. Bringing in as many of them as is needed tends to raise the organization’s expectations the way a rising tide raises all boats. It sets a standard of excellence across the entire organization. And if the need arises to find a different supplier due to performance issues, that one segment can be excised without affecting the entire operation.

It’s really about portfolio management. Think of it this way: It is without doubt easier to manage a single stock than a diverse portfolio. But it’s also a lot riskier. In addition, a single stock only answers part of a savvy investor’s needs. It can be aggressive, conservative, poised for growth, capable of protecting gains, etc. – but it can’t be all of them. Smart investors select the best stocks to accomplish all of their investing goals. That’s what smart organizations do, too – select their suppliers based on specialties and required outcomes, then manage that portfolio scrupulously.

A holistic approach to outsourced services may seem solid on the surface, but when you dig deeper you’ll see it’s really laden with holes. Creating a tightly managed network of specialty suppliers assures you get the best each has to offer rather than having to settle for both good and bad.

Don’t get psyched out. Avoid allowing situational variables to dictate your behavior. Instead, use the same approach to hiring business suppliers as you do with suppliers in your personal life. You’ll find your results greatly surpass your expectations.

– JB

The Power of Dashboarding

Each day, the first place I visit on the web is this blog.  I’m the admin…the person behind scenes.  I’m the one that removes the spam (like taking out the trash really), edits tags, makes sure that the posts are tweeted and ensures that the post tagging is consistent.  The other thing that I do is look at how people get to our site.  I look at the keywords that they used and the sites they left to get here.  One thing I noticed this morning is that “John Bostick” was a hot topic.    As a matter of fact, one of the searches led me to an article on another site that I did not realize John had written.  It got me to wondering, “What else has John written that we haven’t posted here?”  I decided at that very moment to go searching for John’s other material and provide links back here.  I’ll be doing it all week.  I hope you take a look.

SEGUE

Speaking of Dashboarding…what is your corporate dashboard doing for you?  Are you learning new things about your services and products?  Does it help you to manage things differently?  You read above how thefuturevalueofbusiness.com dashboard helped me to manage my posts differently.  I’d love to hear your stories of how your corporate dashboard caused you to change how you managed your business.  Share them below!

In the meantime…I hope you enjoy John’s posts this week.

– Jodie

Using OLAP to Improve Organizational Effectiveness – Part 2

This is the second in my series of 3 posts on using OLAP tools to improve the effectiveness of organizations.  In Part 1 I discussed some background concepts and terminology.  In this part, we’ll talk about some specific examples of how OLAP can have an impact in this area.

OLAP’s Impact on Organizational Effectiveness

How can an OLAP tool help improve an organization’s performance as measured against its objectives?  Answering this question requires a greater understanding of how strategies and tactics are implemented within organizations.  I’ll use a model of organizational effectiveness developed by Michael Beer to illustrate the implementation of strategies and tactics.

The picture below shows a simplified version of a model of organizational effectiveness developed by Michael Beer (Note on Organizational Effectiveness, 10).  Business goals and strategy influence and are influenced by top management.  Management determines and implements the proper organizational design to achieve the organization’s goals.  The design of the organization, in turn, influences human resources attributes of the organization.  Finally, these HR attributes directly impact organizational effectiveness.

This simplified version of Michael Beer’s model is presented again below.  Added to the model though, is the position of an OLAP tool in improving organizational effectiveness.  OLAP technology exerts its influence on organizational effectiveness in three sections of the model:

• Management
• The Measurement and Reward Systems aspects of Organizational Design
• The Coordination aspects of Human Resources.

While the impact of OLAP technology in each of the areas above is slightly different, each is related and shares a common trait: improvement in communication.  Utilizing OLAP tools to improve communication requires a broad audience for their utilization.  OLAP tools are traditionally utilized by analysts and managers.  In this model, front-line employees become critical users of the tool as well.  The wide-scale availability of web-based OLAP tools makes such organization-wide implementations cost-effective.

Business Intelligence in Utilities

A few weeks ago I posted some thougths on the future of Smart Grid and what it meant to the consumer.  In essence, my observation was that it may be BI for BI’s sake.  My musings were based upon a post from Bart Thielbar of Sierra Energy which were posted in Intelligent Utility.  He and I started trading some email, which led to a discussion on how Business Intelligence initiatives were being led at utility companies.  I’ve had some experience at FirstEnergy, Duke Energy (formerly Cinergy), AEP, and Southern Company.  Bart had just finished a survey of utility execs on BI.  Here’s what he found:

We compared notes and were both pleasantly surprised to find similar results.   Click here to read more about his findings.  Click here to see his post that started all of this.

(Note:  if you aren’t engaging in dialogue around the Net, you should.  You’ll meet some fabulous people along the way and gain more insight!)

Follow me on Twitter:  @LUCRUMinc

-  Jodie

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