Archive for July, 2009

Businesses do not Exist

I am not certain if it is a matter of being lazy or if it is nature’s way of not burdening us with too much detail but regardless of the reason people do not ‘think’ correctly about governments, religions, races or businesses.   Our thinking falls down when referring to any group or entity as if is one thing.

We often hear about how inefficient “the government” is in the US.  “The government can not run anything” or “the military and intelligence should not be used in the same sentence”.  What we are failing to realize is the government is not one thing  – it is many.  The military (while being protrayed as having some questionable purchasing practices) is composed of many brilliant people.  The military is many.

And when we speak about business we should remember that it is not just one thing.  I spent seven years in the role of CIO.  One of the challenges facing CIOs centers on the idea of aligning IT with ‘the business’.  And here is when I learned that ‘the business’ does not exist.  The business is a collection of disparate groups, all sharing a common banner, but operating relatively independently of each other.  Each have their own metrics, own goals, objectives, and key performance indicators.   Each being led by a person wishing to have a World Class organization. 

Essentially each department is a business within a business.  I witnessed it first hand when I sat in on the assessment of the alignment of an IT department with the rest of the business.  The findings were not in favor of the IT department.  The consulting company determined that more than 80% of the IT projects did not support the key drivers for the business.  The consulting company therefore determined the IT department was not aligned with the business.  Just how wrong the consulting company was became apparent when it was discovered that every one of those projects originated outside of IT.  Those projects came from ‘the business’.

What you have is the situation where ‘the business is not aligned with the business’.  Actually there is no such thing as ‘the business’.  ‘The business’ was never designed as an entity but instead it evolved one decision at a time and just happens to look the way it looks.

This is the primary achilles heel for every business – business executives do not understand that the business they are leading actually has a design and  that design is as tangible as the design of their products or processes.  Nor do they understand that the design of a business has the greatest impact on the performance of ‘the business’.

Wouldn’t you like to see what your business design looks like?  Wouldn’t you like to be able to analyze the performance capabilities of your design and make any necessary changes to improve its performance? 

If you took the time to have your business designed – then your business would actually exist.  Without the design your business is really just a bunch of departments acting mostly independently.  Good luck with that.

Fundamentally flawed thinking for 21st century

I do find some interesting discussions on LinkedIn.  I tend to spend my time with Business Process people since they have a slightly better concept about how something invisible (process and/or business) can have a design.

Here is my 2 cents when addressing the idea of how some business thinking is fundamentally flawed (which I agree in principle).

I know I sound like a one note singer but I am willing to live with that. I want to comment on the idea of “Fundamentally flawed thinking for the 21st century..”

It is all about Context! It is my contention that the relevance of any design is determined by the environment in which it exists. Think about that sentence and apply it to any design. Apply it to processes, to products and to businesses.

Businesses are created within the existing environment and survive because its design is compatable with the environment. But as we know time changes things. The expectations of the customer change (outside in design), the offerings of the competition changes and materials and technology change. What was a leading design becomes obsolete at an ever quickening pace.

Important tenets that affect business performance (according to me):
1) Businesses, just like products and processes, have designs that can be documented.
2) No product, process or business can outperform its design
3) Design dictates performance
4) The best any product, process or business can do is to reach the maximum performance capabilities of its design.
5) The best any strategy can do is to help the business reach its maximum performance capabilities of its design.
6) Strategies do not change the design of a business.
7) Four step process to business (or process) performance: Design, Implement, Execute and Manage. Carpe DIEM
8) Businesses are much more than processes. Don’t get lost in processes. You must have the Context for processes just like you must have the Context for products and the other facets of the business.

The most important responsibility of any executive is for the design of the business and for executives to not understand that is the biggest flaw in thinking today!

That concept fits the idea of Outside In design better than most people realize. One can only create a relevant business design by understanding the context in which it exists (the outside). I can go on and on about this but will stop here.

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Some business truths

One LinkedIn discussion centered on truths.  Here was my offering.

It seems to me the issue is not around set theory and the axiomatic approach. Board members (representing those holding the equity of the company ) and customers (representing those deciding to spend their disposible cash with your company) don’t care.

Executives are at the center of the fulcrum. One the one side are the equity holders wanting a better return on their investment and on the other side are the customers who want the greatest value for the money they are spending. And the business leaders are trying to navigate through the existing environment and give each what they desire.

Here are a few ‘truths’ those executives should be paying attention to:
– Products, processes and businesses have designs that can be documented.
– Products, processes and businesses can not outperform their design.
– Changing strategies has no effect on the design of a business.
– Strategies are executed, designs are implemented.
– Strategies can only be executed if the design can accommodate them.
– Strategies need to be embedded in the design of a business.
– Design, not strategy, is the key to change.

Getting to KPIs. Their use is in determining when a design needs to be updated. Since designs gain their relevance from the existing environment KPIs need to be sensitive to what is changing.

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