Capability
Good or Grief, Charlie Brown!
Reality can be harsh, particularly when it shatters imagery we’ve valued. There is imagery and perceptions that are aligned with the beliefs we’ve allowed to become paradigms, and those that are aligned with positive values are really important. This week has had a few of those harsh shattering moments. On this Veterans Day, we reflect on the priceless sacrifices that those in uniform have made on our behalf. I’ve always had the belief and imagery that those that perish in the roles of our guardians against harm are treated with sacred respect and their internments are handled with priority and protection. The US Air Force has apparently thought differently or has forgotten who we are and who they are supposed to be. The desecration and obscene treatment of our fallen is criminal, not just incompetent. This obscenity has been going on for a very long time and covered up in the interest of image preservation.
Coincident with this revelation are the discoveries of the criminality against children committed within the halls of what I believed to be one of the most respected and morally driven football programs in the NCAA, Penn State. This obscenity has been going on for a very long time and covered up in the interest of image preservation.
On Wall Street, there are groups of protesters demonstrating outrage at the abuses of many in the corrupt destruction of our economy and millions of lives. Sadly, this obscenity has been going on for a very long time and covered up in the interest of image preservation.
This pattern should not be a surprise, but its current frequency is important. We’re in an age where transparencies will eventually conquer opacity. This age of social media creates real problems for those accustomed to paying off problems and sweeping them under carpets. If we say something here, it becomes viral before we get to say it there. Political candidates in the last few years of election cycles are living and more frequently dying from convenient and inconvenient memory lapses, gaffes and violating the adage from Confucius of “It is better to remain silent and be thought a fool, than to speak and remove all doubt.”
This age of transparency is putting lots of light on the bad, but far too much of the good remains in the dark. We savor the salacious and crave for sin and guilt, much like public the hangings that were once a big family event. The despicable deserve the light, much like the roaches or other vermin, hidden, be they church or state, home or work, big or little leagues.
However, these are not who we are as a society, and we can’t get to where we need without the light on the many whom and what that are good and noteworthy. Despite the shameful absence of statesmen and leaders, good and great abound, perhaps right next to us. As this holiday season begins and Thanksgiving nears, let’s identify a good or great each day and give thanks and light to them.
I’ll Take That Message Medium, Please
When the author, Marshall McLuhan wrote the phrase “The medium is the message” he was articulating the powerful interrelationships that exist between the two. It’s a good illustration of the Yin-Yang symbiosis across our world. The Gutenberg Bible broke the constraints of the intellectual slavery the early church imposed on members who could have no access, redefining the nature of the message and its impact by creating an accessible medium. The medium and message play critical roles in world-changing history. In 490 BC, during the first Greco-Persian Wars, a runner (the medium) ran from Marathon to Athens to warn the fellow Greeks that they had won the battle and to resist the Persian fleet (we might be speaking Farsi today if he had failed). In 1862 a package containing Gen Robert E. Lee’s orders to his generals was discovered in a field by a Union soldier, something that would have likely reshaped the direction of the war (with perhaps two governments incapable of managing their spending).
Today, the conquest of electronic medium over physical medium is far-reaching. Borders Bookstores are gone, Kodak is facing bankruptcy, Netflix angers the world over media strategies, Blockbuster was rescued by a streaming company, the US Postal Service will likely change or die from diminishing relevance. How the world communicates, entertains, manages, and fights wars is on the shoulders of digital media. Cyber-attacks are often scarier than hostile takeovers. Business today is often at the speed of light, fraught with wonderful benefits and horrible risks and calamities.
Medium is really not the message. Medium, true to its Latin origins, is what is in the middle; it’s what is between us and the message. Electrons are really good at that role. More today than ever, disintermediation, getting rid of what’s in the middle (the medium) is transforming our world. The Arab Spring flowing over the Twitter Falls, our instant access to Google and streaming, email and video conferencing have made connectivity a commodity and global access common.
That is, for our customers. Their expectations have transformed and are demanding the convenience of disintermediation. What others and competitors do cannot now be obscured by the strength of our relationships alone. We are flying toward increasing transparency across all sectors and that begs a hard rethink of our business processes and models. Today, the medium is becoming ubiquitous and globally accessible, making the message the differentiator for the accessible ones.
Do our processes match the message? Are we agile throughout and within our systems? Do we use the good old fashion way of getting it done with meetings, reports, approval signatures, and internal snail mail? Is our business within in-sync with the requirements of the customer without, or have we gotten to the without customer part?
Pass the Herring Muffin, Please
I wonder what a red herring and muffin breakfast sandwich would taste like?
This week’s story about the US Department of Justice’s fiasco over the cost of muffins and coffee at conferences made headlines over most newsfeeds. More fascinating was the outrage of congressmen about the costs and the call for heads to roll in order for the issue to be resolved. OK, so maybe they were expensive, but they are a miniscule bump on the back of an ant when measured against the levels of imbedded waste in our Federal spends. To continue debates about debt limits and keeping government moving resemble the chest pounding of gorillas on the opposite side of the river … lots of noise, but nobody’s going to actually get wet. I, for one, have lost much confidence that the folks accountable for spending on my behalf are capable of changing the game and reducing waste.
There are many reasons, many, creating two symptoms, institutional blindness and organizational gravity.
- Institutional Blindness. Looking at the performance and behavior of government, or business for that matter, through a budget lens will blind the viewer to the inherent waste. The fundamental reason is that the waste resides in the processes, not in the bank accounts.
- Organizational Gravity. The greater the mass, the greater the forces against changing, resulting in enormous pull against whatever is trying to leave. When size of budget is a measure of importance … well you can figure out what happens.
Mike George, founder of Strong America Now, brings an alternative, one that he has brought to business leaders and has transformed how performance effectiveness and efficiency are achieved, Lean Six Sigma. Lean Six Sigma has the capability of recapturing over $5 trillion that is embedded in the life-ending process obesity in our public service world. We have good people dedicated to serving us the taxpayer fighting a system that is designed to and, therefore, operate wastefully. I can only point you to < http://strongamericanow.org/>. I suggest that we skip the muffin and digest how we can change the game.
My motto for Lean Six Sigma is: Fitness Precedes Performance.
Opportunity in Every Storm
Five years ago this last Monday, Katrina struck along the Gulf Coast. Its aftermath still lives with us, the 9th Ward in New Orleans still devastated with diminishing hope. The Katrina experience was transformative along many dimensions. It graphically illustrated the execution rigidity born of planning and responsiveness that comes from leadership gained through cronyism and political machines. Lives were lost and value was destroyed in an experience that put light on our soft underbelly. In fact, 1836 people died and 135 were missing and financial losses exceeded $108 billion. The aftereffects from looting, violence, and losses to the economies would fill scores of books. It reshaped the local economy, created a diaspora of resources and cast doubts globally about our values.
Elected leadership made bad decisions. “Good decisions come from experience. Experience comes from making bad decisions.” - Mark Twain (1835 – 1910),
On the flip side, Entergy, the electric utility, distinguished itself with an exceptional response and record setting electrical system restoration. They were ready, willing, and able. This last weekend Isabel struck the East Coast, but this time, with very different consequences. We learned and many alive today can give thanks for that. Elected and appointed officials were ready, willing, and able. The final count is not in, but fewer (40+) have perished and early estimates of costs hover around $10 billion. It brought with it the still growing calamities from flooding, yet to be assessed.
While both storms destroyed property and economic value, some irrecoverable, those in charge with preparation and execution during Irene saved scores of lives. Why? While arguably we may have some better elected and appointed officials, the gene pool of the planners and responders did not change. What did change was the process, specifically, the process capability. The game changed from disaster response to disaster prevention. The process learned from the consequences of managing downstream from the storm, to well upstream of the storm. Change comes and storms are unavoidable, and they are both opportunities to be harvested. Luck is when preparation meets opportunity and there is opportunity in every storm.
Our business environment is well into a violent and unstable economic and geopolitical hurricane season. Do our planning and response processes reflect that? Do we hunker down, hold our cash in a safe box and wait for the storms to end, or harvest the opportunities each storm creates? Are managing with “detect and correct” or with “predict and prevent”?
“A ship is safe in harbor, but that’s not what ships are for.” Salt in My Attic by William Shedd
I’m Shocked
The 9.0 earthquake that devastated northern Japan continues to have severe aftershocks. They are shocks in what clever physicist would ascribe to a type of space-time. It’s not about Star Trek stuff, or the time travel that fantasies love to use, but rather how one type of event starts a whole series of other events along a different type of path, affecting a different space at a different time, but connected. These types of other events are very real “butterfly effects” where a small change in one place can cause a whole bunch of changes downstream. Believe it or not, that earthquake has changed our lives, our businesses, and our collective futures. Toyota, the world’s largest automaker is expecting a 35% drop in profits, primarily from supply chain disruptions. Maybe that’s a no brainer, but it’s also driving severe supply chain effects globally and very real adverse economic and employment pain here in the US. From automakers and their suppliers, to many of the stuff we buy including our beloved electro-gadgetry … it’s still hurting.
How many of our business plans had “the earthquake” included as a scenario? Not very likely … Our nuclear industry was in the early days of a beautiful renaissance, one with a promise that would be a large driver of untethering us from our OPEC masters … but it too has been severely damaged by an aftershock … but one with no Richter scale. Disruptive events aren’t what they used to be. Historically, disruptive events were contained to the extent of our technological and logistical isolation …. We weren’t all networked. Globalization has changed that … we’re one big interdependent and interconnected family. The apparent and marketed successes of globalized supply chains and very sensitive “just in time” systems had a big Black Swan lurking … behind our chosen lines of sight.
Today, complexity has become a global behemoth, creating new rules of business and generating many more choices and opportunities for innovation and value creation. I certainly love my Android phone more than the beeper I had 30 years ago. For businesses, that complexity requires a severe filtering of what is included in planning and consequently what we chose to be blind to. Planning in business love the optimists and sometimes ostracize the pessimists … the ones who ask the unnerving questions.
Given Japan’s location, how likely are earthquakes? I heard an unfortunate comment from a nuclear industry spokesperson … unfortunate because it is an industry I love and believe in … that “the damage at the Fukishima plant was not from earthquake damage … but rather from the tsunami, it performed as designed.” Aren’t earthquakes and tsunamis connected?
Today’s world is much less dominated by trends and easy predictions … how many surprises have we had to respond to in our enterprises? My bet is that we’ve had more of them more frequently … in some multiple of our increasing interconnected interdependency. Take a look back and count them … what would we have done if we had known or prepared ahead of time? As we look ahead and build our planning and business models for the coming year … are we asking the right questions? How many levels of “what if” along our interconnectivity are we exploring? Have the aftershocks created more timidity in decision making? How much time do we invest in complexity driven failure modes versus “win” and “capture” plans. Do our business continuity plans address the really scary stuff?
There is opportunity in every storm, after all, “Luck is when preparation meets opportunity.” Seneca, Roman philosopher, mid first century AD.
Steering and Branding
What’s in a name? How about the three R’s: recognition, reputation, and revenues? What’s the value of a brand? BRANDZ has just published their evaluations and valuations of global brands. It’s a measure of just how valuable the commercial brand is and supporting insight into the whys and wherefores. The shifts and changes in their rankings are a barometer of how our choices of who delivers value are manifested in our buying behavior. It’s not an opinion poll, but rather an evaluation that incorporates business results with analysis inclusive of some subjectivity. It’s free and easily downloaded. The big global headline is that Apple, with an 84% jump in score, has surpassed Google as the most valuable brand in the world. Technology, specifically technology that enables our multi-polarity and interconnectivity to flourish, rules the top of the list … the standard bearers of an increasingly untethered and disintermediated consumer and commercial world. That means that value propositions increasingly incorporate wireless connectivity without a middle man. Googling it, Tweeting, linking up on Facebook or LinkedIn, catching it on YouTube are fully integrated into our lexicon. Recently, repressive government regimes in the Middle East have learned just how powerful these untethered forces are.
There is surrealism to this, particularly for us Baby Boomers. Brands exist in a very Darwinian environment, with success belonging to the fittest. What being fit means has changed lots over the years. The shift years ago from industrial dominance was led by the services economy. In fact, one of the top 5 this year, IBM, now a consulting and technology services giant, was once a hardware maker selling typewriters and lots of computers, behemoths and little ones. The current kings of the hill are all technology firms, with the exception of McDonalds and some might argue that their value proposition and the stuff they sell are untethered, disintermediated, and high tech as well. To nail down the point, Amazon is now a more valuable retail brand than Wal-Mart.
Early losers in this sea change included stock brokers replaced by powerful web engines that enabled more effective, efficient transactional capabilities. Those that transitioned to become trusted advisors are still with us, but very few order takers remain. Be they Borders or Blockbuster, wireless and untethered trumped brick and mortar between customer and supplier.
Delivery of value has increasingly demanded convenience as the driver.
- How often do we measure our performance in delivering convenience?
- Are we ubiquitous in accessibility?
- How many hand-offs exist in between us and the customers’ actual securing the benefits they seek?
- How well are our electrons delivering value? Do we paper or pdf, snail mail or email, travel or teleconference, drive to the mall jungle or click to Amazon, carry cash or card it, keep knowledge in persons or in our systems and processes ……?
- How are our customers deciding where to shop and how will they decide with whom to buy?
- How quickly do we adapt and respond to changing requirements?
- Are our improvement efforts focused on where our customers are going or on getting better at where we are at today?
Please Tell Me All About Me
For many years we’ve been helping our clients sort out how to create and sustain value for their customers. Few would argue that the Voice of the Customer is essential. We all too often find that the Voice of the Customer collected and reported is more about the organization, how well they are liked, or opinions on performance (not real performance), rather than those that focus on the customer’s world. Hearing and understanding the actual Voice of the Customer has too often been interpreted from gathering data that feed survey instruments, reports, dashboards or scorecards. By searching for and producing data that can be rolled up, opportunities for critical insight are lost. Feeding the tool or report can become the goal and by the time the report comes, the customer might be gone. Are we missing something? “Happy families are all alike; every unhappy family is unhappy in its own way.” Leo Tolstoy, Anna Karenina. Count Leo has a point.
Let’s consider firms in the business of making money. The public sector has lots of added complexity in sorting out voices and timeframes. The Voice of the Customer is or should be The Voice of Revenues. Understand why we make money and who has it. What we’ve found often are a great deal of questions that deal with how we make money, and opinions on how well we do the basics, not why. Consequently, we spend lots of money on questions we should be answering with our performance capability data. Customer satisfaction scores are not performance capability data.
Here are some questions to consider:
• How do we know whether we are capturing what we need to know from our customers?
• What do we do with this customer survey data? How and when is it useful?
• We are measuring service and product satisfaction, and yet why are complaints rising and customers leaving?
• There are so many “voices” to deal with, how do I cope?
• How much change are our customers facing?
• How does our service impact their ability to succeed?
•How is time spent in our organization:
1. In a stable repetitive work stream (The process world)?
2. Building and implementing new solutions (The less stable project world)?
3. Responding or reacting to changing requirements (The unstable world)?
• How and when do we find out about customer facing issues?
• Is that good or bad?
• How dependent are we on suppliers?
• How much do our suppliers impact our customers?
• Does our current Voice of the Customer process and information keep up with the “drumbeat” of the marketplace?
Any thoughts?
Getting the Point
The Macedonian Phalanx was a battlefield formation developed by King Philip, father of Alexander the Great. It was the most effective military ground weapon to meet enemy forces head on, enabling attack by cavalry and other forces along the flanks. It utilized collapsible long spears and was virtually undefeatable for over 300 years. It combined the interlocking and cohesion of shields and the long reach of the spear. The units were well trained. It was a marvelous combination of strategy, technology, resources, process and, execution. Sounds like a phrase of a business book. The phalanx had worked so well, that it changed very little strategically until the Battle of Pydna in 186 BC when Roman Legions massacred the Macedonians. The Romans also combined strategy, technology, resources, process, and execution. There is one contrasting difference, the phalanx was a weapon built on rigidity, and these Roman legions applied agility against their enemy. The phalanx was vulnerable on uneven ground, the flanks and rear and was next to useless close up. The Roman gladius was the epitome of a close battle weapon, a breakthrough technology, one that moved from bronze and iron to forged steel.
The Macedonians experienced a disruption in their capability; they did not decay battle by battle. Content with the phalanx, they continued to make it better, each day, and becoming less likely to win against the Romans. They suddenly discovered and dearly paid the Cost of Unreadiness. Over the last few years evidence of the Cost of Unreadiness has been unavoidable. We saw it in the recession triggered by the meltdown, to the ravages of earthquakes and tsunamis, lagging or no capability in response to Katrina, incompetence with the oil spill; there are plenty to consider.
So, there is such a category of cost and it can be so high that it can be terminal, life ending, for humans or businesses. This cost is part of a family of costs we don’t measure, but we experience. We budget for them, but not explicitly, rather they are buried in our standards and estimates, processes, and plans. Traditionally, Lean has sought to reduce the costs of imbedded waste, Six Sigma attacking the costs from unwanted variation. In our current environment, full of complex systems, interdependencies, changing requirements, these other costs are likely to grow, perhaps with emphasis on the costs of unreadiness and rigidity.
Looking back at the last few years, how did your enterprise fare with:
• Disruptions?
• Reduced capability?
• Consequences from unplanned events?
• Costs from rigidity?
• Costs from unreadiness?
• Lessons learned?
• Changes in strategy, technology, resources, process and, execution?
Are we ready for the next surprise? Any thoughts?
Going Nuclear
Last fall I experienced a nuclear stress test. It had nothing to do with power plants or the stress that the operators in Japan are undergoing. Mine was conducted by my cardiologist and the isotope was a means to gain transparency into my system under different conditions, conditions that evaluated my behavior in a dynamic environment. Happily, it rendered good news that rewarded the hundreds of miles and several of my treasured New Balance athletic shoes.
Over that last couple of years, we’ve highlighted the evidence and perspectives that our business world is increasingly more dynamic, interdependent, highly networked, dangerously complex, and managed by tools and traditions built on much more stable process experience. Business models and algorithms, control systems, enterprise tools and performance improvement technologies derived significant power from the likelihood that behavior repeat sufficiently to enable the power of statistics to improve decision making. I many cases, that stability and value remains and I expect that that will go on beyond any horizon I can conjure. In fact, Dr. Deming encouraged us to look at the world through the lens of Plan, Do, Check, and Act, and his truism remains eternal.
• When and how do we subject our enterprises to that PDCA?
• What is the nature of our Check activities?
• Do we get beyond “according to plan or budget”?
• What type of stress tests are we employing? How would our business continuity plans hold up?
• Are we evaluating what we operate against the assumptions we made when we developed our plans, processes, and systems?
• Are the experiences of the last three years is sufficient to justify a fresh look at our Check phase?
• What causes and effects do we think about today that were insignificant a few years back?
• Have we learned anything new about assumptions, risks, and opportunities? Do our enterprise systems, business processes, strategies and objectives reflect that learning?
• Who is asking the discomforting questions within our enterprises? What questions do our trusted advisors ask of us? What answers do they provide to our questions?
• Are yesterday’s data building today’s processes to deal with tomorrow’s problems? What change do we anticipate?
• How well do we currently change our capability in the face of adversity or new requirements? How far upstream do we analyze?
• Where do we sit on the fragility to agility scale?
• Do our metrics come from an odometer or a telescope?
“Events will take their course, it is no good of being angry at them; he is happiest who wisely turns them to the best account.” Bellerophon by Euripides 480-406 BC
Class Struggles
Best in Class! How often do we run into the term? I believe it’s a term that has lost much meaning. I suspect that overuse, or selective playing around with what “class” we pick, or the unreliability of rating organizations render it useless too often. In the world or process improvement it is applied to a goal setting step for evaluating how large a gap there is to close and subsequently chartering projects and resources to close that gap. There are some pitfalls to the approach:
• If the “class” we are selecting as a benchmark is a poorly performing one, we may be aiming at becoming the “best of the worst” or “the cream of the crap”.
• If becoming best in class for a unit within an organization does nothing to positively impact the performance of the total organization, we may be investing in meaningless improvement.
• The goal may become obsessive, a powerful distraction, directing attention and resources away from value adding opportunities.
• The customer, shareholder, or taxpayer does not benefit.
The last bullet is very important. Most organizations are not created with a primary purpose to have functions, departments, employees, IT systems, training centers, enterprise applications, procurement groups, or resources of any kind. That’s not why enterprises exist.
• If they are commercial organizations, they exist to deliver goods and services that financially profit so that they can earn the trust of their investors through returns. Yep, they are around to make money. The best ones do it legally, ethically, with respect to all stakeholders, no adverse externalities, and with a vision to create new value. They deliver value to customers and returns to investors.
• If they are a public service organization, they exist to fulfill a mission to deliver beneficial outcomes to their stakeholders (taxpayers and public at large). The best ones are effective, efficient, ethical, agile, focused on delivering benefits and positive societal outcomes, responsive to their public, and transparent. They spend public funds and deliver positive and beneficial outcomes.
• Purpose is fulfilled when value is delivered. There is a value stream that threads what delivers value and it provides the ruler with which to measure what is appropriate or lacking.
So, resources, systems, functions, departments, assets …, within the organization should exist and operate in order for the organization to thrive. That means that goals for units or entities within the organization have real value and legitimacy to the extent that they can verifiably contribute to the organization’s value proposition. Of course, this is unlikely since significant waste abounds and gaps in performance are forever with us.
The issue is not whether to improve or not. The question is how much, by whom, and to what ends. Where should we set the bar? How good is the good we should be? In a relay race, how would we decide where to focus our efforts? How do we create the appropriate focus, discipline and follow-through? Of course, most groups aspire to be the best at what they do, but unfortunately, it is overly focused on only what they do. It would be tragic, if not ridiculous, to claim success within a unit where the organization or enterprise is tanking. Our operation was successful, but the patient died.
Thoughts?
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