Monday, November 29, 2010

The Halo Effect

Great article outlining why fads in business strategies don't work.

The most basic problem that I identify is an example of what is known as the Halo Effect. When a company is doing well—when its revenues and profits are up, and its share price is strong—it’s natural to infer that the company has a good strategy, an effective leader, excellent customer focus, and a vibrant corporate culture. When that same company falters, it’s easy to say that the strategy was misguided, the leader became ineffective, the culture became complacent, and the customer was neglected.
In fact, very often the company did not change much at all. Rather, people made different attributions based on its changing performance. Unfortunately, so much that we read about companies—in the business press, case studies, and even large sample research studies—is based on data that are undermined by the Halo Effect. These studies appear to have described the factors that lead to high performance, but are more correctly understood as identifying the ways that high performing companies tend to be described.

Most companies and organizations understand at some level they need to change. But they go for quick fixes instead, and do not possess the courage and  will to institute the kind of change that will make the difference long term.
I would rather build a house than work with organizations and companies that do not have the courage and will to do what it takes to institute real change.

Saturday, November 20, 2010

Macro Planning--Putting it Together

I am not sure I'll be able to connect all the dots for you here, but what I'd like to do is riff off this brilliant except from Herbert Simon's "Strategy and Organizational Evolution", courtesy of the top notch Farnam Street blog.

It's a longish post and well worth the read. Here's the bit I'd like to riff on:

Institutionalizing intelligence activities
How can a firm organize so that it will scan the horizons with sufficient vigor, identifying potential problems and potential opportunities? It is no accident that the eyes and ears are located on the surface of the body and not in its interior. Intelligence requires continual contact with the relevant environments, and in the case of business firms two of the most relevant and important environments are the end-use (customer) environment and the science and technology (research and development) environment. Other parts of the firm should not be excluded from the search for information, but these are perhaps the two most important in it.
The marketing function is not simply a function of selling and distributing products to customers. It is equally a function of acquiring, through contact with the end-use environment, information about the future of the firm's markets and of markets into which it might enter. Salesmen and sales engineers may play an important role in this intelligence activity, but only to the extent that it is an explicit part of their function, they are trained to do so and they are linked effectively in communication with top management, planning and design units. Specialized units may also provide various kinds of intelligence—products of customer polls, for example. I shall not attempt to describe in detail how one organizes intelligence about the end-use environment, but simply call attention to its importance.

This is a big part of what the three pillars approach is designed to do.
One-- is to create the culture for what Simon calls "institutionalizing intelligent activities".
Two--systems thinking is understanding that all the 'parts' of an organization cross function is a multitude of ways, and in a non-linear fashion.
Three--Organizational and personal learning is an autonomous incentive cycle that creates the organizational intelligence across all boundaries internal and external to the organization.
Four--Social media technologies are very well suited and evolving rapidly for a organization to fully embrace, utilize and extend it's internal and external intelligence.

Unlike a mechanical system approach to organizational behaviour, where the default mindset is everything has to be measurable to discern value, the living systems approach is process oriented where value is an emergent result of the process.
What we really need to remember here is all successful long term enterprises are based on relationships.
Relationships with your employees, relationships with your suppliers, relationships with your customers, and these all interconnect in ways that are increasingly unmeasurable. This is not something that is quantifiable through data.
When we really dig down, it is based on trust! 

To build and maintain trust and relations, any organization must have a culture and system in place to constantly develop and nurture that trust and those relationships. This is the very heart of the three pillars approach.

Extending this further, the days are increasing behind us where the organization, particularly publicly owned corporations, can be thinking of themselves as separate or above the larger socio-economic system. Enterprises that are going to last, and prosper in the rapidly changing environment of the future will noticeably be seen as part of the solutions to today's and tomorrow's challenges.
The internet and the social media technologies it has spawned will make it increasingly difficult to have a disconnect  between the values of the organization and the values of society at large.

Seeing the world from a living systems point of view means recognizing that we are all part of the larger system, and it's long term health depends on the quality of us and our organizational behaviour.

Winning organizations of the future will actively have a culture of macro planning with organizational intelligence where the long term health of the organization and that of the socio-economic environment on which it depends supersedes that of the short term incentives that most humans and organizations are prone to.
This is both a profitable and winning strategy.

Monday, November 8, 2010

Rich Social Media--Third Pillar (Pt Two)

I want to open this post by making a very key point: my strategy for 'social media' only makes sense in the broader context of it as part of my three pillars approach to an organizations operational process and functionality, and that the organization is viewed as a living system operating in an environment of other living systems.
For our purpose here, "living systems" is defined as any and all formal and informal forms of social organization. Economic activity is the result of all "living systems" and individuals pursuit of resources required to maintain life.

If we embrace the idea of systems thinking (how else, I'd ask, would we think of a world that is comprised of a complex networked web of systems??) as how we think of and look at our organization, and we embrace the idea that our organization should be and is a learning organization, then what the internet and social media give us is an amazingly vast set of ways and tools to be a highly adaptive and trusted organization in today's highly dynamic and ever changing world.

One of the most obvious uses is internal social networking. Your organization has an enormous amount of untapped information, knowledge and intelligence than your organization is currently using. A stratified organizational hierarchy is a real damper on motivation and the inherent talent within your organization. Internal social networking can flatten that. If management and executive are threatened by that--get over it. Either they are insecure, incompetent or both. If internal social networking sniffs these sorts of bureaucratic deadweights out, be grateful. They are doing nothing but sapping team spirit and your bottom line. Skilled, competent management and executives can and will use the extra resources to do their jobs better, more productively, more intelligently with greater confidence and decision success rate than before. This exists within your organization--unleash it.

Organizations themselves are inherently complex, nobody can know everything there is to know about it and it's functionality--including you. For that matter, odds are you have an ignorance about a lot about your organization.
A comprehensive list of the array of networking tools available is beyond the scope of this post, but it's quite likely they might exist already within your organization and are being under utilized.

Externally, the dynamics of networking increase exponentially. The list of examples of companies and organizations that have tapped into and connected with their customer base, supply webs, and the randomness of network connections is legion. Your organization may already be tapped into it.

Developing the full potential of your organization using techniques and tools enabled by the internet and social media take courage, vision, and a change of leadership style. In today's socio-economic climate, this isn't an idle choice, it's becoming a necessity.

Why? Because the environment in which your organization operates is morphing daily. To grasp it, it takes things like a distributed intelligence to better comprehend it. That intelligence lies both internally and externally to your organization. If you are developing strategic paths without at least an awareness of what that intelligence has to offer, you are missing pieces of the picture. You are flying blind into an increasingly complex future.

Leading organizations that want to be the winners of today and tomorrow understand this. 

Rich Social Media--Third Pillar (Pt One)

Let me start this right off by saying I am not an expert on social media. I barely exist on Facebook, I do not as yet have a Twitter account, I blog but only to a very small and intended audience.
And this is partially the point--I don't have to be. In today's operating environment, we can't be everything, know everything, do everything. We are continually being broken down into, or fragmented into two very broad categories--specialists and generalists. It will be of interest at some point that I draw many of my functional uses of those two terms from my many years in the home building industry--but this is for posts further down the road.
I am in the generalist category, a synthesizer of specialists, you might say.

Now, while there are many ways to effectively use social media for both personal and business use, in this post we want to look at it as part of a broad strategy of integrating it as part of a three pillars approach as an organizational operating system.

To start, if we are running an organization, we are thinking of it as a living system. A living system can be guided, but not controlled. As a living system, it consists of web of sub-systems. Very broadly, those are going to be employees, your supply webs or networks (supply chains is so last century!), your customers and/or constituents, if publicly owned, your shareholders and/or stakeholders, if publicly owned, the media and social media including analysts. Every organization will be slightly or very different, but you get the idea.
First thing we need to understand is these are already networked in ways that can't be mapped or understood. They are also networked in ways that can be mapped and somewhat understood. (Valdis Krebs for example, provides a service and software for social network analysis)
All these sub-systems are made up of individual actors, each with varying motives. Each individual actor now has the means to connect and communicate with any of the other actors. This also needs to be understood. 

To be clear, all these sub-systems that are part of the web that is your organization are networked in ways that can and cannot be mapped and understood.
This is important to realize. It's also part of why if we're running an organization we have to change our perceptions of control. We can guide, we can lead, we can not control.
If the sub-systems are connected in formal and informal ways, they exchange information and knowledge. This is both good and bad. You need to understand this. You also need to understand that it is unlikely that you know whether it's good or bad.
Ignore this dynamic at the peril of you and your organization. This dynamic exists whether you like it or not.

In the world that is now, this is both the good news and bad news. It's probably salient to point out now that in today's world it's best if you can hold those opposing points of view in your mind at once. This is part of systems thinking.

The dynamics that are the internet and the social media it enables are working both for and against your organization as we speak (so to speak). By now, I hope you realize you are not controlling that dynamic.
This said, it's not unlikely that your organization does have some kind of social media strategy. You may even have a social media guru of some sort in your employ. It's likely you have some kind of social media branding strategy.

What I want to do is develop a deeper understanding for you and your organization that there is much more to be gained via the internet and social media.

That is what we'll dig into in the next post (which, in blog style, will appear before this post. )

Rich Social Media--Context

If we are creating an operating program for organizations to be more adaptive to the challenges and opportunities of the 21st century with the explicit goal to be a leading, winning organization of the 21st century, the question here is:
How does 'social media', or as I call it, "rich social media" play into my three pillars approach for creating such an operating program?

To fully understand the role that so called social media plays, we need a quick overview of the environment in which it operates.

All organizations, private or public, profit or not, operate in an environment and compete and/or cooperate for resources.
For much of the industrial era economy, this environment was relatively stable. Or, to be more accurate, the perception of the time was that it was stable. (a retrospective look would reveal it wasn't as stable as the perception.) The production of goods and services was mechanized, standardized, the input and output was measurable (or so it seemed), business cycles were long (the horizon was distant), management and organizational processes, systems, culture and psychology reflected the times in which it operated in.

With the advent of the computer and subsequently the 'knowledge economy' (or 'information economy'. these are subjective terms to try describe something that is broader, deeper than we can conceptualize, but serve the purpose of distinguishing the modern economy from that of the old industrial economy.) we have been leaving the mechanized industrial economy behind, and have entered an economy that is much more fluid, dynamic, non-linear, chaotic and unpredictable.
Operating in such an environment necessitates an entirely different mindset (mental model) and operating system, one that reflects biology and living systems. It is very important to understand this is not analogous or metaphorical. We are much more defined by living systems than we are mechanical systems.

Accepting this reality means giving up our idea of what is knowable, what is manageable, what is controllable along with the conventional wisdom of how to operate in an environment such as the one that exists now. We need to think more in terms of leading, rather than controlling, inspiring rather than constraining. 
In the industrial economy human capital was considered and treated as parts of a machine, and as a cost. While not strictly conceived of that way today, human capital is not considered with an open mind as to it's massive potential, a potential any organization needs to fully embrace to compete in today's operating environment.

For organizations to adapt, thrive, and remain relevant today, there are three main tenets that need to be understood and accepted:
One--life is comprised of countless interactions among living systems (enhanced by mechanical and socio-technological systems creating a web of systems that is unknowable. This is complexity.
Two--knowledge and information are what separates those that survive and those that do not.
Three--communication and media have forever been transformed by the internet.

These are pretty incontrovertible. If they are, you probably should not be reading this blog, you should close your browser, and move on. I can't help you in any way, shape or form. :) There are people and organizations that may live outside the bounds of those tenets, but they're also unlikely to be relevant in the future.

Accepting these, it becomes inherently logical for people and organizations:
One--to have a conceptual and operational understanding of living systems with a functional systems thinking mindset.
Two--to have a culture of organizational and personal learning to facilitate the acquisition and spread of knowledge and information.
Three--to have a conceptual and operational understanding of the nature and use of the internet and social media.

A tidy little overview like this makes it sound all so simple!! It isn't. Not at all. Why? That answer is simple--we're humans. As individuals, we're complex, and an aggregate and organized, we're even more so.
If this was easy, I'd have no prospects, and I'd be better off sticking to the sensible profession of home building.

Okay! We have a brief and I hope succinct bit of context here, in the next post I'll look at the concept of social media and the internet in more detail.

Sunday, November 7, 2010

Social Networking

I've not addressed this aspect of my approach to organizational and personal adaptation to the change and challenges we're facing, and over the next few weeks I want to address this deeper.
For today, however, I want to post this quote:
 “If you don’t have a social strategy, you better go get one,”
That from here:

That in turn from this very encouraging post here at Andrew McAfee's blog. (Which is on my blog roll to the right)

Tag-Why Few Organizations Adopt Systems Thinking

Tidy little paper by Russel L. Ackoff on Why Few Organization Adopt Systems Thinking

Key points, one I touched upon below in my previous post:
--the cover your ass principle endemic in most organizations.
--systematic punishment of failure
--accounting practices and principles that cannot account for the value output of systems thinking
--very little inter-organizational communication...the right hand not knowing what the left hand is doing
--jargon that makes sense to those learned in systems thinking but is incomprehensible to lay persons

Missed in the paper is the personal responsibility aspect, which, near as I can tell, most systems thinkers miss.

Hat tip for this piece goes to the LinkedIn discussion boards on Systems Thinking.

Coming from the ground up as I have, with no formal training or academic grade education, I perhaps have a more intuitive touch in getting people I talk to to grasp systems thinking. It's not that difficult. But! It takes time.
Adopting systems thinking is another matter. That is in large part to our culture of individualism, and not having a means of continuous education and practical application.
My goals for Transforming Organizations and Transforming People are to help address these shortcomings, but there are many boulders to roll up hill before I/we get to that point.

Living Systems--Feedback Cycles 202

Or, "Why We Can't Get Good Government or Business Practices"

My brother sent me a link yesterday for a news article George W. Bush calls Katrina photo a "huge mistake" .
There's several aspects to this story that I'd like to explore.
One, is in retrospect, Bush takes ownership over his handling of Katrina. In retrospect. In real time, during the crisis, we've evolved a system that makes that kind of ownership and responsibility either highly difficult or nigh on impossible.
The feedback loops of media and voters that vilify that kind of leadership. Instead, we get spin, and cover-our-butts type statements and actions.
Leading in politics and in business, in other words, in this world we've created, that we are a part of, becomes very difficult. We are part of the feedback loops that create this dynamic.

Two of the largest systems that have enormous effect on the general living systems that is general society--government and publicly traded companies--are governed by these feedback loops that are us.

It's easy to want to blame capitalism and/or government for the plights of society. Yet, who are the voters? Who shapes the media? Who are the people that have shares on publicly traded companies? Who is supporting all this? Oh, yeah, that would be us.

This is the tough part of systems thinking. Taking ownership, taking responsibility in our part of these systems. We may understand our ideological political beliefs (this is highly debatable, by the way) but we do not understand how government works, we may understand our own economic needs, but we do not understand how economies work.
We are the feedback loops. But understanding that takes responsibility, ownership, and a desire to improve on our ability to be part of a sustainable system.

Leadership and a real desire for sustainable change starts with you. Yeah, you. Yes, it's work. Yes, it means adapting new mental models as to how the world works. Yes it's grasping the very graspable concept of systems thinking and that we are all part of living systems and that we all play our roles in the feedback loops of these systems.

A former President is taking ownership of some of his roles. How about you?