Follow the Money

Strategic Execution: An Oxymoron?

What makes strategic execution an oxymoron?  The Heisenberg Uncertainty Principle states that: “The more precisely the position is determined, the less precisely the momentum is known in this instant, and vice versa.”  In other words we can measure how fast something is going, or measure the direction it is going, but not both at the same time. 

In 1927 Werner Heisenberg applied this statement to subatomic particles.  However the same seems true for most businesses.  If operations are optimized for execution (speed), then the business drifts from its intended strategy. However if operations are controlled to conform to a strategic purpose (direction), then business execution suffers. It is as if efficiency is the enemy of effectiveness; and the two can never be found in the same place at the same time.

Strategy and execution are two different worlds.  Strategy tends to be the domain of big picture outward thinking. What are market trends, where is the competition going, what are the next enablers for customer value creation? Whereas execution tends to be the domain of tactical inward thinking. How can each individual in each functional department be made more productive?

A paradigm shift is in management thinking is needed to treat execution with the same big picture system-wide thinking that is used in strategy development.  Organizations must stop treating organizational structures, business processes, and enabling technology as foundation infrastructures or raw materials and begin to leverage them as strategic weapons.

As strategic direction changes, each and every asset and activity of the organization should be reviewed for how it contributes towards executing the strategy.  Not just how to make them more cost efficient, but more effective overall at delivering the desired strategic value. Designing strategy directly into the operational fabric of an organization enables management to then focus full speed ahead on execution. Execution with strategy already built in removes the need to simultaneously manage and measure speed and direction; overcoming the limitations of Heisenberg’s Uncertainty Principle.

The Power of Diversity

Medical science recognizes the importance of diversity to the health of all living things.  Reduce the amount of diversity by any one of a number of factors and over time organisms become weaker in their ability to face new threats.

The same is true for social organisms, whether with friends or business.  Yet many social organizations appear to ignore this fact.  We as individuals seem to purposely look for situations where we are among those whom are most like us.  The exact opposite of what nature tells us we should be doing.

Much of the conflict I see in U.S. based business is caused by people with different backgrounds, experiences, and personalities.  Any surprise here?  Yet somehow this is viewed as negative.  Rather than embracing diversity of backgrounds, skills, or opinions as the secret to success it is, U.S. businesses seem to strive to eliminate it. 

A new year a new beginning.  Make it a New Years resolution to personally thank all of the people whom have at one time or another last year gave you grief, or otherwise represented a diverse view.  Then encourage them to join you in fostering diversity as the means for maintaining a strong and vibrant business community.

Who is the Customer?

How do you know a customer when you see one? We all hear: listen to your customers; customer service is everyone’s job; and without customers there is no business. These sayings are often repeated, and often believed - but who is this customer?

Customer is defined by most dictionaries as someone who purchases a product or service. Therefore the easiest way to identify a customer is if they give you money in return for a product/service. But what if a parent gives a merchant money for a product that a child uses? Aren’t they are both customers in this case? The parent is a direct customer of the merchant and the child is an indirect customer.

So the dictionaries are not fully accurate in their definitions. To better address the parent/child example, the customer definition should be expanded to: A customer is someone who accepts a product or service provided by the efforts of others, under mutually beneficial conditions.

In the example above, the merchant, parent, and child all established mutually beneficial conditions; with the parent accepting the product from the merchant, and the child accepting it from the parent. Under the expanded definition, the parent and child are customers of the merchant, and the child is a customer of the parent.

Consider a supply chain that consists of multiple companies. Using the new definition, each link in the chain is a customer to all the prior suppliers. Suppliers that understand the needs of their customers, their customers’ customers, and their customer’s customers’ customers, etc., will be able to provide increased benefits and greater value to each level of customer.

Now consider a single company. Supply chains exist within companies as well - since each individual in a company that accepts a product or service from another, under mutually beneficial conditions, is a customer.

This definition treats a lot of people as customers. Excellent customer service generates the same benefits from them as from any customer. Companies managing their internal supply chains as their external ones: reduce costs, increase throughput, lower cycle times, and improve overall quality.

Why IT Projects Fail

Studies show that over 70% of all Information Technology projects fail. Who is the perpetrator of these crimes? A little detective work identifies three possible suspects: technology, people, and processes. Which one is the culprit?

It’s extremely rare for a computer to make a mistake. Given the same inputs and state, a computer always generates the same outputs. So the fault doesn’t seem to lie in the hardware. Software is not as reliable as hardware. The definition of a trivial software program is one that has no bugs. This said it is usually not the software that causes projects to fail. Software is a flexible medium and easy to change. If a bug is severe enough it can usually be trapped and killed, or a workaround discovered.

People make as many or more mistakes as software. But people have been around long before computers. Before computers most projects seem to complete successfully. It turns out people are pretty flexible too; they are good at adapting to any situation. Given a problem, a group of people can almost always come up with a creative way to solve it.

That leaves process as our last remaining suspect. Process is pretty hard to put the finger on. Usually process is invisible, inflexible, unstructured, and undocumented. Process is such a shifty character it must be the villain. As it turns out process usually is the cause of most project failures because: 1) complex processes interact with each other in complex ways, 2) when performing analysis, design, development, and implementation, rarely is the impact of process considered, 3) an error in process is nearly impossible to detect, and 4) processes are difficult to change.

To reduce the odds of failure, IT projects should do two things. 1) Accurately document both the current-state and proposed future-state business processes impacted by the project, and 2) Implement change management with all of the rigor of project managment, enabling process transformation to keep up with the technical transformation.

Lean and Mean?

There are times when people think "lean" should also be called "mean." It is easier to use the savings from lean to cut staff, than it is to look for new and innovative ways to add greater customer value for the same labor cost.

This is one of the reasons for advocating the simultaneous adoption of both agile and lean methods. Agile provides a continuous lifecycle between strategy, delivery, and results. Results then form the basis for new strategies and new delivery capabilities, driving new results, etc. Agile, used as a continuous process, helps to discover new strategic investments for the savings resulting from going lean. Investments that payoff in increased revenues and profits - as opposed to just a bottom line impact of cutting staff.