Organizational Intelligence Richard Veryard January 2011 Modelling Intelligence in Complex Organizations
Abstract Twitter tag #orgintelligence Organizational Intelligence can be modelled as a set of cognitive loops … … integrating human, social and machine intelligence within a sociotechnical system or enterprise. These models provide a useful analytic perspective on business viability and survival. What are the implications of this approach for requirements engineering and organizational change?
Traditional Divide Smart people Smart organizations Smart machines Smart systems and networks Human Intelligence Machine Intelligence Organizational change Requirements engineering
Reductionist view:Cognition only makes sense for individuals Only individual people can “know” and “understand” things. Organizational cognition is an aggregation of individual human cognition. Perception Knowledge Learning Intelligence Individual Collective
Holistic view:Individuals inhabit systems What we know (or think we know) depends critically on our environment Social systems Technical systems Organizational cognition is not an aggregation of individual cognition. More? Less? Completely Different? Individual Collective
Talent Myth The success of an organization depends on a few highly talented individuals. Reliance on “talent” can destroy an organization. See for example: Malcolm Gladwell’s analysis of Enron Belief Observation
A sociotechnical perspective Sociotechnical systems can be decomposed into social subsystems and technical subsystems. The subsystems of a sociotechnical system are themselves sociotechnical. Reductionist View Holistic View
Sociotechnical Cognition How do we know what is going on? How do we understand what is going on? How do we act upon what is going on? How do we remember things? How do we communicate things? How do we learn from experience? All of these capabilities are both technical (dependent upon an array of devices) and social (dependent on other people).
Historical ExampleGalileo Newton Galileo’s observations used a new optical device. Galileo didn’t know how the device worked, so his calculations were wrong. Newton understood optics, corrected Galileo’s theory.
Modern Example: Google A third-class mind is only happy when it is thinking with the majority. A second-class mind is only happy when it is thinking with the minority. A first-class mind is only happy when it is thinking. A. A. Milne What happens if you use Google as your primary lens for viewing the world? (Many people do.) Do you understand the “optics” of how Google works? (Most people don’t.)
How does your organization discover what is (really) going on? Enterprise applications and corporate databases Dashboards and reports Management accounts Management by walking around (MBWA) Water cooler The Internet Formal systems Informal systems
From Water Cooler to Internet 14 Blogger Delicious Facebook Flickr Google Linked-In Twitter Yahoo How do such devices change the way we exchange information and ideas? Better, worse, or just different?
Business example: Transport Network What is the operational state of the line? Are the drivers in the right place? Are the trains in the right place? Is there a risk of breaching performance targets? Control room displays and dashboards Automatic scheduling software Telephones, personal contact etc Questions Control subsystems
Three strategies Several interacting operational subsystems with complex side effects Train timetable Driver roster Signals Deconfliction Central optimization Distributed intelligence (“power to the edge”) Challenges Approaches
Exploring system properties Robust Efficient Variation Intelligent Efficient / Effective Variation Operational System Management System Requisite variety Requisite Variety: The more “complexity” you have on the left side, the more “power” you need on the right side.
Planning and Coordination Challenge Normal Timetable Defines “ideal” operationDefines variation tolerances. Normal Operations Within operating limits defined by normal timetable. alert restore Complexity Increases Emergency Timetable Plan (or fragments of plan) available when normal timetable breaks down. Includes transition plan for returning to normal timetable. Abnormal Operations Outside operating limits defined by normal timetable. invoke
Typical responses to crisis Reduce operational complexity Provide skeleton service Drop non-essential tasks Significant fall in operational performance. Call in higher levels of management Are they any better at solving complex problems? Maybe not, but it’s what they’re paid for. Complex interaction with other agencies Aargh!! Simplification Escalation
Intelligence Strategy Attempts to “solve” these complex problems centrally using a single integrated set of (dynamic) planning and (re)scheduling tools. Optimized schedule Real-time optimization The problem-solving capacity of the system is distributed across several autonomous subsystems, each supported by human and machine intelligence. Directed Intelligence Collaborative Intelligence
Towards the Network-Centric Business“Power to the Edge” 22 improves Robustly Networked Workforce Information Sharing Based on Alberts & Hayes dramatically improves Quality of Information Information Sharing and Collaboration enhances Shared Situational Awareness Mission Effectiveness Collaboration Shared Situational Awareness enables Self-Synchronization
Many cycles of learning Reflex (sub-second) Automatic responses to urgent events – e.g. safety cut-out. Correction (minutes, hours) Sorting out complex operational problems Prevention (weeks, months) Identifying systemic improvements Experimentation Note the different tempi associated with these three cycles 23
Collaboration Requirements Adequate technology good communication tools, etc, Good use of technology Social protocols and habits knowing when to send a message to whom knowing how to send a clear message And embedded in business process. Not Only But Also
What is intelligence? An ability to make sense of complex situations and act effectively An ability to interpret and act upon relevant events and signals in the environment Ability to develop, share and use knowledge relevant to its business purpose Ability to reflect and learn from experience Collective, not just individual People fully engaged in their organizations Effective use of appropriate tools Effective coordination of people and systems
26 Information Gathering Decision & Policy WIGO (what is going on) Learning& Development Knowledge& Memory Simple intelligence loop
Information Gathering Decision & Policy WIGO (what is going on) Learning& Development Knowledge& Memory Complex intelligence loop 27 Sense-Making Communication & Collaboration
Organizational intelligence requires six sociotechnical capabilities Information Gathering How well does the organization collect and process information about itself and its environment? Sense-Making How well does the organization interpret and understand itself and its environment? Decision-Making & Policy How effective are the (collective) processes of thinking, decisions, policy and action? Knowledge & Memory How does the organization retain experience in a useful and accessible form? Learning & Development How does the organization develop and improve its knowledge, capabilities and processes? Communication & Collaboration How do people and groups exchange information and knowledge? How do they share ideas and meanings? 28
Some pieces of the puzzle … Business Intelligence Command and Control Knowledge Management Business Process Mgt Enterprise 2.0 shown in following slides There is a little industry associated with each loop, each offering some useful tools and practices. But none of these loops provide the complete picture. Loops Assessment
30 Sense-Making Information Gathering Decision & Policy WIGO (what is going on) Knowledge& Memory Business Intelligence Loop
31 Sense-Making Information Gathering Decision & Policy WIGO (what is going on) Communication & Collaboration Command and Control Loop
32 Sense-Making Information Gathering Knowledge& Memory Learning& Development Communication & Collaboration Knowledge Management Loop
33 Information Gathering Decision & Policy WIGO (what is going on) Learning& Development Knowledge& Memory Business Process Management
34 Sense-Making Learning& Development Knowledge& Memory Communication & Collaboration Enterprise 2.0 Loop
Requirements for Organizational Change ALL THE WAY FROM more effective and relevant information gathering … THROUGH TO rich and productive learning and development Differentiation Better ability to respond to relevant variation in the demand environment Integration Better ability to act coherently, in a joined-up manner More intelligence Achieving better outcomes
Operational Differentiation Degrees of Differentiation Retail Example 36 Zero variation. No differentiation between customers. One size fits all. Fixed segmentation. The retailer identifies a number of (fixed ) market segments, and assigns each customer to the appropriate segment. Dynamic deconstruction . Differentiation based on the detailed actions and inferred intentions and context of customers. Customer Management Customer Purchase Segment Context
Progressive Differentiation Anonymous Customer Customer Identified at Checkout (Loyalty Card) Customer Behaviour Tracked Inside Store (RFID) ? Retail Example Your Industry 37
Capability Intelligence Focus on the most relevant differentiators. Sufficient range of responses to differentiators. Coordination between variety of perceived differentiation and variety of response. Feedback loops to improve relevance and accuracy of differentiation. Feedback loops to refine responses. Progressive elimination of unnecessary or irrelevant complication, along with exploration of new opportunities Success Factors of Effective Differentiation Customer Management 38 customer intelligence attenuation amplification customer operation