How Can IT Fix the Problems of Stupid Organizations?

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  • The collective intelligence of an organization can be improved by appropriate technologies used in appropriate ways to tackle the inherent complexity of modern business in a dynamic environment.  These technologies include business intelligence, event processing, knowledge management, process improvement and social networking.  Most large organizations use these technologies, but fail to join them together or use them effectively, so there is a huge missed opportunity here for IT.  Ultimately, the value that IT can bring to business is not just from automating clerical tasks and enabling large-scale global operational processes, but from enabling and supporting management processes such as coordination and innovation.  Organizational intelligence is a critical measure of the management capacity of an organization in a demanding competitive environment, and IT has a key role in improving organizational intelligence.  This talk will provide a roadmap for IT to make a strong contribution to business viability and survival.
  • The collective intelligence of an organization can be improved by appropriate technologies used in appropriate ways to tackle the inherent complexity of modern business in a dynamic environment.  These technologies include business intelligence, event processing, knowledge management, process improvement and social networking.  Most large organizations use these technologies, but fail to join them together or use them effectively, so there is a huge missed opportunity here for IT.  Ultimately, the value that IT can bring to business is not just from automating clerical tasks and enabling large-scale global operational processes, but from enabling and supporting management processes such as coordination and innovation.  Organizational intelligence is a critical measure of the management capacity of an organization in a demanding competitive environment, and IT has a key role in improving organizational intelligence.  This talk will provide a roadmap for IT to make a strong contribution to business viability and survival.
  • http://demandingchange.blogspot.com/2010/05/symptoms-of-organizational-stupidity.html
  • We may differentiate customers (and their behaviour and intentions) according to a number of factors, with greater or lesser granularity. Each degree of differentiation increases the complexity of the process. Under the right conditions, increased differentiation may produce better outcomes for the organization and its customers. Under the wrong conditions, differentiation merely adds complication, increases cost and risk, and may produce worse outcomes.There are arbitrarily many degrees of differentiation – these are just typical points on the curve.
  • The introduction of the loyalty card represented a radical strategic shift for the large retail chains. Stores now had a formal basis for recognizing a customer as the same again. They can identify customers, and collect and analyze data about the behavior of specific customers. And they can use this analysis to differentiate the response to different customers. For example, different customers may receive different special offers. Amazon is of course well-known for its pioneering work in providing targeted information and deals based on a customer’s browsing and buying history, and creating new forms of associative information which may be reflected back to the customer.Obviously if the retailer can identify the customer as she enters the store, then this differentiation can be done as the customer browses, rather than only when the customer comes to pay. This is relatively easy to implement with online shopping (for example through the use of cookies); and there are various mechanisms that might achieve the same result in a physical store – perhaps face-recognition software in the store camera, or loyalty cards with RFID chips – if the obvious privacy concerns can be allayed.And if there are RFID chips on the goods and RFID scanners on the shelves, then the customer can be presented with information based on the stuff that is already in the shopping basket. Again this capability is very easy to implement for online shopping, and this stimulates retailers to build an equivalent capability for physical shopping. (This is an instance of an increasingly common generalization pattern: take a simple innovation from one channel and look for ways of implementing it in other channels. We then need to define a general structure for the data from different but equivalent sources, and render the data through a common service interface, to enable aggregation and comparison of data across channels.)
  • Effective differentiation is a function of the intelligence embedded within the customer management capability. The greater the “quantity” of intelligence, the greater the capacity to differentiate effectively.For the sake of analysis , we may regard “Intelligence” and “Operation” as separate sub-capabilities of Customer Management.We can then identify the signals that pass between “Intelligence” and “Operation” , and the attenuation and amplification mechanisms that govern these signals.
  • What are the events and information flows that help to join up the retail operation as a whole?Where is the strategic knowledge of the enterprise located, and how is it continuously development and effectively used? What are the mechanisms to support innovation and organizational learning?
  • There are many different pathways for joining-up the business.How does a jar of organic baby food get managed alongside other jars (pasta sauce)?alongside other baby goods?alongside other organic produce?Wrong answer #1 – pick one of the above. Adopt hierarchical managementWrong answer #2 – pick two of the above. Adopt matrix management. Wrong answer #3 – swing erratically between different alternatives (oscillation)Correct answer – manage and coordinate all the relevant pathways. Adopt complexity management.Note – each of these pathways may be associated with a different capability area, and mobilizes a different kind of intelligence.
  • Lawrence, P., and Lorsch, J., "Differentiation and Integration in Complex Organizations" Administrative Science Quarterly 12, (1967), 1-30.In this paper Lawrence and Lorsch develop an open systems theory of how organizations and organizational sub-units adapt to best meet the demands of their immediate environment. Organizations must balance differentiation and integration to be successful. Those companies who manage to achieve high sub-unit differentiation and yet still maintain high integration between sub-units seem to be best equipped to adapt to environmental changes.Groups that are organized to perform simpler, more certain tasks (e.g., production groups) usually have more formal structure than groups focusing on more uncertain tasks (e.g., research and development).The time orientation of sub-groups is primarily dependent on the immediacy of feedback from their actions. Thus sales and production groups have shorter time orientations than R&D.The goal orientation of sub-units is based relative to the part of the environment that affects them the most.http://faculty.babson.edu/krollag/org_site/org_theory/Scott_articles/lawren_lorsch_cont.html
  • http://www.robertelliott.com.au/gallery.php?id=people
  • How Can IT Fix the Problems of Stupid Organizations?

    1. 1. Organizational Intelligence<br />Richard Veryard January 2011<br />How Can IT Fix the Problems of Stupid Organizations?<br />
    2. 2. Abstract<br />Twitter tag #orgintelligence<br />Organizational intelligence is a critical measure of the management capacity of an organization in a demanding competitive environment. <br />IT has a critical role in maintaining and improving organizational intelligence.<br />
    3. 3. Structure<br />Twitter tag #orgintelligence<br />Situation: Characteristics of intelligent organizations<br />Problem: How intelligent organizational succeed (and stupid ones fail)<br />Implication: How IT contributes (possibly) to organizational intelligence and stupidity<br />Need: Leadership role for IT in improving organizational intelligence<br />
    4. 4. What is organizational intelligence?<br />Ignore important signals from the environment<br />Cannot discriminate between the important and the trivial<br />Respond incoherently to crisis<br />Oscillate wildly between extremes<br />Fail to learn from mistakes<br />Innovate slowly and painfully<br />Detect and interpret weak signals of possible significance<br />Mobilize coherent response to complex opportunity<br />Rational approach to risk and uncertainty<br />High-quality decision-making throughout the organization<br />Collective learning and innovation<br />4<br />Stupid Organizations …<br />Intelligent Organizations …<br />
    5. 5. Org intelligence as whole-system property<br />Very clever people, who don’t talk to each other<br />Very sophisticated technology, poorly wired together<br />Patterns of interference<br />(2+2=3)<br />Good people, who work well together<br />Good technology, used well<br />Patterns of collaboration<br />(2+2=5)<br />5<br />Stupid organizations may contain <br />Intelligent orgs may contain <br />
    6. 6. Org intelligence as sociotechnical property<br />How do we know what is going on?<br />How do we understand what is going on?<br />How do we act upon what is going on?<br />How do we remember things?<br />How do we communicate things?<br />How do we learn from experience?<br />All of these capabilities are both technical (dependent upon an array of devices) and social (dependent on other people).<br />
    7. 7. Symptoms of stupidity<br />7<br />Choke<br />Inability to access existing capability.<br />Denial (Kettle Logic)<br />“Problem, what problem ?”<br />Guesswork <br />Acting in the dark.<br />Meddle <br />Tinkering and management interference without understanding.<br />Muddle <br />Confused by overlapping and conflicting narratives.<br />Panic <br />Overtaken by events.<br />Policy-based evidence <br />Finding data to support or justify <br />Ignoring any contrary data. <br />Repetition / Oscillation <br />Repeating same mistakes without learning. <br />Going backwards and forwards between two problems without permanently solving either of them.<br />Short-Sighted / Tunnel Vision <br />Narrow focus on a single short-term goal<br />Inability to consider broader or longer-term vision.<br />
    8. 8. 8<br />Information<br />Gathering<br />Decision<br />& Policy<br />WIGO<br />(what is going on)<br />Learning& Development<br />Knowledge& Memory<br />Simple intelligence loop<br />
    9. 9. Information<br />Gathering<br />Decision<br />& Policy<br />WIGO<br />(what is going on)<br />Learning& Development<br />Knowledge& Memory<br />Complex intelligence loop<br />9<br />Sense-Making<br />Communication & Collaboration<br />
    10. 10. Organizational intelligence requires six sociotechnical capabilities<br />Information Gathering<br />How well does the organization collect and process information about itself and its environment?<br />Sense-Making<br />How well does the organization interpret and understand itself and its environment?<br />Decision-Making & Policy<br />How effective are the (collective) processes of thinking, decisions, policy and action?<br />Knowledge & Memory<br />How does the organization retain experience in a useful and accessible form?<br />Learning & Development<br />How does the organization develop and improve its knowledge, capabilities and processes?<br />Communication & Collaboration<br />How do people and groups exchange information and knowledge? How do they share ideas and meanings?<br />10<br />
    11. 11. 11<br />“Perhaps you have already seen memos from me or others here about the importance of the Internet. I have gone through several stages of increasing my view of its importance.”<br />“Exponential improvements in communications networks … the Internet is at the forefront of this”<br />“Now I assign the Internet the highest level of importance.”<br />Microsoft Example<br />Bill Gates “Tidal Wave” May 1995<br />
    12. 12. Microsoft Example<br />Review of history<br />Weak signals becoming stronger<br />Gradual shift of opinion<br />Pivotal shift in direction<br />Evolving strategies<br />Collective responsibility<br />Any large organization faces a huge number of challenges, both large and small.<br />Success of organization depends on achieving a good enough response to a good number of these.<br />Key Points<br />General Implications<br />
    13. 13. Some organizations don’t need much intelligence<br />Too much intelligence may be “overkill” or “overhead”<br />Organizations can survive by following simple predictable patterns<br />Simple predictable patterns create vulnerability<br />Intelligence is vital to survival<br />13<br />In simple stable environment …<br />In complex dynamic environment …<br />
    14. 14. How much intelligence do we need?<br />Multi-Sided Markets<br />Demand Volatility<br />Globalization<br />Falling rate of profit (?)<br />“Fly-By-Wire” Business<br />“Requisite Variety”<br />Business Complexity<br />Management Capability<br />
    15. 15. Operational Differentiation<br />Degrees of Differentiation<br />Retail Example<br />15<br />Zero variation. <br />No differentiation between customers. One size fits all.<br />Fixed segmentation. <br />The retailer identifies a number of (fixed ) market segments, and assigns each customer to the appropriate segment.<br />Dynamic deconstruction . <br />Differentiation based on the detailed actions and inferred intentions and context of customers.<br />Customer Management<br />Customer<br />Purchase<br />Segment<br />Context<br />
    16. 16. Progressive Differentiation<br />Anonymous Customer<br />Customer Identified at Checkout (Loyalty Card)<br />Customer Behaviour Tracked Inside Store (RFID)<br />?<br />Retail Example<br />Your Industry<br />16<br />
    17. 17. Capability Intelligence<br />Focus on the most relevant differentiators.<br />Sufficient range of responses to differentiators.<br />Coordination between variety of perceived differentiation and variety of response.<br />Feedback loops to improve relevance and accuracy of differentiation.<br />Feedback loops to refine responses.<br />Progressive elimination of unnecessary or irrelevant complication, along with exploration of new opportunities<br />Success Factors of Effective Differentiation<br />Customer Management<br />17<br />customer<br />intelligence<br />attenuation<br />amplification<br />customer operation<br />
    18. 18. CapabilityCoordination<br />intelligence coordination<br />18<br />customer<br />intelligence<br />product<br />intelligence<br />store<br />intelligence<br />staffing<br />intelligence<br />amplification<br />amplification<br />amplification<br />amplification<br />attenuation<br />attenuation<br />attenuation<br />attenuation<br />customer operation<br />product operation<br />store operation<br />staffing operation<br />operation coordination<br />
    19. 19. Supplier Segment<br />19<br />Customer Segment<br />Buying?<br />Promotions?<br />Customer Segment<br />Store Layout?<br />Integration Pathways<br />
    20. 20. Differentiation and Integration<br />20<br />Integration<br />Which route to improved intelligence?<br />Which route to improved intelligence?<br />Differentiation<br />
    21. 21. IT = information AND technology<br />Advanced technologies, tools and platforms for information processing and communication<br />Effective use of information and communication across enterprise systems<br />Not Only<br />But Also<br />
    22. 22. How does your organization discover what is (really) going on?<br />Enterprise applications and corporate databases<br />Dashboards and reports<br />Management accounts<br />Management by walking around (MBWA)<br />Water cooler<br />The Internet<br />Formal systems<br />Informal systems<br />
    23. 23. From Water Cooler to Internet<br />23<br />Blogger<br />Delicious<br />Facebook<br />Flickr<br />Google<br />Linked-In<br />Twitter<br />Yahoo<br />How do such devices change the way we exchange information and ideas? Better, worse, or just different?<br />
    24. 24. Tools for organizational intelligence<br />The collective intelligence of an organization can be improved by appropriate technologies used in appropriate ways.<br />Most large organizations use these technologies, but fail to join them together or use them effectively.  <br />Business intelligence, data mining and analytics<br />Event processing<br />Knowledge management / content management<br />Process improvement & performance management<br />Social networking<br />
    25. 25. Some attempts to join the pieces …<br />Business Intelligence<br />Command and Control<br />Knowledge Management<br />Business Process Mgt<br />Enterprise 2.0<br />shown in following slides<br />There is a little industry associated with each loop, each offering some useful tools and practices.<br />But none of these loops provide the complete picture.<br />Loops<br />Assessment<br />
    26. 26. 26<br />Sense-Making<br />Information<br />Gathering<br />Decision<br />& Policy<br />WIGO<br />(what is going on)<br />Knowledge& Memory<br />Business Intelligence Loop<br />
    27. 27. 27<br />Sense-Making<br />Information<br />Gathering<br />Decision<br />& Policy<br />WIGO<br />(what is going on)<br />Communication & Collaboration<br />Command and Control Loop<br />
    28. 28. 28<br />Sense-Making<br />Information<br />Gathering<br />Knowledge& Memory<br />Learning& Development<br />Communication & Collaboration<br />Knowledge Management Loop<br />
    29. 29. 29<br />Information<br />Gathering<br />Decision<br />& Policy<br />WIGO<br />(what is going on)<br />Learning& Development<br />Knowledge& Memory<br />Business Process Management<br />
    30. 30. 30<br />Sense-Making<br />Learning& Development<br />Knowledge& Memory<br />Communication & Collaboration<br />Enterprise 2.0 Loop<br />
    31. 31. Who is responsible for intelligence?<br />Information Technology?<br />Enterprise Architecture?<br />Knowledge Management?<br />Operations Research?<br />Human Resources?<br />Innovation?<br />Strategy?<br />31<br />
    32. 32. IT has a key role in improving organizational intelligence<br />The value that IT can bring to business is not just from automating clerical tasks and enabling large-scale global operational processes…<br />… but also from enabling and supporting management processes such as coordination and innovation.<br />Not Only<br />But Also<br />
    33. 33. New Challenges for IT<br />“These are the standard things we pay attention to in our business.”<br />“Here are the systems and dashboards that focus management attention on these standard things.”<br />Alert and aware. Always open to weak signals.<br />Building flexible tools and platforms to support exploration and experimentation.<br />FROM<br />TO<br />
    34. 34. New Challenges for IT<br />We collect and control information as an asset.<br />We give management the information they ask for. How they use this information is up to them.<br />We understand how effective use of information contributes to business outcomes.<br />We support the whole information  decision cycle.<br />From abdication<br />To engagement<br />
    35. 35. New Challenges for IT - Example<br />We provide people with the facility to send and receive email.<br />Ambiguous and misdirected emails waste time and attention, and reduce management effectiveness.<br />Better social protocols for email would benefit the organization.<br />And for some purposes, there are better tools than email. <br />Situation<br />Opportunity<br />
    36. 36. New Challenges for IT<br />Providing systems and reports and dashboards and tools and platforms<br />Helping the organization<br />With all these tools <br />To use information <br />Intelligently<br />To the benefit of the organization.<br />Not only<br />But also<br />
    37. 37. New Role for IT?<br />Chief Information Officer<br />Chief Intelligence Officer<br />from<br />to<br />
    38. 38. … and more<br />One-Day Workshop February 9th (Unicom)20% discount for members of BISSG<br />OrgIntelligence.BlogSpot.com<br />Future Events<br />Other Material and Links<br />

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