I've just learned that a paper that was written by Pietro Micheli (Cranfield U), Toby Hatch (Oracle) and myself is now available as a case study on hbr.org. You can find it here.
Tuesday, October 12, 2010
New Book Teaches Business Executives and Anyone Struggling with Dilemmas How to Turn an Unknown into an Advantage
My latest book has just come out, I've been writing about it before in this blog. Here's my best short description of it...
Every day, the news reports on difficult dilemmas in business and public sector:
• In difficult economic times, the government needs to stimulate the economy, yet save costs. Should the government invest in infrastructural projects leading to new jobs, or cut deep in expenditures?
• A banking regulator sees problems at a small bank. If the regulator moves quickly, her actions become a self-fulfilling prophecy, harming the business. However, if the regulator moves too slow, the risk increases. What should the regulator do?
• A bank is confronted with professionals demanding high bonuses. Should it risk public outcry, or defecting professionals?
• How far can you go in interrogating a criminal suspect in order to prevent more crimes or an imminent attack?
• In difficult economic times, the government needs to stimulate the economy, yet save costs. Should the government invest in infrastructural projects leading to new jobs, or cut deep in expenditures?
• A banking regulator sees problems at a small bank. If the regulator moves quickly, her actions become a self-fulfilling prophecy, harming the business. However, if the regulator moves too slow, the risk increases. What should the regulator do?
• A bank is confronted with professionals demanding high bonuses. Should it risk public outcry, or defecting professionals?
• How far can you go in interrogating a criminal suspect in order to prevent more crimes or an imminent attack?
Executive decision-making is fraught with dilemmas, trying to reconcile long-term and short-term needs, and the requirements of multiple stakeholders. Unfortunately, we don't know how to solve dilemmas.
Based on years of research, an international survey and in-depth interviews with executives from global companies such as Cox Communications, Novozymes and Polycom, as well as Dr. Edmund Stoiber, former minister-president of the largest state in Germany and General (ret.) D.L. Berlijn, former commander of the Dutch Armed Forces, I have concluded that avoiding dilemmas is not a good strategy, and that there are perfectly feasible ways of dealing with dilemmas.
All we learn in our business education and best practices is analysis. However, analysis only confirms and strengthens dilemmas. A different toolkit is needed for strategic decision-making: not analysis, but the opposite, synthesis. By bringing together opposite positions, you fundamentally solve business problems, and you raise your organization to a new level of insight.
While almost 60% of respondents world-wide report that they cannot effectively solve any of the standard dilemmas that businesses face, I use many practical examples to describe how the ability to solve dilemmas leads to tangible business benefits. In the book, I describesthe six dilemmas all businesses face, and how to effectively tackle them. Dr. David P. Norton, one of the creators of the Balanced Scorecard, called the book "excellent" and "an important work that will enhance organizational effectiveness."
For answers on how to solve these and more, contact me here.
Dealing with Dilemmas: When Business Analytics Fall Short
John Wiley & Sons, Inc.; $49.95; 240 pages
Available Now; ISBN 978-0470630310
Dealing with Dilemmas: When Business Analytics Fall Short
John Wiley & Sons, Inc.; $49.95; 240 pages
Available Now; ISBN 978-0470630310
About the Author
Frank Buytendijk is a former Gartner Research VP and currently Vice President and Fellow at Oracle Corp. He is an exceptional speaker at conferences all over the world, and is known for his out-of-the-box thinking and provocative style. His professional background gives him a unique perspective on business strategy, performance management and organizational behavior. His work was awarded the "thought leadership award", the "cultural icon award" and "most innovative presentation award". For more information, go to www.frankbuytendijk.com.
Frank Buytendijk is a former Gartner Research VP and currently Vice President and Fellow at Oracle Corp. He is an exceptional speaker at conferences all over the world, and is known for his out-of-the-box thinking and provocative style. His professional background gives him a unique perspective on business strategy, performance management and organizational behavior. His work was awarded the "thought leadership award", the "cultural icon award" and "most innovative presentation award". For more information, go to www.frankbuytendijk.com.
Book review
... and in the series of videoblogs: reviewing a few really good books I recently read. Access the videoblog here. More on www.youtube.com/frankbuytendijk.
frank
Creating options
An important measure of the success of an IT strategy and architecture is its ability to adapt to changing circumstances.
• CIOs are faced with long investment cycles, while technology lifecycles are only getting shorter. IT needs to be ready for trends and requirements that are completely unknown when the investments are made.
• A good part of IT innovation that drives new business opportunities comes from consumer IT, and CIOs need to be ready to link in. Today this comprises the 2.0 world: Trends on the horizon include augmented reality and sensor technology, for example. Analyst company IDC predicts unstructured data will grow at twice the rate of conventional data. Already by 2010, unstructured data will make up the majority of all enterprise data.
• Many businesses are investing in value chain integration, requiring processes and systems to link to a wide variety of processes and systems owned by customers, partners, suppliers, and other stakeholders.
IT offers an infinite range of alternatives and unlimited choice in how to tackle these challenges. Winnowing down a wide range of technology choices requires discipline. CIOs can demonstrate the required leadership by turning unlimited choice into a set of directed options.
• CIOs are faced with long investment cycles, while technology lifecycles are only getting shorter. IT needs to be ready for trends and requirements that are completely unknown when the investments are made.
• A good part of IT innovation that drives new business opportunities comes from consumer IT, and CIOs need to be ready to link in. Today this comprises the 2.0 world: Trends on the horizon include augmented reality and sensor technology, for example. Analyst company IDC predicts unstructured data will grow at twice the rate of conventional data. Already by 2010, unstructured data will make up the majority of all enterprise data.
• Many businesses are investing in value chain integration, requiring processes and systems to link to a wide variety of processes and systems owned by customers, partners, suppliers, and other stakeholders.
IT offers an infinite range of alternatives and unlimited choice in how to tackle these challenges. Winnowing down a wide range of technology choices requires discipline. CIOs can demonstrate the required leadership by turning unlimited choice into a set of directed options.
Choices are not the same as options. Choices, or alternatives, represent all possibilities. We use the term options in the sense of financial options, acquired with the express purpose of being exercised at will. Creating options means taking matters into your own hands. In a skillful hand, a portfolio of options helps decide what initiatives to expand, which ones to delay, where to change direction, and what to expedite. If you have specific options - as opposed to unlimited choices - you are better prepared for change.
Business and IT alignment
I recently received a promotional email for a "masterclass" on business and IT alignment. The training promised answers on the following questions: "how do you know your IT strategy is aligned with your business strategy?", "how can you put together a governance model that ensures IT follows the business?" and "Pitfalls and success factors".
I checked, the email wasn't from 1983, but seriously from 2009. How can we still have that discussion? Has nothing improved in the last 20 years? And moreover, how can business/IT alignment be so misconceived?
First of all, let's define alignment, this is usually skipped already. From a social-psychological, a person is aligned when the self, self-perception and external perception closely match. The self-perception is how you look at yourself, and the self is who you really are. If there is a mismatch you could become delusional, frustrated, and generally uncontrolled. You don't understand yourself. If there is a big gap between the self and self-perception, and the external perception, people expect you to be someone that you are really not. This leads to role distance, and unauthentic behavior too. The same can be said of organizations. If there is a big gap between true organizational behavior and who we think we are, we are kidding ourselves. Did you check out your mission statement and values lately? And if there is a big gap between external perception and the organization's true motives, you spend more time figuring out how to spin your strategy externally than actually executing on it. Quite dysfunctional.
Same with business/IT alignment. Like any relationship, it needs to come from both sides. Business perception about value needs to match the IT perspective. But... functional relationships should be based on equality. If both parties agree that IT should follow the business, you're in a dependent, submissive relationship. Not mature.
Business needs to align to IT, as much as IT needs to align with the business. It's a two way street. The nature of technology dictates so, for starters. If you are a carpenter, and you buy one of those circular saw tables (new technology), you'd better organize your process and work around that table, instead of lifting the table to go to the wood. If IT were to follow the business, deleting text on a screen would have to be done with Tipp-ex. The whole point of technology is to not align with the business, but to bring innovation. New, different, better ways of working. If anything, business should align to technology in order to be more successful. In fact, secretly we do so already. It has become a best practice to adapt the business to the processes built into the ERP system and CRM application, and rightly so.
Then, let's discuss Business/Business alignment. How many times is IT struggling with suboptimal business cases, based on budget held by the business, by having to put in a departmental solutions, because each department is "unique"? IT is often found to be "nerdy" and having "no sense of urgency" for talking about architecture and infrastructure. True, IT driven projects are usually not very successful (the business will see to that), but the only thing worse is a business driven project. Short-term successful, but ill-architected, nothing repeatable, and lots of them combined form one big negative ROI in two years down the road. It is the role of IT to see commonality between functional requirements, and take an integrated approach. It would be a lot easier if the business departments would align with, well, the other business departments, instead of IT having that struggle all the time themselves.
And, while I am on the subject, it's a pity if organizations are still discussing business/IT alignment. The real battlefront has moved on already. The name of the game is value chain integration. Aligning all stakeholders around a successful and sustainable business model. Making sure partners, suppliers and channels all benefit from integrated logistical and administrative flows, while taking into account the requirements of investors, regulators, and society at large. This is how alignment contributes to the business strategy.
But perhaps we should start with something else. Remember the definition of alignment. The self, self-perception and external perception need to closely match. Perhaps the real problem is the gap between self and self-perception. IT people sometimes think too little of themselves, and desperately want to be seen as a 'business partner' and considered of strategic importance. Don't worry. You are. Because of the nature of technology. And IT people sometimes think too much of themselves, claiming they understand the business better than the marketing, operations or sales executives. Don't kid yourself. When was the last time you talked to a customer, and constructed a multi-year deal? Think of yourself as who you really are: at the core of business innovation, while at the same time making sure the business runs smoothly.
Thanks for reading. Rant over.
frank
BBQ = BPM + CRM + EPM + ERM
This summer I bought one of those fancy outdoor kitchens, and it runs on gas bottles. I got one bottle as part of the BBQ, and off we went. After a while the bottle was empty, and I wanted to exchange it, getting my 55 euro deposit back. I found a garden center in the neighborhood that sells that brand. My wife was surprised to see me come back to the car with two bottles: a full one and an empty one. I had not been successful in trading it in. The garden center explained to me I needed a special deposit form, and the original receipt. The special deposit form could be obtained by sending in yet another form to the supplier's headquarters, and they would send the deposit form back. Within. Three. Weeks. Excuse me? 21st century?
A short call to the call center proved them right. Indeed, a complete circus of administration that would make most 'red tape' look pale. And I didn't have the original receipt anymore. I sent an angry email to the contact center, with the request to pass it to management. I pointed out that we both our interests were aligned, I have their bottle that they want back, they have my deposit, that I want back. I further explained, I couldn't help myself as a former management consultant, that processes like this can lead to serious consequences. People might give up and simply dump the bottle in the trash, which would not be in line with the "green image" the gas company wants to portray. I also pointed out the reputation risk. That it would take only one person to set fire to the bottle, and make a funny movie out of it that is posted on Youtube. Frankly, I didn't even expect a response, just got it from my chest, and went on finding out how on earth I could get a new receipt from the internet-shop where I ordered the BBQ.
To my surprise, the next day I got an email from the company's marketing director. I had caused a dilemma, she said (quoting my own research!). Either help an angry customer, but run the risk of fraud (no paper trail), or keep a tight process and lose a customer once in a while. Then she asked "what would you do in this case, Mr. Buytendijk?". That was the most fantastic response you can think of. Showing strength by opening up, turning a complaint in an opportunity, using my negative energy in a positive way. "Service recovery", as CRM specialists call this. It means that complaints that are dealt with will often lead to higher customer satisfaction, even compared to before the incident. Well done.
Over the next days we had an interesting email conversation, for instance about lean and six sigma. The starting point is that processes need to add to customer value. If they don't they should be abolished or changed. This process clearly didn't add value, in fact, it destroys customer value. Although I didn't see the need for such a process (in fact, all you need is to track the serial number on the gas bottle), if the company would insist, first move it to the Internet, second, make it a worthwhile process by supplying BBQ tips generated by the community of users, while registering your bottle. However, what I found out was that these bottles do not have a serial number. That is odd, it is a basic principle in auditing that wherever there is a change for fraud, the flow of goods needs to be monitored. Without identification, there is no monitoring. The lesson we can learn from that is that if the basics fail, no process, or no technology is capable of adding customer value anymore. Unless you get the basics right, all you can do is damage control. And, reasoned the other way around, if you get the basics right, the problems the company has between balancing the needs of the back office (fraud prevention) and the front office (smooth customer interactions) would completely disappear!
Oh, one more thing. I did a little bit of "market research" and found more people who use gas bottles from the same company. In their case it was solved differently. The outlet where they got the product told them to never mind the whole bureaucracy-nonsense, they would exchange it for them anyway. The dysfunctional processes was replaced by a shadow-process, figured out in practice. A solution, yes, but wouldn't it be better to be in control of your own processes?
Process, performance, risk and customer relations cannot be seen as separate disciplines. An optimization from one point of view then leads to problems looking at it from another angle. However, when you take a more integral approach, often a simple solution means a world of difference. Will the gas company take the advice? That's the question, sometimes the simplest advice is the hardest to follow.
A short call to the call center proved them right. Indeed, a complete circus of administration that would make most 'red tape' look pale. And I didn't have the original receipt anymore. I sent an angry email to the contact center, with the request to pass it to management. I pointed out that we both our interests were aligned, I have their bottle that they want back, they have my deposit, that I want back. I further explained, I couldn't help myself as a former management consultant, that processes like this can lead to serious consequences. People might give up and simply dump the bottle in the trash, which would not be in line with the "green image" the gas company wants to portray. I also pointed out the reputation risk. That it would take only one person to set fire to the bottle, and make a funny movie out of it that is posted on Youtube. Frankly, I didn't even expect a response, just got it from my chest, and went on finding out how on earth I could get a new receipt from the internet-shop where I ordered the BBQ.
To my surprise, the next day I got an email from the company's marketing director. I had caused a dilemma, she said (quoting my own research!). Either help an angry customer, but run the risk of fraud (no paper trail), or keep a tight process and lose a customer once in a while. Then she asked "what would you do in this case, Mr. Buytendijk?". That was the most fantastic response you can think of. Showing strength by opening up, turning a complaint in an opportunity, using my negative energy in a positive way. "Service recovery", as CRM specialists call this. It means that complaints that are dealt with will often lead to higher customer satisfaction, even compared to before the incident. Well done.
Over the next days we had an interesting email conversation, for instance about lean and six sigma. The starting point is that processes need to add to customer value. If they don't they should be abolished or changed. This process clearly didn't add value, in fact, it destroys customer value. Although I didn't see the need for such a process (in fact, all you need is to track the serial number on the gas bottle), if the company would insist, first move it to the Internet, second, make it a worthwhile process by supplying BBQ tips generated by the community of users, while registering your bottle. However, what I found out was that these bottles do not have a serial number. That is odd, it is a basic principle in auditing that wherever there is a change for fraud, the flow of goods needs to be monitored. Without identification, there is no monitoring. The lesson we can learn from that is that if the basics fail, no process, or no technology is capable of adding customer value anymore. Unless you get the basics right, all you can do is damage control. And, reasoned the other way around, if you get the basics right, the problems the company has between balancing the needs of the back office (fraud prevention) and the front office (smooth customer interactions) would completely disappear!
Oh, one more thing. I did a little bit of "market research" and found more people who use gas bottles from the same company. In their case it was solved differently. The outlet where they got the product told them to never mind the whole bureaucracy-nonsense, they would exchange it for them anyway. The dysfunctional processes was replaced by a shadow-process, figured out in practice. A solution, yes, but wouldn't it be better to be in control of your own processes?
Process, performance, risk and customer relations cannot be seen as separate disciplines. An optimization from one point of view then leads to problems looking at it from another angle. However, when you take a more integral approach, often a simple solution means a world of difference. Will the gas company take the advice? That's the question, sometimes the simplest advice is the hardest to follow.
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