Category: MWT Components (Page 1 of 3)

Getting closer to the future of the IT function

My views on business capability-based governance extend to the idea that an “IT function” doesn’t really make any sense at the highest governance levels.  However, the implications of this are significant.  So, in the meantime….

Nine of world’s biggest banks join to form blockchain partnership

LONDON Nine of the world’s biggest banks including Goldman Sachs and Barclays have joined forces with New York-based financial tech firm R3 to create a framework for using blockchain technology in the markets, the firm said on Tuesday.

Commonwealth Bank of course joined earlier.

from: http://www.reuters.com/article/2015/09/15/us-banks-blockchain-iduskcn0rf24m20150915

Interesting Times at Westpac – Dave Curran, CIO

I would have loved to have seen the presentation that’s been given some positive press here.  Westpac are putting some meat around their transformation agenda after having learnt from the experiences of other banks.

Many of these large scale transformation programs (think ERPs, CRMs, core systems replacements, etc) have a tendency to teach the organisation about a product.  The whole organisation will learn how to implement that product – they’ll learn it’s strengths and weaknesses, and the right and wrong ways to successfully exploit them. Those in the organisation who aren’t part of the solution will at least learn that they have an opinion about these things.

Now, the actual benefits of these programs aside, this is a strange way to for your organisation to spend a few years.  These programs become a distraction that take up executive, management, and operational attention.  But what if you changed the conversations so that rather than learning about a product, you completed the same program but what you where really doing was learning about your customers and how to better orientate your organisation towards their needs?

I think the approach Dave Curran has managed to convey (again, based on the reporting – I wasn’t there) starts to do that.  This approach means that effort is first and foremost about the customer. Now I’m the first to say it’s not that simple.  There is still a lot of work to make that vision operational. But it completely changes what the organisation will primarily be learning during program.

The key lessons now will be about customers – what Westpac knows about them, what they don’t, what decisions they are making every day, and how that might be understood by Westpac staff when making their decisions.  The other lesson they will be learning is how technologies they already have, combined with technologies available in the market, can be used together to support various customer scenarios.  Not trying to find “the best” solution without any context, but trying to design solutions across a well informed view of what is important to customers.

I think too that if this is done right, the discussions won’t be broad sweeping generalisations. They won’t be “is this one monolithic system really customer focused?”  Likewise, there shouldn’t be that tendency to continuously revert to “yeah, but what is a customer?”  That conversation seems out-of-the-box but is typically only asked because the people in the room have never met a customer (!) so they revert to broad open questions rather than use their experience.

Done right, this approach will draw out rich, informed conversations that admit that we have to bring components together to support specific customer scenarios.  It will draw out conversation about what we don’t (!) and ensure we find out.  Done right, this approach keeps up the sustained momentum these programs need to do the hard work that will truly transform the organisation.  

I have a few grounding concepts that I think are relevant here.  They are quite simple in their nature but powerful as the basis for governing change.  I’d suggest these should be established for the program.

The Customer Advocacy Office

We talk about the importance of customers all the time but often the question we don’t ask is “what is the business unit in our organisation that advocates for our customers?”  I don’t mean lets give somebody the responsibility for customer and then split the role into “Contact Centre” and “Web site”.  I mean real, serious thinking about customers.  Being able to understand and back up with facts.  Being able to offer targeted operational changes – backed by evidence – that will improve the experience of customers.  

Customer Experience Campaigns 

Your organisation is probably comfortable with marketing campaigns.    But what if the concept of a campaign was expended to include any situation where your customer had a defining positive or negative experience with your brand?  Customer Experience Campaigns apply the basic concepts that are used to manage a marketing campaigns to all of the individual experiences of your customers.  This is actually really difficult, and really important.  And it’s what we mean when we say we want to be customer focused – but do we actually do it?

Customer Information Management

There is a lot of work required to get a single view of a customer.  There is even more work required to repurpose that view so that it highlights the information required for different groups to make decisions (i.e. single core data, multiple views).  But that’s still not “customer information” – that’s just consolidating and presenting data effectively.  A true responsibly for customer information management means knowing what you don’t know about your customers, and understanding the value of finding out.  It also means understanding how modern technology allows us to understand and predict the complex decisions that our customers are making by using big, social, cheap, integrated data to act as a proxy for intimacy when you can’t always get inside your customer’s heads.

Customer Return on Operations

Things like Net Promotor Score (NPS) are great but they are the tip of the iceberg when it comes to using customer-driven metrics to improve your organisation.  These “voice of the customer” metrics are great but they are “lag” indicators until you do the correlation required to make them “lead” indicators.  Measuring you customer return on operations combines how your customers think you perform with how you think you perform.  It’s hard, it takes a prolonged effort, but who could argue that it’s not important? 

Competency Centre -based Business Transformation 

Many transformation programs are top-down.  This means they are limited to the types of transformation that you can achieve top-down.  The Westpac approach will required a middle-out approach.  There are many functions within the organisation that will need to be transformed to execute on the vision.  Thankfully, competency-centre based business transformation is an excellent alternative to top-down transformation – if your transformation team “gets it”.  

This approach also includes the question of which type of “core” you want your organisation to have (accounting, versus product customisation, versus customer hub). When you’ve done the right homework, you can then make clear and informed decisions on whether something is differentiating or not differentiating. This decision drives standardisation but it is so mixed up in a tight bundle or current power struggles it needs an informed third party to arbitrate. 

I’m not saying just talk about the concepts above in the executive management team. I’m saying that in addition to the other governance required for this sort of program there are executive roles for each of the above areas.  There are charters and terms of reference for each of the above areas.  Each of these areas should be managed as a business capability where the executive in charge is responsible for working across functions so that the people, process, information, and technology all work together to support the capability.

 

By the way, I’m not sure I get the title “Dancing About Architecture” that the article  I link to above uses.  I’m assuming it’s a reference to the “Writing about music is like dancing about architecture” quote that I, like everybody else, mis-attributed to Elvis Costello until I just looked it up.  It’s a nice image – the idea that you might use something other than architecture (such as your customers) to guide the direction of your architecture.  You dance around (or “about”) your architecture so it knows where to look.  Though by alluding to the music quote the author seems critical of the approach.   Anyway – looking forward to part 2…

 

Cloud-First Policies vs. The Real Impact of Cloud

What a slow process it is to watch jurisdictions implement “cloud first” policies.  State and federal governments are all doing it and in the end they all look pretty similar.  Some might say it’s a policy of considered common sense, or a policy not to exclude the obvious.  At least the process is getting done.  
 
Though as I was reading the latest commentary on the Coalition’s new “cloud first” policy it struct me that this drawn out response is hiding some of the real impacts that Cloud will have. Not just as an obvious technology choice, but as a real disruptor to business and government.  
 
Of course, this “cloud first” mandate is always qualified – but it’s the nature of these qualifications that is telling.  In the case of the latest policy, the qualifications are simply that the Cloud solution also needs to be fit for purpose, competitively priced, and met the Protective Security Policy Framework.  So it’s a mandate to use the best approach even if it’s cloud. You’d wonder why you need a mandate to use the best approach so I’m sure the policy doesn’t fundamentally change the existing risk aversion, lake of knowledge and vision, or whatever else was stoping Cloud adoption in the first place.
 
As we know, the problem with mandates is that they tend to reduce individual accountability.  So the very real data governance and privacy issues relating to Cloud are likely to lose some attention for a while; particularly when paired with the removing of the need for double ministerial sigh-off for storing data off-shore.  I personally don’t see the problem with requiring double-ministerial sign-off to do something.  The only problem might be if I were one of the ministers who signed off and then something went wrong… Oh, hang on, I get it.
 
Problem is, like everything else, decisions are not just made by getting the right sign-offs.  You actually need to make the right decisions.  So policy that does nothing but try to gate decisions or make somebody accountable isn’t as useful as policy that actually helps decision-making.  There must be better uses for policy development effort than the use of Cloud as a technology choice.  Say for example as a disruption.  
 
The impact of Cloud on ICT strategy is that application architectures will be made up of silo’ed by highly functional applications that support a particular business function or customer touchpoint very well.  
 
These applications will also have imbedded analytics which already cover the management and operational decision-making relevant to the area they support.  
 
Integration will be achieved only where there is a business case to do so.  Except the integration imperative will be so strong – as its absence reduces enterprise agility – that there won’t be individual business cases for each integration.  Instead, a top-down approach such as enterprise information management (EIM) will be used to build a single cohesive business case for integration as part of a program of driven by information governance, analytics, business intelligence, and the recognition of what I call “core shared information”.
 
The impact of Could on organisational design is that the functional organisation is dead.  The ability to acquire cloud-based services that provide not only the application services, but in the case of business functions the backend management of the function itself, means functional organisation is no longer viable.  
 
The management trend where everything of value is being managed as “a cross-functional team” is now the norm.  The only thing left is to remove the functional organisation that created that language in the first place.  Functional organisation made it easier for managers (i.e. to shift across organisations, and also because they only had to understand how their function fits + strong stakeholder management) now managers have to be better at managing.  Though they also have better [cloud-enabled] management tools to help deal with this.  
 
Impact of cloud on information governance is that it’s time to disconnect Cloud from information governance and privacy issues.  Dumping the off-shore data double-ministieral sign-off policy because it happened to be inconvenient to Cloud initiatives is simple baby-with-the-bath-water stuff.  
 
Sending personal data off-shore is still a breech of Australian privacy legislation if this hasn’t been agreed with the individuals who own that private data.  Organisations are still at risk of legal action if damages occur due to mis-handing of personal data.  So this shouldn’t have ever been mixed up with Cloud.  
 
Impact of cloud on business strategy means that your differentiation cannot be based on what is easy to acquire – because value comes from scarcity not from abundance.  Actually this has always been the case but the impact of Cloud is the breadth and depth of things that are now easy to acquire.  
 
Your ERP was never going to differentiate you from your competitors.  But because it was expensive it was able to provide a competitive advantage at a pinch (as long as the business case held up after the inevitable cost overruns).  Now that ERPs and significantly more valuable targeted services are available in the cloud they are much easier to aquire.  So they have value, sure – but don’t have value as a differentiating feature of your organisation.
 
The impact of Cloud on government is that there are so many things that peer-to-peer markets can do better than government.  The government shouldn’t just be shifting the services they offer to cloud-based solutions. The government’s Cloud policy should be how does a cloud-enabled market solution remove the need for this government function?  How do we ensure services are more effectively targeted by using Cloud services to manage the market for services?
 
In a way, the impact of Cloud is nothing more than the impact of lower transaction costs played out on the acquisition of services.  Sure, it’s probably bigger than that be it will be called something else by the time it become outcome-as-a-service.  So for now “Cloud polices” are the place to ask the disruptive questions.  
 

Another example of Market-based Management: Kanban As an Economic Bargaining System for Portfolio Management

Principles

“1. Introduce a common unit of currency – must be scarce”
“2. Provide a marketplace for buyers to bid on units of supply using common unit of currency”
“3. Provide just-in-time information to promote market liquidity”

Industrialised Adhocracy and The Future of Work

Excellent overview on Industrialised Adhocracy and The Future of Work:

http://www.procurementandsupply.com/resource/David%20Moloney%20-%20Industrialised%20Adhocracy%20-%202nd%20CPO%20Exchange%20-%20July%202014.pdf

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Rats participating the markets

Okay, so this has the scientific due diligence of an art installation rather than an actual proof of utility.  But it shows why market-based management is so important.  

One project is Michael Marcovici’s Rat Trader. The book describes the training of laboratory rats to trade in foreign exchange and commodity futures markets. Marcovici says the rats “outperformed some of the world’s leading human fund managers.” The rats were trained to press a red or green button to give buy or sell signals, after listening to ticker tape movements represented as sounds. If they called the market right they were fed, if they called it wrong they got a small electric shock. Male and female rats performed equally well. The second generation of rattraders, cross-bred from the best performers in the first generation, appeared to have even better performance, although this is a preliminary result, according to the text. Marcovici’s plan, he writes, is to breed enough of them to set up a hedge fund.

From http://marginalrevolution.com/marginalrevolution/2014/09/hedge-fund-rats.html

If the above scenario actually works it means a dramatic change in the way we think about the “decision-making” part of the management process.

If the stream of data (think “big data”) can be processed by an arbitrary meat-based neural network – and proven to be effective – what is the point of performance management on the rats?

Market Stereotypes

Once you start looking for market stereotypes you can see them everywhere:
 
Market Stereotype Description  Examples
Competitive game Gaming performance where team’s are made of individuals with similar goals Sales team leaderboards 
Cooperative game Gaming performance where only team performance matters but individual team members contribute in different ways  Collaborative
workforce
management 
Discovery & scoring Add discovery of information by scoring of information and collective curation elancer 
Redundant production Make more than you need to find quality RFIs, competitive development
Unwanted feedback Ensuring feedback isn’t filtered Business Intelligence 
Interface versus interpretability Designing for unintended uses Open data
App store analogy
Using the model of an “app store” in a different context 
Defence app store initiative
Separate management from measurement Separate the management process from the measurement process Business intelligence + separate performance management function
KPI exchange Making a high-level metric tradable rather than using derived metrics Allowing employees to trade their “utilisation” performance metric
Lean business case  Making a market for project portfolio ideas; ensuring ideas are tested quickly while capturing intelligence  Idea factories
Agile development Dealing with uncertainty through iteration, continuous feedback, and no-fixed-plan Everywhere in IT
  
 
 
 
 
 
 
 
 
 
 
 

Technology can change what it means to manage

A16z Podcast: Engineering a Revolution at Work | Andreessen Horowitz: “today’s cloud-based tools change the role of managers”

Including this:

“Theses are the things to me that are just these huge cultural shifts in how you manage an organisation.  What your role of a manager is in a meeting is no longer to be reported to.  Because frankly if you want to know, you should just go to the place that everybody on the team is already using to keep track of there information.  When you get everybody together it shouldn’t be to argue the pros and cons of how the information was gathered, or is it the right number, or is the number pivoted the right way.  We wall agree, this is the number, is it good or bad?  What should we do as an organisation to change that number?”

Given the premise of this blog, and the time I’ve spend in information management, to see the idea that technology can effect what it means to manage is always pleasing.

And this:

“It’s not that you’re going to look at a 15 page status report and say ‘how can I do a 15 page status report in this tool?” or look at this giant tracking spreadsheet and say ‘how do I do this in a tablet?’.  What’s happening is new tools… The tools are now five years old, or at the very least two or three years old, and all of the sudden we’re seeing this explosion in new approaches to the work products themselves and that’s what’s particularly exciting right now… There’s enough experience with the form factor to say now we don’t just have to do it the old way.”

 

Analytic teams need their own IT… but should they?

As per linchpin project #9 (“Project 9. IT federation: shrinking corporate IT and embracing shadow IT”) we need to view our success in terms of capabilities not functions – and remove any roadblocks to maturing our capabilities.  

So this is happening:

Big data: Why IT departments mustn’t be a drag on analytics | ZDNet: “‘Technology functions are still finding it difficult to keep up with business demands. Working in analytics and being responsible for analytics, I can’t let that happen,’ said RBS chief analytics officer, Customer Solutions Group, Alan Grogan.

‘I can’t turn around to my CEO or to my customers — or even just if I want to retain staff — to say ‘I’m sorry, we just don’t have the scalability, the flexibility or the control on the domain’.'”

At the same time, there are efficiencies in building a federated IT capability.  When Analytics teams need to manage their own IT they aren’t evolving the IT function.  And when Analytics teams manage their own IT the IT function has to evolve.  There is a joint responsibility to manage this process.

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