Learning and Technology

If the “world is increasingly flat”, why should anyone in IT care about the mountains and the valleys? January 15, 2008

If the “world is increasingly flat”, why should anyone care about the mountains and the valleys? If globalization is slowly but surely leveling the field of ideas, passions and business models, why should information technology help mangers identify and appreciate differences in culture, motivations and action? Will these differences in managerial behavior soon be a thing of the past, or potential reservoirs of talent and innovation that can be analyzed to help organizations grow their markets? Let’s quickly review our premises concerning globalization, how today’s business software influences and often distorts our vision, and what kinds of IT might bring the picture into better focus in the near future.

In the World is Flat, Thomas L. Friedman provides abundant proof, anecdotes and stories to support the idea that of the increasing circulation of ideas, services and labor across the borders of both organizations and markets. This global village that Thomas Friedman sees so clearly differs profoundly with the village I’ve chosen to live in nestled high up in the French Alps. Writing from my desk, the mountains and the valleys of the Belledone offer welcome relief from the monotonous routines of big city life. People choose to live in villages like mine because they see things a little bit differently than those living in Europe’s metropoles; they play the game of business a little differently. If business applications fail to capture the values and passions that define why we come to work, what lessons are managers minimizing or leaving out of the picture altogether?

In an interconnected economy, information technology plays a fundamental role in shaping how we see our organization, our business and our markets. Business applications help us capture, aggregate and structure “proof” of client demands, organizational capacities, and the efficiency and/or effectiveness of our efforts to produce sustainable revenue streams. Business applications commonly do this by helping managers structure organizational data into scorecards (boxes) and/or processes (activities and tasks) and that help them focus on what’s essential in pushing their businesses forward. Whatever doesn’t fit into the picture is either flagged as a bottleneck or worse discarded as unworthy of managerial attention. Although managers must continually filter and structure information given the monumental sums of data at their disposal each day, are business applications helping them focus on the right information? Is IT largely responsible for the impression that our world is flat, when anyone looking at a sunset can see abundant proof of importance of the mountains and the valleys?

In there is little doubt that managers can neither hide from nor ignore the winds globalization, there is little doubt that local context, culture and vision continues to influence the actual patterns of business practice. One reason appears to be experience with “real” clients and customers, for managers judge the value of the information they receive against their impressions of current and past realities of trying to get work done. A second justification can be found in how different business communities use information: whereas in certain businesses information is often taken at face value, in other cultures information is believed to be essentially a political instrument, and in others still more often than not largely divorced from business behavior. A third explanation could be analyzed in understanding how rules and regulations impact corporate behavior: whereas many cultures feel that managers must play by the rules, others accept the reality of a “grey” economy, where in others legislation offers only a vague guideline for organizational behavior. Faced with the rugged contours of reality of business, it is of little wonder that managers have widely varying opinions of the facts and figures provided by today’s business applications.

Implicit in our concepts of “modern” markets is an assumption that local cultures are slowly but surely giving way to one global lifestyle. Current business applications, based on notions of best practice, projects and processes, and the objectivity of information, reinforce the view that the business world is indeed “flat.” Corporate culture, which colors the mountains and the valleys of business practice, are largely ignored in today’s approaches to enterprise applications. Corporate culture has proved difficult to define but easy to see: it’s composed of a coherent set of beliefs and values that define how managers perceive themselves and the organization around them. Although corporate culture isn’t easily captured in a database nor specified as part of an operating procedure, it conditions how IT is appropriated and used to do business on a daily basis. Proof of these unwritten rules of engagement are relegated to the anecdotes and stories told in corporate hallways and restaurants, human attempts to give meaning to the naked facts and figures of corporate reporting and scorecards. Why aren’t current business applications capturing these realities of business?

Several challenges need to be resolved before such applications can help managers appreciate the importance of mountains and valleys in shaping local markets. How can business applications best be designed to capture information outside of projects and processes, i.e. the large parts of each workday in which managers are firefighting, relationship building and just simply muddling through? How can enterprise applications best represent “non-structured” data, i.e. data on feelings, values, and experience that is difficult to put into spreadsheets and databases? How can taxonomies, processes and procedures accommodate differences in opinion, experience and vision from one manager to another? How can interfaces be designed to draw managers’ attention to dissonance, data that doesn’t quite fit into the tables, not as a source of error, but as a potential reservoir for improving an organization’s products, services and ideas? If the industry can rise to meet these challenges, they will develop better visions of the depth and breadth of potential ideas, passions and business models that will continue to shape markets in the foreseeable future.

Improving management’s vision of the realities of business : Processes or Networks? January 8, 2008

In response to our initial post, C.R. wrote an e-mail asking for more details on how IT distorts management’s vision of reality. Given the work and resources that have gone into enterprise applications over the last two decades, he asks, why doesn’t IT feed back a true image of how we work? If the daily statistics and scorecards provided by today’s business applications don’t seem to “ring true”, what can an organization do to improve the quality of the data to better reflect individual customers, projects, and opportunities? To understand this challenge, and to explore potential scenarios to improve enterprise applications, we need to first consider how business applications today represent and aggregate data, then explore the fundamental weaknesses in this logic, and finally investigate other avenues of putting the pieces together.

Enterprise applications, including those dedicated to enterprise resource planning, supply chain management and even project management, and are largely based on the principles of business process improvement. A process can best be understood as a set of activities and tasks that managers group together to meet internal or external client demands. Processes thus have four defining characteristics: their origin can be detected in an organization’s recognition of a client need for a product, service or information, they consume resources, and they have a set cost and produce a benefice that ideally meets the clients’ needs.

Improving business processes requires tracking inefficiencies in how an organization captures market demand, supply or measurement. How are an organizational activities and tasks executed to capture client demands? How can an organization improve its capacity to deliver products and services? How does the organization capture and evaluate costs and benefits? Enterprise applications provide responses to these fundamental questions in allowing management to map the current state of existing processes, implement best practices around ideal designs of how these processes should work, and measure organizational progress to these goals.

The resulting ‘process-centric” view of the organization is often a weak approximation of the reality of business practice, and as such limits the usefulness of enterprise applications. One reason for this is that business process improvement was originally designed for organizations producing standardized physical goods, modeling processes around personalized services and/or information delivery has proven a much more difficult assignment. Implementing business processes assumes that management (or their business partners) understand where an industry or a market is headed, an assumption that is sorely tested today in industries ranging from information services to banking to telecommunications.

Moreover, the notion of “best practices” which assumes that there is “one best way” to build product or deliver services has been widely disputed in organizations that have traditionally put a premium on company culture, customization, and understanding individual customer needs. Finally, improving business processes assumes that the employees and managers involved in the targeted processes agree with organizational objectives, and are willing and able to follow organizational guidelines. In many situations, even this assumption is contested by those that prefer focusing on the realities of their organization and their market (i.e. getting the job done) than complying to unrealistic or unworkable company procedures. For all of these reasons, “process-centric” software most often offers management a highly distorted view of the realities of the workplace.

If we abandon the notion of processes, how can business applications be modeled to provide a more realistic view of work? A growing number of management specialists are underlining the importance of networks in understanding how employees and managers actually get work done. In business, networks are interconnected systems of people that share common interests, beliefs, and goals. Social and business networks are used by workers and managers alike to solve problems, to identify opportunities, to build trust and passion, and make sense of their jobs, organizations and careers. These networks cross organizational boundaries; they are composed of centers of influence (the “hubs”) and are held together by the intensity of personal relationships (the “links”).

If most managers understand the importance of their personal networks, improving networks requires understanding how these networks function and how they can be extended and strengthened. Social researchers have identified a number of defining characteristics of networks that potentially can help mangers improve their effectiveness: “power laws”, “degrees of separation”, “discontinuous change”, “fat tails”, etc. These networks are held together by common beliefs, passions, trust or know-how: in other words non-structured information that largely escapes “process-centric” view of enterprise. The power of networks has fueled the popularity of a new breed of the social media applications: LinkedIn, Plaxo, and Facebook are among the better known examples. Will this new generation of software applications help management improve their business?

One value proposition of such network-centric applications is to shift the focus of attention away from an ideal set of activities and tasks (what we “should” be doing) to how employees and managers actually get things done (what they “are” doing). A second insight of a network based view of business is the understanding that networks are self-structuring; people seek to work with those their share their goals, passions and beliefs. A third point of interest is understanding the importance of “non-structured” data, just because we can’t get passions, trust and know-how into a spreadsheet doesn’t mean they don’t largely influence the way we work. Finally, this line of inquiry reminds us that business is essentially a human activity; technology’s role in business is limited to understanding, uncovering and eventually enhancing the human interaction that defines the nature of “work”. For management and their business partners, these propositions constitute powerful levers to improve the value of information technology.

None-the-less, there certainly is a considerable amount of work to be done before applications like LinkedIn or Facebook help managers improve their jobs, organizations and careers. The metaphors of “avatars”, “friends” and “connections” don’t easily translate into the realities of either commerce or industry. The personal information, photos, and videos available in social media today are certainly interesting, but often of little use in driving a business forward. These applications today are largely hard coded; it is difficult or often impossible for end-users to enrich either the information or the software. These applications capture data on how end-users wish to see themselves, rather than how they actually practice business (or anything else…). Most importantly, these virtual networks don’t elucidate today the passions, beliefs, and goals that define how individual professional networks operate. If network-centric applications provide a glance of how the future of enterprise applications can improve business practice, these images need to be brought into focus.

Next Week : In an interconnected business world, what does “local” mean?