Some reflections for the final blog of 2006

My previous blog entry may well be construed as me moaning about the bad customer service incident.  This is true, the problems I had with Going Places lead me to think about what the company, and others, were doing with their web sites.  Hopefully I have managed to draw some useful lessons from the experience.

It also led me to think about what I am doing, and saying in this blog.  I have a few personal rules about this blog and I have tried to explain them to readers before - well I say readers more really a case of documenting them for myself!

While one rule there isn't a listed there and which I break from time to time (regularly?) is about customer service.  I don't really want this blog to become a moan about customer service - there are plenty of other blogs for that and it would be far too easy. So I paused before I wrote that entry to think about this blog.

New Year seems a good time to think about this blog.  From time to time I think about the description of this blog on blogger and contemplate changing it.  Trouble is, so far I haven't actually come up with anything better.  So who am I latest thoughts on what this blog is...

This is a blog about what happens when technology, specifically software development, meets the business world, specifically business strategy. And to me business strategy is not really very far from business operations, there is no great divide.

In fact to my mind technology and strategy share a lot of things in common.  Both are highly dependent on people and both are highly creative.  Associating creativity with technology and strategy might surprise some people but what is the point of technology without innovation?  Similarly what is the point of strategy if it is merely a repeat of what has gone before?  Or a copy of something else?

But it is knowledge and learning that interests me most in this area.  We cannot create new technologies and new strategies without knowledge and learning.  In some ways both technology and strategy are cutting edges of the modern economy.  Both are responsible for creating the world in which we live.  And it is because they are at the cutting edge of people occupy such an essential role.  If you could replace the people in either one you are simply change the problem.  You would still need people to address the new problem.

And with that I will sign off 2006.  Hopefully those final remarks will make it clearer what this blog is actually about - to me if nobody else!

 

Web sites should not be bolt on optional extras

As our day-to-day lives become more more dependent on the Web the quality of website becomes more important.  Unfortunately many companies treat their web presence as some kind of bold on optional extra.  Consequently we end up with web sites which frankly aren't very nice to use and can actually be misleading.

That's from a customer point of view from a corporate perspective things are potentially even worse.  Companies that created a bolt on website are not maximising the benefits they can achieve from the web and properly from an IT in general.  Not only are they not maximising the benefits of the holding if only costing the more.

This had been brought home to me in the last few days by the travel company Going Places this is a UK-based package holiday company with High Street travel agents.  Such companies are having a pretty rough commercial time at the moment three factors have come together to make business more difficult:

• First the rapid growth in budget airlines in Europe means customers have more choice and package holiday company's charter airlines have competition.
• Second the Internet means that travellers like myself can put together our own holiday schedules without a travel agent.
• Finally all customers are familiar with travelling abroad so they don't feel the need for the comfort blanket of a package deal.

That said package holidays can be convenient.  So while I arranged my own honeymoon online couple of months ago without a travel agent insight, for my skiing holiday next year I opted to buy a package deal, sheer laziness on my part to be honest.

Actually it wasn't that lazy because the websites operated by the main package tour companies in the UK are pretty damn the awful.  I wonder how many people really want to download an entire 200 page full-colour holiday brochure in PDF format.  Then there is a search facility.  Unless you know what you're actually looking for it very hard to find anything.  And when you do know what you're looking for the search facility shows you holidays which aren't available. 

These guys have just picked up their off line model and dropped the online without any consideration for how it is used or what improvements they could make.  No wonder these companies are losing market share.

But actually this was trumped by experience at this weekend, again with the Going Places website.  From reasons I won't go into I actually needed to go to one of their branches.  Naturally I consulted their web site for the location of my nearest branch - although it is surprising how many web sites make this simple task difficult.

Helpfully the website for me my nearest branch was located at 42 High-Street Ealing.  So on Friday morning I dutifully made my way to this address only to find no travel agent.  Thinking I must have the wrong address I bought a coffee in a coffee shop with Internet connection and check the address.  Then I dialled the company's premium rate telephone number to ask exactly where the shop was.

Now the punchline: the operator told me the shop had closed over a year ago.  She apologised but told me there is nothing she could do about the website.

Let's think about this the moment:

• The website is totally disconnected from the company's practices, it is not up-to-date and there is little they can do about changing it
• The website is misleading potential customers and creating bad customer relations
• Tthe website is not connected with company strategy which seems to involve closing branches

This is a company that has just reported its first year in profit after four years of losses.  Even as outside it is pretty obvious to me why the company has difficulty making money.

Obviously this is a company that treats its web site as a bolt on extra.  Potentially this company would make more money if it just stopped doing a website altogether rather than having a bad one.  Instead it could concentrate on doing what it does well (whatever that might be) instead of spending many an energy on a poor website.

Unfortunately for consumers to many companies are creating bad web sites which do not create a positive experience.  Everybody suffers consumer, the company and even the website designers and fully know most of the failings in the website.

Book review: Strategy Bites Back

I’ve already mentioned this book in a blog entry a couple of weeks ago in this blog so it should come as no surprise that I’m recommending Strategy Bites Back.

If you have an interest in business strategy then this is an interesting book to read.  And if you know nothing about business strategy but think you should then probably this is the best book you could buy.  The book will come as no surprise to anyone familiar with The Rise and Fall of Strategic Planning- also by Henry Mintzberg – many of the same themes emerge.

In fact this might be the most enjoyable book I’ve ever read on business strategy – and yes, I have read quite a few.  The book takes a light hearted, serious and intelligent look at strategy and some of the contradictions and absurdities firms and strategy makers wrap themselves in.  Early on the authors admit they are trying to add some humour and fun to what can be a boring and all too serious subject.  There reasoning is: strategy needs to be fun, it needs to be fun so we enjoy doing it, if you don’t enjoy it then you probably won’t make any use of your strategy.

Another nice thing about the book is that it is structured as a series of short essays – or bites and bytes as the authors call them.  Some bites are just a page long, others run to several pages but none of them get overly academic.  I found quite a few of the bites offering really useful insights, either supporting something I already suspected or giving me a new idea to think about.  Two of the later bites in particular stood out.

One, from Harvey Schachter finally lays to rest the debate about whether strategy comes from the top of an organization down (lots of big brains sitting in a board room directing company activity) or whether strategy comes from the bottom up (lots of individual decisions and initiatives made by people who actually do the work and later adopted as strategy).  Actually says Schachter companies do both.  Yes the big brains in the board room have a role to play but so do the little people at the coal-face.

The book contains no less than three pieces from Jeanne Liedtka and while her “Strategy as a little black dress” may have the best title of any strategy article (ever) its her third contribution, “Strategy as the art of seduction” that really caught my attention.  She argues that for a company strategy to be effective it has to appeal to everyone in the organization, the strategy has to make them want to change and implement the strategy.  Thus, the importance of the strategy is not so much whether it is a “good strategy” or not but rather whether it motivates people.  That is: does the strategy seduce you and make you want to be part of it?

Liedtka’s argument is also an argument for involving everyone in the organization in strategy formation – something I’ve been know to argue myself in this blog.  And if your going to involve everyone in formation and execution then naturally your going to want to make strategy fun, which neatly brings us back to were this book came in.

Companies who understand IT get the benefits

Anyone who read my last blog entry might be wondering what it was that I found so interesting in the Sloan Management Review, well, it was this piece Generating Premium Returns on Your IT Investments which got my attention.

I've been running across the term IT Portfolio Management for a while now and wondering what it was all about.  You can always make an educated guess from such a term but then you risk getting it wrong or missing the important points.  Quite often IT Portfolio Management was associated with the term IT Governance which is something else I thought I should know more about.  Well, this piece on IT investment did three things: it set me straight about what is IT Portfolio Management, it inspired me to read more about IT Governance (I'll write something about this soon) and it provided some interesting statistics about IT success.

So, what is IT Portfolio Management?  Basically it is the idea that organizations should know what IT projects they are undertaking and should review them as a whole rather than just a one at a time basis.  The idea is that while you might have four big IT projects on the go, all of which make sense in their own right, when you look at them collectively you see that two of them are doing the same thing.

Now this is one of those things that sounds obvious.  How could any reasonable company not know it was funding overlapping or even competing projects?  Yet this happens, its quite possible large companies don't know every project that is happening, in a geographically dispersed company things get more difficult still.  Add in the way many companies distribute IT projects to business units and its quite clear that the investment group in Australia might be doing a project that looks a lot like the new business group in Sweden.

So the first step in IT Portfolio Management is simply to catalogue all your IT projects.  The next step is to review them all and then... well this is were the SMR piece is really focused.  This suggests that companies should categorise each project as: Strategic, Informational, Transactional or Infrastructure.  Each company should also decide what percentage of the IT budget to allocate to each of these types of project and use that as a management tool for managing the whole protfolio.

Well that's the idea in a nutshell, I won't go on about it any more.  The interesting thing that arises from this research is that the authors identify two types of company: those that are IT savvy - i.e. those that understand IT and can exploit IT - and the then those who are not IT savvy.

Those companies that are IT savvy can have higher profits the year after doing an IT project, typically $247 extra profit for every $1 invested in IT.  So for these companies doing IT project makes a lot of sense.

For the other companies, the non-IT savvy companies, the reverse is true.  Doing IT projects reduces subsequent profits, typically they make $909 profit less profit for each $1 spent on IT the year before.  In other words: these companies would be better off not doing IT projects.  (Which is worrying from a long term point of view.)

What occurs to me is that we can link all of this back to Nicholas Carr's arguement IT Doesn't Matter.  Carr argued that IT was no longer strategic and companies should concentrate on commodity IT.  Of course many people (including myself) took exception to this and argued the contrary.  Now perhaps we have an answer to the discussion, and its answer using one of those re-occurring business ideas: segmentation.

Carr is right, for some companies IT is not important, for those companies who are not IT savvy, they should get away from IT and find some other way to improve their business.  For other companies, namely the IT savvy ones, IT is important and can produce real benefits.

So the answer to the question: “Is IT important?” is simply; “it depends.”

Before finishing there is one more points that struck me in the Sloan piece.  One of the recommendations is: Companies should learn from post-implementation reviews and formal training.  This gives two action points.

Firstly, companies do not invest enough in IT training - typically less than 2% of the IT budget.  They optimistically think that giving someone new software is enough.  It isn't, you need to train people in it.  I've lost count of how many times I've seen this done.  Being on the development side I hear about companies who buy software but don't buy the training, or users who see the software as too complicated (it usually is) but can't get any more training; or, perhaps the worst of all, the manager who believes his staff can learn a new package (or even programming language) by reading the manual.

People are great learners, they will find a way of learning new software and even complex languages so the manager are right, why spend the money?  Simply: providing the training will help it happen much, much faster.  You want your project sooner?  You want your product delivered quicker?  Want to see an improved ROI?  Then spend the money on the training, don't leave it to trial and error and manuals.

Second point; post-implementation and in-process review help companies realise the benefits of IT projects, motivate the staff and improve organizational learning thus making the company more IT.  In other words, Retrospectives make a difference.

Too many companies talk about doing retrospectives but very very few companies actually do them.  The reasons for not doing them vary, and often when they are done they are done badly so fail to maximise the learning and change.  When they do happen and are done right they make a massive difference.

Now the question is: do you want your company to be IT savvy?  If so, start doing the retrospectives and giving people the training.  If not, then I suggest you save your money and get out of IT altogether.

So I’ve subscribed to a Serious Business Journal...

I read a lot but I don’t read everything, there are some things I positively don’t read and there are some that I just can’t find time for.  Although I read the Economist and FT regularly (and yes they do often seem to overlap – but that’s a different blog entry) I’ve felt for a while that I should be reading a more thoughtful business journal, something slightly academic in fact.

While there are many academic business journals most of them are unreadable - unless you have serious need to read them, in other words: you are in academia.  Probably the only time most business people read these journals is when (like me) they are studying for an MBA.  I finished my course thinking “I should keep reading on the journals” but, they are difficult to get hold of, expensive, and largely unreadable.

There are a couple of exceptions, most notably the Harvard Business Review (HBR).  This places itself somewhere between an academic journal and a thoughtful business magazine.  Compared to other academic business journals this decidedly easy reading.  However, if what I hear is true, while the HBR has a high circulation figure most copies go unread.  In other words, people subscribe to be seen to read the HBR – OK, they may simply find they don’t have the time but then why renew the subscription? 

Maybe I’m being cynical but I just can’t bring myself to subscribe to HBR.  I think its probably some form of reverse-snobbery.  Still, I felt I should subscribe to some serious journal....

During my MBA I also took a liking to the California Management Review.  Once in while I’ve wondered over to their website and thought about subscribing, but then I see the price, I remember its more academic that the HBR and ... well I don’t.

Then there is the Sloan Management Review, or as it is now know the MIT Sloan Management Review (SMR).  As with the other two I sometimes thought about subscribing but couldn’t see when I’d get the time to read, couldn’t justify the costs and wondered if it would be too academic.  Still, as with the other two I’ve bought the odd download from their website in the last couple of years.

And so it was that SMR used the oldest marketing trick in the book – and thats the Book of Readers Digest marketing.  A flattering letter, the offer of a free copy and a discount price.

The free copy turned up last month and I was pleasantly surprised.  Of the 15 or so pieces in this issue (Winter 2006 which means last January) there are only a few that interest me enough to read them.  But I found those I did read very interesting and it reminded me that many ideas appear first in these journals.  Such pieces are usually fresher and shorter than the books on similar subjects.

So I gave in.  I’ve spent the $125 to subscribe for a year.  Why did I finally do it?  Well, four factors really.

• I think I’ll learn some new stuff, it will expose me to things I might not see otherwise.
• The dollar is weak at the moment so it is cheap and a low risk – even if the discount price turned out to be not so discount.
• SMR is quarterly, so I have three months to read each copy.
• I can now get all the kudos of reading a serious management journal while being able to look down on those who read the mass-market HBR.

How will I know if the journal is worth reading in future?  Well I could use the Dr Dobbs test...

I’ve long had a theory that if your sitting on the Tube and you see someone reading Dr Dobbs then you should immediately hire them.  If someone is interested enough to read Dobbs they are going to be a good programmer.

The theory doesn’t hold the Economist or HBR.  They may be good journals but they are too common (you’d hire too many people) and they don’t set the threshold not high enough to make the reader an instant hire.

Now, lets see what I think about SMR readers in a years time...

Rational decisions?

I'm currently reading Strategy Bites Back and I'll write a proper review in time.  Before then I read something on Friday that really made me think.  The book is organized a series of essays, summaries and reprints - the "bites" of the title.  The bite I read on Friday was by Spyros Makridakis who is a business school professor so he should know what he's talking about.

What he says is: manager have a hard time making rational decisions. 

They may think they are making rational decisions but they probably aren't.  And its not just managers, its all of us - even engineers!  This is because....

• Most people only look for evidence to support the point of view they hold.  If we believe something we don't tend to look for opposing evidence.
• When we do look for supporting evidence we may not always find conclusive evidence but we'll think positively of the evidence we do find - even if it is isn't quite what we needed.
• We are far more likely to remember evidence that supports what we think than evidence that challenges what we think.
• Making decisions in groups doesn't necessarily help because we suffer from "group think".
• Managers are in a worse position because they rely on information filtered at various levels below them, since everyone below them suffers from the same problem it is unlikely that opposing evidence will ever get in front of a senior manager.
• Finally, many of the things that our culture leads us to believe are true aren't, e.g. we make better decisions when we have more evidence - this doesn't hold, indeed, for all the reasons I just outlined more evidence may simply support our initial position.

So making a rational decision is hard, very hard.  And not just for us, what about for our competitors, our employees, our employers and everyone else in our business?  The same effect works on them too so they won't act rationally, and how do you predict what an irrational person or business will do?

My question is: if making a rational decision is so hard what can we do about it?

At the moment I don't know, I find the whole thing quite worrying.  This much is clear: we need to learn to accept opposing evidence and we need to make a positive effort to seek it out to correct our natural bias.

Which makes the question: how do I seek out evidence and information I might otherwise avoid?

Again I don't have the answer.  It does seem that putting yourself in unusual situations might help, opening yourself to new ideas and talking to different people should help.  I'm also reminded of Scenario Planning – one promise of scenario planning is to help you consider the world differently and practise for difference scenarios.

For the moment thought the world just got a lot more irrational.

Incremental solutions

Mary Poppendieck recently pointed out this piece on one of the mailing lists I subscribe to.  It is a piece in Fast Company magazine online about Toyota's approach to improvement.  It is well worth reading.

Working to improve things in your organization means you have to tread a narrow path.  On the one hand if everything is good you risk complacency - nobody sees the need to change or improve anything.  On the other hand if things are bad and need changing then you risk depressing everyone by constantly talking about problems and failings, people get defensive and don't want to change - this takes us into the arguments around appreciative enquiry.

So, you want to motivate people to change but you don't want to get them all defensive.

The Fast Company piece describes how Toyota are constantly making improvements to their process and products but nobody seems to be defensive or upset by failings.  The pull factor is the urge to do better, its the promise of a better tomorrow, a more productive company, a better factory, more enjoyable work.  To some degree Toyota may have pre-selected for employees with a problem solving attitude but they have also created a culture were people see opportunities to get excited about and not problems to get depressed about.

The net result is that Toyota are constantly improving, and that means many incremental improvements and solutions on top of existing incremental improvements and changes - thousands of changes a year in one plant.

I like this, I'm a fan of incremental change, incremental improvements and solutions.  However I'm also aware that incremental change often gets a bad press, that's because incremental change can go horribly wrong and make things worse.

The problem with incremental solutions is that you don't tackle the underlying problems, rather you only tackle the immediate problem and the obvious issues.  Unfortunately we see this with many Government actions: tariffs to protect industries from overseas competition, financial support for declining industries, sticking plasters for infrastructure - sometimes we need a root and branch overhaul, or we need to recognise that some activities have no long term future and we are better letting them slowly die while we developing new ideas and industries.

Sometimes radical change is needed and I don't want to say that incremental change can solve every problem.  But, and this is a pretty big but, if you need radical change then you have failed at incremental change.  The objective of incremental change should be to ensure that you never need radical change because you have already adapted yourself to a changing environment.

Look at Toyota, lots of small incremental changes, you don’t see major change programmes like you do at Ford or GM.

The problem for incremental change is to avoid simplistic solutions which only tackle the immediate problem, the symptoms if you like.  Before you make incremental changes you need to fully understand that which you are proposing to change.  You need to think deeply about the issue/opportunity/problem, talk it through with other people, maybe model the situation and your proposed solutions, maybe create some future scenarios, engage in systems thinking, understand the real problems and look for alternative solutions. 

And when you do change look to see if your change makes a real difference, or whether there are any unforeseen side effects.

In short: incremental change needs to be thought through and considered in depth.  Don't jump at the first thing you think of.

Having said all that don't let the need for analysis and deep thought stop you from making a change, don't get caught in paralysis by analysis.  Get use to changing often and changing fast.  So what if you get things wrong once in a while?  You can always put things back the way they were and mark it down as a learning experience.

That's an awful lot to do for a small change, but then, I never said this stuff was easy.  If it was easy then we'd all be doing it and it wouldn’t need writing about.