Tag Archives: LEO

The north-south divide

Note: This is the third part of a longer series on how social media is affecting management. You can find the earlier posts – The future of (knowledge) work and Knowledge Workers in the British Raj – and subsequent posts – Working in Hollywood, World of Warcraft in the workplace and Problems and the people who solve them – elsewhere on this blog.

Developing and manufacturing a product, and delivering it to the waiting customer, has historically been a significant expedition. We would establish a series of camps – departments, containing the tools and skills needed – along the route from start to finish to support us as we ferried the materials we needed from their source to where they were required. However, the assumptions that drove this behaviour are no longer true. Where previously materials, skills and tools were all in short supply, today we can usually find what we need lying on the ground near where we stand. Developments such Strategic Sourcing{{2}}, Business Process Outsourcing{{3}} (BPO), and Social Media have removed the need for us to carry what we need with us, and has been the trigger for us to start dismantling those departments that we no longer need.

[[2]]Strategic Sourcing defined at Wikipedia[[2]]
[[3]]Business Process Outsourcing defined at Wikipedia[[3]]

The large bureaucracies companies have traditionally required are slowly being collapsed, hollowed out, as we find that we can achieve the same result more efficiently with smaller and more agile organisations. Companies are starting to use a more alpine style{{4}} of operation, leveraging a small carefully, chosen team with more flexible tooling, and relying their own wits to survive in a rapidly changing and uncertain environment. This shift is pushing us to rethink the nature and organisation of our businesses, setting aside many of the specialised departments and resources we relied on in the past to find a new organising principle. The impact will be both subtle and dramatic, with business continuing to do what business does (constrained, as it is, by government and market regulation) while the roles we all play as individuals change dramatically in response.

[[4]]Alpine style climbing defined at Explore Himalaya[[4]]

An interesting thought experiment is to compare the companies we work in to the societies we inhabit. After all, companies are really just small (and some not so small) societies, with all the dynamics and politics of a community of a similar size. The nature of both societies and companies is largely determined by the tools they use{{5}}, as it is these tools that determine how the community functions. Agriculture, for example, requires a society to be stationary and drove the creation of property ownership, while the telegraph enabled the creation of new business models by separating, for the first time, the transmission of information from the carriage of goods, and gave the world Reuters{{6}}. The tools and technologies we use determine the nature of the societies and companies we inhabit.

[[5]]Timothy Taylor (2010), The Artificial Ape: How technology created humans, Palgrave Macmillan[[5]]
[[6]]The history of Thomson Reuters[[6]]

Historically, societies can be broken into two rough technological groups: equatorial and seasonal. Equatorial societies exist somewhere near the equator, living in a climate that varies little throughout the year, other than in the amount of rainfall they receive. Seasonal societies live some distance from the equator in a more temperate climate, a climate that provides them with distinct seasons over the length of the year. The further north or south you go from the equator, the more seasonal the climate becomes.

The climate a society lives in has a strong influence on the type and nature of technologies that it uses. The orthodox strategy in a seasonal climate is to tailor specific toolkits to the challenges faced in each season of the yearly cycle; jackets in winter and shorts in summer. When it becomes extremely cold, it’s wise to bring along the sleds, snowshoes and heavy clothing. However, when it’s warm these the tools in this toolkit are somewhat less useful. Many tools fulfil a specific, and important need at one point in the seasonal cycle, but this also means that we have little use for the tool in the remainder of the year.

Societies in more tropical climates typically adopt a different strategy. Their focus is on creating a single toolkit that has a smaller number of simpler, but more flexible tools. They have little need for specialised tools, as the climate they live in is relatively stable over the year, which means that their success (or failure) depends on their ability to adapt to unanticipated disturbances or unexpected opportunities as they present themselves. While they are not concerned about stockpiling food to survive through a cold winter, they do need to be able to adapt to the sudden appearance of a cyclone. When a cyclone strikes you rarely have time to go and grab a cyclone proof shelter, and you need to be ready to pick up and use the fallen coconuts once the wind had passed. You must to make do with what you have.

In the former, seasonal societies, the emphasis is on the gear. If the gear fails then you do too, often with fatal consequences. This drives you to invest a significant amount of your time and effort into ensuring that the gear can’t fail, striving to add enough nines to the end of that reliability measure to ensure that you’re not left out in the cold. The technologies you develop are complex and highly entailed, addressing specific needs and requiring a long a sophisticated chain of skills, materials and tools to manufacture.

In the latter, equatorial societies, the emphasis is on skill. Your fate is determined by your ability to adapt the resources and tools found in the immediate vicinity to the problem at hand. The tools you need are simple and flexible, either lightweight and compact enough to carry with you or based on technologies which enable you to manufacture them from whatever materials you have at hand. These technologies are only lightly entailed, addressing general needs and requiring a relatively short chain of skills, materials and tools to manufacture.

Companies have traditionally been organised along similar lines to the seasonal societies. The pulse of business beat slowly, and our main concern was to address the specific challenges that existed in each season of this regular cycle. These challenges were also complex and highly entailed, requiring large toolboxes with specialised tools and skills that are highly interdependent. Success depended on the quality of our assets and processes, and our focus was on mobilising enough people and technology to create and staff the processes we needed.

Take, for example, LEO (the Lyons Electronic Office), which may well be the first business computer. Unable to buy a beige box from the local electronics shop, the team at Lyons had to build their computer from scratch, requiring a large team with a number of specific and specialised skills, and three years of effort. I wouldn’t be surprised if they were forced to blow their own vacuum tubes. The result was a machine that, in 1953, could calculate a person’s pay in 1.5 seconds, rather than the eight minutes taken by an experienced clerk. LEO was a long and highly entailed investment.

LEO, the Lyon's Electronic Office, in 1951
LEO, the Lyon's Electronic Office, in 1951

However, since then the pulse of business has increased dramatically. Over the last few decades we’ve gone from worrying about decades to years, and more recently to months and weeks. Soon we might even be worrying about days. The seasons in business are changing so quickly that we are finding it difficult to keep up{{7}}. Our business environment is, in fact, starting to look more like the environment the equatorial societies inhabit rather than the more temperate climes of old: a relatively stable progression over the year, but with a pressing need to adapt to the unexpected disturbances and opportunities as they present themselves.

[[7]]Why we can’t keep up @ PEG[[7]]

At the same time, the nature of the environment our businesses function in has changed dramatically. Many of the skills and tools we fought hard to obtain can now be easily picked up where we stand. From global logistics providers and contract manufactures, through outsourcing, the various consultancies and software as a service, most of what we require can be easily picked off the ground when we need it. LEO doesn’t hold a candle to many of the bureau and SaaS payroll solutions that we can use on demand.

What we need is a more equatorial approach to organising our business, one more in line with reality of the business environment we operate in today. This means stocking our organisation with a small collection of flexible, but potent, people that can rapidly adapt to our changing needs, people who can use a small set of flexible tools to respond to the challenges and opportunities presented to us. It involves pulling down our highly entailed bureaucracies and connecting the C-level with the team at the front line. Overhead functions such as IT and HR will be torn down. (After all, if all our IT exists in the cloud and our company is hollowed out, removing the bulk of our bureaucracy, then we don’t need these departments anymore.) The old value producing functions (manufacturing and so on) will be externalised and bought as a service. More than anything, our success will depend on our ability to mobilise – both as an organisation and as individuals – and adapt the resources and tools in the immediate vicinity to the problem at hand.

This requires a huge shift in how we think about staffing our organisations. Deep specialisation is no longer the benefit it was in the past. While specialisation brings knowledge and insight, it also (typically) reduces flexibility and adaptability. Someone with a decade or more invested in being an IT architect, sales manager, change agent, human capital management expert, process wizard or (even a) social media guru, needs to protect that investment. Their value is in their specialisation; they will defend the status quo and resist being pulled away from what makes them valuable{{8}}. The people we need are sun-shaped{{9}}. They’re highly skilled (though not highly specialised), focused on solving a problem we have, and bring with them a diverse toolkit of simple but flexible tools.

[[8]]From doctrine to dogma @ PEG[[8]]
[[9]]The sun-shaped individual @ PEG[[9]]

Continued in Working in Hollywood.

Some new rules for IT

The other week I had a go at capturing the rules of enterprise IT{{1}}. The starting point was a few of those beery discussions we all have after work, where we came to wonder how the game of enterprise IT was changing. It’s the common refrain of big-to-small, the Sieble to Saleforce.com transition which sees the need for IT services (internal or external) change dramatically. The rules of IT are definitely changing. Now that I’ve had a go at old rules, I thought I’d have a go at seeing what the new rules might be.

As I mentioned before, enterprise IT has historically been seen as an asset management function, a production line for delivering large IT assets into the IT estate and then maintaining them. The rules are the therefore rules of business operations. My attempt at capturing 4 ± 2 rules (with friends) produced the following (in no particular order):

[[1]]The rules of Enterprise IT @ PEG[[1]]

  • Keep the lights on. Much like being a trucker, the trick is to keep the truck rolling (and avoid spending money on tyres). Otherwise known as smooth running applications are the ticket to the strategy table.
  • Save money. Business IT was born as a cost saving exercise (out with the rooms full of people, in with the punch card machines), and most IT business cases are little different.
  • Build what you need. I wouldn’t be surprised if the team building LEO{{2}} blew their own valve tubes. You couldn’t buy parts of the shelf so you had to make everything. This is still with us in some organisations’ strong desire to build – or at least heavily customise – solutions.
  • Keep the outside outside. We trust whatever’s inside our four walls, while deploying security measures to keep the evil outside. This creates an us (employees) and them (customers, partners, and everyone else) mentality.

[[2]]LEO: Lyons Electronic Office. The first business computer. @ Wikipedia[[2]]

Things have changed since these rules were first laid down. From another post of mine on a similar topic{{3}} (somewhat trimmed and edited):

[[3]]The IT department we have today is not the IT department we’ll need tomorrow @ PEG[[3]]

The recent global financial criss has fundamentally changed the business landscape, with many are even talking about the emergence of a new normal{{4}}. We’ve also seen the emergence of outsource, offshore, cloud computing, SaaS, Enterprise 2.0 and so much more.

Companies are becoming more focused, while leaning more heavily on partners and services companies (BPO, out-sourcers, consultants, and so on) to cover those areas of the business they don’t want to focus on. We can see this from the global companies who have effectively moved to a franchise model, though to the small end of town where startups are using on-line services such as Amazon S3, rather than building their own internal capabilities.

We’re also seeing more rapid business change: what used to take years now takes months, or even weeks. The constant value-chain optimisation we’ve been working on since the 70s has finally cumulated in product and regulatory life-cycles that change faster than we can keep up.

Money is also becoming (or has become) more expensive, causing companies and deals to operate with less leverage. This means that there is less capital available for major projects, pushing companies to favour renting over buying, as well as creating a preference for smaller, incremental change over the major business transformation of the past.

And finally, companies are starting to take a truly global outlook and operate as one cohesive business across the globe, rather than as a family of cloned business who operate more-or-less independently in each region.

[[4]]The new normal @ McKinsey Quarterly[[4]]

So what are the new 4 ± 2 rules? They’re not the old rules of asset management. We could argue that they’re the rules of modern manoeuvre warfare{{5}} (which would allow me to sneak in one of my regular John Boyd references{{6}}), but that would be have the tail wagging the dog as it’s business, and not IT that has that responsibility.

[[5]]Maneuver warfare @ Wikipedia[[5]]
[[6]]John Boyd @ Wikipedia[[6]]

I think that the new rules cast IT as something like that of a pit crew. IT doesn’t make the parts (though we might lash together something when in a pinch), nor do we steer the car. Our job is to swap the tyres, pump the fuel, and straighten the fender, all in that sliver of time available to us, so that the driver can focus on their race strategy and get back out on track as quickly as possible.

With that in mind, the following seems to be a fair (4 ± 2) minimum set to start with.

  • Timeliness. A late solution is often worse than no solution at all, as you’ve spent the money without realising any benefit. Or, as a wise sage once told me, management is the art of making a timely decision, and then making it work. Where before we could take the time to get it right (after all, the solution will be in the field for a long time and needs to support a lot of people, so better to discover problems early rather than later), now we just need to make sure the solution is good enough in the time available, and has the potential to grow to meet future demand. The large “productionisation” efforts of the past need to be broken into a series of incremental improvements (à la Gmail and the land of perpeputal beta), aligning investment with both opportunity and realised value.
  • Availability. Not just up time, but ensuring that all stakeholders (both in and outside the company, including partners and clients) can get access to the solutions and data they need. There’s little value in a sophisticated knowledge base solution if the sales team can’t use it in the field to answer customer questions in real time. Once they’ve had to fire up the laptop, and the 3G card, and the VPN, the moment has passed and the sale lost. Or worse, forcing them to head back to the bricks and mortar office. As I pointed out the other week, decisions are more important than data{{7}}, and success in this environment means empowering stakeholders to make the best possible decisions by ensuring that the have the data and functions they need, where they need, when they need it, and in a format that make it easy to consume.
  • Agility. Agility means creating an IT estate that meet the challenges we can see coming down the road. It doesn’t mean creating an infinitely flexible IT estate. Every bit of flexibility we create, every flex point we add, comes at a cost. Too much flexibility is a bad thing{{8}}, as it weighs us down. Think of formula one cars: they’re fast and they’re agile (which is why driving them tends to be a young mans game), and they’re very stiff. Agility comes from keeping the weight down and being prepared to act quickly. This means keeping things simple, ensuring that we have minimum set of moving parts required. The F1 crowd might have an eye for detail, such as putting nitrogen{{9}} in the tyres, but unnecessary moving parts that might reduce reliability or performance are eliminated. Agility is the cross product of weight, speed, reliability and flexibility, and we need to work to get them all into balance.
  • Sustainability. Business is not a sprint (ideally), and this means that cost and reliability remain important factors, but not the only factors. While timeliness, availability and agility might be what drive us forward, we need still need to ensure that IT is still a smooth running operation. The old rules saw cost and reliability as absolutes, and we strived to keep costs as low, and reliability as high, as possible. The new rules see us balancing sustainability with need, accepting (slightly) higher costs or lower reliability to provide a more timely, available or agile solution while still meeting business requirements. (I wonder if I should have called this one “balance”.)

[[7]]Decisions are more important than data @ PEG[[7]]
[[8]]Having too much SOA is a bad thing (and what we might do about it) @ PEG[[8]]
[[9]]Understanding the sport: Tyres @ formula1.com[[9]]

While by no mean complete or definitive, I think that’s a fair set of rules to start the discussion.