Technology and Organizations

It’s great if you have systems savvy. It’s even better if you practice it in public. Systems savvy starts with the ability to see and understand the possibilities of all the technical and organizational options available to you. Systems savvy people either don’t have, or can overcome, a bias towards stand-alone technical or organizational solutions. Instead, systems savvy people look to how they can build systems out of combinations of technical tools and organizational practices. But here’s the trick — if you practice systems savvy in private, your good decisions have less power.

Explicit use of systems savvy is better than tacit use because it allows others to coordinate. Think about the benefits gained in a kick-off project meeting if the group comes to a set of explicit decisions about where files will be stored, how sign-offs will be managed, and the best strategies for communicating. Coordination can also be more physical — I had a recent phone call with a building supply vendor who carefully laid out the options for transporting and offloading some recycled plastic panels: Would a forklift be available to lift the pallet off the truck? If not, would at least one person be available to join with the driver in offloading by hand? Both scenarios illustrate the value of working together to make technology and practice tradeoffs.

This is even good advice for all systems management, not just ones where technology is playing a role. Nilofer Merchant says in her organizational strategy book, The New How:

If, say, only a small group of leaders knows why decisions are being made the way they are, it leaves the rest of the organization in the dark. It suggests to people that there’s some “all-powerful wizard” behind the mysterious curtain who is the only one with the ability to make things happen, and that each of us is not a co-creator. It can leave the organizational players believing they have no say in what is being decided. By now, you know these two outcomes are taboo.

Everyone is better off when they know why decisions are made with as much accuracy as possible. It gives them an understanding of what matters and provides information on which to base the trade-offs constantly being made at every level. It also boosts buy-in and energy from the organization. When reasons behind decisions are not shared, the decisions can seem arbitrary and possibly self-serving. That is, they may seem like they are made for the good of the decision makers, rather than the good of the organization. (p. 59)

From Nilofer’s perspective, we not only gain improved coordination from being explicit about our systems savvy practice, we also gain motivation and commitment.

Rhonda Winter, CIO of Indianapolis Motor Speedway, has helped me with another perspective on the explicit use of systems savvy. I’ll be sharing her thoughts soon.

Transparency is the concept of the quarter. Transparency has always been an important management topic (how much, with whom, about what). But I think we’re entering an era where transparency may have a chance of going mainstream. Three big triggers for me:

• Comments by Eugene Lee suggesting that he’s seeing greater transparency in a variety of firms
• Nilofer Merchant’s new book The New How: Creating Business Solutions through Collaborative Strategy
• Series of comments at the Enterprise 2.0 conference this week — Social media creates transparency, often whether you want it or not — so you better manage it

I covered Eugene’s comments last week. Here I’ll focus on The New How and the E2.0 conference.

The New How: Creating Business Solutions through Collaborative Strategy

At Santa Clara University’s Leavey School of Business (where I teach Organizational Design and Technology & Innovation Management), we have the pleasure of Nilofer Merchant being a member of our advisory board, and an alum. I’ve had a chance to talk with Nilofer a time or two and she was kind enough to forward me a early copy of her new book.

In The New How, she provides clear examples (often personal) of the flaws of top-down thinking and how this approach threatens strategy development and implementation. Her “Air Sandwich” is a clear and memorable way to describe the problem (p. 13):

An Air Sandwich is, in effect, a strategy that has clear vision and future direction on the top layer, day-to-day action on the bottom, and virtually nothing in the middle — no meaty key decisions that connect the two layers, no rich chewy center filling to align the new direction with new actions within the company.

Transparency is one aspect of modern management that can help us find the rich chewy center.

Everyone is better off when they know why decisions are made with as much accuracy as possible. It gives them an understanding of what matters and provides information on which to base the trade-offs constantly being made at every level. It also boosts buy-in and energy from the organization. When reasons behind decisions are not shared, the decisions can seem arbitrary and possibly self-serving. That is, they may seem like they are made for the good of the decision makers, rather than the good of the organization. (p.63)

Foundations of the “New How”:

• Distribute decision making
• Demand good followership
• Reward co-ownership
• Set clear goals and then improvise
• Be students of the game: “We… know that learning organizations get better over time at innovation, disruptive change management, and operational excellence” (p. 218).

While some of these ideas have been around, this presentation and our current environment may contain the levers that finally make it happen on a grand scale.

The environment is creating a fertile ground for the ideas of The New How. In prior times management had to decide to practice transparency (for example, Open Book Management), but with blogging/social media/greater access to data, employees can create some of their own transparency. This dynamic exists across organizations, not just Silicon Valley regulars. For example, the Enterprise 2.0 session on “Is E2.0 a Crock?” (conclusion is that it’s not) included:

• Jamie Pappas, Manager, Social Media Strategy, EMC
• Bryce Williams, Social Media Consultant, Eli Lilly
• Megan Murray, Community Manager/Project Coordinator, Booz Allen Hamilton
• Claire Flanagan, Senior Manager, KM and Enterprise Social Collaboration, CSC
• Bruce Galinsky, Director IT, Metlife
• Greg Lowe, Social Media Architect/Program Manager, Alcatel-Lucent

This is going to happen. “Culture can lead, so you better find tech ways that work for company goals” (Bryce Williams, Eli Lilly). Management should see transparency as an opportunity rather than a challenge. A well informed organization is better able to perform on every level.

Want more data? Here’s a start: Mendelson (2000) Organizational architecture and success in the information technology industry, Management Science. Using data from 63 business units during 1994-1995, Mendelson looks at how the following dimensions of what he calls “Organizational IQ” impact performance (also provides excellent references to foundational books/article around participation and transparency) excerpts from article:

• Promotion of widespread awareness of new information from the organization’s external environment, including information about markets, new technologies, and changes in customer tastes.
• Co-location of decision rights with the pertinent knowledge, which often implies considerable decentralization of decision authority to lower level managers or front-line employees. This, in turn, requires an incentive system that aligns individual and organizational objectives.
• Practices, technologies, and systems that improve the diffusion of knowledge and information within the organization.
• Reduction of complexity and information overload by focusing on fewer activities.
• Reliance on a network of partners for performing noncore activities, following the same principles that define the intraorganizational IA architecture, but applying them beyond organizational boundaries, across the entire network.

Want more examples?

• Military: “Power to the Edge” (pdf of book) notes that transparency and decision rights being located at the “edge” (where the work happens) are necessary in today’s environments.
• Small Business: Laura Lorber describes the benefits of “An Open Book” in a Feb Wall Street Journal article.