Thinking Faster

The corporate balancing act

I've been reading The Smartest Guys in the Room - the seminal book on Enron and the eventual downfall, and the book, along with my consulting experiences, have led me to a conclusion about most organizations and how they are structured.  It seems that most firms care about and place emphasis on one axis of measurement or the other - they either care about RESULTS (who cares how the results were achieved) or PROCESS (process over all).  Now, it's simplistic to say that firms only focus on one or the other of these when in fact both have to be addressed at some level.  Realistically though most firms place more emphasis on one or the other.  If we were to break it down into a 2x2 matrix - the favorite analysis approach of any self-respecting MBA - we'd see these four quadrants:

High Process/Low Results:  This organization emphasizes the process to a fault.  The results often are understood and barely achieved, but the process governs everything.  Rewards are focused based on adherence to the process, risk taking and new thinking is discouraged except to improve or enhance the process.

High Process/High Results:  Ideally, where we'd like all firms to be.  Clarity and focus in operationally excellent processes and high achievement on results.  Few firms manage to be very good at both over the long run, although we all would like for that to be true.

Low Process/High Results:  This is where Enron and a lot of the dot-com boom failed.  There were short term "results" - perhaps measuring the wrong things.  Most firms must scale out of this mode where there are results but the results aren't sustainable over the long run.  This model has the most room for experimentation but the greatest risk of failure.

Low Process/Low Results:  Typically you won't find a lot of firms in this quadrant very long.  A firm cannot subsist very long with poor operating models and poor results.

So, let's assume for the sake of argument that most firms belong in one of the first three quadrants identified, and that it's rare that firms do a good job achieving high adherence to both process and results over the long run.  That means at any point in time most firms are either in the Low Process/High results quadrant (a potential Enron) or in the High process/Low Results quadrant (safe, secure and boring).  If that argument is true, then what you have are the brash upstarts (low process/High results) versus the comfortable incumbents (high process/low results).  Only the paranoid, to quote Andy Grove (high process/high results) survive.  The brash upstarts either get process and manage more effectively or burn out, and the comfortable incumbents get blindsided by the upstarts and forced to change, or they change themselves.

What should matter to you is not so much where your firm exists in the three quadrants, but what is the trajectory and trend line for your firm.  If you are a brash upstart - do you have the ability to add reasonable controls and process to sustain your growth?  If you are a comfortable incumbent, do you have the ability to change, introduce risk and grow?  If you are in the high/high category, can you balance the potentially choking growth of process to maintain high efficiency, and marry that with creative growth and effectiveness?  Don't worry about where you are - you are there now anyway.  Start thinking about your trajectory and where you are headed, since this is a difficult ship to steer, and will take time to move effectively.

Free Agents in the workforce

Do you remember back in the dark ages, oh, probably five or six years ago when all was sunny and bright?  When the promise of increasing bandwidth and fascinating dot-coms would create value by "stickiness"?  When technology and brainpower would free us from the drudgery of a 9-5 job.  From the looks of the most recent economic numbers, they got the last part right.  A lot of people have been freed up from their 9-5 drudgery.

However, what I'm most interested in examining today is the concept of the "Free Agent".  You may recall a book on the topic - Free Agent Nation - which argued that with so much well educated talent and the ability to work wherever, whenever an individual wanted, it was likely that we'd become a nation of free agents, selling our talents in short time spans to the highest bidder, then moving on.  That book was published in 2002, as the Dot Com era was beginning to fall apart.  I think that after the dot com bust and 9/11, people sought the comfort of more permanent, "stable" employment in larger organizations, so Pink's ideas did not find root in that timeframe.  However, there's a good argument to be made that the concept of the free agent may be more important in the near term future.

Right now, many firms are struggling to determine where their core values and capabilities are, and what's extraneous to those core capabilities.  Every firm has strengths and weaknesses, but most are trying to get back to base principles, and then build from there.  What many of these firms want is flexibility in their workforce, the ability to quickly scale up and slim down.  Additionally, many would rather have a few very deeply skilled people than a big team that may not have as much skill.  I suspect that these factors, along with the increase in broadband, Software as a Service and mobility will lead to an increase in free agents.  Right now there are a number of very strong people available who have been burned by "safe" organizations - Bear Sterns anyone? - and may trust themselves over corporations again.  There are still needs for many of the talents and services these folks can provide, but newly chastened firms won't be hiring full time again soon.  The needs of the businesses may coincide with the desires of the newly departed.

Using more "free agents" will provide greater flexibility, new thinking and perhaps a deeper skill set than retaining an internal team.  It will cost less, as firms don't have to carry retirement or health care on the free agents.  On the flip side, the free agents can build credible small businesses and control their own destinies. 

Pink was probably right, just out of phase with history when he wrote Free Agent Nation.  The discontinuity of the downturn may lead to a new contract between businesses and talented individuals.

Can we work any faster?

As a consultant, I am never surprised when a client asks me - can we speed up this project?  Can we work any faster?  What does surprise me, however, is how many of the barriers and roadblocks to progress that exist in the environment of my client's company, process and expectations.  My typical (somewhat sarcastic) answer is, "Yes, I can, but I doubt your organization will let us".

What are the barriers to working faster?

• Signoffs and approvals - often we need to educate others to get approval to do what we want to do - the more risky and rapid the work, the higher the need for approval and, generally, the longer to receive
• Funding - generally good work costs money, and money is ever tight.  If you need to go through a specific process for obtaining funding, then it is often exceptionally difficult to speed up this process.
• Resources - Most organizations don't have much slack in the system - their employees are actively engaged.  To do more work more quickly, we can scale up a consultative force (see funding) or free up more people, which requires negotiation and time.
• Culture and inertia - trying to speed up a project that involves doing things the firm is unfamiliar with or uncomfortable with is pushing a string uphill.  The "faster" you try to move without complete buy-in, the more the organization resists.

OK, if these things are true (trust me, they are), how can we best more with all due speed?  Slow down at the beginning of the project or effort and define the investment that's possible, the commitment that's available and the urgency and visibility of the problem or challenge.  Something with low commitment and no urgency and little investment will never accelerate, while projects with high visibility, good scoping and high commitment can accelerate to a great extent.

Don't believe the old saw "there's just no money available".  That's simply a way of saying that there's no money for your project since it was not high on the priority list.  There is ALWAYS money available for good projects that meet management criteria and thresholds.  You and your project need to understand how you can map to those factors, so there will be money available for you.

Covey talks about "sharpening the saw" before cutting the wood, to improve effectiveness.  I recommend adequate planning and defining commitments before starting a project, to understand the appropriate speed of the project.  In any project there are certain "governance" vehicles management teams and cultures use to slow or speed up a project.  A consultant can ALWAYS staff up and speed up their work.  I find that most clients can't do so with any alacrity.

Ultimately there are a couple of other issues that stand in the way.  One is decision making.  Procrastination is a huge issue - it's almost as if delaying a decision will somehow make it less painful.  Another issue is the hyper-scheduled employee.  Recently one of my clients demanded to convene the project team as soon as possible, and when we compared calendars the earliest meeting that was possible to achieve even a quorum of the team was six weeks out.

Yes, you can work faster, by establishing the expectations, commitment, funding and decision making up front.  It is exceptionally difficult to change these once the project is underway.

The increasing cost of information technology

I was reading a blog post recently by a CIO from a large retail bank, bemoaning the ever increasing cost of information technology.  Why, he asked, is the cost of information technology ever increasing, when the cost of hardware, processing power and memory constantly falling?  As Pogo said, we have met the enemy, and he is us.

While Moore's law stipulates that the cost of processing power will continue to fall at a spectacular rate, and the cost of memory will fall perhaps even faster (my MP-3 player has almost as much memory as my laptop from 2 years ago), these laws denote the fact that we can make the infrastructure incredibly inexpensive.  So inexpensive, in fact, that we've ignored the ever increasing cost of capturing and holding data.  I'd be willing to bet that while the cost of hardware and processing power has fallen at a steady, regular basis for years, the increase in the amount of data we capture, manage and hold has grown exponentially.  Even in an IT downturn, such as the one we are in right now, firms that make data storage systems are doing relatively well, simply because we can't keep ourselves from capturing and storing ever more data.

And, once we've captured and stored that data, we've got to protect it.  So, even with inexpensive servers and software, we add another layer of security, which means more people have to administer the applications and more layers of integration and complexity.  And, of course to justify all the data we capture we have to analyze and report it.  Which means more software to slice and dice and report the data, and more people who can manipulate and manage the data.

Ultimately, we have in any IT environments several "honey pots" of data that must be protected and analyzed.  And these do nothing but grow.  Soon we are seeking "off site" locations for the data to be housed and stored.

Perhaps we need a new Moore's law, which would be the rate of increase to capture, store, protect, analyze and manage one gigabyte of data for one year.  Unlike Moore's law, which suggests the price of processing power should fall over time, I suspect the Phillips law (immodestly named) will indicate a significantly rising cost over time, and demonstrate the true cost of information technology.  We need to begin to ask the question - do we really need all of this data, and all of the infrastructure costs associated with capturing, managing, storing, recalling, analyzing, archiving and reporting it?

A modest tax proposal

You'll forgive me, gentle reader, if I digress from personal productivity and management insights for just a moment to vent my spleen about one particular issue that has me rather angry.  Currently, we are being fed a load of manure about the efficacy and trustworthiness of some proposed officials in the Obama administration, and it sticks in my craw to think that Geithner and Daschle are in positions to be Treasury Secretary and HHS Secretary even though they failed to pay their taxes.  What does this say about these individuals?  There are basically three choices:

1. It was all a big mistake.  They didn't pay attention to the tax codes and never recognized that they should have paid these taxes.  So, average Americans get punitive penalties for not paying their taxes and we are expected to do so promptly.  These two guys paid up years later with no fees or penalties.  Both of these gentlemen will run significant agencies of the federal government.  If we accept the premise that it was all an oversight, why should we trust them with the management of a significant portion of the government?
2. They knew they needed to pay taxes but didn't understand or didn't think the taxes applied to them, or couldn't figure out how to do them.  Again, if this is the case, then do they deserve to be running a complex agency?  Average everyday people I know struggle to do their taxes but they do them.  Perhaps we can state that the income taxes are simply too difficult.
3. They chose to ignore the fact that they needed to pay taxes.  Perhaps they've lived in a bubble too long and no longer believe that the rules that apply to many of us also apply to them.  Why does Charlie Rangel (Congressman from NY) get to skip paying taxes on condominiums in the Dominican Republic, and have four rent controlled apartments in NYC?  Are these individuals different from the rest of us and somehow above the law?

Where is the outrage about the fact that these financial and political geniuses seem to believe they don't have to abide by the same laws that the rest of us must follow?  Have we allowed an untouchable political class to evolve that may pass laws that we must obey but have allowed them to become immune to the same laws?  Doesn't that begin to smack of royalty?  Well, I suppose if senate seats can be almost handed down (to Caroline Kennedy, or Beau Biden, or Lisa Murkowski) then we have created a royalty.

Here's a modest suggestion to level the playing field.  Let's propose a new law which states that anyone running for federal office is REQUIRED to be audited by the IRS when running, and every year in which the person serves in a congressional role, as a senior member of the executive branch, and so on.  This should apply especially to anyone who writes the laws or enforces the laws on financial matters or lobbying.  At least in this way we can all go to bed at night thinking that Timothy Geithner and Tom Daschle have to pay their taxes in the same way that we do, and if they don't, will have to cough up the same fees, and penalties, that the average Joe does.

Otherwise we risk becoming a nation not just with a professional political class, but one that can create and enforce laws on the majority of us that they themselves can ignore.