Hack:
Delegate Authority to Process Teams and Provide Enterprise-Wide Decision Support to Improve Decision Success Without Bureaucratic Structure

As I described in the PROBLEM component of Phase 4 Hackethon, there are two key components to eliminating bureaucratic structure. 

• The first is executive commitment by the entire management team- CEO, C-suite, and throughout the management chain-to support the initiative and walk the talk.
• The second is to provide personnel with the necessary business-market-and technology competencies and skills as well as technology enabled support systems that provide learning and knowledge building across the organization to reduce decision-making risk. This will enable process teams to improve their decision-making capability, reduce the risk of adverse decisions that negatively impact a company's reputation, good will, and most importantly its financial structure, and successfully create innovative customer value, improve financials, and enhance shareholder wealth.

CORE COMPONENTS OF SOLUTION

This Phase 4 Hackethon will focus on the second component, which comprises a two-phase solution.

1. Provide personnel with the necessary business-market-and technology competencies and skills

2. Develop and implement a technology-enabled support system that provide learning and knowledge building across the organization and reduce decision-making risk

Following is more detail for each component. At the end of this section I provide examples of organizations who in the process of implement this solution

1. Provide personnel with the necessary business-market-and technology competencies and skills

Enabling personnel and process teams to improve their knowledge about the business, the market, as well as technologies will result in better decisions for the business and reduced risk associated with decentralized process teams making decisions. To do so requires personnel to build a set of competencies and associated skills. First, let me make a distinction between a competency and a skill.

A competency is the application of skills. For example, learning how to use a hammer is a skill. Knowing how to build a house is a competency. For process teams to make effective and well-informed business decisions requires competencies in four specific areas:

• Business Competency
• Market Competency
• Technology Competency
• Cross-Dimensional Competency.

Each of these competencies has associated skills. See the following graphic that depicts this framework

Competencies and Skills for a Bureaucratic Free Organization

a) Business Knowledge Competency: Process team personnel need to understand how the business operates, understand customer value and how value is created across the enterprise, and the potential opportunities to provide improved customer value. A Process focus is equally important so process teams can identify the information intersects across the enterprise value chain, where value is created, or can be created.

a1) Business Knowledge and Environmental Skill: Developing Business Environmental skills will enable your process team personnel to understand and articulate the business enterprise strategy, objectives, culture, and internal environment. Understanding the business is fundamental if you want your organization to align services to the needs of the customer. The focus of your organization needs to be the business value achieved measured by business outcome metrics.

a2) Opportunities and Challenges Skills: If process teams can develop Opportunities and Challenges skills, then they will be more effective in working as part of business teams. Knowing what business opportunities exist as well as challenges provides your process team personnel the ability to identify solutions that can enhance customer value, revenue, and profitability.

a3) Process Centric skills: These skills are a very important for process team personnel to work effectively as part of a business team. The business enterprise consists of numerous processes across the value chain supported by information technology. Understanding these enterprise processes and how they align to customer value is critical in effectively working with business personnel to achieve business outcomes for company challenges and opportunities

b) Market Knowledge Competency: This is an important competency since process team personnel cannot effectively improve customer value without a good understanding of the company products, industry trends, and the competitive environment. For process teams to be successful they need to have a good understanding of the market. It is almost more important that key personnel who interact with the business on a daily basis have the same skills. Otherwise, process teams will not effectively contribute to any discussion involving business challenges, opportunities, and potential solutions.

            a1) Associated Skills:

Product Knowledge Skills: Gaining knowledge about the products and services your company provides to customers and value chain partners is necessary for process teams to enable business strategies. How do you expect to understand the business challenges if you do not know your company's products and services? You cannot. Knowledge about the products and services provides the context for participating in business discussions about the company challenges and opportunities.

a2) Industry Knowledge Skills: Understanding industry trends will enable process team personnel work with marketing, sales, product engineering, and other organizations responsible for designing, developing, manufacturing, selling, and supporting your company's products and services. Having this knowledge will make process teams an active participant in discussions with C-suite and executive management personnel discussing company challenges and opportunities.

a3) Competitive Landscape Skills: When process team personnel have a comprehensive understanding of the competitive landscape, they will be better informed and capable of identifying the associated issues and opportunities that your company needs to overcome. They will understand the competitive landscape, the companies you compete with, and the value that differentiates your company from your competitors. You cannot participate in this discussion if you do not understand the competitive environment as well as what makes your company products and services valuable to customers.

c) Technology Prowess Competency: Technology is advancing at such a rapid pace. There are three major challenges CIOs face. The first is that not every new technology is an appropriate fit for your business. The right technology choice is the one that meets the needs of your business, not the one that is the latest and greatest. The second challenge is that business executives read about all the new technologies and want to know why the IT organization is not implementing them. The third, and most dangerous, is that business unit executives are contacting software vendors and acquiring products and services avoiding the IT organization. This is dangerous because the acquired software by the business units can conflict with other enterprise wide systems creating business issues. There are three key skills required by your IT personnel. The first is to develop a technology strategy that is flexible and can adapt to changing business conditions. The second is to develop agility within the IT organization so teams can quickly form to address business challenges and meet the demands of the business, which are changing at a quicker pace than ever before. The final skill is a strategic project capability that enables IT organizations to execute projects with speed, minimal risk, and within schedule requirements. Doing so will enable the IT organization to process more projects through the pipeline and address the strategic project demands from the business.

c1) Associated Skills

Technology Strategy/Adaptability Skills: Your IT organization requires a Technology Strategy / Adaptability that enables the company to develop and enhance new products and services. To accomplish this you and your technology teams need a strong understanding of the available and emerging technology available in the marketplace, and develop a technology strategy, which will enable IT to leverage these technologies into new, and or, enhanced products and services.

c2) Organization Agility Skills: Today's marketplace is very dynamic, placing new and demanding requirements on the IT organization. The only structure that enables the organization to respond these ever-changing demands from the business is to develop Organization Agility skills; whereby your IT organization can quickly form teams to collaborate with the business to respond to new business opportunities. In today's competitive marketplace, speed is mandatory and the ability for IT to have personnel with multi business and technical skills is necessary.

c3: Strategic Project Capability Skills: One of the greatest challenges for an IT organization is its ability to absorb strategic projects with current staff and budget constraints, while still maintaining the nuts and bolts of the business. You can only accomplish this if you have visibility into projects, whether they are enhancement of run and maintain projects, and can control execution with a set of robust processes and tools. Only then, can you optimize performance and reap the rewards of reduced time and resources, which will free up funds for strategic investments. The graphic below depicts this strategy.

d) Cross Dimensional Competency: Cross-Dimensional competency is a critical component for a strategic IT organization. Every C-Suite executive, business unit executive, managers, directors, convey a vision of how the business operates and provides value to its customers. Unless process team personnel can envision the future state in terms of strategies, projects, metrics, and business goals, as well as how it will benefit each person in their career paths, any change in enterprise strategy will fail. Associated Skills:

d1) Vision, Leadership, and Communication: Executive management and key management personnel must have effective cross dimension competency and skills to lead their organization The skills associated with the cross dimensional competency are vision, leadership, and communication. I do not include teaming as a skill it is a basic requirement in today's organizational environment. Personnel in effective process teams think, behave, and interact as part of business teams in entirely new ways. As we all know, behaviors are not easy to change. In fact, behaviors are one of the most difficult aspects of managing people. Most organizations develop a tactical focus, whereas a strategic organization focuses on business outcomes. A tactical organization is technically oriented and performs tasks with a silo mentality. Personnel take direction from a Directors and Managers. Most tactical organizations have DNA that drives reactive behaviors. They tend to respond to the directives from the business. A strategic organization, on the other hand, has proactive DNA. They tend to exhibit 'sense and respond' behaviors based upon their business knowledge and constant interaction with business teams.

2. Develop and implement a technology-enabled support system that provide learning and knowledge building across the organization and reduce decision-making risk

Today's global business environment is more complex than ever before. This is due to the following three paradigm shifts in the competitive marketplace; each causing a governance chasm for the business enterprise.

• Expanding global marketplace requires constant vigilance to uncover competitive opportunities and threats.
• Consumerization of IT results in customers demanding new digital products and services that IT organizations need to develop quickly and cost effectively.
• Changing organization models composed of virtual teams making complex business decisions replace the traditional vertical and hierarchical structures.

Each of the three market changes listed above has resulted in a new wave of information gathering by companies to better understand the competitive environment, pulse the needs, wants, and desires of its customers, and develop a more seamless communication process across the entire enterprise. The result is a broader and deeper enterprise structure overloaded with data. True, companies' today focus externally to capture and mine much of this data, using social media and sophisticated analytical tools, to uncover customer behaviors and market trends. However, companies must also focus internally to mine process data to anticipate where process breaches could significantly affect a company's revenues, costs, and potentially its survival. In effect, mitigate the risk of a potential disaster before it happens.

Take a look at all the major companies that have a global reach. Procter & Gamble, Johnson and Johnson, IBM, JP Morgan, Walmart, GM, Xerox, FedEx, and UPS are all familiar names to us and are just some examples of companies that have thousands of employees around the world making critical business decisions each and every day. The command and control structure of the past no longer works. Market dynamics require companies to make decisions and take actions faster than ever before. Customers demand it. As a result, organizational structures are more decentralized and decision-making authority is delegated throughout the entire process, even to personnel closest to the customer.

The dilemma facing executives is simple. Jack Welch recognized this years ago when he wrote about "Managing in the 90's in the 1988 GE Report to Shareholders the following.

"At the beginning of the decade...we saw two challenges ahead of us, one external and one internal. Externally, we faced a world economy that would be characterized by slower growth, with stronger global competitors going after a smaller piece of the pie. Internally, our challenge was even bigger. We had to find a way to combine the power, resources, and reach of a large company with the hunger, agility, spirit, and fire of a small one."

I underlined the last sentence of the quote because this summarizes the challenge that the executive suite faces today. Following is a personal example. When I joined ITM Software in 2003, a new startup, the founders and a cadre of 30 employees with a high energy level and entrepreneurial spirit worked hard and pushed the boundaries to grow the business. Everyone wore multiple hats and communication flowed freely and quickly. Everyone was aware of business decisions on product design, development, marketing, sales, customer service, etc. When a decision inadvertently resulted in a negative impact on the business, the team quickly banded together to correct the problem. At other times, when team members worked together to discuss a potential action and someone anticipated a potential problem, he or she spoke out, discussed the possible consequences, and the team agreed on an appropriate course of action. Such is the DNA of the small company. As companies grow, management instill processes and structure to maintain a core of discipline and consistency in the execution of activities. Decision-making is tightly controlled. However, information flows, which often traverse both  vertically and horizontally, are often filtered as they traverse the management chain.

Here is a message to all CEOs, CIOs, and C-Suite executives: take heed of the challenge and figure out how to develop an information system for managing in the 21st century that replicates the speed, agility, and spirit of a small company. How would you answer the following questions?

• As your business has grown, have your processes and policies slowed down the communication of information across the business?
• Have you ever been surprised to find out after the fact that an incorrect decision negatively impacted your company's reputation, loss of market share, revenue, and share price due to a process not followed properly or even worse, personnel inadvertently making a poor decision, even though everyone was telling you that everything is ok?
• Did you find out during the postmortem analysis that "someone always knew" or there were warning signs that could have prevented the problem if they were properly captured as data or appropriately communicated to the management team?
• Do you realize that the inability to monitor and govern appropriately could jeopardize the survival of your company?

If you answered yes to any of these previous questions, you need to figure out how to address the problem. This subject is explored by Lynda Applegate, the Sarofim-Rock Professor of Business Administration at Harvard, in one of her many papers on the subject. In her 1999 paper, "Time for the Big Small Company" published in the Mastering Information Management Series by the Financial Times on March 1, 1999.  Applegate's main thesis is that information systems in the 1960's were not mature enough to handle the "volumes and complexity of information flows required" by complex organizational structures. However, advances in technology and information systems are now available to provide a digital governance layer across the entire business enterprise.

The next evolution for effectively managing in the 21st century lies in the development of an information-based system that can predict and identify potential risk areas for the day-to-day decisions that, if made incorrectly, could negatively impact the company. The key to success will be monitoring key enterprise processes and identify potential risk areas.

An example of an enterprise-wide decision support system to reduce decision risk is an airline cockpit, where the on-board governance system constantly monitor aircraft processes and alerts the pilots of any impending threat with mitigating data and voice instructions, via the cockpit dashboard, to avert a potential problem. The airplane is a very complex set of processes composed of hydraulic systems, fuel systems, navigation systems, take-off and landing systems, wing and stabilizer controls, etc. All have to work in harmony for the aircraft to fly safely to its destination.

An extension of the cockpit example is to look at the United States Federal Aviation Authority National Airspace System (FAA-NAAS). This organization is responsible for providing the safest most efficient aerospace system in the world. At any given time of day, approximately 5,000 aircraft fly in the skies above the United States. In addition, on any single day, the FAA monitors approximately 85,000 flights. Through an extensive network of systems, highly trained air traffic controllers stationed at airports and FAA facilities across the United States monitor all flights "to ensure that all traffic moves as smoothly as possible" and handle "constraints in the system, such as weather, runway closures. ⁶ The Air Traffic Controllers reroute aircraft based on early warning indicators if planes are too close to each other, forecasted adverse weather conditions, or if an aircraft needs to be rerouted due to an onboard medical emergency. Although each aircraft has their own on-board systems to monitor the plane's systems, the FAA's governance process ensures that all aircraft flying in the skies above the United States move safely through their filed flight patterns.

I would like to explore this analogy. Think of the airplane cockpit as one of your company's process cells where personnel from different parts of the organization perform a variety of process activities. Think about logistics, product development, projects, and vendor management as examples of processes that contain high degrees of risk. Major issues can occur if incorrect decisions are made or information about the process is not available to personnel performing process activities. Inadvertently routing of logistics carriers, vehicles, planes, trucks, or rail, without knowledge of impending weather, traffic, or mechanical issues can impact sales, cause product spoilage, and create havoc across the entire network for many companies because of the lack of an early warning system. Projects reflecting a "green" status may in fact be "yellow" or "red" due to team members being unaware of warning signals, resulting in project overruns, inefficient resource allocation, out of scope efforts, etc.  A product development team makes a decision not realizing that the same decision previously implemented by another product development team resulted in untimely delays One of your major strategic vendors, while providing similar services for another company, make decisions that negatively  impact revenue and cash collection.  . These events happen every day at many companies. Yet management has yet to figure out a way to proactively mitigate these negative outcomes

Managers at companies around the globe spend billions of dollars improving the effectiveness of business processes but not nearly enough to provide a governance "early warning system" to ensure that potential risk areas are identified, communicated, and proactive actions taken to prevent negative outcomes. An enterprise-wide decision support system to provide early warning of potential risks would reap billions of dollars in potential savings around the globe, speed up innovation, and result in consumers benefiting with unique and value based products and services.

COMPANY EXAMPLES

1. Provide personnel with the necessary business-market-and technology competencies and skills

2. Develop and implement a technology-enabled support system that provide learning and knowledge building across the organization and reduce decision-making risk

There are some examples of where this is happening in today's business environment. Two are discussed below.

Procter & Gamble

Procter & Gamble addresses part of the challenge with its Decision Cockpit and Business Sphere applications that help managers and teams make well-informed business decisions. Filippo Passerini and his IT / business teams digitized the company data and accomplished three major objectives. First, there is now one set of information, so there is no dispute about the accuracy of the data, which often plagues teams in accurately analyzing data. This enables 8,000 employees to focus on data analysis versus data integrity when performing their job. Second, much of the non-value added time resulting from capturing, organizing, and conducting some preliminary analysis is eliminated. Most managers will tell you that they spend 50-80% of their time gathering, organizing, and interpreting data. Eliminating the data accuracy confusion provides managers the ability to spend a majority of their time on decision scenario analysis to make well-informed business decisions, which is a value-add activity.  Third,  data is analyzed extensively using business analytics and presented in various graphical formats for ease of interpretation. This strategic use of technology and information addresses the islands of information challenge that plagues many companies. The net result is managers and teams focus on reviewing analyzed data that result in personnel and teams making  well-informed business decisions.

CAI, Inc.

CAI, a professional services firm, is developing a suite of SaaS solutions named Advanced Management Insight (AMI) that according their CEO, Tony Salvaggio, does this. Salvaggio, a former IBM sales executive, founded CAI in the early 1980s and has always believed that "process excellence is the road to success". Over its 30 plus years in business, CAI has developed methodologies, processes, and solutions, around their intellectual capital that focuses on improving IT processes.

One of the newer initiatives at CAI is the development of an early warning system to proactively identify potential risk areas in all areas of the business, not just IT. Their AMI suite is comparable to an airline cockpit where the on-board governance system constantly monitor aircraft processes and alerts the pilots of any impending threat with mitigating data and voice instructions, via the cockpit dashboard, to avert a potential problem. The airplane is a very complex set of processes composed of hydraulic systems, fuel systems, navigation systems, take-off and landing systems, wing and stabilizer controls, etc. All have to work in harmony for the aircraft to fly safely to its destination. CAI uses the cockpit as an example of management cell where employees perform activities to support a business process. 

CAI efforts are right on track. Today's business enterprise is composed of a very complex set of processes, just like airplane systems. These processes have to work in harmony to develop, sell, and deliver products and services for customers. I am sure your company focuses much effort on optimizing these processes. However, you may not be focusing enough energy on the need for a governance system that monitors these processes to avert risks that occur due to incorrect decisions made each and every day throughout the company, and perhaps a major one that could even impact the very survival of your company.