Optimizing the value of time

April 28, 2011 By Leave a Comment

Summary : time measurement is a permanent concern for any organization because it’s tightly connected to productivity : the less time needed to perform a task the more productivity and, so, the less costs. That’s not sure at all in the knowledge economy where time and value are loosely tied. If time measurement is not a relevant indicator anymore, the focus has to be put on created value and not necessarily by increasing work intensity which is not key for knowledge worker but rather by working smarter.It will need, among other, to push information depending on its relevance in a given context and a better information sharing, what is the “informational” version of economies of scale.

 

How many times did we hear, while asking employees to change anything in the way they work and collaborate, comments like “we don’t have time” or, from their managers, “how much time will it take to them ? I don’t want them to waste their time”.

The reason ? Time is easy to measure and, once done, costs are easy to infer. In fact…it’s not that easy. What was true decades ago isn’t anymore. While the nature of work is evolving and people have to perform many tasks in parallel, trying to know how much time was needed for each of them is counter productive. What I often explain by “it never takes a lot of time but it takes time often”. While we’re being asked more and more to collaborate, be available to help others, all these activities are seldom taken into account. The consequence is that the role of a given person in getting a result often remains unknown but, even worse, that this person may be blamed for collaborating or helping others.

So, even if we keep up measuring time because we haven’t found another better right now, it’s now obvious that it’s not a relevant indicator to measure the performance of a person, a team or the whole organization.

Let’s also add that if time is not relevant anymore to track costs, it’s not relevant either to track value creation because it’s not proportional with time anymore. In the knowledge economy a lot of value can be created in 10 minutes by solving a problem or having an idea while days can be spent to do something that’s key in a global project but has few value per se.

Recently talking about organizations that want to move away from email to other tools, I heard :

- “they say employees are spending too much time in emails”

- “And they think they’ll spend less time in social networks ?”

That’s true. On the other hand, if the amount of time spent remains the same and, so, its cost don’t decrease, its value can be increased. Like it’s often said, an information send by email is only accessible by its receivers, if shared it becomes a part of the informational capital of the organization, can be reused and make other people save time. An information may be sent to someone who don’t need it while someone else may need it to perform a valuable task.

So, the question is not time measurement but how to optimize its value.

Some ideas ?

• Make people focus on what create value. Making a decision relying on information creates value while searching information to make a decision is a waste of time. It can be made possible by “analytics” that will suggest relevant content and people as well as robots based on “Watson-like” technologies. By the way, it’s impressive to see how many organizations say they have a sharing problem while, before all, they have a search problem.

• Multiply the value of time by making what’s been produced reusable. It will need sharing mechanisms “in the flow of work” as well as generalized capitalization practices.

• To be completed with you own ideas…

Filed Under: Economy & New Models, Knowledge & Information management, Management & HR Tagged With: , , , , , , , , , , , ,

Cost reduction : a false good idea for organizations in tough times ?

February 24, 2011 By Leave a Comment

Summary : In tough times, businesses have one major concern : reduce costs. A saving attitude provided it’s not mixed up with its far relative : the reduction of spending and investment. Spending reduction may be the logical consequence of a cost reduction program but does not replace it. Reducing costs means pondering one’s operational efficiency and the organization of work. Spending less does not always mean producing better and when this issue is overlooked the only result of cost reduction is that the enterprise is thrown in a negative spiral

It’s been the motto of nearly since the economy collapsed : costs have to be reduced. Any possible solution is leveraged : people are laid-off, projects prozen, the smallest expense questioned… Nothing but logic (except for the concerned people).

At the beginning it inspired me some very basic thoughts : after all, if these people and spending were useless why having keep them for so long ? Then I tried to digg a little further : for what I can remember, costs and spending have never been synonymous, either in the common or financial vocabulary.

So I reminded of a years old anecdote, that dates from the time when I was a student. We had to work on the case of a company that was loosing money again and again. Basic reflex : I started to examine all items of expenditure and start to cut all unnecessary ones before having a deeper look. By luck, the company started to make money again. The miracle happened and I did not need to go further. All the other students, of course, did the same.

Then came the debriefing session with the professor. It can be summed-up in one sentence. “Sirs, while you had to focus on costs you cut many expenditure items to make the bottom line become “green” again. Let me tell you that you could have followed you logic till the end : sell machines, stocks, all the assets and then close the business. You would have achieved what seemed to be you goal : a zero expenditure company. Let me tell you that this kind of organization won’t create any kind of value but, at least, won’t lose any money !”.

In fact the production tool, the organization and the business model well so irrelevant that the enterprise could not make money. So short-term cheating was possible by cutting expenditure but the situation could not last and cuts had to happen again and again until there was nothing left. Not even mentioning the fact that at each expenditure reduction phase, the potential that would have helped the organization to recover in the future was destroyed.

“Of course, rethinking organization, strategy and production takes a long time and it’s a tough work so you did what was the simplest. In the “real life” you would even have been rewarded for that and got a bonus. But if such a situation happens in your future, take the bonus and run because it would mean that you have put your organization on a path that will lead it to its end.”

Reduce costs does not mean expenditure reduction. It’s reducing the cost of obtention of the product of service that’s sold to the customer. It means organizing resources differently to get the same with a lower cost. In the case in question, it would have meant investing in more modern machines, increase the budget of R&D and rethink work organization to increase collective efficiency.

But I have to admit that this reasoning has limits : it only works in a growing economy. In a stable or collapsing market, producing “smarter” means than less resources are needed what leads to expenditure reduction.

Hence my first conclusion : reducing expenditures is relevant if it’s the consequence of a more efficient organization of work. If reducing expenditures means “avoid a global approach to the way we work”, that’s the beginning of the end because it starts a trend that leads to the “zero spending company” that has no resource to reinvent itself or create any value.

But it’s also possible to reduce costs without impacting expenditure. It implies that new markets are found. Impossible in times of crisis ? No, if the interactions between the organization and its ecosystem are more dynamic, if there’s a focus on value co-creation, on internal agility that allow ongoing business models design and refinement. Have a look at Cisco’s numbers these last years ? Isn’t it the result of Chamber’s obsession that turned Cisco into a “market transition focused organization ?”. In a different style, could we think that the success of Apple at the same period is the consequence of its capacity to create new markets ? Anyway none of these companies reduced anything during these hard times while some others were becoming fossilized, waiting for better days to come. Operational efficiency + ability to understand the market and anticipate are key for success…provided all the people that make it people have not been laid-off (in fact they are often those who are forced to leave first because they’re impact is more on middle/long term than short term).

By the way…what about cost reduction ? It’s relevant and even essential when it’s not confused with spending reduction. The solution is not in a local approach to production factors but in a systemic understanding of value creation. Kind of “work smarter”…

Filed Under: Management & HR Tagged With: , , , , , , , , , , , ,

The myth of free and how it impacts employee’s participation

November 12, 2009 By 3 Comments

Many people are discussing all around the web (and even beyond) whether digital things must be free or not. On the one hand, there are those who think that everything that is not tangible and is fluidly exchanged through the net is free by nature, on the other end there are those who think that everything as value, because of the time spent to make these contents and that their dematerialization, even if it can lower storage and distribution costs in such ways to lower the final price, doesn’t mean things have to be free.

It’s both a social and economic discussion, that is very close to more concrete things we experience everyday in the workspace.

Let’s be clear : nothing is free. There are things that people has not to pay for, and mistaking the two concepts may make us go astray to a large extent. When we don’t pay for a content we must keep in mind that advertisers pay for us. Let’s consider, for instance, something that is free at first sight : the content of a blog. The author pays the price : hosting, the time invested… But, most of times, he decides not to pass the costs along the readers. Fortunately, he has a job that makes him earn enough to live. No one pays his rents with the consideration shown by his audience or with an exchange of service.

Knowing that, if the actitivity of producing contents is different from the one that makes people earn for their living, it could be free, when they meet it’s impossible except if the content producer can live on nothing and than gentle organizations will provide him with a home, food, electricity,…without anything in return. Stop dreaming.

The same phenomenon happens in the workplace when things come to collaboration, participation, social networking.

Everyone has his job, for which he’s paid. Everything he does and produces is financed by the person who pays him (he’s paid on a “local” budget which someone is responsible for even if at the end it’s the company money). On a strictly accounting point of view (and don’t tell me it’s irrelevant, everyone who has to manage a budget knows what I’m talking about), breaking silos means making something that has been financed by one person should become freely accessible by the whole company. Even worse, freeform collaboration means that someone someone who is paid on a department or business unit’s budget should be asked to make something (either it lasts 1 min or 1 hour) that someone else will benefit from.

The problem is not a the employee’s level, at his level everything being transparent, but at the management’s level because it’s in charge of optimizing how budgets are used. Unlike the general public web, businesses don’t know how not to pass a local cost along to the the whole organization since everyone has to justify the way the allowed funds are used. In brief, businesses don’t understand free across its departments. Rather, their internal policies don’t make that possible.

Do solutions exist ? Knowing that, in the end, the company takes benefit from collaboration, beyond internal rivalry, maybe the equivalent of a “global licence” should be a good thing. As a matter of fact, money comes from a one and only pocket, the company’s, that would like collaboration to grow within its walls. But it should take away manager’s sense of responsibility and the cure may be worse than de disease. Or maybe the good old distribution key, revisited for the service industry, could work. Who knows.

NB : Goldratt tells us that “cost allocation kills productivity”. Here’s an example that makes businesses continuously reivent the weel.

Filed Under: Recommended Bookmarks Tagged With: , , , ,

Is Saas the future of your corporate IT ?

September 25, 2009 By 1 Comment

This is one more question that haunts many people’s night. More serioulsy, if it doesn’t make people stay awakened all nights long, it creates debates and brings some confusion that doesn’t help businesses to move forward. As a matter of fact deploying any solution is not that easy when one still have many infrastructure related concerns.

So, let’s try to get cleared idead about what’s going on.

Which debate ?

To make it short,  while companies have been used to host their information system on their own infrastructure are facing the emergence of an alternative solution, called Software as a Service, that makes possible to deliver applications through the internet, using services that are not hosted by its IT dept anymore but by external providers. The debate could be simple (I manage everything by myself vs I let others dealing with the issues and I pay for for service) but there are security and privacy concerns that are not trivial. Concerns that are legitimate even if, sometimes, the answer is simple, in a world where old habits have a very heavy weight.

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Filed Under: Software & Tools, Web & Usages Tagged With: , , , , , , ,

External social networks are not only for marketing purposes

January 21, 2009 By Leave a Comment

Generally, when I talk about social networks for other people than employees, I’m answered “ah ? I thought you were not interested in all these marketing things”. This is the obvious proof that, for many people and many companies, when you aim at an external audiance it’s for communication and sale purpose, following a one way flow. Said differently : “outside we talk, inside we work and both have nothing in common”. Seen with a little distance it embodies the idea according to which it’s the company that condition its environment and not the opposite.

Preconceived ideas that were true at a given moment but shows we are now entering a new era.

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Filed Under: Management & HR Tagged With: , , , , , , , , , , , , , , , , , , ,

Enterprises far beyond enterprise 2.0

January 20, 2009 By Leave a Comment

A few weeks ago I amused myself proposing a few tracks on what enterprise 2.0 may be in 2009. But I think pushing the reflection beyond would be worth : enterprise 2.0 is only a side of a much complex reality that is enterprise and will be of any use only in a global framework. Since enterprise, and economy in general, can be defined as the place where more and more numerous interactions melts, believing it can be improved by only cosmetic improvements. Evry initiative that’s not aligned with a macro vision that will take all these considerations into account won’t bring anything worthy.

So, let’s put ourselves in the main player’s place.

• The top management

The less we can say is that top management is very worried. Because of the downturn, CEOs are trying to protect the organization. It’s hard to find more revenue so, in order to preserve the result they want costs to be cut. Or spendings, which is not the same thing. In the other hand they know that if they keep on cutting costs, they will soon be unable to make any cent go in the bank so they try to find how to make work more efficient, to work on costs instead of expenses. And, finally, the idea of business networks comes to the surface. But how to make it happen ?

On the other hand, this crises is about something deeper that worries them a lot. Always promising more has its limits and now it seems that these limits have been reached.  Do they have to stop promising the moon since they know organization’s performance have its limit and trying to balance it with financial performance leads to the situation we now know ? Do we have reached the limits of a system and is this crisis the consequence of a management model failure. Do we have to reinvent the way we do business ?

In brief, an increasing demand for more responsability and sustainability in management, that is not so far from a tendency that brings many companies to think their development together with their human ecosystem’s in order not to ruin their tomorrow’s markets.

Many issues that have a lot in common and that, without forseeing the answers that will be given, will have to be taken into account this year.

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Filed Under: Enterprise 2.0 & Social Business, Intranets and digital workplace, Management & HR, strategy Tagged With: , , , , , , , , , , , , , , , , , , ,

Can enterprises organize themselves as markets

January 17, 2009 By 3 Comments

What’s a market ? It’s a place when offer meets demand.

Companies love markets because it’s the more efficient way to find outlets for their products and identify suppliers. It’s a competitiveness factor because of the outlets it provides and the optimization of costs that competition makes possible.

The “social” web is a market somehow. Contents can find an audience, ideas outlets, projects people who’ll make them become real, people partners, question answers. It’s because of this market that events as trivial as flashmobs happened, that some people had great carriers evolutions, that some companies where born. This huge self-organized space made possible things that would not have been in a classical, organized, regulated market, operation costs making it irrational the organization of niche micro-markets. It’s because it has no physical nor economic barriers that the web made all this possible : intermediation and transaction costs are near to zero.

There is another place that is full of ideas, projects, needs, competences, longings, question, which would gain a lot if the ones were able to meet the others within its walls : the enterprise.

Experience showed me this is definitively the place where exist the more questions and answers, and the place where we can be sure there are very few chances that the ones meet the others. Companies are traditionnally, on this point of view, the place for misses opportunities. It may sound surprising according to all the things companies do, to all their obvious successes, but when looking at what they don’t  or painfully do and would make sense, it may makes us feel dizzy. A kind of vertigo that is proportional with the size of the enterprise. Are there any reason to that ? Of course : high transaction and intermediation costs and the fact companies don’t want to give intermediation up.

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Filed Under: Economy & New Models, Enterprise 2.0 & Social Business, Knowledge & Information management, Management & HR, Web & Usages Tagged With: , , , , , , , , , , , , , , ,

When tools are on the cloud, companies have to make money rain

November 7, 2008 By 1 Comment

Cloud computing is the new buzzword, at least untill the next one comes.It’s a reality we can’t ignore, even if it’s more about a question of place than about technology : it’s the place where things happen.

Let me explain. Consider someone who is able to work alone and must work this way. It’s the efficient model that was proposed by Taylor decades ago. No one needs nobody else and has to repeat the same task endlessly. It’s easy, in such a context, to know where things  happens : they happen at the individual’s level and it’s easy to calculte in which proportions each one contributes to value creation. Tools are on the groung, beside the person that operates them without any kind of interpersonal interaction. Everything’s so easy in a perfect world.

But one day the perfect world breaks into pieces. Companies realize than a worker can do nearly nothing on his own, that he has to exchange with others, to things with them. Worse ! They have to innovate, find answers, fix problems togethers. And in order to do that, they’re provided with tools : phone, email, forums, wikis, blogs…

For decades business have ben ran following a cost driven approach, trying to answer these questions : who’s doing what, for whom, how much does it cost, how much does it bring in… I let you answer these questions today. Take also into consideration that the “old” model supposes that each player operates appart from the others and can be evaluated individually, that his performance is not impacted at all by his colleague’s…. Headache in sight…

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Filed Under: Management & HR, Web & Usages Tagged With: , , , , , , , , , , ,

Do enterprises really outsource the right things ?

August 28, 2008 By 1 Comment

Some of my reflections point to the slow but unavoidable outsourcing of the human side of the enterprise.

First because of organization models and systems that allow companies to focus on their core business : identifying key issues and needs, they can concentrate on elaboring a stragegy to respond…and let others do the rest. The rest, from innovation to delivery can be fully outsourced, to the general public or specialized partnes whose small size helps them being really agile and reactive. This organization model provides even more satisfaction to partners than if they were employed within the company. So, large businesses’ performance will highly rely on its ability to fin right answers and organize the competence chain to deliver.

We also have to know that incurate tools and organization causing high costs to access that so important ressource that internal information has become, Coase law could apply in reverse since outside expertise and knowledge is cheaper than internal one.

Then, and this previous post was only an example among many others, because knowledge process outsourcing becomes a real market and a source of growth for many countries that want to jump on this train et benefit from what will be their industrial revolution, putting an incredible presse on occidental companies that may see the advantages to outsource their knowledge processes.

There’s a simple reason to all that : since machines were there to imporve activities’ scalability, knowledge related activities still rely on people’s time. Even if some are slowers than others, it’s useless to replace them by more productive ones when the purpose is more qualitative than productive, the only solution is to hire more people, with the consequences we know about costs. Which must make us wonder more than ever on the question of work related costs in our occidental economies.

Sure, things will get balanced one day or the other, than one day the Indian worker will be as expensive as the european worker. But when ? Perhaps too late. And we can’t be sure there will never be a “new India”.

In brief, although it may looks very attractive, this trend is not a good thing for our economies.

Another point is that, since we all know in a knowledge economy people will be companies’ more important wealth, businesses are doing exactly the opposite of what they should : they keep control of their tools and outsource their people.

Whatever we could say, many IT depts step on the brakes as soon as they hear the word “Saas”, although the fact they will more and more need larger and more complex infrastructures to store more and more datas, will make it inevitable according to the experts.

It’s a strange paradox to see competences, skilles, expertises, slowly going out of companies that, at the same time, don’t want their information systems to go out of their firewal : common sense would make companies keep their people, their knowledge and outsource their IT. I can’t see the benefits of investing in technologies that allow businesses to take the most of their talents if the talents have left the company.

Filed Under: Economy & New Models, Intranets and digital workplace, Knowledge & Information management, Management & HR Tagged With: , , , , , , , , ,

To understand enterprise 2.0 companies should learn from theory of constraints

August 21, 2008 By Leave a Comment

It’s funny to see how history seems to be endlessly repeating, how issues that have been fixed years ago are coming back to the surface.

Because the question of productivity, time management, ROI in an enterprise 2.0 or in a Service Oriented Organization remembers me of something that already took place years ago (and was fixed) in manufacturing industry and seems to be breaking out again in the knowledge and services industry.

It’s nothing more than a nth application of theory of constraints (TOC).

I first looked into this case when I was a student and was very interested in optimization issues (finally I didn’t change that much since I’m mainly blogging about optimizing organization in a knowledge economy context). At the end of a manufacturing management class, the outside contributer advised me to read “the goal”, from Eliyahu M. Goldratt.

First surprise, it was a novel. The proof of the power of storytelling because I’m not sure I would have been caught up in this if it had been writen in a more academic manner.

Second surprise : I was really slapped in the face to realize I had to unlearn many thing I thought being unbreakable truth. The young and inexperienced student I was at this time was convinced that everything was about productivity and outputs there was no sheet anchor. I learned, on the contrary, that it was sometimes efficient to have employees that don’t work and machines that don’t produce anything. It was not that idiot : if the final product needs many pieces to be assembled, it’s no use having a huge sock of “A” if “B” needs more time to be produced. Doing this drives stocks that cost lots of money, so it’s sometimes better to slow production down, even interupt it. And the employee that is, as a consequence, not working, helps you to make money because he’s not making you loose money by creating stocks.

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Filed Under: Enterprise 2.0 & Social Business, Management & HR, Web & Usages Tagged With: , , , , , , , , , , , , , ,