How is it that companies
possessing capable and experienced executive and management teams still
fail to take the right actions, or to solve problems when the solutions
appear before them? The answer most often lies in conservatism.
Contrary
to the popular image of the bold entrepreneur, the true nature of
business is conservative. When you manage to build a value chain that
produces revenue, the last thing you want to do is disturb that income
production. First and most importantly, leaders have to possess the
cautionary instinct that prevents their destroying the company.
Often
the caution of each individual executive is magnified in a group of
similarly minded managers. In board meetings, committees, fact-finding
teams, and decision-making caucuses, the slightest trace of uncertainty
is generally enough to delay final approval, or kill a prospective
project.
How can companies move beyond these reactive
reversals, and calculate the correct course despite personal
misgivings? Much of the solution lies in modeling the possibilities.
James Taylor, who writes extensively on enterprise decision management
(EDM), explains one of the elements of corporate decision-making, the
concept of Champion and Challenger.
“Champion/Challenger is an important concept. The
idea is that you identify your current approach as a ‘Champion’ –
documenting the business rules and analytic models that together
represent your best approach to a given decision. “Challenger”
approaches are then developed. Each Challenger differs from the
Champion in some measurable and defined way. Perhaps it has different
business rules, perhaps it uses a different risk model, perhaps it is
more aggressive about retaining customers. Each Challenger will
therefore deliver different results from the Champion.” See Adaptive Control: Champion/Challenger
This is taken from Taylor’s series of articles on Adaptive Control, which is a key concept to successful EDM.
“Adaptive Control is about continuously improving the
way you make decisions. Some of these changes will come from changing
business conditions that force a change in the approach being taken to
the decision. Mostly, however, it is a case of making a decision better
and better over time to boost profits, reduce losses, or improve
retention.” From Why do you need Adaptive Control?
Taylor gives the technology architecture
required to deploy these decision-making processes as software tools
that IT and business managers can use together, to model the future
path of the company. Taylor supplies a full exposition which should be
read. We quote it in brief here:
“To support adaptive control, your production
environment needs to support the deployment of multiple Challenger
approaches to the existing Champion while business users need access to
simulation tools.” See Adaptive Control: Technology Architecture
All this serves to illustrate that the
enterprise has ways available to simulate potential and imagined
scenarios, and ways to calculate results of actions. Other tools and
possibilities exist, and we'll look at them in the future. For the moment
we want to consider the politics and dynamics of how a company improves
its decision process.
As we said yesterday, IT can be a large force in the evolution of the company’s thinking, playing far greater a role than it currently does.
It
is not likely that business people within any company will understand
the kinds of tools they can have to work with; it’s far more likely
that IT people will appreciate the advent of new technical
opportunities – but how will this knowledge translate into executives
getting new tools?
CIOs in recent years have focused on cutting costs and improving efficiencies, but now the CIO
mandate is changing to one of delivering agility to the enterprise.
Part of this involves creating information systems that aid the
executive and management layers in seeing what’s happening now, and
choosing correct actions. For more information see for example, A new day may be dawning for CIOs. Will they be ready?
Nicholas
Carr remains skeptical that CIOs can deliver. It may be that their
position is simply too proscribed to allow them to help with innovation.
“They both believe that most CIOs serve mainly a
control function rather than one of innovation.” That’s a big change
from the prevailing view about the direction of the CIO
job at the dawn of this decade, when it was commonly assumed that the
IT department would become the locus of not just IT innovation but
business innovation in general.” From Are CIOs “dead weight”?
So how will the decision makers of the
modern enterprise loosen their hierarchical caution enough to become as
agile as the technology they want to deploy throughout their company?
It
may be that the best answer lies with the technology itself. If
managers don’t know enough about the software tools they could be
employing, and if CIOs aren’t in a position to step beyond the urgent
constraints of operations, then innovation in management process may
just come from technology.
Technology will end up on the executive’s desktop one way or another. As we’ve mentioned, Enterprise 2.0 is coming, either outside of IT’s control or within its guidance. Social media are coming to the top layers, and the naked company at the CEO level is a phenomenon worth examining.
All
of the tools enjoyed by the lower levels of the workforce, and the
highest levels, such as integrated knowledge management systems, wikis,
blogs, and mashups, are working their way into decision-making management. Software
developers are exposing all business processes to software numeration,
turning data into information with meta descriptions.
Eventually
the decision makers themselves will innovate new workflows in their own
ways of making decisions, and this will happen because – whether by the
hand of IT or behind IT’s back – new software tools will have arrived
to enable this change.
