SNw 028 Thrive = right information + right decision well executed Created by James on 6/12/2013 2:00:28 PM
For over twenty years I have been conducting Pulse Measurements -- focused short duration diagnostic assessments of under-performing ERP and other business information systems.
The single biggest complaint when I interview Chief Executives and other C level executives is "I have spent all this money but I cannot get the answers I need when I need them".
1. The biggest frustration – cannot get the answers I need when I need them
I first heard this statement by the Chief Executive of a large consulting engineering firm in 1990.
Within one day I had resolved the problem – a simple matter of a breakdown in communication between an executive and clerk.
Since then I have heard similar complaints repeatedly from diverse clients with diverse ERP and other systems.
The refrain is always the same "I have spent all this money but I cannot get the answers I need" – this factor is probably the single biggest factor behind the statement reported by the Financial Mail a few years ago that "19 out of 20 ERP implementations do not deliver what was promised".
Not long ago I interviewed the CEO of a start-up enterprise that had spent just under R30 million on a big brand ERP. He stated, "we have one business unit at present and they cannot tell me the cost of running that unit. In eighteen months' time I will have eighty similar units – what am I going to do – we obviously bought the wrong software".
Others have bemoaned to me that "IT tell me it will take another two years and cost Rxxx million".
And so it goes.
Why is this?
In the balance of this article I will elaborate on the reasons this happens and what is required to overcome this problem.
Let me stress that the key indicator of the problem is that executives cannot get the answers to their questions NOW in order to make today's decisions.
Let me also stress that I have NEVER found the problem to be the software.
2. The thrive cognitive cascade
In using the term "thrive" I am basing my definition on the definition of Professor Malcolm McDonald who defines strategy as "doing the right things" and tactics as "doing things right".
He goes on to say that "if your organization does the right things well it will thrive". My logo is based on McDonald's matrix with the thrive quadrant emphasized.
Thus, when I speak of an organization thriving I am speaking of an organization doing the right things and then doing the right things really well.
I would like to introduce a concept that I would like to term "the thrive cognitive cascade", it is a logical flow that looks something like this:
In order to thrive we require:
ð Right business concept
o Right questions
§ Right information
¢ Right decision
# Right execution – includes right process
This is the progression of logic that supports an organization to be successful.
The business must have the right business concept, the right definition of products and services, marketing message, etc that enables the organization to carve a niche for itself in the market place.
Executives must then ask the right questions, the questions which, when answered, will give rise to high value business decisions.
It does not help to ask the right questions if one cannot get answers to those questions – this is where the ERP comes in, some of the time -- fact is that indications are that 85% of the information that executives base decisions on is soft or tacit information – gut feel – but they DO need reliable data on which to base those gut feel decisions. Proper implementation of the ERP is vital here.
Then they must take the right decisions – this speaks to properly qualified and experienced people who understand the underlying business, commercial and market logic and are able to interpret the information in ways that give rise to high value outcomes. It is so that two people can be given exactly the same information and reach startlingly different decisions.
It is NOT likely that both decisions will have similar value. One of the key elements in selecting executives is to select executives with the knowledge, experience and cognitive ability to make the right high value decisions most of the time.
As I have mentioned previously it is so that no one is right all the time, successful people are simply right more often than they are wrong.
Taking the right decision does not guarantee a successful outcome, that decision must be effectively executed – converted into value producing action.
In many businesses process becomes important at this point.
3. Answer the questions you have yet to think of
In order to satisfy the above requirements, one of the fundamental requirements of the implementation of your ERP or other business information system is that it must be implemented in such a way that it enables executives to get the answers to the questions they have never previously thought to ask.
This seems impossible but, in fact, it is quite straightforward, PROVIDED it is provided for in the design stage of the ERP configuration.
All attributes that reasonably describe a product, a customer, a supplier, etc for the purposes of running that particular business must be defined and those attributes added to the master data in the ERP.
But that is a lot of work, I hear you cry. Relatively speaking it is more work than not doing it, but if it is done upfront as part of the configuration process the incremental time cost is relatively small.
Adding attributes later is more work but it can be done.
Provided you have all reasonably required attributes and the granularity of the taxonomies (coding schemes) is fine enough you will find that you can get answers to most of the questions you can reasonably expect to ask as the years pass by.
4. Precision strategic configuration
This leads to what I call precision configuration.
The use of highly structured strategic taxonomies and code schemes that reflect the essence of the business and how it thrives determined from a first principles examination of what makes the business "tick" (thrive or prosper).
This in turn will lead to the systems being easier and more precise to use and result in drastically lower system operating costs.
5. Notice that process is an output
Considering the thrive cognitive flow or cascade described above I would like to draw your attention to some important points:
a. The cognitive flow described above might be described as a "process" but I suggest for your consideration that if we define "process" as a "workflow" then this is NOT a process.
In fact, I suggest for your consideration that despite the phrase "strategic process" being widely used, there is no such thing as a strategic process in the narrow sense of those words.
b. The first steps in the cognitive flow relate to strategic concept, the right questions, the right information and the right decisions – these all speak to "doing the right things" = strategy according to McDonald's definition.
Strategic thinking is fundamentally intuitive, often unstructured, often spontaneous, seldom carefully thought out in an A, B, C, … sort of way.
You just KNOW the right thing to do and your peers concur and so you do it.
c. More operational decisions are tactical in nature and are often far more structured and lend themselves to process orientated thinking.
d. Notice in all this that process is fundamentally operational and tactical – this points to one of the biggest reasons for ERP investments failing to meet the expectations of executives – they are implemented in a process centric manner and therefore concentrate on the operational and tactical benefits to the organization.
e. Most ERP investments deliver at the tactical and operational level but fail to deliver at the strategic, thrive level. They succeed at the level that is necessary in order to stay in the game but not at the level that is necessary to support the business to take bold new steps where no-one has gone before and define the rules of the game.
f. Downgrading of process to a primarily output parameter and upgrading strategic thinking and thrive configuration of the ERP to center stage is a fundamental requirement for a high value ERP implementation.
6. Requires special techniques, training and tools to maintain and manage
The development of a strategically focused configuration and associated taxonomies is challenging, time consuming and arduous but the rewards are dramatically worth the effort and investment.
This requires specially developed techniques, special training of staff and software tools to maintain and manage the resulting taxonomies and configuration settings to the highest possible precision with the highest system operational efficiency dividends coupled with thrive decision support.
I am currently involved in a project to develop software specifically to assist with these techniques. The prototype has been used effectively on two projects and we are currently in the process of making major enhancements to the system.
The goal is a totally integrated suite of configuration development and management software that will co-exist alongside your existing ERP software.
Support for the so-called thrive cascade introduced above is an essential element of achieving high value ERP and other business system outcomes.
Alternatively much of this capability can be carefully engineered into the business intelligence and data warehouse environment.
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