The problem with INTEGRATION

[PART I]

Our view on the fundamental problem with integration is that the word does not contain the 4Cs of essential successful outcomes:

  • Communication
  • Change Management effort
  • Control and Coordination
backdrop-blue-technology-gear
 
Effective COMMUNICATION strategies and plans
 
We know the word good or effective communication is banded around quite frequently, however, this brief analysis of the process will hopefully highlight the challenge we see in effective communication of the change effort required, in order to lead to a successful Integration project.
  1. Communication is multi-dimensional
  2. Communication is multi-channel
  3. Communication is a two way (one to one) or one to many process
  4. Communication requires time, an action plan and monitoring and control
  5. Communication requires a feedback loop mechanism to measure outcomes
The list above is by no means exhaustive, however, in the next article in this series, we will focus on each element of the communication process in turn.
Change Management effort
 
In the animal kingdom, if you stand still for too long, the chances are that some predator or other will catch and consume you.  In organisational life the same principles apply.  Those who accept the Status Quo for too long will become endangered and their organisations will suffer.  So, with change so endemic in organisational life, why are we still so bad at managing overall Change Management effort and process?
Even when we put Change Management front and centre in the INTEGRATION process; why does it still depend on a coin toss as to the likelihood of a successful outcome?
We believe that part of the answer lies in a fundamental misalignment and misunderstanding of ‘COMPETING PRIORITIES‘.
priorities
And this comes back to the communication processes and strategies deploy in the first place.
If we do not communicate what and why the urgencies exist and what the critical drivers for and against change are; do we believe we have any hope of a positive outcome?
People in organisations are generally very busy.  They consume, process, create, oversee, manage, do, etc., etc. a lot of information and tasks, constantly shifting priorities in an ocean of decision making and information flows.
If any Change effort and Change Management specialist does not understand and compensate for this factor, is it any wonder that INTEGRATION and Change Management efforts are less than optimal?
Control and Coordination
 
Like any process, control of the process itself and coordination and monitoring of the effort (resources deployed) is an essential part of driving the INTEGRATION agenda forward.
Deming’s Plan-Do-Check-Act cycle is a useful guide in this area of control and coordination.  The two words, however, do not mean the same outcome will be achieved in the end.
2000px-PDCA_Cycle.svg
A clear distinction needs to be made between Efficiency and Effectiveness when controlling and coordinating INTEGRATION projects.
We have all heard the ‘busy fools’ analogy and if not, we have to guard against efficiently doing the wrong thing.  Sometimes decision-making is carried out in an environment where information is lacking and if the ‘gut feel’ is not followed in favour of imperfect information, then sub-optimal decisions can be perpetuated by continuing to justify the original decision point.
We are reminded here of a phrase in a stanza from Felix Dennis’ poem, ‘How to Get Rich’:
 “Never be late 
to quit or cut bait
 
CutBait-home-page-2014
In our next article on the topic of INTEGRATION management, we will continue the conversation regarding COMMUNICATION and continue to delve down deeper into analysis and commentary on the 4Cs of the Integration effort, namely

Communication

Change Management effort

Control and Coordination 

 ….to be continued in part II

© theMarketSoul 2015

The Kuznets swing and the market for labour and skills

You must have seen the headlines recently? British wages falling sharply in real terms versus our EU brethren…

We wrote about a particular economic phenomenon referred to in this post about economic cycles and particularly the Kuznets swing; which we find the most interesting and thought provoking cycle. The reason for this is that it is a generational cycle, only lasting or more accurately stated lasting anywhere between 15 – 25 years.

Image representing oDesk as depicted in CrunchBase
Image via CrunchBase

So where are we on this cycle and what does it mean for me, should be the two most obvious questions to answer?

Lets address both separately below.

Firstly we believe we are now around seven years into a downward phase of the Kuznets cycle, therefore to some analysts it would mean that we are either almost half way or to others around a third of the way through this cycle.

Secondly, and more importantly, the impact it has on market participants like all of us:

We believe that the downward phase of a Kuznets swing is the ‘exuberance‘ correcting phase; when markets and other factors of productions contributing to mostly normal market clearing activity ‘got slightly out of kilter’. The Kuznets swing is always there to bring these factors of production into alignment. It is a consolidation phase of the cycle and interestingly for this particular phase, it coincides with disruptive technological advances around Cloud Computing, dis-aggregation of intermediaries, especially in labour markets with labour or skills exchanges appearing everywhere.  Examples include, Elance, oDesk, PeoplePerHour, etc..

English: Cloud Computing
English: Cloud Computing (Photo credit: Wikipedia)

Furthermore, and this is the most import action point for our readers to understand and appreciate, this consolidation and technological advance has a severe impact of wages levels and the distribution of where actual ‘work’ is being performed.

Hence headlines like the one we spotted this morning regarding real wages in Britain declining relative to other (very unproductive EU cousins) are not helpful without the pundit exploring and engaging n deeper analysis of the underlying drivers for the pressure.

The Income and Substitution effects of a wage ...
The Income and Substitution effects of a wage increase (Photo credit: Wikipedia)

Our recommendation:

Understand that the world of work is changing much faster than we had ever become used to in previous generations. As active able and willing participants in this market for labour and skills we have clear choices: Up-skill, be competitive appreciate and plan for volatility in the labour supply market, by ensuring flexibility in location, skills and prices. It is especially painful to suffer real wage declines, but remember this is the market’s subtle way of signalling a problem or challenge in that particular market and a way of adjusting in order to restore the natural balance and clearing prices.

We believe every interfering politician and educating commentator should always bear this in mind.

theMarketSoul ©2013

Tags:

Dysfunctional, “Disinterested” and Disenfranchised

…and some would add it is a Disaster!

The fact is that in a Digitised Economy with control as the key behavioural modification tool utilised in organisational context; the more ‘control’ and micro management we apply, the more dysfunctional, disinterested and disenfranchised employees and collaborators become.

Now the terms employee and collaborator used in such close proximity should create a slight twinge of cognitive dissonance, but do we really pick up on the subtleties of the situation? Possibly not, however this thought piece is an extension of our initial thoughts on [the Future is collaboration], publish a week ago.

Logo Open Source Initiative
Logo Open Source Initiative (Photo credit: Wikipedia)

With collaboration and an Open Source or purely OPEN philosophy to achieving value creation for individuals and society in large, the biggest ‘contractual challenge’ of the beginning of the 21st Century is the revolution in the engagement process.

No longer a process purely dominated by an HR focus, but more around our key concept of CLUSTERS OF SKILLS & EXPERIENCE.

Creating the environment and framework that supports the ability of market participants to ‘cluster’ around skills bases and then for willing procurers of those clustered skills to engage in such a market is the cornerstone of the Digitised Economy in the third wave of ‘Industrialised Revolution’. In fact the word Industrial Revolution is a disingenuous statement to make, as the third wave of prosperity should be called the DIGITAL EVOLUTION.

Open Source Media Framework Icon
Open Source Media Framework Icon (Photo credit: Wikipedia)

theMarketSoul ©2013

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Random Collisions of Chance

Chance and spontaneity are two interesting phenomenon required for innovation and creativity.

We were reminded of this in an interview recorded of a LinkedIn executive recently*.  He stated that chance encounters are “where we make some of our most significant connections“, be it your life partner, business associates, etc. and that speeding up those chance encounters was one of the fundamental principles and aims of social networking.

That idea struck a chord with us.  Like our free market principle of ‘Spontaneous Order’, random collisions and network creation, leading to opportunity exploitation and ultimately wealth and welfare maximisation is intuitively an attractive proposition.

The Free Market: A False Idol After All?

So, we have the mechanisms in place, with online tools and social networking sites, but how much of this activity is outward focussed revenue and income generating?  What is meant by this is that the revenues are not focussed on increasing advertising and network operator revenues, but individual participant to participant’s opportunity flows.

And beyond building an online presence with followers and individuals being influencers and thought or trend leaders in their domains, how many of us focus on being revenue leaders and wealth and welfare ‘maximisers’ in this space?

Do you have personal metrics of success, which help inform and modify and moderate your personal behaviours to ensure that you maximise your ‘Return on Ether-time’? [ROET]

Maybe it is well worth a thought because in the neo-classical world of market participation, if you aren’t in the market and making a living (or a half descent living) from it, you might get marginalised and lose out on the wave that hit us when Web 2.0 arrived.

English: A tag cloud (a typical Web 2.0 phenom...

theMarketSoul ©2010

* We are searching for a link / reference to this interview.  Once we have found it, we will update this post


Risk-Based Change Management

Introduction

Cost cutting has been a priority in the private sector, ever since the financial credit quake started in 2008, yet the words currently are ‘austerity measures’ and budget cuts in the public sector.

Most of the cost cutting in organisations has been along the tactical and operational lines and we believe that in the ‘age of austerity’ we are within, revisiting cost cutting from a more strategic perspective would add significant value to both the private and public sector organisation alike.

Budgeting
Budgeting (Photo credit: RambergMediaImages)

A Zero Based Approach

Within most organisations budgeting and budget setting is an incremental affair.  It is very much focused on a business as usual mentality and the status quo is rarely questioned or scrutinised with any level of depth and rigour, as long as the financial plan delivers the numbers senior managers anticipate and the investor community expects.

Yet this is exactly the kind of ‘tyranny of the status quo’ that has destroyed a significant proportion of value in organisations over the past two years.

A zero based approach addresses some of the short comings associated with incremental budgeting and financial planning.  It is by no means a perfect replacement for incremental budgeting, it cannot address all the strategic issues and it is fraught with its own pitfalls, yet we assert that a focus on some recent lessons learnt in organisations that have implemented cost cutting via a zero based approach can add value to our clients budgeting and financial planning systems.

Zero-based budgeting can be summarised as the process of preparing financial plans from a change perspective, normally building the financial plan from scratch (the zero base), viewing the process as if the organisation has not delivered the particular service of product in focus before.

Some of the lessons learnt are briefly listed below:

  • Many versus few – Instructions and the interpretation thereof by individual users

    Journal of Human Capital
    Journal of Human Capital (Photo credit: Wikipedia)
  • Focus on the Full Time Equivalents (FTEs)  and people cost early in the process
    • Check Payroll Data integrity
    • Understand thoroughly the organisational restructuring issues (get Human Resources understanding the financial budgeting language early in the process)
    • Ensure a distinction between building a Business Case versus Budgeting
    • Confidentiality (how, who, what and staff and managerial morale implications)
  • Education process and ensuring skills, knowledge and information convergence to ensure the budget is delivered as a value added ‘conversation’
  • Appreciation of management style versus timetable for budget delivery
  • Over communicate (more information is better than more or inadequate assumptions)
  • Concentrate on the budget story (strategy and changes) and ‘hang’ the budget numbers on the end of the storyline (Making the budgeting process less ‘threatening’ to budget owners)

These lessons can be separated into two distinctive themes, namely the Human Capital dimension and the Systems issues.

Themes to be aware of

As far as the Human Capital dimension is concerned the major lesson is to ensure that both the budget holders and prepares are fully cognisant and understand the language of both budgeting and what the inherent risks and concerns around a zero-based approach is.

Key issues and risk are around work stream teams from different disciplines (HR, Finance, Operations, IT and marketing) not always having a common language and frame of references for similar linguistic terms and phrases.  Ensure that potential for misunderstanding the objectives and delivery mechanisms are addressed early in the Zero Based Budgeting approach.

Foster a culture of empathy within the management ranks and never underestimate the emotional impact that getting rid of people can have on both the managers having to make the tough calls and both the staff being called upon to leave and the staff morale of the people earmarked to remain behind and deliver the business as usual processes.

As far as the Systems issues are concerned, ensure that enough time and preparation goes into the planning and delivery of the Zero Based Budgeting mechanisms and tools, as you will be running a process that has not been utilised and thoroughly tried and tested under operational conditions before.  There are risks in the following areas to be aware of:

  • Data integrity
  • Spreadsheet modelling and calculation errors
  • Documentation and the support services (handling budget holder queries and concerns)
  • Skills and knowledge of the budget holders and preparers might be limited
A diagram showing the flow of knowledge in the...
A diagram showing the flow of knowledge in the Financial Planning Profession (Photo credit: Wikipedia)

Conclusion

As was suggested in the Lessons Learnt listing above, over communicate with managers, budget holders and preparers and staff.  Ensuring that adequate information is made available in comprehensible and non-technical language is the key to success.  Too often we have seen ‘lazy’ and shortcut assumptions being made, when a little bit of extra effort, ‘digging’ and asking the right people with the operational knowledge the right questions would ensure a more robust and rigorous budget.

Finally, ensure that both the process and outcomes are well documented and articulated as they serve as your shield and defence when the reality does not turn out as the best laid financial plan might have anticipated.

We view Zero Based Budgeting as a risk-based change management tool that assists and informs the senior managers in any organisation of the opportunities and risks inherent in designing and building innovative change processes to help add value to the organisation’s overall performance.

At theMarketSoul ©1999 – 2011 we have practitioners available who can assist you on a consultancy basis to operationalise the full 360 degree Financial Management practices most organisations require in order to ensure that they remain competitive, profitable and continue to create value.

Risk Management Ideas

Risk has as one of its essential elements TRUST as a foundation.

Trust on the other hand has many other factors that interplay and interact on it.

Markets are created when there are needs that are not immediately met from you local environment and therefore scarcity exists.  Market participants step in to fill this ‘needs’ void.

English: Risk management sub processes
Image via Wikipedia

As for any subset of Risk, either Operational, Market, Liquidity, Interest, etc. a big part of the assessment process it not just about looking inward and assessing the risk profiles, risk attitudes, risk systems, etc., but an important part of the process is stepping into the realm of uncertainty and looking outwards and the wider market context we find ourselves in.

Being too prescriptive about the individual risk profiles and control systems will only stifle innovation and growth.  Some say we need a very healthy dose of growth right now, whereas others are content with the new world order of the ‘anti growth economic’ bias (our description of austerity) we have already entered in the Western Hemisphere.

Our positive risk management framework, also known as Value Oriented Risk Management encapsulates both risk and uncertainty management and combines it with the best offerings of Value Based Management.  (For more information or to contact us, please click on the Contact us link or read the article entitled “The Intersection – Where Risk, Value & Reward link by clicking on the embedded link.

Our Value Oriented Risk Management is the positive Risk Management focus, acting as an enabler ensuring that you unlock value in your organisation a midst the regulatory compliance constraints added to your management agenda.

TheMarketSoul ©2010