Search

ekoshapu

Notes to Myself

Category

SixSigma

Corporate restructuring, mumbo jumbo and Metrics

My organization is undergoing “yet another” corporate restructuring.

It happens so frequently that I think it is one of the deliverable or KPIs of the top management – every year they would announce some “significant corporate restructuring” to make the organization “lean, agile and responsive”.

CEO announced organizational changes in a long email and said that his direct reports would send further communication detailing out respective org structure.

So far 3 BU heads have announced their re-org. And it all sounds mumbo-jumbo to me. I cannot figure out how the Metrics would change, or be defined and how the effectiveness of re-org would be measured.

Here are some citations from various communications related to re-org (and all of it is REAL verbatim communication, not made-up!)

  1. Given the strategic nature of XXX business unit to our growth and success, we are moving XXX within Corporate Strategy
  2. I (the Chief Strategy Officer) will work closely with Mr. A (BU head), who will lead the XXX Group, to craft the right Go-To-Market strategies, and create a compelling and differentiated leadership position for us in the market as XXX experts.
  3. YYY channel business will also roll up within the Corporate Strategy. We believe there is strong growth potential within this business and keeping it under the CS Organization will allow us to invest the right effort in leveraging this opportunity.
  4. Mr J will join the Corporate Strategy team, with a global focus on select Strategic Partnerships and Channel Relations
  5. Mr. P will lead Corporate Marketing; Mr. Z will support me (Mr CSO) on Strategic initiatives and will have a dotted-line reporting to Mr. P
  6. In FY17,  we executed towards our strategic intent to enable business transformation for our clients through digital innovation and driving operational efficiencies through automation, by leveraging our tools and with shift left initiatives
  7. Solution leaders will focus on enabling sales support, solutions & domain skills development & partnerships
  8. In FY17, we enabled large business transformation for our clients through consulting, innovation, and domain-led solutions.
  9. Over the years, we have built a solid foundation for growth with a strong leadership team, differentiated solutions, and robust delivery capabilities. We are realigning the ZZZ organization for FY18 with changes that will help us build on this foundation and accelerate business growth, sharpen our go-to-market, improve our prospect-to-win ratio and continue our heritage of delivery excellence.
  10. ZZZ Solutions leader will be responsible for tying together all horizontal solution and industry domain expertise to address multi-skill proposal requirement and enhance our win ratio
  11. The Operations leader will support the SBUs in ensuring the right talent is available to staff engagements, maintain utilization and talent acquisition as well as improve profitability through operational efficiency
  12. Our go-forward structure has been designed to simplify and accelerate decision making, empower leaders with end-to-end responsibility and improve our ability to realize our FY18 business goals of resuming industry leading growth, expanding profitability, enhancing operational excellence and strengthening our position as a leading Transformation expert.
  13. In summary, the changes we are making will enable us to function more effectively as an organization, improve our operating efficiencies, create new growth opportunities for our team members, support our clients more effectively, and capture a larger share of the market opportunity available to us.
  14. I am confident that with our realigned organization we are better positioned to make FY18 the best year in our history!

How does that sound in terms of meaningful, actionable and measurable strategic plan? Read it two or three times again if you “really really” want to understand the purpose of this re-org; or want to have a healthy laugh! The write-up can hold true for any re-org in any year!

There are many web pages that help you generate corporate jargon – some precisely call it as “bullshit buzzword generator” tools. Just Google this term to see examples.

Here is a Dilbert cartoon and a link to Corporate Bullshit Buzzword Generator that helps you build a catch phrase which could be thrown into any Strategic discussion.

corporate-bs

I found another website which has taken the buzzword generator idea to a new level!

This website generates not just jargon but entire conversation! Isn’t that amazing?!

Anyways…what’s your bullshit buzzword for the day?

 

P.S: This reminded me of a conversation with a customer who jokingly said: You guys said you have set up a “Center of Excellence” for some of your clients. I want something extra. How about a “Center of Perfection” for me?

Well, why not? As Mark Twain once said “What’s in a name? A rose by any other name would smell as sweet”.

What? Was it William Shakespeare and not Mark Twain who said that? Even better…that just proves the point. What’s in a name?

A “Center of Perfection” would sound as sweet as a “Center of Excellence”…maybe, a bit sweeter. And the best part is: both would do nothing!

I am waiting for my day when I would announce a corporate restructuring “to create 5 “Centers of Excellence” which would roll up into a new strategic “Center of Perfection” in order to enhance our market leadership through focused differentiation using CoE/CoP as vehicles for accelerated growth!

I knew I was made up for this B***S***!!!

 

Advertisements

A real-life example of Metrics

 

 

Further to my earlier blogs on Metrics, here is a real-life example of Metrics.

Our Government’s endeavor is to bring in more transparency and make things accountable (and of course, measurable). Right To Information Act 2005 is one such tool through which citizens can seek information on various aspects of governance.

Recently, just ahead of the Republic Day the Government of India announced list of this year’s Padma awardees and caused some debate. The list contains mix of many “unsung heroes” as well as politicians such as Sharad Pawar!

However, before the announcement the Government had invited nominations from Citizens in addition to the authorities who can nominate people for Padma awards (authorities include – Chief Ministers and Cabinet Ministers and such officials).

padma-awards_650x400_81473756093

I am not sure since when the process of getting nominations from citizens started but it must be a recent phenomenon. And Government and government supporters take pride in starting such initiative.

NDTV reported that Home Ministry received 5000+ nominations this year through the portal.

I had a stimulating debate with one of staunch supporters of Government who claimed that the initiative to invite nominations from Citizens is a great reform and shows that Government is transparent.

I disagreed. My argument was that the Government initiative for online nominations from Citizens is at best an example of “process automation”. Getting 5000 nominations doesn’t imply anything about the transparency or fairness of selection; or the process resulting in awarding Padma Sri to “many unsung heroes”.

Let’s put it in terms of Metric.

My point is that “number of online nominations” could be a metric for measuring effectiveness of “process automation”. Number of nominations is NOT a metric for fairness of selection process or identifying “unsung heroes” who deserve the award.

The online nomination process had two categories. Nomination by Authorities (Chief Ministers of states, Cabinet Ministers, Governors and such key government officials), and nomination by Citizens.

The nomination process required a Registered User (identified by mobile number and other details) to nominate a person for Padma award and give 800 words write-up justifying the nomination. The NDTV report said that the Government received 5000 such nominations – from Authorities and Citizens.

To make my point I plan to file an RTI query to get following information:

  1. How many nominations were received from Citizens and how many were received from Authority

This would give us the break-up of 5000+ nominations

 

  1. How many of the people nominated “exclusively” by Citizens finally got Padma awards.

This would tell us how many people “exclusively” nominated by Citizens got the award. i.e. the people who were not nominated by “authorities” but were nominated by “citizens”

 

  1. How many people distinct nominations were submitted by Citizens. And list of top three nominations

This would tell us how many “different” nominations Citizens came up with. i.e. how broad the suggestions were. It may happen that all citizens unanimously nominated only 1 person (extreme case), or it could be possible that each citizen nominated a unique person (the other extreme).

I think having such Metrics would tell us whether the Government is really “considering” Citizen’s suggestions or not. In absence of such Metrics and going simply by the number of online nominations received, the process is reduced to nothing more than a reality show voting game – similar to Indian Idol or Big Boss. And we really don’t know if the voters’ choice really ends up being winner of Indian Idol or Big Boss.

Can you suggest more such Metrics which would determine the “effectiveness” of process of getting citizens to participate in choosing Padma awardees?

 

On Statistics & Distributions

I am planning to write few posts on Statistics and Distributions soon.

Meanwhile, here is some food for thought…

average-is-a-failing-formula

 

Metrics – You are what you measure yourself on!

Even since I studies Statistics, and Six Sigma principles I got interested in Metrics. I had studied a subject on Instrumentation and Control in my under-graduation (Mechanical Engineering). But it was more about what different tools you use to measure, to take readings in conducting experiments. It was not about Metrics – the purpose and principles of setting right Metrics.

The purpose of Accounting (Balance Sheet, Profit and Loss Statement, Cash Flow Statement) is to “measure” how the business is doing. You need a lot more analysis and ratios to understand the health of business; however it starts with the basic activity of recording, and reporting of transactions – i.e. by measuring. The same is true for everything.

Harvard Professor Clayton M. Christensen wrote an article in 2010 titled “How Will You Measure Your Life?“. It was later published as a book with same title, which received a lot of attention and applaud.

Without getting into details of the book, the point I want to emphasize is on “measuring”.

That which is measured, will improve.

Actually this is not entirely true. Here is the precise argument.

agile-metrics-velocity-is-not-the-goal-agile-2013-version-20-638.jpg

And this view causes all complications and trouble. Everything in life comes at a cost – it could be monetary cost (tangible, countable), or non-monetary costs such as Opportunity Cost, Social Cost, Psychic Cost etc.

Thus the dilemma is not only about “measuring to improve”, but “at what cost?”. Cost benefit analysis of measure becomes an important part in designing the measure. Let me give an example. In 100 meter sprint, the winner of 1920 Summer Olympics clocked 10.6 sec, the runner-up 10.8 sec and the second runner-up 11.0 sec. The time recorded was only up to first decimal place i.e. 1/10th of the second was “the least measure”. Now we can record up to two decimal places i.e. 1/100th of a sec. And this comes at a cost. We need technology, support staff etc. to measure that level of accuracy.

Can we assume that we cannot record time up to 1/1000th of time? Maybe not. We probably “can” record a time such as 9.975 sec; but “at what cost?”. And more importantly: is it required? If the winner is completing the race in 9.58 sec (Usain Bolt!) and the second-best is taking 9.62 sec, why do we need accuracy up to 1/1000th of sec?

The same is true about any other measurement. John Maynard Keynes, the famous Economist and Nobel-laureate once said: “It is better to be roughly right than precisely wrong“. You should not “measure” something with lot of accuracy just because you have the tools and techniques available. The important question is: Does it serve the purpose for which you want to measure?

However, lot of times people confuse measure with target. Goodhart’s Law summarizes it well.

charles-goodhart

Increasing employee headcount to 100,000. Having 100 offices across the world. Being on cover of TIME or Forbes magazine. Are these targets or measures? You may reach 100,000 employees or 100 offices by acquiring another company. Then what? What you do with employees and offices should be a goal  and not the 100,000 or 100.

And yet organizations often set wrong KPIs. A CEO of $500 million IT Services Company would be given a target of achieving $1 billion in 2 years. The $1 billion then ceases to be a measure and becomes a target. He would tell his subordinates to “hire more people” to achieve the $1 billion target. “Hiring more people” then becomes a target for his subordinates. The hiring target would then be broken down into X% of laterals and Y% of freshers. The campus hiring team would go to campus and select Y% from ANY stream, because Y% was set as the Target! The selected freshers from unrelated streams (Chemical, Mechanical, Petroleum?) need to be trained. So you build training facilities, university like campus, run training institute like L&D programs – because training Y% has become your target!

It’s a chain reaction…

I will write in next blog about few other aspects related to implications of Metrics and its power to change behavior.

 

Metrics, KPIs and CSFs – in Business and in Life

What is a Metric?

metrics_definition

Here I am referring to the first definition i.e. a system or standard of measurement, and not the Metric system.

Metrics are for measurement. Business Metrics are for measuring Business parameters. Key Performance Indicators (KPIs) are for measuring performance. Critical Success Factors (CSFs) are for measuring the outcome (of an initiative or a project or a decision). Different names – but ultimately they all are Metrics – a system of measurement.

And why do you measure? You want to manage, and improve things. As Peter Drucker put it: If you can’t measure it, you can’t improve it” and “What gets measured gets managed”

Drucker-1.pngpeter-drucker

Metrics should not be confused with Data or Information.

You can’t pick your data, but you must pick your metrics.

Slightly deviating from Metrics, do read about DIKW Pyramid. I’ll write a separate article on DIKW (borrowing from my MBA dissertation). But for now, keep in mind that Data is NOT Information. Information is NOT Knowledge. And Knowledge is NOT Wisdom. So don’t use these terms loosely, and interchangeably.

Coming back to Metrics – Metrics is not same as Data or Information (or even Knowledge/Wisdom). I’ll  talk about this common habit of mistaking a Metric for an Insight later. Let’s look at some reasons to measure:

slide_3

Metrics are a special form of Statistics. Statistical study is the practice or science of collecting and analysing numerical data in large quantities, especially for the purpose of inferring proportions in a whole from those in a representative sample. While the purpose of statistics is “to infer”, the purpose of Metrics is more specific – “to infer in order to manage”. Anything that gets measured is easier to manage – simply because you can understand it better.

KelvinLord-Measure500x250px.jpg

Focus on Metrics has been the backbone of statistical analysis, process improvement, Quality initiatives and Six Sigma methodology of DMAIC [ Define –> Measure –> Analyze –> Improve –> Control]

DMAIC methodology tells us something important in the journey of transformation. D comes ahead of M. You have to “define” what you want to achieve and hence what you want to “measure”. This is the foundation of Performance Management or philosophy of Management by Objectives (MBOs).

By setting right performance metrics AND right incentives, benefit/reward system you can INDUCE favorable behavior and manage performance.

You will realize how crucial this thought is once you look around and see its application. “Carrot and Stick Approach” is the crudest form of this principle. You incentisize by showing a carrot or bring in discipline by using a stick. However, understand that carror or sticks are NOT Metrics. They are rewards or penalties. Not the metrics.

Metrics are not outcomes. However, good metrics should “influence” outcome.

Let’s build on this thought. You want a child old teenager to “behave”. You use carrot and stick approach. You reward the boy with a candy if he behaves well. You punish him with stick if he misbehaves. Neither candy nor stick are metrics. Also, the “good behavior” is not a metric. But the measure by which you’ll determine whether the behavior is “good” is a metric.

Why is this understanding important? Suppose you tell the child that he should “behave well” to get a candy, otherwise he would be beaten up. The child would ask “What do you mean by “behave well”? In other words, the child is saying “Define the metrics that would determine if he behaved well or not”.

Now if the metric is set as the following:

  1. If the child studies for 4 hours a day, completes home-work, doesn’t watch TV, sleeps before 9 PM and gets up at 6 AM – without fail for 1 year – that’s good behavior and would get reward
  2. If the child fails at any of these even for a SINGLE DAY – that’s bad behavior and would get punishment

bad-metric

You can see that the metric is “designed to fail”. The success criteria is so difficult that the child would think that no matter how hard he tries he is not going to achieve. You are bound to miss those targets some time during one long year. So by setting such steep metric you cannot bring any behavior change in the child.

Right?

Well, almost yes, but not entirely…

What we are not considering here is Metrics and Reward/Punishment relation.

Let’s say for the same Metric the reward is not a candy but a brand new Xbox or Playstation console! Now the target is worth giving a try. Or let’s take the other extreme scenario (and this is really really extreme, meant only as an example). For the same Metric the punishment is that the boy would be beaten up to death. Now the target looks really achievable.

So the key point is – setting a right metric AND setting right reward/penalty system will likely lead to change in behavior and improvement.

Following picture summarizes the “Metrics –> Behavior –> Outcomes” link.

metrics-2

I will continue this in next blog posts and talk about why Metrics fail.

 

Blog at WordPress.com.

Up ↑