Sunday, June 12, 2011

Effective Communication

When the message is understood by the receiver in the same meaning as it was conceived in the brain of the sender that is effective communication.
The ability to do that is, unfortunately, with a few people; it is, however, not a gift with one is born with, it’s an art. To some it does come naturally but it’s not something that cannot be acquired.
Effective communication does require a great degree of being ‘rhetoric’ but that alone does not help. Rhetoric communication always has to be coupled with gestures; enough gestures that help in getting the point across rather than appearing to be speaking with a ‘lah-dee-dah’ accent. Simply, rhetoric communication is what we all refer to as Verbal Communication and the gestures are known as Non-verbal Communication.
A speaker may use verbal communication to transmit his message without any non-verbal tools but then you would notice that apart from the use of words there is a variation in voice, stress on specific words and change in facial expressions. An example of this is the head of state making a televised address to the country.
There are those, who when speak have no facial expressions, no voice variations. An example here is the ex-US President George W Bush.
Communication does not mean just talking nor does it mean the inability to talk fluently in a given language. You would have come across people who cannot speak English very well yet they are able to tell you exactly what they mean and what they want in the first go. That is because they structure their sentences in a way that the message is concise, clear and comprehensive. Language does not remain a barrier anymore. This is what effective communication is all about.
Knowing your target audience, knowing the sensitivity of the message, knowing the distortion and misinterpretation it can go through, you have structure your message in a way that it is well received and understood. This fact is better understood when Nissan had to withdraw its TV commercial last year. Nissan launched their fuel efficient model. It showed Arab sheikhs smashing windows and denting the car’s body just because it was too fuel efficient. Nissan had to apologize and withdraw. Do not try this with your message. People, the receivers of the message may not want to appreciate the creativity if you have hurt their feelings. It will certainly dent if not take away your credibility.
For your message to be well received you need to be credible. Credibility comes over years when your words are backed by your actions and it goes away with one-slip-of-the-tongue. Unless you, like Nissan, want to apologize and withdraw your statement. How well would that do to your credibility?
Speaking purely in terms of business and how communication affects businesses. Communication is the life blood of the business, operationally speaking. Where management does not communicate its goals, its decisions and the logic of its decisions across the organization and also does not make an effort to ask for feedback, especially from people who are on ground doing the job it causes frustration and loss in morale. Where such communication happens, planning is effective and the execution of the plans is efficient. Employees also feel being a part of the organization and the idiom “employees owning the business” actually makes sense.
I read this somewhere and will conclude on with this line, “Communication is the secret of success. Pass it on.”

Monday, May 23, 2011

Corporate Culture

The modus operandi, the response to stimuli, the attitude with which employees work, the manner in which an organization chooses to perform and the flow of information within an organization essentially give it a distinct flavor. It is this distinct flavor that we refer to as Corporate Culture.

Often a phrase is used across the business world that every business is unique and each requires personalized attention and customized solutions; well this is why.

Corporate Culture is like a set of rules of engagement developed in any organization. How will departments or functions communicate with each other? What are the rules of acceptable conduct of employees? and much more.

A culture can be created or reinforced. It is in our control to shape the culture that is the best fit or an organization. Like for example, where you have the top management, the middle management as well as the lower management along with all the factory workers aware of the corporate vision and mission statement known to all, long term and short term strategy shared with all, year-end goals known to all and allowing people from all levels to freely contribute for ways that can help improve the organization in developing it as a revered work-place; such corporate cultures have positive impact on the overall productivity, organization psyche, effectively the work environment therein.

Organizations that boast that “our employees are our most important assets” as a part of their organizational philosophy and on the contrary, employees witness executives (senior and junior) being terminated without any fore-warning or personal contact or someone receiving an email explaining where they will be sitting and who will they be reporting to does not show of a strong culture. Training and development costs are stopped in order to cut costs. Where actions consistently reflect a certain culture, this will effectively emphasize to employees what the top management values are than any publicized statement. Actions have to reflect the culture.

As part of an experiment, they once locked 15 gorillas in a huge cage in a zoo. With all those gorillas in the cage, the zoo-keepers started hanging bananas from the ceiling. The gorillas would try to have them on a first come-first serve basis. On the eighth day when the bananas were lowered and the gorillas tried to have bananas, they were flushed with high pressure water from fire hoses. The water at that pressure hurt the gorillas and slowly after three days they realized that even if the bananas were hung up, the water would be fired at them, hence, they stopped jumping for the bananas anymore. However, when these gorillas stopped responding to hanging bananas, they replaced 14 gorillas (which means only 1 from the first batch remained inside the cage) and lowered the bananas, when the 14 went at the bananas naturally, this one from the original batch attacked all others to stop them from going to the bananas and this happened till the new batch realized they would be attacked. The zoo-keepers brought in the original 14 gorillas back to the cage and now with bananas hanging from the ceiling, no gorilla moves an inch.

Then there are companies with either a strong culture or a weak culture. Ones with a strong culture are those where staff responds to effectively and efficiently to work because of their alignment to the organization’s values. Such organizations operate like ‘well-oiled machines.’ On the other hand, a weak culture depends on an authoritarian (or perhaps bureaucratic) approach on management, resulting in limited alignment to organizational values, employee frustration and dissatisfaction from work.

Studying corporate culture is an essential study in change management; change management requires strong leadership and clear communication of the expectation based on the new road map that was already communicated.

Sunday, May 01, 2011

Corporate Governance

Governance is the setting of expectations, the grant of power and monitoring performance against the set expectations. These expectations, either in governments or businesses are goals set by the managers therein. For a government, it comes from the manifesto that they float during their election campaigns and as for the businesses, it comes as a strategic business plan; both are broken down into various categories and almost each category having a distinct goal for itself. In many well defined documents, how the government or the management of the business intends to accomplish these goals is clearly set. How effectively do these managers achieve these goals and while achieving these goals what exactly was the modus operandi - how did they behave as an individual and as an entity - or simply put, Corporate Governance.

The most influential parties involved in corporate governance include governmental bodies, stock exchanges, the management itself (including the board of directors and its chair, the CEO or equivalent, other executives and line managers, shareholders and auditors). Other influential stakeholders may include lenders, suppliers, employees, creditors, customers and the community at large. 

Corporate governance is the set of policies and procedures, rules and regulations even as much as a code of conduct that manages the processes in the organization which effectively control the direction of the company and reflect its management style while highlighting the attention it sets on CSR, the environment, obligation to customers and its commitment to product quality. 

Corporate governance spills over all areas of the business and its management. To wrap it all up the UN Intergovernmental Group of Experts on Good Practices in Corporate Governance Disclosure. This document captures good corporate governance in the following 5 broad categories:

  1. Auditing
  2. Board and management structure and process
  3. Corporate responsibility and compliance
  4. Financial transparency and information disclosure
  5. Ownership structure and exercise of control rights

The Organization Structure
Corporate governance is hugely affected by ownership structures and the dominance of individuals within.

A family owned business structure is going to be well weaved and be dominated by the eldest member, usually, sitting at the top as against the public company being run by a bureaucrat. This alone allows the family owned business to react faster than the public company which no matter has realized the urgency would still have to go through a lot of red tape before it can plunge into the opportunity.

Similarly, a top performing individual would have to wait till his year end review/appraisal or a very important task that he pulls off saving the company its image and dollars (both or whichever comes first) to an individual in the family owned business who could attract attention, responsibility, power and rewards fairly easily. 

In a recent study by Credit Suisse found that companies in which "founding members retain a stake of more than 10% of the company's capital enjoyed a superior performance over their respective sectorial peers."

Each business structure has to be managed in a way where the costs, benefits, processes and the time taken to get the job done bring about optimal performance.


Popular principles of corporate governance
  • Rights and equitable treatment of shareholders
  • Interests of other/minor shareholders
  • Roles and responsibilities of the Board
  • Integrity and ethical behavior
  • Disclosure and transparency

Corporate Governance Through Built-in Internal Controls

Corporate governance internal controls monitor activities and then take relevant and necessary corrective (or to some extent 'reactive') action to accomplish organizational goals. Examples include:

Monitoring by the Board of Directors
  • The Board of Directors, with its legal authority to hire, fire and compensate top management
  • Regular Board meetings allow potential problems to be identified, discussed and avoided
  • Whilst non-executive Directors are thought to be more independent, they may bring in experience in overall performance of the organization but then they may not always result in more effective corporate governance
Internal control procedures and internal auditors
  •  Internal control policies and procedures are implemented by the Board, the audit committee, management and other personnel to provide reasonable assurance of the entity achieving its objectives related to the financial reporting, operating efficiency and compliance with laws and regulations.
Balance of power
  • The simplest balance to power is very common; require that the President be a different person from a Treasurer
  • There should be clear distinction as to who is doing what and what does the job description say in the first place?
  • In case where there are for any reasons overlaps in the job descriptions, how will things be rearranged to get the most out of employees' efforts?
Remuneration

  • Performance based remuneration is designed to relate some proportion of salary to individual performance. It may be in the form of cash and non-cash payments such as shares and shares options, end of service benefits or other benefits
  • Such incentive schemes, however, are reactive in the sense that they provide no mechanism for preventing mistakes or opportunistic behavior and any intolerable behavior 



A continual process


As a process, governance can operate in an organization of any size; from a single human being to a corporation spanning continents whether it does or does not work for profits. A reasonable or rational purpose of governance might aim to assure, that an organization produces worthwhile pattern of good results while avoiding an undesirable pattern of bad.

Wednesday, February 16, 2011

Business Architecture

Business architecture (BA) establishes the company-wide or an organization-wide road map to achieve its corporate mission. This can be made possible through optimized performance of its core business processes within an efficient IT environment. In simpler words, BAs are well thought, chalked out execution documents - blueprints – as the engineer friends call them - for systematically and completely defining an organization's current (baseline) and/or desired (target) environment.


BAs are essential for developing information systems and those newer systems that optimize business performance. This includes a well-thought and detailed plan for transitioning from the baseline environment to the target environment; effectively, change management. If clearly defined, adequately maintained, and implemented properly, these BA blueprints assist in optimizing the work and document flow in an organization's business operations and the underlying IT that support operations. Without complete and enforced BA, organizations run the risk of buying and building systems that are duplicative, incompatible, and unnecessarily expensive to maintain.


Business Architecture is a strategic information–asset base, which defines the mission, the information necessary to perform the mission and the technologies necessary to perform the mission, and the transitional processes for implementing new technologies in response to the changing mission needs. Business architecture includes baseline architecture, target architecture, and a sequencing plan.


Architecture is the structure of components, their interrelationships, and the principles and guidelines governing their design and evolution over time.


Organization is any entity supporting a defined business scope and mission. An organization includes interdependent resources (people, organizations, and technology) who must coordinate their functions and share information in support of a common mission (or set of related missions).


Baseline architecture is the set of products that portray the existing enterprise, the current business practices, and technical infrastructure. Commonly referred to as the As-Is architecture.


Target architecture is the set of products that portray the future or end-state enterprise, generally captured in the organization's strategic thinking and plans. Commonly referred to as the To-Be architecture.


Sequencing Plan is a document that defines the strategy for changing the enterprise from the current baseline to the target architecture. It schedules multiple, concurrent, interdependent activities, and incremental builds that will evolve the enterprise.


Business Architecture Products is the graphics, models, and/or narrative that depicts the business environment and design.

BA terminology carries many variations within each organization and in the vast array of literature. Although the term business is defined in terms of an organization, it must be understood that in many cases, the business may transcend established organizational boundaries (e.g., sales, marketing, finance and accounting logistics, inventory flow, HR).


In general, the essential reasons for developing a BA include:

  • Alignmentensuring the reality of the implemented enterprise is aligned with management's intent
  • Integration - realizing that the business rules are consistent across the organization, that the data and its use are immutable, interfaces and information flow are standardized, and the connectivity and interoperability are managed across the enterprise
  • Change - facilitating and managing change to any aspect of the enterprise
  • Time-to-market - reducing systems development, applications generation, modernization timeframes, and resource requirements
  • Convergence - striving toward a standard IT product portfolio

 

Tangible benefits

A BA offers tangible benefits to the enterprise and those responsible for evolving the enterprise.


The BA can:

  • Capture facts about the mission, functions, and business foundation in an understandable manner to promote better planning and decision making
  • Improve communication among the business organizations and IT organizations within the organization through a standardized vocabulary
  • Provide architectural views that help communicate the complexity of large systems and facilitate management of extensive, complex environments
  • Focus on the strategic use of emerging technologies to better manage the enterprise's information and consistently insert those technologies into the enterprise
  • Improve consistency, accuracy, timeliness, integrity, quality, availability, access, and sharing of IT-managed information across the enterprise
  • Support the processes by providing a tool for assessment of benefits, impacts, and capital investment measurements and supporting analyses of alternatives, risks, and tradeoffs
  • Highlight opportunities for building greater quality and flexibility into applications without increasing cost
  • Achieve economies of scale by providing mechanisms for sharing services across the organization
  • Expedite integration of legacy, migration, and new systems
  • Ensure legal and regulatory compliance. The primary purpose of a BA is to inform, guide, and constrain the decisions for the organization, especially those related to IT investments. The true challenge of enterprise engineering is to maintain the architecture as a primary authoritative resource for enterprise IT planning. This goal is not met via enforced policy, but by the value and utility of the information provided by the BA.

Architecture Principles

There are principles that govern the BA process and principles that govern the implementation of the architecture. Principles help devising rules, rules in turn dictate the organization's behavior. Architectural principles for the BA process affect development, maintenance, and use of the BA itself. Architectural principles for BA implementation establish the first doctrine and related decision-making guidance for designing and developing information systems.


The Chief Architect, in conjunction with the CIO and select business managers, defines the architectural principles that map to the organization's IT vision and strategic plans. Architectural principles should represent fundamental requirements and practices believed to be good for the organization. These principles should be refined to meet the organization's business needs. It should earnestly try to map specific actions, such as BA development, systems acquisitions, and implementation, to the architectural principles. Deliberate and explicit standards-oriented policies and guidelines for the BA development and implementation are generated in compliance with the principles. Each and every phase of the Systems Life Cycle is supported by the actions necessitated by the architecture principles.
 
The Business Life Cycle

The business life cycle is the dynamic, repetitive process of changing the enterprise over time by incorporating new business processes, new technology, and new capabilities, as well as maintenance and disposition of existing elements of the enterprise.


Although the BA process is the primary topic, it cannot be discussed without consideration of other closely related processes. These include the business engineering and program management cycle (more commonly known as the system development / acquisition life cycle) that aids in the implementation of a BA.


Overlying these processes are human capital management and information security management. When these work together, effectively and effectively, the organization can effectively manage IT as a strategic resource and business process enabler. When these processes are properly synchronized, systems migrate efficiently from their baseline legacy technology environments through evolutionary and incremental developments to their target environments, and eventually to prove the point that the investment has been worthwhile.

 

The Business Architecture Process

As a prerequisite to the development of every business architecture, each organization should establish the need to develop a BA and formulate a strategy that includes the definition of a vision, objectives, and principles. The drawing alongside, shows a representation of the BA process.

  1. Executive buy-in and support should be established and an architectural team created within the organization.
  2. The team defines an approach and process tailored to organization's needs.
  3. The architecture team implements the process to build both the baseline and target BAs.
  4. The architecture team also generates a sequencing plan for the transition of systems, applications, and associated business practices predicated upon a detailed gap analysis.
  5. The architecture is employed in the business engineering and program management processes by way of prioritized, incremental projects and the insertion of emerging technologies.
  6. Lastly, the architectures are maintained through a continuous modification to reflect the organization's current baseline and target business practices, organizational goals, visions, technology, and the required infrastructure.

Sunday, January 09, 2011

Theory of Constraints

This is how it all started, I was introduced to this theory by an engineer, he talked about how good the theory was and how it affected his factory; he had his product to go through various manufacturing processes before it turned in to something he could sell.


I was overwhelmed by the whole idea, theory of constraints was quite a thing and my engineer friend explained how important it was for the manufacturing processes. How it could be used to optimize production and how to adjust the supply chain so that the constraint was minimized.


I was lost, too much jargon and information overload but then, it’s our engineers that make simple things look complex so that complex things look simple. Didn’t get it, take a look at a bridge better yet look at a suspension bridge and study its design, you’ll know what I mean.

Later did I learn that the theory is more about the management of the organization as a whole rather than the idea suggested by other management theories of having each department aligning itself to the overall corporate goal. Honestly, the theory of constraints is more like macro economics versus micro economics in organization management. That is what I liked about the theory.

The Theory of Constraints (TOC) is something like this, the achievement of the goal is only limited by the constraints in the organization, these constraints need to be addressed and the flow after careful analysis, correction and well thought strategy be implemented for the flow to increase. The more the increase in the throughput the closer the organization gets to achieving its goals.

The idea behind TOC is continual improvement, raising the stakes every time a bench mark is met. Continual improvement means being constant at one state and this is, change.

A constraint is anything that prevents the system from achieving its goal. There are many ways that constraints can show up, but a core principle within TOC is that there is at least one and at most a few in any given system. Constraints can be internal or external.


An internal constraint is when the market demands more from the system than it can deliver. If this is the case, the focus should be on discovering that constraint and following the five focusing steps to open it up (and probably remove it, if possible).


An external constraint exists when the system can produce more than the market will bear. In this case, then the organization focus should be on mechanisms to create more demand for its products or services.

Internal constraints usually are:



  • Equipment: The way equipment is currently being used limits the ability of the system to produce more salable goods / services.
  • People: Lack of skilled people limits the system. Mental apprehensions held by people can cause behavior that becomes a constraint.
  • Policy: A written or unwritten policy prevents the system from making more.






There are three questions that need to be asked now:


  1. What to Change?
  2. To what to Change?
  3. What to do to cause the Change?


And after having solved these three questions you need to manage the change.


 
What to change?

Identify the core problem causing symptoms and producing corrupted results. Go back from the results all the way to the origin, trace the causes. Build a tree-like structure that validates the identification of the core problems, this helps understand the existing cause-and-effect relationships, it also identifies the illusive formal and informal policies and to an extent the behaviors that support the existence of the corrupted results.


 
To what to change?

Construct a new tree focused on what the expectations are from the future more specifically defining the complete solution or at least the strategy that:

  • Resolves the issue of all the corrupted results by making their opposites, the Desired Effects
  • Ensures alignment with the strategic objectives of the bigger system that the management area under discussion is a part of
  • Ensures that no new negative effects (Negative Branches) will occur from implementing the solution/strategy
  • Identifies what changes in the culture (formal and informal policies, policies and procedures) of the system and/or sub-system must be made to ensure the symptoms are resolved

What to do to cause the Change ?

All organizations work to their distinct culture. Therefore, when taking up a change initiative, it has to be not only well thought off in terms of what is wanted; it also needs a lot of thinking in terms of how to get that change in. As you would have read in my earlier post on Change Management, resistance is always there. Some employees raise their voice, some even retaliate physically and then there are those who make sure it’s a failure by not doing anything that was expected out of them and this is just because they found nothing in it for themselves. Therefore, employee buy-in is crucial.




The change management should be a well devised strategy. Knowing who is going to do what and when is really important; this measured by KPIs can get the job done.





Stay tuned: There is more to come.

Monday, January 03, 2011

TQM: Six Sigma

If you are someone in the market with the idea that you are one day going to be the best, you then need to make sure about one thing and that is, being proactive rather than reactive. Otherwise, the guy in the proactive seat is going to just drive past at an alarming speed and leave you wondering what did you do wrong?

If you have started to wonder what do I mean by being proactive and reactive? Read on, in order to answer this, people like Edward Deming, Eliyahu Goldratt, James and Champy, John Welch have spent their lives to come up with the right answer and to their utter disappointment, every time they have come close to answering it, someone somewhere just changed the questions.

It all started with the slogan, Total Quality Management (TQM as most of us know it). With this came man’s flirtations with the idea of having things done right the first time instead of setting it right the second time; yet men have had two world wars and still haven’t managed to get the global political scenario to look any better.

This is where Motorola in the 1980s copy/pasted the 1920s concept of Statistical Process control. They called it Six Sigma (6S). The purpose of 6sigma is to reduce process variation to the point that all goods and services provided meet or exceed customer expectations. Mathematically, 3.4 defects per one million occurrences, or this is what it’s supposed to look like.


The Concept

The concept of 6 sigma is a more “Frankenstein” of my theory on output. Its something like this, in order to have a quality output you need to have quality input and since output is never a hundred percent, therefore, the input has to be a hundred and fifty percent to maybe achieve ninety nine percent in the output.


The term "six sigma process" comes from the thought that if there are six check points or six indicators or six standard deviations (statistically speaking) between the process mean (in statistics, mean means average) and the nearest specification limit and these limits signify the tolerance in error of the output resulting from a process the company has set for itself as shown in the graph below, then practically no items will ever fail to meet specifications. This is based on the calculation method employed in process capability studies.



Graph taken from Wikipedia
USL = Upper Specification Limit
LSL = Lower Specification Limit

Capability studies measure the number of standard deviations between the process mean and the nearest specification limit in sigma units. As process standard deviation goes up, or the mean of the process moves away from the center of the tolerance, fewer standard deviations will fit between the mean and the nearest specification limit, decreasing the sigma number and increasing the likelihood of items outside specification


How does Six Sigma Work?

There are three elements of 6sigma
  1. Process improvement
  2. Process design/re-design
  3. Process management
Let’s look at each of them, briefly


Process improvement

The main idea of process improvement really is to pluck out the root causes of performance deficiencies in processes that exist in the organization. These performance deficiencies may be the real problems or may be preventing it from working as efficiently and effectively as it could. To eliminate these deficiencies a five-step approach is used.

Definea problem is identified and a team is formed with the responsibility and resources for solving the problem.

Measuredata that describes accurately how the process is working currently is gathered and analysed in order to produce some preliminary ideas about what might be causing the problem.
Analysebased upon these preliminary ideas, theories are generated as to what might be causing the problem and, by testing these theories, root causes are identified.

Improveroot causes are removed by means of designing and implementing changes to the offending process.
Controlnew controls are designed and implemented to prevent the original problem from returning and to hold the gains made by the improvement.
 

Process design/re-design

Sometimes simply improving existing processes is not enough, and, therefore, new processes will need to be designed, or existing processes will need to be re-designed. There are several reasons why this could be necessary:

  • An organization may choose to replace, rather than repair, one or more of its core processes.
  • An organization discovers, during an improvement project, that simply improving an existing process will never deliver the level of quality its customers are demanding.
  • An organization identifies an opportunity to offer an entirely new product or service.

As with process improvement, a five-step approach is used to design/re-design a process:

Define identify the goals for the new process, taking into account the customer requirements.

Matchdevelop a set of performance requirements for the new process that match these goals.

Analysecarry out an analysis of these performance requirements for the new process, and based upon this produce an outline design for the new process.

Design & Implementwork this outline design up into a detailed design for the new process, and then implement it.

Verifymake sure the new process performs as required and introduce controls to ensure it keeps performing that way.

Process management

Because it requires a fundamental change in the way an organization is structured and managed, process management is often the most challenging and time-consuming part of Six Sigma.

In general, process management consists of:
  • Defining processes, key customer requirements, and process “owners”.
  • Measuring performance against customer requirements and key performance indicators.
  • Analyzing data to enhance measures and refine the process management mechanisms.
  • Controlling process performance by monitoring process inputs, process operation, and process outputs, and responding quickly to problems and process variations.



This is the first on the series on TQM, in subsequent posts, will be talking of many other concepts that we have heard of but not really sure what they are. Happy Reading.


Aggregate Demand

* Aggregate Demand – Concept We’ve studied the Law of Demand, we know it is a negative relationship between the price of a commodity and it...