Put Yourself to The Test
by Bill Fisher, CEO, Relevancy Systems
With the constant heavy demands made daily on executives, the toughest part of the job can be carving out time to gain some perspective and stimulate your brain to new ways of thinking -- but research shows the returns on investment are high when you do. I’d like to invite you to have some fun and take a minute to answer a few questions about your company. You’ll probably want to ask your colleagues to take a crack at them, too. I’ll follow up the questions with some comments and information I hope will be stimulating brain food for you.
Put Yourself to The Test
In Venice in 1494, Fra. Luca Pacioli invented double-entry bookkeeping and published the world's first textbook on accounting principles and practice. In those days and on through the industrial revolution, a business consisted of tangible things such as property, buildings, inventories, and cash in the bank. Double-entry bookkeeping provided an organized way of tracking the ebb and flow of these tangibles, and by mapping how money and goods flowed through a business, allowed investors and business people to analyze a business, evaluate risk and return, and assess the wisdom of investing in it. For its time, it was a tremendous breakthrough. But that was then. This is now. The Industrial Age has given way to the Information Age. Yet, astonishingly, double-entry bookkeeping has continued to be the basis of investment decisions for five centuries, and students in business colleges and MBA programs around the world are being taught medieval measurement as if today's businesses were still made up of tangibles, and such a creaky old system were adequate. We have computers that can perform billions of computations a second, yet we are still using pre-Newtonian systems to make our business decisions. This must change.
Transforming Data into Pictures of Understanding
Could our current medieval investment/business decision-making system of financial and statistical results be the equivalent of XY squiggly lines of seismic data? Consider these facts:
The Living Company
As in any living organism, if a company lives long enough, all of its cells will eventually be replaced. Royal Dutch/Shell researched the behaviour characteristics of long-lived companies, and in the book he wrote based on the study he headed, former senior vice-president Arie de Geus shows how the strategies and tactics used by long-living companies are significantly different from short-lived quick-flip companies. (His book, The Living Company, is recommended reading for any executives eager for good brain food.) Understanding the fundamental differences between a living company and a corporate entity is crucial to improving sustainability.
A successful living company needs an effective way to link its corporate strategy to the behaviour of all cells, and perhaps most importantly, its employees. Pictures of understanding do this by improving your employees’ understanding, focus and performance. By showing employees the big picture and where they fit into it, the pictures reduce their fear of change and connect them as individuals into your corporate strategy.
Pictures also provide you with immediate feedback and valuable insight. Is this or that critical? Yes/no? Or you can do in-depth analysis on critical high-risk situations. Such analysis might track behaviour-economic relationships for user relevance, for example, by asking how your ratio of prospecting costs (behaviour) to gross profit (economics) compares to what you want that ratio to be (relevance). Speed, flexibility and immediate insight are key.
Pictures of Understanding Ease Cultural Transitions
You need to build a picture of your living company and of the alliance company, then compare their strategies, tactics, behaviour, movement and economics. The next step is to simulate what may happen if the two merge, and apply what you learn to the real-life situation at the negotiation stage.
How Pictures of Understanding are Developed
Three things a company must do simultaneously to increase profit are: 1. Increase throughput; 2. Reduce money tied up in inventory for sale; and, 3. Reduce money needed to increase throughput. This is our answer to test question No. 3. The traditional answer is increase sales and/or reduce costs. If you’re not familiar with 1-2-3 throughput/bottleneck management techniques, The Goal, by E. Goldratt, is a fun read and a good introduction.
Three kinds of work behavior are: 1. Relevant – moneymaking; 2. Relevant – non moneymaking (pay roll, tax, etc); Irrelevant – counterproductive (cutting a deal that does not improve 1-2-3). Along with other factors, pictures of understanding show how the company’s “behaviour-nomics” either move the company towards (relevant) or away from (irrelevant) what the company wants to become or achieve (user relevancy model).
Pictures of Understanding That Become Key Indicators
Well-crafted agreements must do much more than simply address the tangibles. They need to reduce the possibility of conflict both now and six months from now. Some traditional agreements/contracts adopt an adversarial us/them tone. It may make lawyers happy, but does little to promote long-lasting relations. Learning to use interactive processes can greatly improve your good sale/bad deal ratio.
Competitive Intelligence: Even simple pictures of understanding can effectively convey a ton of valuable information about size, behaviour, strategies, tactics and direction.
A start-up ‘living’ company can be viewed as a Raindrop that hopes to survive beyond splashing down on the chilly street of reality. A shallow Puddle company would hope to survive in the hot sun and not evaporate. There are the quick-flip quick-profit small-cap Puddle jumpers. And then you have the self-renewing long-living River Companies. Finally there are Muddle Companies -- who often make excellent takeover targets. A River Company and Puddle Company forming a strategic alliance will often merge their different strategies and tactics to produce just what they don’t want -- a Muddle Company. But once they’re in the quicksand of a mud hole they don’t know how to say “stop.”
Work Ethic: Which work ethic picture fits you and your company? The traditional 8 to 5+ nose down ass up work ethic or the dolphin work ethic? Let's build a picture of understanding of both and then compare.
Conway Management has tracked traditional work behaviour in more
than 1,000 corporations. This picture of understanding has emerged from their
Companies do all kinds of things that are counterproductive. They form strategic alliances that fail, re-engineer themselves into a mud hole and put people in wrong positions, to name a few. Think of all the extra time, money and effort needed to cover these costs.
What is the dolphin work ethic? Research on dolphins shows they are very efficient athletes and hunters. In fact, they are so efficient at finding food and converting it to energy that they have lots of time to play. And even while they are playing, swimming in your bow wave, they are developing their athletic skills even further, which improves their hunting skills that much more.
Wouldn’t you love to swim with the dolphins? You can. Rather than do something
counterproductive, go play. If in doubt, go play. Don’t feel guilty, go play.
Improve your eye-hand co-ordination, practice your presentation skills, build
a picture of understanding. Here’s an example from Whirlpool.
Managing Skills for Relevance: What good are formal credentials or technical skills if they don’t increase throughput? In assessing the cells of your living company, ask these questions: How does this skill or that training improve the company’s behaviour and economic performance? What is the best way to quantify that? Relevancy-based “behaviour-nomic” descriptions of skills and jobs create pictures of understanding that benefit everyone, and are a significant improvement over medieval measures.
“Behaviour-nomic” descriptions make the idea of in-house Yellow Pages a powerful application. You could produce maps that show where the knowledge is located – in whose heads, for example.
Managing Information: Beware of information overload -- it’s counterproductive. You and your employees need relevant information precisely when you want it. Pictures of understanding boosts executive productivity and slashes work stress by giving you the relevant information you need, when you need it.
To implement the techniques and concepts I’ve been talking about here, you can start by learning more about the Relevancy Systems concept and building a Relevancy model. Use it as a communication tool to test ideas for user relevance and to get a good feel for overall potential. Talk with your colleagues about the dolphin work ethic and how it might fit in.
Relevancy Systems believes in training in XYZ Relevancy techniques as people do their work -- for example, when they prepare to negotiate or write agreements -- and adding tools and techniques to complement your business system as they become necessary.
Relevancy Systems -- Quality Pictures of Understanding
Books the company recommends:
Have a question or comment? Contact Bill-Fisher@RelevancySystems.Com