I suspect everyone reading this blog has, at least once, been guilty of making a knee-jerk decision – I know I certainly have. You know the type of situation: you’re presented with a couple of facts that look ‘urgent’, so you make a quick decision without seeking further information, context or data. Soon after, you find the facts were very unrepresentative of the real holistic situation, and the decision you’ve made suddenly looks like it might not lead to the outcome you were hoping for. In fact, it may be a complete overreaction and in retrospect might seem like a bad decision…
If you’re ever in the UK city of Portsmouth and you want to hear an impassioned debate, ask some local residents about car parking. You’ll be sure to stir up a variety of opinions and ideas. After you ask the question though, I’d recommend standing back… it’s a very divisive topic!
It may help if I explain the context. Portsmouth is a crowded island city. It’s heavily populated and surrounded by the sea, only connected to the mainland by road bridges. This creates an interesting dilemma — the capacity to build anything on the island is limited. There is only so much land, and short of building underground or on the sea, that capacity is finite. This creates a real problem when it comes to parking. The vast majority of houses on the island were built in the 1800s and early 1900s – long before anyone needed to think about driveways or garages. So parking space is at a real premium, with most residents needing to park their cars on the street.
The trouble is that demand outstrips capacity. There are many more people who want to park on the streets than there are available parking spaces. This has led to the local council trying various tactics to control parking – from creating (and then suspending) residents-only parking schemes right through to creating a ‘park and ride’ scheme.
Time and experience has shown that there is no silver bullet to Portsmouth’s parking problem. Every intervention that the council makes will inevitably have some affect and some impact – but the impacts that are positive for some stakeholder groups are negative for others. Often, a problem that is solved in one area creates a brand new problem elsewhere. This leads to the council being in a perpetual state of confused oscillation: Creating new parking zones, then suspending them, in a desperate attempt to find something that works.
The city is a system: The solution isn’t always near the problem.
In reality, parking problems might be solved with seemingly unrelated solutions. The city of Portsmouth is a complex system with interwoven dependencies that are difficult for the eye to see. To solve a parking problem, you have to analyse and crunch the data of the entire holistic system. This requires collaboration and analysis across departments, organisations and areas. Take the following examples:
- Portsmouth has a large university and a transient student population, who often share houses. This means a house may have 4 or 5 cars, and those cars might only be used occasionally. So perhaps offering a car-sharing scheme for students, which saves them money whilst still enabling them to use a car might help.
- There is a trend towards converting older properties into apartments; each apartment owner will probably own a car. So perhaps the town planning regulations should change to control this or at least ensure adequate parking is built on redevelopments (or that the developments are in areas that are sufficiently close to public transport)
- There are areas of Portsmouth that it is difficult to get to on public transport. By understanding and improving this, the need to own a car may be reduced.
- Since on-street parking is free, there isn’t a disincentive to park. So perhaps there is an argument for some kind of affordable parking for a guaranteed space
The examples above just skim the surface – but the key point is that in order to solve a parking problem, it would be necessary to think in a much broader way. It would be necessary to examine wider data sets too. A solution may involve not just the parking department, but also the town planners and maybe even the local university. It’s important to understand what is driving demand and the complex network of interrelated factors that are causing the problem. A combination of seemingly unrelated interventions may create a far better outcome than an “obvious” knee-jerk reaction.
What this means for business and business analysis
I was recently travelling home after a business trip and I checked in to a very small regional airport. It was around 6:30 p.m. and I had over an hour to kill so I visited the airport’s only café to buy some food. The café appeared to be part of a regional mid-sized chain, and they had a standard range of food, so I knew exactly what I could expect. I looked through the menu, made my choice, and went to the counter to order.
I gave my order to the cashier who looked a little embarrassed and immediately apologised:
We’ve all been there. A senior leader in an organisation gives a pep-talk about how she or he wants more innovative thinking in the organisation. We need to be brave, bold and ‘think outside of the box’. We need to brainstorm, ignore constraints, and come up with radical new ideas to solve problems and better serve the customer.
Out-of-the-box brainstorming can be a great way to encourage innovative and divergent thinking. It can be a great way to come up with completely new ideas in a supportive environment, and a great way to challenge our existing assumptions.
Yet I guess everyone reading this will have seen at least one situation where an organisation encouraged out-of-the-box thinking, but then delivered something very much inside the box.
Sadly, over time this can lead to real cynicism. You can almost hear that deep, cynical sigh from a co-worker that we’ve got to attend yet another “fluffy out-of-the-box brainstorming” session. It is sad that this happens, and it really doesn’t have to be like this.
So — why might efforts to encourage “out-of-the-box thinking” fail? Here are some situations I have observed with some potential ways of avoiding them. This list is by no means exhaustive, and I’d love to hear your examples too:
Trap 1: We’re not really brainstorming, we’re divining
In small enterprises, job roles can be very blurry. Since there are few people working for the company, the boundary of each job role tends to flex in order to meet demand. Over time, and as organisations grow, it is likely that this will change and each individual’s role will become more tightly defined. How tightly defined each role becomes depends on a number of factors including structure, culture and leadership style. However, in midsize and larger companies it’s likely that there will be less flex in each role, with each individual having a clearly defined role.
Clearer role boundaries certainly have significant advantages, yet over time a hidden problem can emerge. Sometimes individuals in organisations start to ‘hoard’ information, knowledge and data that is relevant for their specific role. Perhaps they are the only person in the organisation who has access to the data that is needed to create a particular sales report. Or perhaps they are the only worker who knows how to operate a certain system or process. There are various reasons why an individual might hoard information in this way – for some it might be completely unintentional. In some cases it might be down to circumstance, with not enough staff available to support them. However, in other cases an individual might subscribe to the view that ‘knowledge is power’, and therefore continue to intentionally find ways of absorbing more and more data, information and knowledge.
When silos of this type emerge, for whatever reason, there are real organisational risks attached. However efficient and effective a particular individual within an organisation is, it is incredibly problematic when they are the only person able to execute a particular process or tap into a particular data source. This creates a key-person dependency and a potential bottleneck. If that person goes on an extended vacation, for example, the organisation may suffer as a result.
In today’s blog post, we break from our usual format to bring you an interview with John Hackett of Franklin-Hackett. I first met John at a business analysis conference a year or so ago, and I’ve really enjoyed hearing about his innovative approaches and reading his blog. I recently caught up with John for a ‘virtual’ chat, and John shared some really interesting insight:
So, John, you engage in a rather intriguing discipline that you describe as “Organisational Change Alchemy”. Can you tell us a bit more about what this involves?
Well firstly, thanks for inviting me to contribute to your fantastic blog, Adrian!
Perhaps the best way to answer that question is to talk about how change in organisations has been carried out historically.
Organisations tend to think of change in a very structured way, which means they usually try to implement it in the form of a time-limited, specific and managed approach. Hence why we have “change projects”. It’s an attempt to implement change in a controlled way.
This situation exists because the dominant mindset within organisations states that change is a short term phenomenon that has to be planned and structured in order to avoid disruption and reduce “risk”. It treats change as something that comes in, does stuff and then goes away again.
So traditional change methodologies accommodate this mindset by being heavily structured and focusing purely on specific areas such as business processes or purely on IT.
The problem is that in reality, change is actually a constant and emergent phenomenon. It is also complex, in that there are multiple elements that work together to create a situation, all of which have to be considered when implementing change. The structured approach of traditional change interventions is at odds with the emergent nature of change. The tendency towards a narrow focus when implementing change means that many traditional change interventions fail to address all elements and result in poorly embedded outcomes.
Time really does fly! I can’t quite believe it’s less than six weeks until the start of the Business Analysis Conference Europe 2014 (#BA2014). As I put the final touches on my presentation, I can’t help but get a little excited about the event – it’s always a highlight of my year. Every year the conference attracts such a wide variety of delegates and speakers, it’s such a great place to meet people and hear new ideas.
The conference gets bigger every year and, in fact, is venturing in to a new and bigger venue this year. I believe there are still tickets available — so if you’ve been thinking about attending, it’s not too late! You can find out more details about the conference by clicking the link below:
I highly recommend attending the conference, if you can. There are fantastic presentations from real-world practitioners, and there’s also the opportunity to relax and chat over a beer (or two) after the conference has closed. If you haven’t been before, I’d highly recommend taking a look.
If you’re attending, drop me a mail or tweet and we can catch up.
See you there?
PS — if you can’t make it to London, you can also catch me at the BBC Conference in Florida, USA on 6th November. Hope to see you there!
I recently came across an interesting discussion on LinkedIn that highlighted the dangers of relying on spreadsheets. The discussion made reference to an article on Fortune.com, which showed how a range of large and powerful organisations allegedly made significant analytical errors. These errors allegedly included the way they valued acquisitions and calculated risk, amongst other things. One common cause that the article cites is simple: The organisations relied on spreadsheets for complex analytical calculations and data manipulation, and once errors had permeated into the spreadsheets, they went unnoticed until disaster struck.
The article reminded me of how many times I’ve seen and heard of spreadsheets being used in extremely important situations. It never ceases to amaze me how many midsize and even multinational organisations use spreadsheets for very complex tasks, and I guess that everyone reading this will have seen at least one example where a spreadsheet is being used where a different tool would be better. I remember once being told about a team relying on an extremely complex spreadsheet (with macros) that had been built by someone who had subsequently left, and nobody had any idea how the spreadsheet worked. If the spreadsheet were ever to break, they would be in a very difficult situation indeed.
Of course, spreadsheets have their uses. A spreadsheet’s beauty is in its flexibility, but there also lies a pitfall. It’s very easy to just start ‘building’. If this pattern continues, then before long you are left with a plethora of separate spreadsheets maintained by disparate teams. It can soon become someone’s full-time job to copy and paste data between the various sheets and interpret the results. And with a veritable mixture of manual intervention and manipulation of data, there’s a real danger of errors creeping in, just as the case study above Illustrates. These risks and these hidden costs can grow and can cause real organisational pain. This growth in unofficial and unacknowledged spreadsheet-based applications often happens entirely under the radar, meaning that nobody really knows what it costs the organisation.
There has to be a better way
If I were to take a guess, I’d bet that we’ve all been in situations where we need to make an important decision quickly – where one of the possible options is presented in such a compelling way, it seems like a foregone conclusion. Perhaps the option appears to have benefits that are so hugely significant, it is seen as a ‘no brainer’ – a decision that is so ‘obvious,’ there is little point in putting much thought or contemplation into the decision making process itself. Perhaps it’s ‘obvious’ that we should launch into a new market, slash our prices, buy a new software package or restructure a particular department.
This desire to make decisions quickly is understandable and rational – after all, it’s important that we avoid ‘analysis paralysis’ – yet a real danger awaits the unprepared. In many cases, ‘no brainer’ decisions have far wider consequences than the decision maker might initially appreciate. In fact, further analysis of the data might show that you are being duped into making a bad decision with confidence. Let me illustrate with a hypothetical example.
Imagine an online retailer sees a sudden sustained drop in its sales. It knows that competition in the market is cut-throat, and it needs to retain its market share. It could be seen as a ‘no brainer’ to temporarily cut prices or offer some other type of incentive to increase sales volumes. In some cases, this might be an appropriate response – but in others, it might lead to a dangerous race to the bottom – with all firms lowering their prices until they can bear it no longer.
In the hypothetical situation mentioned above, it would be far better to look at the business situation holistically. It would be beneficial to carry out analysis and look at the business environment and establish what data and insight is available. Maybe there are other reasons that sales have dropped overnight, or other factors that should be considered. For example: was there a similar drop last year? Is there a seasonal peak in sales? Has the weather been unusually hot/cold (which might affect the pattern of people buying or ‘shopping around’)? Are people buying a completely different substitute product altogether (think Netflix affecting DVD sales)? There would, of course, be many other factors to consider too.
In situations like this, it is hugely beneficial for organisations to look at their data and analytics for insight. Carrying out analysis in this way – before making so called ‘no brainer’ decisions – helps to avoid the ‘knee jerk’ reactions that can lead to unexpected and unfavourable outcomes. Ensuring that businesses move from data collecting to curating actionable data and insight is key.
So – if you’re presented with a ‘no brainer’ decision, what should you do? Here are five key questions that you might consider asking:
The humble old “business case” gets a very bad reputation in some organisations. A good and well written business case is a crucial document that helps organisations and teams decide which projects to progress with and even which products to launch. In many ways, a business case is a mini business plan, showing the costs, benefits, risks and impacts of adopting a proposed course of action. It shows the reasons for the recommendation, and it shows the options considered. Depending on the organisation it might be written at different levels of formality—in many ways the underlying thinking and analysis is more important than the document itself. The business case draws on insight and data from within the organisation, and a good business case will draw on the organisations analytical capabilities.
Overall, the business case protects those making an investment in a particular project or product launch and ensures that they go into the endeavour with their eyes wide open. It ultimately contributes towards protecting the interests of the organisation’s owners – who may as well be shareholders.
On the face of it, the creation of a business case sounds logical, and it sounds like a perfectly natural thing to do. I mean why would anyone object to knowing the costs and benefits of a proposed course of action? Yet I suspect many people reading this—from organisations of all sizes whether multinational or midsize— will have experienced situations where there was a desire to “fudge” the business case. Perhaps you were asked to selectively ignore some data, or put a particular spin on things to “force” a particular course of action.
There, I’ve said the unthinkable. Call me a heretic! However, in reality, business cases get fudged. And this isn’t always deliberate—sometimes business cases are unconsciously misinterpreted or misrepresented and this faulty thinking leads to organisations unknowingly taking bad decisions with complete confidence. They might even end up with a “turkey project” that should have been culled at the outset.