Matthew De George

This is some fairly stock standard copy for the corporate blog…

We were at least 20 years into an Internet-fuelled digital disruption before the COVID-19 pandemic abruptly destroyed all of our excuses to not change. Agile delivery approaches, customer-first investment, data, and cloud-first technologies, were already acknowledged as the critical enablers for digital transformation. The organisations who were the most advanced in their digital capabilities were also the most effective in their response to these sudden changes. Elsewhere, we saw just how fragile our interconnected global supply chains could be when financial and non-financial risk scenarios hadn’t been fully accounted for.

Agile delivery is has been proven as a key component of how organisations innovate and respond to change. But we believe the time is quickly approaching where agile becomes business-as-usual and the competitive advantage that can be derived from agile, “new ways of working” initiatives is reaching diminishing returns.

To survive and then thrive, businesses must not only provide superior experiences for consumers, customers, employees, and citizens, but deliver on their promises in a faster, more innovative, nimble and trustworthy way to meet new expectations and needs.

McKinsey recognised early that “The COVID-19 recovery will be digital”. Their surveys showed that “…we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks…”.

But what is even more striking is how these changes have been unbounded by the structural silos within our organisations. McKinsey (see article link above) cites examples of:

• “Banks transitioned to remote sales and service teams”
• “Digital outreach programs launched to customers”
• “Increased flexibility in payment arrangements for loans and mortgages”
• “Shifts to online ordering and delivery as the primary business of supermarkets and grocery stores”
• “Schools and universities shifting to online learning”
• “Doctors delivering telemedicine”
• “Regulatory changes rapidly implemented to enable more flexible employment contracts, trade, and operating model changes”

These types of shifts require all business units to take the lead.

Agile development approaches were developed as a response to the overly complex, document-heavy approaches that once dominated software development. But it’s been over 20 years since The Agile Manifesto was first signed at a ski resort in the Utah in February 2001.

Agile approaches are now the dominant approach in a majority of technology departments, and in some cases specific organisations have developed operating model changes which allow the approach to be extended to other parts of the enterprise.

The level of commitment and success rate of enterprise agile initiatives has been varied. But operating model innovation itself is always difficult and just to see organisations consider the way they work as an important source of competitive advantage has been encouraging.

Missing Alignment

The missing pieces of the agile approach have started to show as adoption spreads and scales. Part of the success of agile for IT and software delivery can be attributed to simply getting out of the way.

Software developers stopped hiding behind elaborate development processes that required top-down agreement of high-level requirements, followed by a sign-off, followed by detailed designed – again, which required a sign-off.

At any point in the old process, if something from a previous step changed the whole process went back to that step. This meant it was often months before any software was even developed.

But the bargain agile makes with other business units is that they will value responsiveness to changes – which is a certain specific type of agility, at best – over trying to predict what is required.

Know what you want? We can do that right now if it’s the highest priority thing you want to do. But ask why it wasn’t done that way in the first place and the answer is likely “nobody told us”.

Agile is a success because it gives somebody else the responsibility of knowing what to do, it doesn’t judge too harshly when mistakes are made, and it responds rapidly when changes are required.

What agile isn’t very good at is acknowledging that it’s difficult be the person that the agile team relies on prioritise the work, to make trade-offs, to know what’s required, to understand dependencies with other teams, and to make the executive commitments that the agile team is unable to make under their approach.

Supporting “product owners”

The person the agile team might call their product owner always has other responsibilities and priorities. They wouldn’t be a good product owner if they didn’t have other responsibilities.

But they might not have the influence over other teams that the agile team wants them to. The perfect product owner doesn’t exist for all the same reasons the perfect design document never existed, and more. Organisations are complex – there is risk, uncertainty, and change.

Reaching for Alignment

Agile teams sometimes take the perspective that the rest of the organisation is there just to provide them with clear requirements, user stories, and priorities so that they can do the risk.

But that’s not why the rest of the organisation exists at all. It exists to serve customers, be accountable, manage risk, implement change, consider the future, manage diverse teams, defend budgets…

Alignment with organisational goals and strategy is almost entirely outsourced by agile approaches and is at the heart of both which capabilities are invested in, and how they are invested in.

Alignment is about taking the organisations market position and strategy, and then deploying that strategy. As part of strategy deployment, any gaps in business capabilities are then addressed via an end-to-end approach the considers the people, process, information, and technology impacts for each business capability.

Powered by Awareness

Our organisations have bifurcated, as they often do, into those deciding what needs to be done and wishing they could be more certain about those decisions, and those doing what needs to be done and striving to be more agile.

We believe that between agility and alignment is a missing competency that combines the power of direct feedback from your customers, and a data-driven approach to decision-making, to continuously optimise how your organisation operates.

Awareness recognises that when people have the right information, they make the right decisions. By removing the idea that some people decide and other people do, you can focus on ensuring the information required to make the right decision is right their when you need it.

But Awareness goes beyond how you make decisions internally. By implementing dynamic, digital-first channels you create a direct feedback loop as you service your customers.

This feedback looks puts the capabilities of your organisation in the hands of your customers. It gets out of the way and allows internal processes to respond and optimise based on customer data that is continuously being integrated from customer channels.

This once seemed far-fetched but is already happening across hundreds of global organisations. What we might call The 3A Enterprise has the foundational capabilities to enable this shift.

Just for the record. I’ve read the proposed legislation and skimmed Facebook’s initial response during the consultation period – and I think they are right to disable the sharing of Australian news on their platform.

In my view, the proposed legislation appears to be saying:

1. We’ll created a government process, administered via the ACCC, to allow news companies to be formally registered

2. Once a news company is registered it can enter into a mandatory bargaining agreement process with a digital platform company (such as Facebook) to resolve issues – including issues relating to renumeration for sharing news content

3. During this mandatory negotiation consideration must be made for how much it costs to produce the news content and that might become part of a proposed compensation paid by the digital platform provider to the news organisation

4. If they can’t negotiate a renumeration between themselves a mechanism exists in the legislation to have both parties submit a proposal and then one of those proposals its chosen and must be complied with

5. There are a number of other obligations for digital platform provides to notify news organisations if they are going to change their algorithms or anything else that might impact how the posts of news organisations are are displayed, the control the news organisations have over comments, and to respond to various information requests from news organisations

Facebook appears to be saying in response:

1. Facebook aren’t using the content of newspapers unless it is shared – either by the news corporation itself or by another Facebook user linking to external content on the news providers website

2. If a news corporation wants control over what is shared that functionality is available on the Facebook platform if they set up a page – and they can choose not to share if they don’t want to

3. If other Facebook users are sharing content owned by a news organisation then this content isn’t scraped or taken from the news site except to show a preview, and all pay walls are respected – so they are sharing a link to the news organisation’s site and they can prevent access to the content if they want

4. Facebook and news organisation are competing for advertising revenue and this legislation is taking sides in that competition

5. It’s not clear that Facebook benefits from the sharing of news; and it believes that it drives traffic to news organisation’s websites to their benefit

So, Facebook has said the wording of the legislation appears to mean that any any point they might be forced to negotiate payment to news organisations even though they don’t believe they get a benefit from sharing. So they choose not to share so they don’t risk being forced into mandatory negotiation.

I might change my mind as I learn more. But at the moment I think they are making the right decision and a decision within their rights.

Update: Good discussion and thoughts from clever folks on LinkedIn where I shared this post.

Update 2: This article and this article are both better than my blog above. 🙂

 

I live in a small seaside town about an hour out of Sydney. My wife and I have lived here for about 12 years. I still get grief from her for not even bargaining the owners of our house down when we made an offer. I just offered to pay them what they asked for. Why wouldn’t I? I wanted to buy their house and I had a healthy libertarian respect for property rights and what it might take to make a family give up their home.

By the time COVID hit we’d lived in the area for over a decade. We didn’t know many people but that was more a function of how my wife and I seperate ourselves from the world than a reflection on the people in the area. Everybody we have connected with is lovely. It’s a great area filled with people who know they made a trade-off living a little further out of the city.

As we get closer to the end of the year we all find ourselves running on fumes. As a consultant I have billable time and non-billable time. So when I found myself in non-billable time just a week before my Christmas leave I knew the chances were I’d be only as busy as I forced myself to be.

So I still spent the morning working on our company’s go-to-market proposition. Part of my job is to ensure the market understands who we are. We don’t have to say it explicitly. Nor do we even have to know who we are. But we need to show it. We need to be transparent about who we are even if we struggle to articulate exactly what that is. It’s a difficult balance but we are committed to it.

After my morning thinking about who we are as a company I spent the afternoon trying to clear my head. I had a few beers – a surprisingly rare lunchtime treat for me during the COVID work-from-home age. Then I had a
wander around our local area.

When I got hungry and wanted to reward the risky “2nd Best Burgers in [my area]” sign-makers I dropped in for something to eat at a tiny bar that had only just opened when COVID lockdowns began.

I consult to medium to large business in Australia and the greater Asia Pacific. So I’m in the habit of knowing how value is created. I casually noted that “you guys started at just the wrong time” when I paid for my delicious burger and pale ale.

But I was wrong. Our local hipster said “No. We didn’t really have an established business model”. He’d started the business with just himself and the chef. He’d made many more meat patties than he expected to when he started the business as the front-of-house guy. But ultimately they were able to pivot faster than the other local businesses.

For three months they ran a successful new takeaway business. Locals who didn’t know who they were before the pandemic were now embracing the business model that they were largely designing and changing as they fought to survive. “We noticed there were local takeaway food outlets but none who sold great burgers”.

My burger was delivered by somebody who understood that they had an advantage. He said “other local businesses had built up this idea that the physical space they occupied was the business”. In saying that he unpacked what we’ve all learnt about what a business actually is, or isn’t.

When technology startups tell you it’s all about pivoting towards the opportunities presented to them you might get the sense that they are faking it until they are making it. But that was a great burger – and everybody else I’ve seen walk into this joint has thought the same. I think the spirit of small businesses, thinking deeply about how they will respond to the needs they see in the market, will save us.

What we can learn from this is that we don’t know everything. Actually “we” know plenty – but we have to bring that knowledge together and recognise that there are those out in the world actually acting on less knowledge than we think we have to make delicious burgers.

In terms of “The Second Best” I also can’t help but think of Matthew Arnold.

 

Part of The Beginning and The End of Information Management.  Now available for pre-order on Amazon.   

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We live in the future. But we hold onto past ideas for too long. One of these ideas is that we should think of business processes before we think of technology or data.

This isn’t true. We should think of value, outcomes, markets, and a whole bunch of other important things and all of them are more important than technology by itself, data by itself, or business processes by themselves.
We have built functional organisations and filled them with people. So we’re going to get some perverse outcomes. People are good at that. It’s what makes our organisations interesting.

We spend so much time telling each other how business processes are more important than technology and data that it starts to feel like a discussion about value. But it’s not. Business processes, technology, and data are all equally important or unimportant. Each of them is only the most important thing to the functions and silos who are responsible for them. And there are only functions and silos responsible for them because that’s how we design our organisations.

But in modern organisations there are business processes, and types of business processes, and indeed whole business models, that can’t operate the way they are designed without the associated information technology. Likewise, all business processes depend on, generate, or coordinate with other business processes through data.

This means that at some level the idea that business processes “comes before” or are somehow conceptually “above” concerns about technology land data is no longer valid.

Justify the value of data

Imagine talking to the CEO of a nuclear power plant. You might say:
“Look, uranium is obviously critical to what we do around here.”
The CEO would nod in agreement or at least impatiently stare you into making your point.

“Well we’ve done a bit of a review and we’ve found some issues with the handling of the uranium. In fact, every time somebody goes near it we find it spreads. The Geiger counters are picking up radiation all over the plant.”
The obvious analogy here is with data: both critical to the operating model of most companies but also potentially risky if handled in the wrong way.
But if this situation played out like most data governance conversions it would continue like this:

“Okay, I know uranium is important. But what is the business value of it?” CEOs ask these sort of open-ended questions to uncover what you know, so this isn’t unusual.

“We it’s fundamental to how we operate. It’s a critical resource. Actually, because it’s a critical resource the way we manage it should be considered an asset. So these machines help us process it and the plant uses it to make power.” You’d feel like you are rambling now – and it’s not a very satisfactory answer but given this is a fundamental part of the operation of a uranium powered plant it’s actually hard to know where to start.
The CEO isn’t uninformed about the operations of the plant so he offers “So we have a cleanup crew for uranium incidents. I spend hundreds of thousands of dollars on this each year so I hope I’m getting something for it!”

This wasn’t where you’d start the conversation but it’s as a good a place as any so you offer “Yes, well that’s once something goes wrong. We need to be more proactive than that.”

“Yes, we need to be proactive. We want to innovate because our strategy is to be a leader in this area.”

“Great – yes – so the cleanup crew can help us once there is an incident but how do we ensure we handle the uranium in a way that reduces incidents?”
“Well we just switched suppliers so we’ll need to give them time to bed down their processes. They have productivity targets built into the contact so we should expect them to be more productive each year. Well they have to or I’ll cut orders from them! We wont tolerate breach of contract.”

You know that the supplier only handles the uranium to the delivery point, and the delivery points seem to be well controlled. Actually, there are a lot of controls in place, but some of them aren’t being followed, and some just don’t seem feasible to follow.

“Our suppliers aren’t the problem, it’s the way we handle the uranium after its delivered. Actually, there is a regulatory element to this too…”
“We want to be compliant!”

“Yes, but the readings we are getting all over the plant indicate that our handling may not be compliant”

“Darn regulators!”

“So let’s try to get compliant but at the same time let’s see if we can get business value from the compliance. There are a lot of sick days maybe they are related to the poor handling of the uranium.”

“I think that’s a cultural problem” the CEO is again attributing common actions across a large group of people to “culture” when you think he might mean “incentives”. But that’s another conversion. Anyway, he’s still talking.
“We need to get business value out of this initiate. I know uranium is important but what is the business value we are going to get form this initiative!?”

“Well at first we just want to contain the issue”

“What’s the ROI?”

“Well it reduces risk”

“Our risk appetite it low at the moment”

“So just to contain it we’ll need to slow down movement of the uranium at critical points and refurbish these damaged containment areas”

“How much will that cost?”

“$2 million”

“Well that’s a lot we don’t have that sort of budget allocated. These things always blow out we started an initiative 3 years ago and it was supposed to be $500k but it blew out to $800k”

“Well, actually this is just the first thing we need to spend, we’ll need to spend a lot more once we have a roadmap”

“I think we should do a roadmap first before we contain the uranium”
At some point in this conversation it’s the CEO that needs to be removed, not the data management consultant (Sorry, the person responsible for the uranium).

An important point: there is somebody in this fictional tale responsible for the uranium and having this discussion with the CEO.

Even if the conversation isn’t getting anywhere there is at least a significant budget allocation, a policy and process library, and a broad understanding across the plant about the dangers and proper handing of the uranium.
So if you’re having bizarre conversations like the one above – and they are about data, and not uranium – you’re at least trying to ensure that the value of data is understood.

But you’ll get into difficulty if you have to answer questions regarding “the business value of data”. The problem is not finding business value of data, the problem is realising that data has business value.
Data has a primary value.

Data isn’t only valuable because you can do specific things with it. Instead it’s valuable because you can’t do certain things without it. If you aren’t valuing the data you aren’t valuing the things you can do with it. If you have a car, and you want to drive it, you need wheels. The tires on the wheels need to be maintained. The business value of the wheels is the same as the business value of the whole car.

It’s hard to make an organisation think this way without sounding like what might be called “a data geek”. But it’s an important part of the transition you need to make into a data-driven organisation.

No organisation attempts to operate without people, but nobody asks “what is the value of people?”. We do have a variety of ways of managing people; including both disconnected performance management systems as well as a general consensus that all interactions people have with the organisation constitute a continuous feedback loop. But we’d never try answer such a general question as “what’s the value of our people?”

I.T. departments are unfortunately stuck in a service posture. They are stuck in the position of having to justify why something is important. You don’t need to do that for data. People know it’s important – when they ask about the value of data they are just messing with you.

I’m starting to build up my thoughts about how society and the mind evolve together.  

For starters, I think we need to consider the possibility that what we think of as “emotional” versus “rational” thought might actually be the same thing.  

If we consider how our minds evolve based on interactions with others it makes sense that we might have built up this distinction in order to manage interactions with other people rather than because they are different inner realms. 

Thoughts are in Notion here.

At Aware we want to create something special – something that endures. To do this we need a strong core that binds us together even as industry trends, best practices, and technologies change over time. How we navigate and respond to the various trends and fads we encounter is part of that core.

Things change, and much has been made of the need to react to change. But we don’t like the word “react” as it’s too limiting. Our relationship to change should go beyond reacting. We also want to be able to effectively drive change, and to hold back from reacting to change that isn’t going to be enduring (i.e. we want to know a “fad” when we see it).

We find two questions help us craft the most effective response to a new fad. First we ask “What if it’s truth?” and then “What if it’s half right?”

What if it’s truth?

This question takes the extreme position that something universal and enduring might be embedded in the fad regardless of whether the fad itself turns out to be important.

For this new fad to become popular amongst all the other ideas in circulation it must resonate in some broad or universal way.

While it might be a waste of time to react to a fad that turns out to have no enduring impact on society, there is still value in engaging with the core truth that made it a fad in the first place.

Take the current trends towards AI and machine learning as an example.

The robots are coming… is a metaphor for the impact of technology on society

We all feel the robots are coming. These robots are the embodiment of our daily experiences: our trepidation when encountering the new, our struggles to use new versions of our computers’ operating systems, and the experience of having to learn new skills when parts of our job are automated to sent off-shore.

Depending on how we define robots, the robots are already here. All of the talk of “artificial intelligence”, “machine learning”, and robots is less about availability of different technologies and more about how these technologies are impacting how we organise our businesses, customer experiences, and societies.

So at Aware, we work at the intersection of the simple, easy-to-use capabilities available at marginal cost from technology vendors and the significant impact the availability of these capabilities have on how we manage operations and customer engagement.

What if it’s half true?

Once a fad is in circulation it becomes hyperbole. If you scale down the expectation you also get a sense of how to response to the fad in a way that reduces risk.

Human + robot beats human or robot every time

Consider the example of AI and machine learning. Blended or hybrid operating models will always proceed all-robot approaches. This is partially because the way technology improves and is embedded into existing operating models means it typically replaces part of a job before it replaces a whole job.

We also know this because we can see the way early, high-profile successes in AI have evolved. The work of Garry Kasparov (and others) in “advanced chess” and “freestyle chess” is a good example. After Deep Blue beat Kasparov in the late 1990s Kasparov moved on. He experimented in new rules for chess competitions where different combinations of collaboration between humans and machine could be explored.

So at Aware we focus on blending the best of what humans can do with the best of what robots can do. We encourage personal relationships with enabling technologies that have direct impacts on the productivity of individuals and teams.

Conclusion

If you want to creating enduring value one thing you’ll need to do is navigate the trends and fad you encounter along the way. Ask two questions to help you craft your response: “What if it’s truth?” and “What if it’s half right?”

An unashamedly technology-linked view of things.  But only because it is impossible to make a business case for compliance without using enabling technology.  See: Embedded Compliance (draft)

Protecting your customers’ data is at the intersection of three organisational competencies that companies already struggle with. Together these amount to a lack of what we might call risk empathy.

Risk empathy is the ability to feel the risks that others face. It’s clear that this is a struggle for many organisations. British Airways (BA) may well be the first high-profile test case for enforcement of the EU’s General Data Protection Regulation (GDPR) but it won’t be the last.

While you might say GDPR only relates to citizens in the EU, the essence of BA’s record fine is a failure to protect personal information and payments data. GDPR certainly offers the most aggressive regulatory protections for these types of breaches, but similar protections are already in place in other jurisdictions – including Australia – and the trajectory of regulation is clear.

In any case you shouldn’t think this-wont-happen-to-us. The core organisational deficiencies that impact your ability to feel risk empathy are familiar to many organisations. If you want to improve your ability to feel risk empathy you have to solve the following organisational challenges:

1. Organisations are traditionally not good at managing the risks relating to the conduct of others. Take, for example, the issues raised during the Banking Royal Commission around conduct risk and our ability to guarantee all parties are working in the interests of customers.
2. Data management itself has also been a challenge to many organisations. Data governance discussions too often begin with the creeping realisation that “we thought that was somebody else’s problem…”
3. Organisations are not good at managing risks they don’t own – or rather that aren’t explicitly represented in the executive accountabilities that would ensure risk mitigations are properly designed and funded.

Data breaches are right at the intersection of these challenges.

In the case of British Airways data was stolen. A third party had to commit a criminal act – but it’s BA that must pay the price.

This is different to the Cambridge Analytica case where the problem was primarily that Facebook and its partners configured features under their control to share data beyond the consent obtained from its customers.

BA’s fine is GDPR’s way of pricing this type of risk. It is a call to consider the risk to the individual who is actually the subject of the data.

Managing “data subject” risk is different to managing other risks an organisation might face. If a risk impacts your organisation you might choose to accept the risk, or perhaps cultural deficiencies might mean the risk is never even raised. There is also a personal risk involved – if the risk event occurs somebody in the executive team will likely be held to account.

But when data subject risks are discussed you have to remember that the data subject – your customer – isn’t in the room. Somebody has to speak for them with a voice that is strong enough to get your organisation to act differently.

We missed something in the spectacle of the Royal Commission. Sure, it’s fascinating to watch what we think of as rich and successful figures struggle. But these are real people doing a difficult job. What the RC also revealed is that managing large organisations is hard.

As commissioner Haynes himself did multiple times during the commission, we need to make an important distinction. On one hand there are all of those omissions, negligent behaviours, and people not knowing things they clearly should have known. The distinction between these things and a deliberate decision to commit a criminal or unlawful act – either as an individual or an organisation – is important.

Breaking the law is obviously wrong and at the very least different to situational incompetence. But it’s on the other side of that distinction that the interesting business of running a global bank – or any large organisation – occurs.

Think also about the line in between these distinctions – or rather the same distinction but for the actions of others. Things like detecting criminal activity, or ignoring it, or having an obligation to not create environments that might incentivise the criminal acts of others. This is genuinely difficult.

We might sometimes think it seems like executive roles just go to the people who want them most. We interpret this in all sorts of ways like ambition, and greed, and politics. But there is an institutional side to this dynamic too. It’s that our organisations are near impossible to manage.

You might be able to manage your place in an organisation. At any level of any organisation you know when this is happening: that’s not my job, we need to do that but we don’t have time or budget, not my problem. But when that process happens at an executive level it becomes: only let me know exceptions, only the top 3 exceptions, that will negatively impact financial performance, and that’s not what I’m focusing on this quarter.

You can scream “but it’s your job to be across everything!” all you want. The question is how?

The leaders in our major organisations typically get paid well. Some of us might question whether they deserve it – but those people tend to question it based solely on competence or based on their view of the institution as a whole. This is niave in at least two ways.

If you don’t understand the value of an effective free-market banking system you don’t really know your history and have likely never tried to build a small business without a loan.

Secondly, you’re naive to think the salary is only priced on competency. Maybe the risk of sitting in front of a royal commission was always built into the salary. At any rate, the management is there to free the owners from lots of difficult and time-consuming decision-making. Part of the purpose of the role is to act as a buffer against a problem we haven’t yet solved.

So the missing lesson is that we genuinely don’t know how to manage our large organisations. Particularly, if by manage we mean full, multi-dimensional management that takes into account all activity and all the economic, community, and moral impacts of the organisation.

I have some ideas about this – I’m sure we all do. As a hint – I don’t say “Information Management IS Management” for no reason. But the discussion we have to have is how we build real management systems that augment the people who are responsible for the management of our organisations.