The Case for Management Standards
The quest for success in business today begins in the repeatable, day-to-day disciplines of management and in something as prosaic as standards.
Standards are our defense against the complexities of life. Because of standards, we can pick up an extension cord, a light bulb, a can of motor oil or a music CD and just use it. Where there is no standard, life gets messy. Does each member of your family have a different cell phone with a different charger? And does each have a different digital camera requiring its own unique plug for the PC?
On the other hand, in the company you work for surely everything that can be standardized is - customer account numbers, paychecks, email systems, operating software, decision rights, budget procedures, metrics, recurring management processes. No? Ah, complexity.
Anything that can be standardized should be, for a simple reason: standards free your people from fussing over routine, repetitive matters and allow them to focus on the things that will differentiate you from your competitors. Imagine the time and energy you would waste if there were no standard for light bulbs or if every new piece of office equipment required a different voltage. How much time do you waste deciding how to make decisions that you know in advance you will have to make? How much opportunity do you lose because each division captures customer data in a different way?
If you examine your organization – everything it has and does – from the perspective of standardization, would you discover that you are trying to re-invent the wheel each time on too many non-strategic activities?
The paradox is that through routine and standardization we create an environment conducive to innovation. The process is similar to the progression from commodity to brand: settle on one way to do what is known and reliable, and devote your mental energy to what is new and not yet known, which is where the real action and payoff lie.
Standards have always been critical in business. They were necessary for the Industrial Revolution to happen. Leading U.S. machine tool makers, for example, sat down a century ago and agreed on a standard screw. The birth of a national economy in the United States required connections among isolated cities, and this required standard railroad track gauges and standard time keeping.
At the same time that these things were being standardized, and as work was moving to the large factory from the small shop, various industrialists and thinkers such as Henry Ford and Frederick Taylor were developing new ideas about standardizing work. Tools such as the Gantt chart came into being. Ford’s real innovation was not the car but how he organized people to work.
With the Digital Revolution, new standards were needed, the World Wide Web being a prime example. Much as trains did for the national economy, the Internet and the Web opened up and connected the global economy.
All the while, management standards continued to evolve, some formal, some simply accepted practice. For example, you can expect a new CFO in your company to follow generally accepted accounting standards. And an HR director will no doubt use a set of tools and practices for compensation and performance reviews common to most companies.
Management processes have been studied and refined for more than a century.
When we think of standards, we usually think of technology. As important as technology standards are, they are not where the real game is today. The action today is in standardizing the management of technology. That is because too often it is still ad hoc, the creation of a beleaguered technology executive, whose maneuverings in the end can’t keep up in a fast-moving, ever-changing environment.
The very fact that there are designated technology executives who feel set apart from the nerve center of the organization, always seeking “a seat at the table,” is a symptom of our innocence in dealing with technology. We focus on the technology itself, whether servers or ERP systems or email or social networking, see it as a cost of doing business, maybe as a necessary evil, peer over our shoulders at what other companies are buying, and hope, fingers crossed, that a $100 million investment will pay for itself.
We know that technology is there to run the business. This is true of information technology, but it was also true of steam and electricity. And those technologies fundamentally changed the nature of work, the processes by which things were made, opening up new business opportunities for those who deployed them wisely and showing the door to those who didn’t catch on that something had changed.
Here’s a dirty little secret: it never was about the technology. It always has been and will be about the business. Technology is only as good as the imagination of business leaders who are focused on customers, markets, business models, threats and opportunities, and can make technology do what they need it to do. Anyone can buy technology, but no one can go online and order a customized strategy or mission.
As with the telegraph, steam and electricity, the business technology available today is changing the game, except that the playing field is global and the players are huge, multi-product, multi-division, multinational organizations. These enterprises need tools to make sense of the technology, to rationalize investment decisions so that they are centered in strategy.
They need to know when spending money makes sense and when it doesn’t. They need to trust that when they pay huge sums for technology it will actually work as intended. Accountants have had hundreds of years to get their act together regarding standards, learning what works and what doesn’t. But the first business use of a computer occurred just over 50 years ago, a relatively short time in which to learn how best to employ it.
Nevertheless, standards for managing business technology have emerged in recent years in academia and applied in the field at major companies. These have become a wheel that does not need to be reinvented. They have been shown to work, and with custom modifications can be made to work anywhere. Thus they can be plugged in and used, and the organization can turn its attention to larger matters.
In the beginning, a half century ago, business technology was simply added on to the way we conducted business. Nothing really changed in most companies; they just were able to do what they had always done faster. Today technology changes the way we work, the goals we set, the very nature of the organization. It creates entirely new business models, industries and markets.
In many companies, however, business processes and the technology that runs them are unmanaged, invisible, and unmeasured. They are executed haphazardly and inconsistently. There is no standard for their purchase, development or management. They do not enable decision-makers to detect and adapt to changing market conditions, and this blindness can be fatal.
Chief among the many reasons for this is that processes cross both internal and external firm boundaries as part of business networks. They therefore become the province of no one. In most cases there are no single-point-of-responsibility process owners. Although there are some recent exceptions to this in best practice companies (for example, supply chain management), few firms currently have managers in place for their key processes.
Business Technology Management, a management science, was created as a direct response to this. It fills the gap between advances in technology and slower changes in the management of it. BTM has been applied in leading corporations and government agencies, and it is constantly being refined on the basis of these experiences and through the research of leading academics. Three critical insights have emerged from this work. Note that each of the companies illustrated below are focused intently on the business, bringing consideration of enabling technology in at the highest level.
1. For many – perhaps most -- companies, alignment is no longer good enough. Some companies are now aiming for synchronization, while others are pushing beyond that to convergence. “We are becoming a converged company,” says Steve Matheys, Executive Vice President of Sales and Marketing and former CIO of Schneider National, the big trucking company. “The CIO reports to the CEO and is part of the executive team with a shared set of responsibilities. That brings the process and technology needs to the executive team unfiltered. It creates business-oriented discussions with the opportunity to do something with technology to change our approach in the marketplace. Those are intertwined conversations within Schneider’s executive team.”
2. Converged organizations are able to adapt – i.e., to move rapidly in response to events – and to innovate. This is because the two “sides” of the organization are acting in unison with full knowledge of what resources they have available and what they need to do to act on an opportunity or a threat. They can see every decision in the context of the organization’s overall business strategy. Being merely aligned suggests a less than strategic role for those who understand how technology works.
3. Convergence occurs in the establishment of organizational structures, processes, information flows and automation that unite decision-making from the boardroom to the project team. These are detailed in the BTM Framework, which the Business Technology Management Institute has developed and promulgated as a management standard.
The Framework becomes the management structure upon which business and technology are converged and technology comes into its own as a strategic resource. By establishing repeatable processes for purchasing and deploying technology, the Framework frees the organization to make the best use of it in pursuit of business goals. The Framework becomes a management standard throughout the organization.
The standard aims to create a seamless management approach that begins with board and CEO-level issues and connects all the way through technology investment and implementation.
It should be obvious that implementing a management framework suggests a deep and comprehensive examination and restructuring of the enterprise, a seemingly monumental and impossible task. Each enterprise must start at a different place, and the right way to approach such implementation is iteratively. The enterprise must first determine where it is in order to focus on specific priorities, customize and implement specific capabilities against those priorities, and then execute and continuously improve upon them.
The enterprise must begin by recognizing where it stands with regard to its management maturity. Only by respecting what it is can it make real progress toward what is to be.
We cannot manage a 21st Century company with 20th Century approaches. The world moves too fast. Technology touches everything – products, processes, business models, and all industries. So how can it possibly separate from the overall management practices of a company? The answer is simple. It cannot.
Diana Mirakaj is senior vice president of corporate development at BTM Corporation (www.btmcorporation.com). BTM Corporation innovates new business models and enhances financial performance by converging business and technology with its unique products and intellectual property. © 2009 BTM Corporation | firstname.lastname@example.org