1. Organizational Intelligence Richard Veryard January 2011 How Can IT Fix the Problems of Stupid Organizations?

2. Abstract Twitter tag #orgintelligence Organizational intelligence is a critical measure of the management capacity of an organization in a demanding competitive environment. IT has a critical role in maintaining and improving organizational intelligence.

3. Structure Twitter tag #orgintelligence Situation: Characteristics of intelligent organizations Problem: How intelligent organizational succeed (and stupid ones fail) Implication: How IT contributes (possibly) to organizational intelligence and stupidity Need: Leadership role for IT in improving organizational intelligence

4. What is organizational intelligence? Ignore important signals from the environment Cannot discriminate between the important and the trivial Respond incoherently to crisis Oscillate wildly between extremes Fail to learn from mistakes Innovate slowly and painfully Detect and interpret weak signals of possible significance Mobilize coherent response to complex opportunity Rational approach to risk and uncertainty High-quality decision-making throughout the organization Collective learning and innovation 4 Stupid Organizations … Intelligent Organizations …

5. Org intelligence as whole-system property Very clever people, who don’t talk to each other Very sophisticated technology, poorly wired together Patterns of interference (2+2=3) Good people, who work well together Good technology, used well Patterns of collaboration (2+2=5) 5 Stupid organizations may contain Intelligent orgs may contain

6. Org intelligence as sociotechnical property How do we know what is going on? How do we understand what is going on? How do we act upon what is going on? How do we remember things? How do we communicate things? How do we learn from experience? All of these capabilities are both technical (dependent upon an array of devices) and social (dependent on other people).

7. Symptoms of stupidity 7 Choke Inability to access existing capability. Denial (Kettle Logic) “Problem, what problem ?” Guesswork Acting in the dark. Meddle Tinkering and management interference without understanding. Muddle Confused by overlapping and conflicting narratives. Panic Overtaken by events. Policy-based evidence Finding data to support or justify Ignoring any contrary data. Repetition / Oscillation Repeating same mistakes without learning. Going backwards and forwards between two problems without permanently solving either of them. Short-Sighted / Tunnel Vision Narrow focus on a single short-term goal Inability to consider broader or longer-term vision.

8. 8 Information Gathering Decision & Policy WIGO (what is going on) Learning& Development Knowledge& Memory Simple intelligence loop

9. Information Gathering Decision & Policy WIGO (what is going on) Learning& Development Knowledge& Memory Complex intelligence loop 9 Sense-Making Communication & Collaboration

10. Organizational intelligence requires six sociotechnical capabilities Information Gathering How well does the organization collect and process information about itself and its environment? Sense-Making How well does the organization interpret and understand itself and its environment? Decision-Making & Policy How effective are the (collective) processes of thinking, decisions, policy and action? Knowledge & Memory How does the organization retain experience in a useful and accessible form? Learning & Development How does the organization develop and improve its knowledge, capabilities and processes? Communication & Collaboration How do people and groups exchange information and knowledge? How do they share ideas and meanings? 10

11. 11 “Perhaps you have already seen memos from me or others here about the importance of the Internet. I have gone through several stages of increasing my view of its importance.” “Exponential improvements in communications networks … the Internet is at the forefront of this” “Now I assign the Internet the highest level of importance.” Microsoft Example Bill Gates “Tidal Wave” May 1995

12. Microsoft Example Review of history Weak signals becoming stronger Gradual shift of opinion Pivotal shift in direction Evolving strategies Collective responsibility Any large organization faces a huge number of challenges, both large and small. Success of organization depends on achieving a good enough response to a good number of these. Key Points General Implications

13. Some organizations don’t need much intelligence Too much intelligence may be “overkill” or “overhead” Organizations can survive by following simple predictable patterns Simple predictable patterns create vulnerability Intelligence is vital to survival 13 In simple stable environment … In complex dynamic environment …

14. How much intelligence do we need? Multi-Sided Markets Demand Volatility Globalization Falling rate of profit (?) “Fly-By-Wire” Business “Requisite Variety” Business Complexity Management Capability

15. Operational Differentiation Degrees of Differentiation Retail Example 15 Zero variation. No differentiation between customers. One size fits all. Fixed segmentation. The retailer identifies a number of (fixed ) market segments, and assigns each customer to the appropriate segment. Dynamic deconstruction . Differentiation based on the detailed actions and inferred intentions and context of customers. Customer Management Customer Purchase Segment Context

16. Progressive Differentiation Anonymous Customer Customer Identified at Checkout (Loyalty Card) Customer Behaviour Tracked Inside Store (RFID) ? Retail Example Your Industry 16

17. Capability Intelligence Focus on the most relevant differentiators. Sufficient range of responses to differentiators. Coordination between variety of perceived differentiation and variety of response. Feedback loops to improve relevance and accuracy of differentiation. Feedback loops to refine responses. Progressive elimination of unnecessary or irrelevant complication, along with exploration of new opportunities Success Factors of Effective Differentiation Customer Management 17 customer intelligence attenuation amplification customer operation

18. CapabilityCoordination intelligence coordination 18 customer intelligence product intelligence store intelligence staffing intelligence amplification amplification amplification amplification attenuation attenuation attenuation attenuation customer operation product operation store operation staffing operation operation coordination

19. Supplier Segment 19 Customer Segment Buying? Promotions? Customer Segment Store Layout? Integration Pathways

20. Differentiation and Integration 20 Integration Which route to improved intelligence? Which route to improved intelligence? Differentiation

21. IT = information AND technology Advanced technologies, tools and platforms for information processing and communication Effective use of information and communication across enterprise systems Not Only But Also

22. How does your organization discover what is (really) going on? Enterprise applications and corporate databases Dashboards and reports Management accounts Management by walking around (MBWA) Water cooler The Internet Formal systems Informal systems

23. From Water Cooler to Internet 23 Blogger Delicious Facebook Flickr Google Linked-In Twitter Yahoo How do such devices change the way we exchange information and ideas? Better, worse, or just different?

24. Tools for organizational intelligence The collective intelligence of an organization can be improved by appropriate technologies used in appropriate ways. Most large organizations use these technologies, but fail to join them together or use them effectively. Business intelligence, data mining and analytics Event processing Knowledge management / content management Process improvement & performance management Social networking

25. Some attempts to join the pieces … Business Intelligence Command and Control Knowledge Management Business Process Mgt Enterprise 2.0 shown in following slides There is a little industry associated with each loop, each offering some useful tools and practices. But none of these loops provide the complete picture. Loops Assessment

26. 26 Sense-Making Information Gathering Decision & Policy WIGO (what is going on) Knowledge& Memory Business Intelligence Loop

27. 27 Sense-Making Information Gathering Decision & Policy WIGO (what is going on) Communication & Collaboration Command and Control Loop

28. 28 Sense-Making Information Gathering Knowledge& Memory Learning& Development Communication & Collaboration Knowledge Management Loop

29. 29 Information Gathering Decision & Policy WIGO (what is going on) Learning& Development Knowledge& Memory Business Process Management

30. 30 Sense-Making Learning& Development Knowledge& Memory Communication & Collaboration Enterprise 2.0 Loop

31. Who is responsible for intelligence? Information Technology? Enterprise Architecture? Knowledge Management? Operations Research? Human Resources? Innovation? Strategy? 31

32. IT has a key role in improving organizational intelligence The value that IT can bring to business is not just from automating clerical tasks and enabling large-scale global operational processes… … but also from enabling and supporting management processes such as coordination and innovation. Not Only But Also

33. New Challenges for IT “These are the standard things we pay attention to in our business.” “Here are the systems and dashboards that focus management attention on these standard things.” Alert and aware. Always open to weak signals. Building flexible tools and platforms to support exploration and experimentation. FROM TO

34. New Challenges for IT We collect and control information as an asset. We give management the information they ask for. How they use this information is up to them. We understand how effective use of information contributes to business outcomes. We support the whole information  decision cycle. From abdication To engagement

35. New Challenges for IT - Example We provide people with the facility to send and receive email. Ambiguous and misdirected emails waste time and attention, and reduce management effectiveness. Better social protocols for email would benefit the organization. And for some purposes, there are better tools than email. Situation Opportunity

36. New Challenges for IT Providing systems and reports and dashboards and tools and platforms Helping the organization With all these tools To use information Intelligently To the benefit of the organization. Not only But also

37. New Role for IT? Chief Information Officer Chief Intelligence Officer from to

38. … and more One-Day Workshop February 9th (Unicom)20% discount for members of BISSG OrgIntelligence.BlogSpot.com Future Events Other Material and Links