« August 2006 | Main | October 2006 »
September 23, 2006
Rockstars and Corporate Scandals
This morning I read an interview with a rockstar that was famous during the 1980s. In the interview he describes what fame meant to him. As of his childhood he dreamt of fame, and wondered how it would be. It turned out to be more beautiful than he had hoped, and more horrible than he had feared.
In the interview he particularly describes the drawbacks of being famous. You dont control your own life and your own destiny anymore. Other people determine who you are, and that makes you loose yourself. The way you perceive yourself starts to drift more and more in the direction of the image the world has of you. But the world puts you on a pedestal, thinks you are a hero. And you are not a hero, something you know deep down. Over time the gap between who you are and who you are supposed to be widens. You thought youd become independent, but you become dependent. You thought all the money would bring you freedom, but eventually being rich becomes a trap.
Let these words sink for a second...
Wouldnt this phenomenon be the most obvious reason for all the corporate scandals we have seen -- and the ones we will undoubtedly see? Many have commented that celebrity CEOs feel they are invincible, that everything they touch turns into gold. But isnt the opposite more likely? These CEOs know they are no hero, they know they dont control everything? That might be the reason why, in desperation, they turn to the one thing left they can control, what they can turn into gold all the time: the numbers.
The problem with fiddling with the numbers is that it widens the gap between reality and how the organization perceives it. It then creates an even higher expectation from the outside world, and that gap widens too. And at one moment you fall into that gap. Unavoidable. It happens within companies, trying to live up to the expectations of our boss. It happens with complete companies needing to live up to the expectations of Wall Street.
How can we prevent this from happening? I think we need to redefine one of the most important success factors in business: alignment. This is often defined as the extent to which we all focus on the same goals. But that exactly is the reason for the phenomenon to kick in!
In my mind, alignment is the extent to which an organizations self, self-perception and external perception closely match. How honest the management thinks about its own performance, and manages the outside world accordingly. Business Performance Management (BPM) can help. Today it is often used inside out, how to optimize our objectives. And where they dont meet the objectives of the outside world, we create strategies to conceal or explain the difference. BPM should also be seen as an outside in initiative. We should understand the different requirements our multiple stakeholders have, and be brutally honest in how we can fulfill as many as possible.
It might seem just a semantic difference, but thats not the same as maximizing shareholder value.
Share:
Posted by Frank Buytenkijk at 3:23 AM | Comments (0)
September 21, 2006
Defining Corporate Social Responsibility
A few days ago I wrote about Corporate Social Responsibility.
Many have coined definitions of CSR, of which we find two particularly workable. The International Standards Organization (ISO) defines CSR as a balanced approach for organizations to address economic, social and environmental issues in a way that aims to benefit people, community and society”. The European Union (EU) defines CSR as a concept whereby firms integrate social and environmental concerns in business operations and in the interaction with their stakeholders in a voluntary basis”. The ISO definition highlights the triangle of economic, social and environmental issues, but focuses on benefiting not the organization itself, but people, community and society. The EU explicitly mentions business operation, but fails to mention that CSR needs to be beneficial.
I think we hit the nail on the head if we combine both:
CSR is a balanced approach for organizations to integrate social and environmental concern in business operations, in a way that aims to benefit the organization and its internal and external stakeholders.”
I failed to take sides in the overview of schools of thought. I fully subscribe to Porters point of view. CSR should be part of the business model, to help figure out how to add value in doing business, instead of extracting value, making the social dimension part of decision management processes. Do you want to know how that works? Contact my colleague Erik Thomsen or myself...
Share:
Posted by Frank Buytenkijk at 9:08 AM | Comments (0)
September 12, 2006
Google Style Access to Hyperion
We announced support for Googles OneBox, providing Google style access to not only BI, but also the business performance management (BPM) applications. The easy bit of the initiative is the Google interface itself. Its whats under the hood that counts. Just Search style access to reports and plans and other BI/BPM components doesnt bring much.
Imagine you are search for Revenue for Product Group X. This will most likely create a long list of results, with many indistinguishable definitions of revenue and many different hierarchies that potentially make up Product Group X.
Traditionally the BI world has responded with trying to come to a single definition, but as I reason in The Myth of the One Version of the Truth most of these exercises are misguided. There is a reason why there are so many versions of the truth. The more a term is connected with the core of the business, the more definitions of it will be around. What we need to do is make sure the relevant versions of the truth are connected through a single context of the truth, an understanding in which part of the value chain, which definition is needed. Flat text search in reports and metadata wont do much good. Management information that needs to provide insight is very high on context.
An engine is needed that understands this context, or at least guides the user through the various possibilities. Just listing a number of reports will only confuse people. And then another thing. What happens if Total Revenue (or any other search term) doesnt give back any direct results in existing reports, as it is only implied as the last number under the line? That would be a poor user experience. Search needs to be able to understand business rules as well, and in the case there are no relevant reports, directly bring up an ad hoc query that has all the known elements filled in already.
There is more to Search style access to BI than keyword search. Google and Hyperion understand that very well. Both companies have worked on making sure the user doesnt necessarily gets what he asked for, but what the user was looking for. Semantics? Perhaps. But a world of difference.
Share:
Posted by Frank Buytenkijk at 5:23 PM | Comments (0)
September 11, 2006
Corporate Social Responsibility
I have been doing interesting research to understand the impact of the multiple stakeholder approach on performance management. The topic of corporate social responsibility is prominent in this discussion. CSR is a highly debated subject, and generally not very well understood.
The worlds most influential thinkers do disagree on how to position CSR. Milton Friedmans opinion is that the social responsibility of corporations is to maximize profits. Managers are legal agents of stockholders, their sole duty is to maximize the financial return to them. CSR is essentially stealing from the stockholders. Kaplan and Norton state the same: private-sector organizations can use a homogeneous financial perspective, increase shareholder value.
Peter Drucker offers a slightly more nuanced view. He starts by saying that an organization is not entitled to put itself in the place of government, or to use its economic power to impose its values on the community. But he introduces one exception, when contributing to a social problem creates an opportunity for performance and results. This is when the management has or should have the competence and authority. Michael Porter comes to the same conclusion. Corporate success depend on the local environment, an appropriate infrastructure, the right education for employees, co-operation with suppliers, local legislation, etc. He adds todays companies ought to invest in corporate social responsibility as part of their business strategy to become more competitive”.
Lastly, there are the proponents of corporate social responsibility, as a goal by itself. John Elkington is famous for the concept of the Triple Bottom Line”: People, Planet, Profit. In contrast to Friedman, Drucker and partly Porter, Elkington starts with the premise of the social responsibility corporations have, as being part of society. And as every stakeholder in society has responsibilities for the society, so do corporations. This school of thought defines CSR as a necessity, where profitability but also social justice and ecological balance are equally crucial for survival. Organizations cannot be managed on financial results alone, as employees and customers are citizens as well. Perhaps the most influential organization representing the Triple Bottom Line school of thought is GRI (Global Reporting Initiative; part of the United Nations Environmental Programme), that has developed an elaborate framework for sustainability reporting for organizations to download and implement within their own organizations.
Whatever school of thought you represent, there is certainly a role for the social dimension of performance management, even if it is only avoiding the risk of being accused of violating labor laws or polluting the environment. We know that measurement drives behaviour. What gets measured gets done.
A clear call to action to study the templates you can download from GRIs website, www.globalreporting.org, even if your name is Friedman.
Share:
Posted by Frank Buytenkijk at 1:18 AM | Comments (0)
September 8, 2006
OLAP - Hotter Than Ever
Time flies. Its already more than 10 years ago that the term OLAP was coined. It was Arbor Software, now part of Hyperion, that was instrumental in the research of Dr. Codd. The idea of multidimensional databases is even older. Actually, its older than the relational database.
Today, OLAP has a crucial role in the governance discussions organization have when they need to weigh flexibility against control. Business users work in an agile world. Todays insight is tomorrows old news. Organizational structures become more fluid, making the company orgchart look like a dancing Octopus. Mass customization trends make there is no standard set of products anymore that organizations sell. Customers buy their own combination. And customers are less easy to define, they shop direct and also buy as part of purchasing collectives, or go for your second-hand market. Business hierarchies change on a daily basis.
Ad hoc querying seems such a beautiful solution. They offer the flexibility of making every single combination possible. But is it the right combination? Different people each creating a query to get to the same data, most likely get different answers. And who is right and who is wrong? Well never know, as the next query, again slightly different, is on its way already. This way of working, offering the ultimate flexibility, in the end does more harm than using spreadsheets. Spreadsheets we know are not reliable as a data source, all we did with ad hoc query tools is institutionalize bad results. Management theory argues for collaborative teams, yet this very collaboration grinds to a halt when the collaborators arrive at their own different answers to the same issue, while using the exact same data.
Theres nothing wrong with ad hoc query technology itself, it just asks for solid control. The control of standard, static reports, with data that has been checked, double checked and checked again. The problem is that static reports may service the needs for IT governance, creating high quality data, but it doesnt serve the need for flexibility of the business.
Competitive forces and the need for control seems to be at odds with each other. What we need in todays business world is an environment where you have freedom to roam around, knowing that whatever you do, the data is always right. End user empowerment is a beautiful thing, as long as everyone is using the same set of lenses to view the data and has a set of guardrails that prevent them from straying off the path. And thats where OLAP comes in. OLAP allows you to freely move through large sets of data, allowing you to compare data, as well as drill down into lower levels of detail. The predefined model ensures that whatever you do with the system, the outcome is guaranteed and certified correct. Now try that with a spreadsheet or a query tool. The users have the flexibility, the IT department can ensure quality. OLAP is since many years a solid, trusted technology. And hotter than ever.
Share:
Posted by Frank Buytenkijk at 12:52 PM | Comments (0)
