investiledysfunction

The July-August 2008 issue of the Harvard Business Review has an article entitled “Employee Motivation: A Powerful New Model” authored by Nitin Nohria, Boris Groysberg, and Linda-Eling Lee which talks about, as the title implies, motivating employees and the drivers behind motivation.  In it, the authors argue that there are four drives that underlie motivation and those are (directly quoted below):

1. The drive to acquire  - obtain scarce goods including intangibles such as social status
2. The drive to bond - form connections with individuals and groups
3. The drive to comprehend - satisfy our curiosity and master the world around us
4. The drive to defend - protect against external threats and promote justice

One of the organizational dimensions that drives motivation and specifically the drive to defend is what the authors detail as “fair, trustworthy and transparent processes for performance management and resource allocation”.  They cite some corporate examples but the overarching theme is that their should be transparency in the resource allocation process and that while pet projects may get killed, employees need to understand the rationale behind the decision.  Employees reporting that funding criteria and process are fair and transparent leads them to be motivated and to view the organization as a “just one.”

Corporate portfolio management which is a discipline to more rigorously manage and optimize resource allocation is often discussed in terms of the financial and strategic outcomes it enables.  The authors of the article hit upon an employee dimension which is often ignored or misunderstood in discussions of corporate portfolio management.  When we work with clients, we often talk about creating “an internal marketplace for project and investment funding” and in some instances, this idea of competing for funding scares organizations because they worry that this will demotivate employees who are the project/investment originators or who may be working on such projects.

In actuality, this marketplace concept is empowering.  Generally, resource allocation as it relates to project and investment selection is a game where people don’t know the rules.  And so people see projects/investment selections predicated on dubious, incomplete business cases or on the basis of relationships and decibel-driven (vs data driven) criteria.  Imagine for a second that you are playing a game where the rules were unknown or always changing.  It doesn’t sound like a very fun game does it?

When employees know the “rules of the game” around resource allocation, this makes the process and the organization stronger and is motivating for employees.  People come with their best ideas because they know those ideas are actually valued and have a shot at receiving funding.  By knowing the rules of the resource allocation process, they understand what is considered an investment, what is needed for an investment to be considered for funding and they also understand the methods by which their projects will be evaluated and funded.  Yes, there will be times when their projects don’t get the funding they desire but at least they can feel comfortable that the process underlying the selection was fair.

Corporate portfolio management (or it’s children in the form of IT portfolio management, project portfolio management) often fail to consider the organizational behavior that is required to make them happen.  More often than not, they also fail to consider the beneficial behavioral outcomes which they can enable foremost amongst them is more motivated employees.

The March 2008 Harvard Business Review had an article about Japan’s Shinsei Bank and their approach to IT which was so spot on, I thought it might be worth sharing Shinsei Bank’s philosophy with regards to IT.

Per the HBR article, Shinsei used a “path-based approach to build an enterprise IT system that would provide a low-cost, efficient platform for running its existing business but was flexible enough to support the company’s growth into new areas.”

Nothing particularly revolutionary there, right?  Sounds like a lot of typical mumbo-jumbo, and I’m sure those same or very similar words have been in PowerPoint presentations that many a CIO/CTO have created.

So the part that is actually great about Shinsei Bank’s approach are the details of how they achieve the aforementioned objectives.  Again, quoting from the HBR article.

“The approach addresses the three main challenges of an IT project: It is difficult and costly to map out all requirements before a project starts because people often cannot specify everything they’ll need beforehand.  Unanticipated needs almost always arise once a system is in use.  And persuading people to adopt and “own” the system after it is in operation is much easier said than done.

First of all, Shinsei’s realization of these as the three main challenges is very impressive.  We’ve seen far too many IT organizations put a massive questionnaire or mandate that a large requirements document be put forth before doing anything.  This is not only a waste of time, but gets you no where closer to what you ultimately want because nobody ever knows all the uses, scenarios, etc they need up front.  So don’t require everyone to detail out every requirement.  I realize this maybe called for on your project manager’s checklist, but this is ultimately not helping the project.   The last point about adoption and ownership of the system is very big as well.  Technology requirements should not dictate what solution gets selected (”There an approved vendor so we should go with them” or “We only use Oracle so you should find a solution that works with Oracle only.”  It should be IT helping to work with and guide the business to making a more informed judgement about what to select while leaving it them.  This helps create the ownership that Shinsei has created.

Let me liberally quote from the HBR article some more to close.

“The path-based principles that Shinsei applied in designing, building, and rolling out the system - forging together, not just aligning, business and IT strategies; employing the simplest possible technology; making the system truly modular; letting the system sell itself to users; and enabling users to influence future improvements - are a model for other companies.”

Ok, let me count the ways in which this is correct.  We always hear talk about alignment between the business and IT.  Besides a being completely overused and generally meaningless phrase, it really is more about creating a shared vision and moving together on that.  This way, IT cannot throw the business under the bus (”The requirements were not fully given”) and business cannot do the same (”The guys in IT move too slow and are just bureaucrats.”)

Going with the simplest technology is another novel concept.  Instead of opting for the fancy bells and whistles that technology providers often tout, go for something that gets the basics right.

And lastly, let users influence the future direction of the applications because ultimately they are the USERS of them.

It doesn’t sound all that revolutionary, but it seems Shinsei is onto something.

We talk about strategy a lot in the business world.  What is our strategy?  How do we become more strategic?  What are our competitors’ strategies?  When we don’t know how to justify doing a project, we say it’s strategic. 

But a Harvard Business Review piece in their April 2008 journal entitled “Can You Say What Your Strategy Is?” rightfully asserts what we probably already knew.  Many people can’t summarize their company’s strategy in 35 words or less.  And that even if someone can, their colleagues may not put it in the same way.

The article states, “It’s a dirty little secret: Most executives cannot articulat the objective, scope, and advantage of their business in a simple statement.  If they can’t, neither can anyone else.”

This is a big problem.  Most firms offer up nonsense like that given in the article of “maximizing shareholder wealth by exceeding customer expectations for _____ [insert product or service here] and providing opportunities for our employees to lead fulfilling lives while respecting the environment and the communities in which we operate.”

This is not a strategic objective.  I’m not sure what it is except a waste of space to be honest because I’m not sure as an employee or manager I know what I’m supposed to do with this or how this might inspire me in any small way. 

So the strategy as the authors rightfully assert is having an objective, scope and an advantage.  I’d encourage you to read the article as it has some interesting examples.  The area where I think organizations should spend even more time once they have a strategy is on the resource allocation that accompanies this strategy.  Ultimately, if your strategy says one thing but your allocation of resources doesn’t match with that, your strategy is again just words on paper.  Resource allocation drives strategy.  This is why corporate portfolio management of the resource allocation process is so vital to executing strategy and realizing financial objectives.