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Reducing Complexity thru The Architecture Advantage
One of the principles of Excellence by Design is called “The Architecture Advantage”. It promotes the idea that just as excellence is rooted in great design, great design is rooted in great architecture. This truth is apparent all around us, as we encounter the products and services of life. Those that seem to work well are usually well architected (if one cares to look deep). It is also true that most that work poorly are in some part, based on poor architecture (although there are a vast number of other reasons they may perform poorly).
Another perspective on this truth on the value and advantage of architecture comes from an unlikely source. The book ‘The Invisible Edge’ focuses on the value of intellectual property as a strategic tool. My experience has been that too often IP is seen simply as a ownership issue, and more is better. The book does good job explaining what makes good IP. The chapter labeled ‘Simplify’ provides the Architectural perspective. It provides 40 pages of very insightful reading.
It starts by describing the danger of business complexity: “Complexity can kill a business. It saps energy. It increases transaction costs. It erodes focus. It distracts attention. Complexity, though, is the inevitable outcome of the kind of economic interdependency that characterizes our modern economy….businesses need to make deliberate choices to reduce it.”
The book then answers the question (and in a way, demonstrates ‘Excellence by Design’) by stating how: “Design strategies lie at the heart of meaningful simplification.” What is really illuminating is that the book respects the importance of good design (and in their focus, IP strategies related to that design) in achieving simplification. In fact they state “simplification strategies are rarely easy to pull off; in fact, executing a successful simplification strategy can be the hardest challenge of all.”
This advice is true for all aspects of a business including product complexity, process complexity, marketing complexity, human resources management complexity, supply chain complexity, etc. Again the authors are right on when they state “Important design choices can be made at every level of aggregation, from the smallest detail of a product’s architecture, to the design of the manufacturing floor, all the way to the design of the organization, and even to the design of the entire network of relationships in the business ecosystem”.
What makes this point so valuable and related to the ExD principle of ‘The Architecture Advantage” is the fact that the book pays homage to the role and importance of architecture as the key to good design and valuable IP that drives simplification and reduces complexity.
Easily said but as a colleague of mine is fond of saying; architecting and designing well is not a job for amateurs. The book goes to provide an excellent discussion of what architecture is and what characteristics are found in ‘good architecture’. Is covers several examples and discusses the tension between having architectural features that are more ‘closed/controlling’ versus ‘open/collaborative’.
A most eloquent quote in this chapter sums it up brilliantly. “Some of the most powerful and sophisticated strategies in modern business involve alignment of IP and design strategies behind a new architecture that breaks the compromise between complete control and overly complex collaboration…strategies like this simplify by rejecting complexity instead of redesigning it.”
Clearly there is an Architecture Advantage to Excellence by Design.
Designing a ‘Network’ business
Thomas Friedman is a NYTimes columnist and author of several books including The World is Flat, and Hot, Flat, and Crowded. He has recently written about China for the NYTimes and in his most recent article describes the difference between ‘Command China’ (represented predominantly by the Communist Party and the State) and ‘Networked China’ (represented by the growing entrepreneurial businesses of China and it’s people.
Mr. Friedman is not making a political point but an evolutionary one and it is worth listening to. He references a new research paper by John Hagel, entitled “Shift Index”. Interestingly, though the paper uses a lot of big consult speak, it very much hits the same themes I highlight as drivers for one core belief in Excellence by Design that “The world has shifted to be essentially uncontrollable and unpredictable…due to the convergence of many factors but the largest are Technology advancement, the rise of Consumerization, and Globalization and its elimination of barriers to entry. As a result, the capability of change to occur has dramatically accelerated: innovation is quicker to arise, faster to market, and more easily adopted by wider audiences”.
Back to Mr. Friedman’s article. He reiterates the implication of this (as Hagel points out) in saying “We are shifting from a world where the key source of strategic advantage was in protecting and extracting value from a given set of knowledge stocks — the sum total of what we know at any point in time, which is now depreciating at an accelerating pace — into a world in which the focus of value creation is effective participation in knowledge flows, which are constantly being renewed.
It’s worth rereading the above and then asking yourself (or your business) an essential question. Are you and your business striving for ‘Command’ Excellence or ‘Network’ Excellence? If you design at all, are you designing with the intention of becoming excellent in this more fluid, dynamic mode of business? Are you managing the business to capitalize on knowledge you have…or the knowledge you need to have? It really can have a huge difference. In the former, you believe you are more knowledgable, powerful, controlling than others, and seek to maintain/maximize dominance of these stock of information/capability. In the latter, you are constantly seeking the new information, new connections, relationships, opportunities. The former can lead to arrogance and resistance to change, the latter to a more inquisitive and faster moving sense. Which is your business?
Think about this as you consider designing your products and services, and the systems and processes that support them, and also the competencies and information sharing means of your people and partners. Sounds like a tall order but one that can be more systematically approached by using some the the principles of Excellence by Design. In a future post I’ll spend more time elaborating on how to go about that.
In any case it is worth a discussion with your staff and peers about the ‘Shift’, moving from a ‘Command’ to a ‘Network’ mode, and the resulting implications on the business, its operations, and especially the people, partners, and customers that bring it to life.
A conversation on the new role of Designer
I recently had a conversation with Marv Adams, a colleague I have known for some years. It was very insightful.
Mike: Before we start right in Marv, perhaps you could share a bit of your career background so our readers can understand the context of your perspective to the conversation we will be having.
Marv: My degree was in Electrical Engineering and I came out of school just as the PC market was taking off. After working in various dimensions of computer & OS design, I did systems engineering work, project management, IT management in various functions and then CIO. I’ve been a CIO in financial services and manufacturing.
Mike: Thanks Marv. As you know I have been working on the subject of business excellence by design, with a focus on how to better design business and its products and services to cope with the increasing degree of change, unpredictability, and competition of today. What thoughts would you have to start off?
Marv: The role, competence and collaborative nature of a designer in today’s highly interconnected world is more important than ever. Excellence in design starts with the designer having a deep appreciation of the context for their product. Depending on the type of product, the designer must design for variation in user capabilities, variation in the physical environment the product will operate in, variation in the integration requirements for the product (i.e. is it likely to be a component in other emergent systems), variation in the amount of change required to the product over its life time (i.e. a fork will experience no change requirements and an OS will experience many changes), etc. The designer must also think about how the product is disposed of at end of life for environmental reasons.
Mike: Seems that the respect of the role of designers exists in some industries (fashion? art? maybe industrial design like Herman Miller). How well do you think this role is well understood, respected, well staffed, and empowered/enabled in most Business and/or IT organizations? Is this an opportunity that needs focus for senior management? A critical success factor?
Marv: GREAT POINT! It is not understood well at all, and that is a growing problem & opportunity in my opinion. More than ever, questions of design are highly interconnected with questions of business strategy. Business strategy is nothing more than designing what markets, what customers, what products and what business models can be most successful. Michael Porter, in his work on business strategy, talks about the importance of having clarity in your business: are you trying to serve few needs of many customers; broad needs of few customers, broad needs of many customers in a niche / narrow market? To effectively design products & services, a designer must have influence on business strategy. A designer or design group must have influence on how the business delivers on its promise as well. Think about Apple, and the role Steve Jobs plays. He is involved in the design of the business system in addition to the product. This involves what competencies are required in their support staff, stores, etc. It involves what is done inside the firm versus sourced. Business leadership must be stronger designers in today’s world AND must pay for / respect product & service designers more than ever!
Mike: You mention Steve Jobs, which raises the example of Apple’s product and services evolution through the iPod, iTunes and iPhone. Compared to what manufacturers of basic audio players and cell phones did, Apple seems to have a far more holistic design in many ways. Certainly interconnected, agile to new uses (iPhone Apps!). While the industry seems to be waking up now…is this a good example of how design (holistic, integrative, business strategy design) gave Apple a huge advantage over the competition?
Marv: Yes, I love this example because it illustrates so many important aspects of great design. One aspect is innovation. Innovation in nature occurs when there are re-combinations or unexpected mutations. In today’s world, where so much is densely interconnected, innovation is largely defined by recombining things that already exist into whole new value propositions. Apple did this in the way they revolutionized music distribution and did it again in how they revolutionized the basic cell phone and made it a compute platform. I believe that Apple operated from a design vision that is rooted in a deep understanding of interconnectedness. When you operate from this perspective, you can have basic success if your product is a successful component, and wild success if you trigger an emergent market. Apple has done both, but the wild success I suspect has come from things that emerged, that they didn’t fully expect. Having said that, they made products which were highly adaptive and able to change with the ideas of the many users who fell in love with their products.
Mike: A last question and back to role of designer. What about staffing such a role? Seems like the role of designer as you describe it is, unfortunately, rare to find, and still an art. While there are plenty of people (in general business or in IT) who do something in the area of requirements or analysis, it is not a competency that is very mature, or has strong educational opportunities (like say, marketing, or finance, or becoming a certified project manager). We have mentioned understanding and influencing business strategy, designing for variation, having a holistic, integrative view of the products and services, designing an ecosystem, having products that enable emergent and unexpected uses, and being mature and skilled enough to wield a significant influence in the Business. Seems like this role would be best served by top talent, until it evolves to something easily practiced. What action might you recommend as a Senior Executive in terms of staffing such a role? Use many people? Few? Use Consultants? Do in-House? High level manager or more of a propeller head (sorry!)? Create a small team to focus on this and grow the competency?
Marv: The billion dollar question!! I’m going to give some thoughts, but I will openly acknowledge that I am personally grappling with this, so my answers are definitely a ‘work-in-process’. There is a new, technical book, entitled “The Master & His Emissary” by Iain McGilchrist. It goes into depth on the role of the left and right hemisphere’s of our brains and makes an observation that the western world has become dangerously imbalanced towards the left. The strengths of both sides are important, but the right side’s strengths are under represented in most institutions. Left side bias looks something like this: mechanistic, sales process / quarterly focus, finance / controllers measuring costs of irrelevant items WAY out of context of anything, IT people placing technology in the way of relationships (think VRU’s), etc. It looks bureaucratic often / short term thinking / solve the next issue but ignore the systemic perspective. To solve this problem requires a deep and healthy appreciation for the strength of the right hemisphere: thinking holistically, seeing systems, visualizing the time dimension, appreciating a multitude of capabilities and perspectives that are essential in today’s interconnected world. Getting more right bias into key positions is critical, and they come from all educational backgrounds. This is going to be really hard! However, institutions who don’t see this will fail in a world that is producing change at a staggering pace. Only those institutions that understand the concepts of complex systems, how to design their firms, products and people to adapt will stand the test of time. The others will be flashes in the pan and then be gone! Again, this spells opportunity!
Mike: Great perspective. Seems that most of todays organizations don’t reward these skills. That is a tough issue not only for the organizations but for those who may aspire to be designers….will the rewards occur, or go to those more left brained, so to speak? Any final thoughts before we close?
Marv: Most of today’s organizations don’t have meaningful, effective or inspiring goals & metrics that matter. They are stuffed with left brain generated metrics. How often have we been in operations, financial or sales reviews where people’s heads are buried in 1 inch binders filled with red/yellow/green colored metrics. One of the realities of the world is that evolution doesn’t think, it simply selects winners from losers. Those who don’t get this right will lose in ‘natural selection’. Our economy has seen extreme examples of this process in action as times have gotten tough. We have also seen new players emerge, who have capitalized on change! Good conversation, thanks for including me!
Mike: This has been a great discussion on the critical role of business Excellence by Design(ers)!. Much appreciated and frankly a lot to think about for our readers, as they consider the role, its potential impact, and actions to build, empower, and reward competency in. You have given us some great things to think about. Thanks again.
Design of Business
Recently I was fortunate enough to talk with a colleague at Doblin Group, an innovation consultancy I respect and a firm that seems to well grasp the nature of designing business to enable sustainable innovation.
Our conversation wandered into the the subject of design for business. We ended up discussing Roger Martin, who is the Dean of the Rotman School of Management and author of several excellent books on design in business including Opposable Mind and the Design of Business.
Roger has made a real study of helping business enhance their strategy by better design. One of his beliefs (that I definitely concur with) is that there is tension between the desires of business to create and operate in predictable, reliable ways, and the need to add value in more unpredictable ways. He calls this the tension between Reliability and Validity. An excellent video of Roger explaining this further is available here. It’s worth the 30 minutes to anyone interested in better understanding the future of business, whether you are a by-the-numbers business person or a creative, innovative designer (The first 15 minutes especially so, if you have ADD).
Roger is absolutely right on as he describes that the nature of Reliability tends to drive narrower focus and emphasis on fewer metrics…after all it is easier to be reliable if there are limits to it. There is certainly a place for this. It is used all the time. It is quantitative, measurable. It’s like having a test with scores. It does the job reliably. IQ measures something. But how much value do these reliable things provide?
On the other hand is Validity (as Roger calls it). It is based more on future, on more variables, and is more uncertain. Indeed, the challenge is that too much emphasis is placed on this at the expense of providing more dynamic and valued capabilities for business.
Roger says: Business people live in a world that rewards Reliability, while designers tend to live in the world of Validity. Business people like items that are predictable, measurable, and thus achievable. Designers tend to live in the future of new ideas, potential, and unpredictability. While I am not sure the words Reliability and Validity capture the essence of the message for me, the message is right on.
Certainly a business must respect the need for and practice of Reliability. Techniques and competencies for this are well known (project management methodologies, six sigma methods, software development techniques, Statistical process control, and many, many others).
In the video Roger positions Designers, in search of Validity, as taking on tough problems, seeking new innovations, and inventing. Business people faced with ever more complex environments prefer algorithmic means to reliably achieve that which was planned. So Roger then challenges Designers to ‘design a way of working with business people who are most interested in Relaibility’.
Roger then asks for methods (language, analogies, etc.) to help this dialogue. A good suggestion…and frankly something that he does not answer but…is the intent of Excellence by Design! I consider Excellence by Design to support both Reliability and Validity and provide some principles to enable the productive blending and dialogue between them.
Roger suggests simply getting people together (those who are focused on Reliability and those focused on Validity) and dialogue on some small topic/problem/challenge. I again agree. I believe the Excellence by Design model can be used to facilitate this. Use any principle as a means to focus the discussion and investigate the tension between the Predictability and Validity points of view.
Feel free to call me if you need help. 😉
Ford Sustainability
The well known management consulting organization McKinsey posted an interview with Bill Ford Jr on his dedication to Sustainability and the efforts at Ford Motor Company. Having spent six years at Ford (2002-2008) in a senior management role and passionate about sustainable business myself, I was interested to see what Bill said.
I had three reactions:
1. Mr. Ford is a rational and well meaning man and indeed had a passion for sustainability throughout his life. He has voiced this during times when it was very unpopular, as he indicates in the interview. He can be legitimately congratulated for his position and interest.
2. However, Mr. Ford was not very successful in achieving excellence in sustainability during his career at Ford. Under his leadership the Company nearly went out of business and would have if Bill had not been convinced to bring in a new leader. He was lucky (or wise?) enough to get a great one, in Alan Mulally. He does an accurate job describing Alan in the interview:
Bill Ford: Alan has done a fantastic job. His leadership style is the best I’ve ever seen. He’s taken a global, previously not-well-integrated company and turned it into one that runs off a universal set of metrics. It’s now a company where people aren’t penalized for raising an issue; in fact, far from it. He asks people to raise issues, and then he asks how we can help, how we can help this person solve that problem. And then the problem is reviewed every week, so it’s not going to fall off the table; there’s no place to hide. But there’s also no shame in saying you’ve got an issue. That was something Alan ran across when he got here—no one wanted to raise an issue. It’s been great for the rest of the management team to learn from him, as well. He’s rallied the organization to the common plan.
3. This points out the principle of Excellence by Design. Bill Ford wanted sustainability, but he never made the changes, or designed the Ford Motor Company, to achieve it. I am not criticizing Bill, just reflecting that he was unable to drive the true changes needed. Once Alan Mulally arrived (a time during which I was employed at Ford and able to observe the effects from a senior management point of view) he changed how Ford operated. Consistency of management reviews, focus on real data, willingness to raise issues and collaboratively address them, and perhaps most of all, work as One Ford. He essentially redesigned Ford for the new reality. His leadership led to full globalization of Ford engineering, significant reduction in platform complexity, adherence to manufacturing quality processes and best practices, commitment to be profitable in small cars, and more.
In Summary:
Bill Ford Jr. should get the credit for being a visionary in desiring to build a sustainable business. Alan Mulally should get credit for being the CEO who drove the revitalized and redesigned management methods to achieve it. There are some particular executives who were most instrumental in driving the changes to fruition, especially Derrick Kuzak. And the Ford employees made it a reality.
Ford is not out of the woods yet, but it is a good example of how today’s world needs more than good intentions or better project management. It starts from the top down, to achieve Excellence by Design.
Excellence by Design 