Language of Metrics (Criteria of Soundness) (Part 1)

How do we evaluate the operational measures framework used by any organization?

Does the framework act like a lighthouse giving accurate direction to the ship or does it create a fog, throwing the organization off-the-track without even it being aware?

Does the framework represent the deep understanding of 'inherent simplicity' or it mirrors the superficial complexity of the organization?

Any organization is a combination of many parts which need to gel well in order to achieve the overall GOAL of the organization consistently over a period of time.

It requires tremendous effort to ensure alignment of various parts to bring about 'synergy' and to also ensure that the parts are not working at counter purpose to each other. We depend on elaborate business performance measurement to get the alignment of the units, sub-units, individual leaders and associates, whether it is Balanced Scorecard based or indigenously developed measurement system.

Eliyahu Goldratt has famously said:

"Tell me how you measure me, and I will tell you how I will behave. If you measure me in an illogical way...do not complain about my illogical behaviour"

End of the day any measurement system is to induce 'behaviour' as organizations are 'people' based systems.

The two main criteria for evaluating any measurement system are:

1. Does it induce the parts to do what is good for the system (organization) as a whole?

This is to ensure that leaders and associates do not focus on local optima but on global optima. A good measurement system should not create any conflict in people's minds while deciding their actions as to what leads to global good. Goldratt has railed against Cost Accounting based measures like efficiency and product costing proving that these create debilitating conflicts and many times resulting in decisions which lead to ruin of organizations. In his business novels, he gives umpteen examples where in the name of increasing labor efficiencies, machine utilization, reducing head-count etc people take decisions which go against ‘common-sense’ just keep up and look good as per the prevailing measurement system.

The global good also needs to be sharply defined rather than vague statements like 'We want to be the best'. Goldratt suggests that for commercial organizations with shares listed on stock exchanges, the Goal has to be "Making money now as well as in future." All the other issues like customer satisfaction, loyal employees, high quality products/services etc can be the critical success factors or necessary conditions for this high level GOAL of the organization.

2. Does it direct the managers to the point that needs their attention (sometimes very urgent, sometimes not so urgent)?

This relates to focus. In an environment of limited time, attention and resources, wasting these precious things on unimportant issues can again result in debilitating consequences.

Losing focus is one thing a manager/leader cannot afford. A measurement system with too many measures has the capacity to create confusion and result in loss of focus.

There is a general belief that 'Any action is better than no action. Perhaps the action you take will be successful; perhaps different action or adjustments will have to follow'.

In a scenario where a manager is presented with multitude of measures, there could be a tendency to 'ACT' to improve some of the measures which are easier to improve and which do not involve tougher decisions, more analysis, resolving apparent conflicts etc. This could lead to a false sense of accomplishment but the reality might be that a decision / action which is most important at that point of time is left unattended or just ignored. Such a scenario is ripe to spring nasty surprises as the unattended 'necessary action' deteriorates the whole system apparently invisibly and suddenly the break / crack in the system appears on the surface. In some cases it gives an impression which is very close to Nero playing fiddle while the Rome was burning.

A typical example is in project management where there are situations when 90% of the project is finished in a year (as scheduled / budgeted) but the remaining 10% takes another year. This points to the failure of the measurement system which proclaims 90% of the work is done. The project manager who is measured on the quantum of work irrespective of the fact whether the activity lies on the critical path or a feeder / non-critical path is tempted to focus on the non-critical path whenever there are conflicts, resource contentions on the critical path. The measurement system does not alert such foolhardy decisions in advance which results in the nasty surprise of budget and schedule overruns when nothing but activities on critical path as pending.

In the next post, we will examine how we can go about building such framework which will meet the above two basic criteria.

Technology support for building SIMPLE organisational tools

If the organisational leadership has the will, the technology available today can be molded into solutions that would help the frontline staff to act with agility in an environment of information overload and quick decision making requirements.

Simplicity is the new Competitive Advantage in a World of More, Better and Faster – Bill Jensen (Simplicity)

An important guiding principle for organizations and people – Whoever is faster at changing rules will win more often.

It is possible when organization empowers its people to do less of what doesn’t matter and more of what does or in other words Working Smarter in a World of Infinite Choices. This means we have to start changing two habits that create work complexity and confusion:

1. We need to use time differently by changing how we organize and share what we know – how we create meaning and make sense of things.

2. We need to work backwards from what people need to work smarter. Most everyone is a lot smarter than we are letting them be.

The technological solutions provided by Portals, Enterprise Content Management, Groupware, Business Process Management in conjunction with User Experience Management (UXM) practice promise to provide a platform for building SIMPLE, user friendly and empowering solutions.

The above combination of practices are the ones which can play very important role in helping organizations to become SIMPLE. Following is a high level elaboration of this assertion:

1. Faster at changing rules more often – Business Processes enabled with state of the art BPM (Business Process Management) and BRE (Business Rules Engine) tools can empower the users to define, visualise, simulate, monitor and control business processes without overdependence on detailed coding skills.

2. Do less of what doesn’t matter and more of what matters – Workplace and Portals personalized to the role of the person removing all the clutter of information and choices. BPM and EAI (Enterprise Application Integration) managing the complexities arising out of investment in different legacy applications

3. How we organize and share what we know – Taxonomy of the knowledge and content, collaboration tools

4. How we create meaning and sense of things – Enterprise Search, Information Access and Discovery tools which index and present the structured and unstructured information from across the information silos ON DEMAND.

5. Work backwards from what people need – Usability and User Experience Management (UXM) practices for designing the interfaces to ease off the presssure on the users

We have the ingredients for the solution but each organization will have unique challenges. Hence, how these components come together to meet the needs would have to be designed imaginatively and creatively.

More quotes on Simplicity

“Insecure managers create complexity. Frightened, nervous managers use thick, convoluted planning books and buy slides filled with everything they’ve known since childhood. Real leaders don’t need clutter. People must have the self-confidence to be clear, precise, to be sure that every person in their organization-highest to lowerst-understands what the business is trying to achieve. But it’s not easy. You can’t even believe how hard it is for people to be simple, how much they fear being simple. They worry that if they’re simple, people will think they’re simple-minded. In reality, of course, it’s just the reverse. Clear, tough-minded people are the most simple.”
- Jack Welch (HBR article sept-oct 1989, p.114, Interview with Jack Welch - Noel Tichy and Ram Charan).

“Cost and complexity is our No.1 problem. It’s a hundred times what it was ten years ago.” - Tony Scott, Technology officer for GM

“Almost all of the IT that we’ve done over the last 10 to 15 years is pretty neat, but it too expensive and too hard to use. We may have given all these enterprises Lamborghinis…” - Vinod Khosla, venture capitalist

“Insanity is doing the same thing over and over again and expecting different results…” - Albert Einstein

“Reducing Complexity is our next big opportunity to create value…as important as Lean and Six Sigma.” - Anne Mulcahy, CEO, Xerox

“The ability to simplify means to eliminate the unnecessary so that the necessary may speak.” - Hans Hofmann (1880-1966), Artist and Painter

“Nothing is more simple than greatness; indeed, to be simple is to be great…” - Ralph Waldo Emerson

"It's easy to have a complicated idea. It's very, very hard to have a simple idea.'' - Carver Mead

Globalization 3.0 and Work 2.0 (The New Contract)

Reading Thomas Freidman's World is Flat and Bill Jensen's work on Simplicity gives some interesting angles to what most of organisations in knowledge economy are not getting it right.

Friedman suggests the world is "flat" in the sense that globalization has leveled the competitive playing fields between industrial and emerging market countries. In his opinion, this flattening is a product of a convergence of personal computer with fiber-optic micro cable with the rise of work-flow software. He termed this period as Globalization 3.0, differentiating this period from the previous Globalization 1.0 (which countries and governments were the main protagonists in) and the Globalization 2.0 (which multinational companies led the way in driving global integration). “Globalization 3.0,” is where instead of countries and rulers, or multinational corporations being the forces driving globalization, it is empowered individuals that now “collaborate and compete globally.” They are able to do this thanks to the spread of new technology such as the personal computer. Globalization 3.0, argues Friedman, allows for a more level playing field so that individuals all across the world now have a chance to participate in important matters and to compete.

Jensen takes the concept of power of individuals inside the organisation. He mentions the shift happening in the nature of workforce and names the new generation as GenY. GenY is the first generation in human history that has been raised on the total democratization of information. This generation has not experienced lack of internet and any thing that comes in the way to free flow of connectivity with information, resources and other people - colleagues, friends, common interest groups etc.

The New Contract is a must read and follow for making the most of Globalization 3.0 within the confines of 'organisation' else attrition is something that will always remain a fact of life.

For the first time since we entered a knowledge and service economy, employees are proposing a work contract that any leader could love. The themes that run through this new contract:
Productivity. Innovation. Speed. Ease of execution. Making a difference. Satisfying customers. Learning. And lots more. Parts of this new covenant between employee and employer read like a leader’s fantasy come true. It’s all about completely new competitive opportunities, reduced costs, more profits, and more success for your organization.

But there is a catch:

Work 2.0 lays out four beacons for 21st-century leaders. These rules are hardwired into the nature of knowledge work. The key premise is that the people you most want to keep, care deeply about these rules. They are watching, but not waiting, to see what you will do.

1. Embrace the Asset Revolution
Employees are seeking daily/weekly/monthly returns on the assets they invest in your company — namely, their time, attention, ideas, passion, energy, and social networks. The new war for talent will be fought over who provides the best returns on these investments.

2. Build My Work My Way
Business must focus on personal, not just organizational, productivity. The future of work is customized, personalized, and tailored to each individual.

3. Deliver Peer-to-Peer Value
Your employees are setting new standards for collaboration without you. Leaders must do more than get out of the way of those exchanges; you must add increasingly greater value. That means bottom-up criteria will drive more and more of your collaboration budgets and strategies.


4. Develop Extreme Leaders
The future of leadership includes greater accountability for performance through greater willingness to be challenged on, and address, work-level details.

Now compare the realities of current organisation in terms of

- policies that bring up artificial barriers in the name of units, departments, processes, projects, geographies
- restriction on access to information, resources - approval processes that stop free flow of work
- complexity of soft infrastructure - multiple applications, multiple access controls, user interfaces designed with no clue of what individual user needs are.


My take is that organisations' top coping strategy to benefit from Globalization 3.0 would be to make all out effort to embrace Work 2.0 else be prepared to be in the queue with the dinosaurs.

Let me know what you think!

Have a nice day.

Three habits of a highly effective / clear headed thinker

Book Review - The Choice – Eliyahu Goldratt

The Choice to invest time, effort, intuition and emotions in overcoming obstacles to clear thinking and leading a full-life

This is the much awaited input from Dr. Goldratt. People who have read his business novels have enjoyed the clear thinking and the common sense ways in which the solutions are derived. But, when it comes to trying our hands at doing the same in our specific context, many of us have found it difficult to be successful to that scale. In this book, Dr. Goldratt teaches us in a very carefully written way how to find the errors we make and how to correct them. I read The Choice through quickly first time, and then read it again slowly, thoughtfully several times. The material talks much of distribution, but it is about living one’s life. To have a meaningful life is up to us; we make The Choice.

We know Goldratt has made proclamations that go against the grain of common-practice. This book helps us understand the basis for Goldratt’s assertions:

1. Instead of taking the route of saving pennies to make a million, he advises to find Archimedes point or the leverage point of the system where a small effort creates a disproportionately large results in a true WIN-WIN fashion.

2. He does not believe in law of diminishing returns, he says if we practice Process of ongoing improvement (POOGI), the system can be continuously improved and the improvement will follow an exponential path.

3. He claims that there are silver bullets whereas most of the management thought lead us to believe that there are no silver bullets.

The format of the book is unlike his business novels. There is no protagonist (Alex Rogo) stuck in a time crunch (most of the times, just a quarter) to save his plant, divisions or career. So if you are addicted to the thrill of living the life on the edge with the protagonist, you will not find it here. The book is made up of Goldratt’s conversations with his daughter, Efrat, his case reports and Efrat’s reflections. Goldratt explains through conversations with his daughter and reports on past TOC projects how we can all choose to live a challenging and meaningful life based on self expression and taking responsibility for our lives. He explains his belief of 'Inherent Simplicity' -- that all circumstances no matter how apparently complicated are subject to fast improvement. He explains clearly and directly how we must try to control our situations and problems by seeking the truth of what causes them rather than being at the mercy of them.

In order to simplify understanding the instructions, the content of the book can be summarized as Three habits of a highly effective / clear-headed thinker. These habits are:

Habit # 1 – Never Say “I Know”

Habit # 2 – Be conscious of following obstacles to clear headed thinking and beware of falling prey to the same
Obstacle # 1 “Reality is Complex”
Obstacle # 2 “Lets settle for an acceptable compromise”
Obstacle # 3 “People are not good”

Habit # 3 – Practice, practice, practice

Habit # 1 – Never Say “I Know”
The way Goldratt keeps on going on and on without becoming complacent with the early successes, it is clear that this is a basic qualifying criteria to continued clear thinking. He demonstrates that this attitude leads to an exciting and rewarding journey with no end, where each success is just a stepping stone. There is no end to deeper understanding.

I relate this to the modified Johari window that William Dettmer has presented in his book “Strategic Navigation”



It does not take too much of contemplation to arrive at the realization that what we know and we are aware of is extremely extremely minute compared to overall knowledge that might exist. We just have to compare an individual’s existence with the universal dimensions. An individual is one amongst about 6 billion humans living on earth. What is the mass / volume / lifespan of an individual compared to mass / volume / lifespan of the universe? It would be real dumb attitude to have even traces of arrogance of ‘knowing’. This is not to belittle our capability to hold the notion of infinite in our mind but I believe, the moment we get a feeling that we have reached the best solution, we become complacent and might miss even better possibilities. The impression of “we know” blocks us from using our intuition and brainpower. Goldratt has demonstrated through his case reports, how his constant quest for better and better solution does not lead to any disappointment.

There is always room for improvement – breakthrough improvement. Thinking there isn’t room for improvement is an obstacle in itself that needs to be removed.

Habit # 2 – Be conscious of the obstacles to clear headed thinking and beware of falling prey to the same

This is the core of the scientific, rational and logical approach that Goldratt has elaborated in the book. He quotes Newton – “Natura valde simplex est et sibi consona – nature is exceedingly simple and harmonious with itself”

The first obstacle that we face is our perception that “Reality is complex”. Goldratt claims that this perception stems from different ways in complexity is defined in social sciences and hard sciences. The social sciences take the level difficulty and number of data points required to ‘describe’ as a measure of complexity whereas hard sciences take ‘degrees of freedom’ or the points required to be touched (manage) to impact the whole system as a measure of complexity. He uses the diagram shown below to make the point.

Which system is more complex?

By the social sciences definition it appears B is more complex than A. But if we look at it from a systems perspective then A is more complex, because there is only one point in B that has to be touched in order to affect the whole system. Whereas for A, the number is four, meaning that it is a far more complex environment to control; and what if there are more than four?

Goldratt, being a physicist asserts any system, including human based systems are inherently simple. It takes an outlook of a scientist to look for common cause which is behind the multiple effects. So if we change the definition of complexity we will have a very different answer. Thus the first step in understanding, and thence using, inherent simplicity is uncovered – the use of Effect-Cause-Effect logic to determine the root cause of the organization, and focus our efforts there. The perception that the reality is complex leads us to look for complex solutions although we keep failing to find lasting solution in this approach.

Goldratt elaborates on “inherent simplicity”, namely the application of a thinking process that allows us to delve into the causal relationships within problems to determine those few (and there may be only one) key areas upon which to focus. It is the discovery of common causes that leads to the understanding of inherent simplicity. We need to have total faith in the existence of “inherent simplicity” keep working to understand the causal relationships that exist in our context till we have a clear understanding of the system that we are part of. A leap of faith through intuition and conviction that convergence WILL happen. There is a convergence as we dive deeper by constantly asking “Why”.

Ask Why?
1. Make an hypothesis of a ‘cause’ of a particular effect that you see in the reality
2. Predict another effect of this ‘cause’, which is observable and measurable.
3. Does the predicted effect exist in reality?
4. If not (or the reality is way different than the predicted effect), then iterate again 1- 3
5. Once you have a plausible ‘cause’ again iterate 1-4 for this entity as an effect.
6. Use categories of legitimate reservation to validate logic

Goldratt says that “good luck is preparation meets opportunity and bad luck is lack of preparation meets reality” and the best preparation is to have logical maps with causal linkages clearly understood. The current-reality tree is the thinking process tool that best serves the purpose for this effort. It would be possible to attain in our practice - “The more complicated the situation seems to be, the simpler the solution must be” - by averting collision with the first obstacle. This is applicable to every aspect of reality including people and whatever they create apart from the material world.

The second obstacle to clear thinking is our propensity to look and settle for compromises. This obstacle appears to be the result of the first obstacle. As we do not understand the inherent simplicity of the situation that we face, we take various conflicts and differences as unsolvable facts of life. With such fatalistic view, the option left to us is look for compromises. Since, we fill helpless with the fatalistic attitude we develop defensive mechanisms for camouflaging the chronic problems. The book cites how in the retail industry Stock-out situations and Outlet and end-of-season sales are talked in jest. We avoid solving larger and chronic problems and go for minor problems. Although our intuition might tell these compromises are short term fixes but we expend energy and emotions to try and make such sub-optimal solutions work.

Goldratt gives example of how the practices in hard sciences are different from the soft sciences. If two interpretations of a natural phenomenon are in conflict, the scientists do not go for a compromise but with a firm belief that, one or possibly both must be wrong, explore and develop even better understanding of the phenomenon. They explore the underlying assumptions that led to such a conflict. In Theory of Constraints there is a tool for dealing with conflicts – the ‘evaporating cloud’. This tool comes handy in our search for the underlying assumptions that hold the conflict in place and then remove the cause of the conflict by dissolving the assumptions - thereby eliminating the conflict altogether. When in an organization with a common goal, two parts are in conflict (or in a dilemma) this means that the reasoning that led to the conflict must contain at least one flawed assumption. The ideas that help us by pass this conflict / dilemma are true WIN-WIN solutions as the organization can proceed towards its goal as the constraint gets eliminated.

The third obstacle to clear thinking is our tendency to blame other people. This I believe, stems from the second obstacle. Any compromise is not a WIN-WIN solution. The party which has supposedly LOST more compared to the other feels aggrieved and develops antipathy. In a compromise, this applies to BOTH the parties. As human beings we always have our own win in mind; we are “programmed” for self-interest. Therefore, when we are involved in a conflict, in a situation that is handled as a win-lose situation, we will be more protective than generous. Goldratt takes us through the importance of harmony, of understanding and seeing the issues from the perspective of the other side and of examining the blame culture that dominates many relationships, both internally within organizations and between organizations. The key here is to recognize that for every relationship there is a change that will cause the parties to achieve what they need from the relationship and thus achieve a level of harmony previously thought unachievable. This is all about changing the mind set such that win-win relationships can be developed and encouraged to grow. The definition of win-win that Eli uses is interesting and novel: the win for my side is less than that for the other side!

Goldratt refers to the accepted wisdom that many improvement initiatives are stymied by resistance from people. He advises to be on guard when the cause contains an abstract entity, like conservatism, resistance to change etc. If we try to come up with a predicted effect with another effect that must be the result of the same cause. Then people should resist every change in different aspects of life. But the reality proves that people, in fact, look for to drastic changes in life like getting married, graduating, changing jobs etc.

Resistance to change is because people like to be in their “comfort zone”. Comfort zone is defined as an area where people feel that they have control or at least a sufficient amount of influence. An additional piece of comfort zone is where a person feels that he/she has sufficient knowledge of the cause and effect – what is going to be the likely outcome of an action and what is going to the likely response to a suggestion. So if you clearly explain the cause-effect, people may be more likely to respond positively to change. Also perform a test to validate the cause-effect that has been suggested.

Habit # 3 – Practice, practice, practice

The keys to thinking clearly are the belief in Inherent Simplicity and, not less important, the belief that people are not bad. A belief that leads to the practice that every hypothesis, before it is even entertained as a plausible hypothesis, should first pass the test of not being derogatory. This is a proagmatic approach which works without fail and leads to improving our chances of living a full life.

Goldratt says that logic doesn’t exist in vacuum. To perform any logical step we need to jump-start and constantly feed the logic with connections that are raised by our intuition. Our intuition stems from our emotions. For things we don’t care about, we have zero intuition. In short, our thinking stands on three-legged stool; emotion, intuition and logic.

We tend to concentrate on our areas of interest as our emotions and intuition are strongest in the areas that are most important to us. Now suppose that we use the intuition that we have in these areas to fuel logic to gain further understanding of other areas, our chances of success improve. The success leads to intensifying emotions in that area. Thinking clearly results in deeper emotions, resulting in stronger intuition, resulting in higher chances to apply logic successfully, increasing the chances to achieve good results, resulting in more meaningful outcomes, resulting in deeper emotions. This is like a helix that swirls upwards.

Each one of us has enough brainpower and intuition to reach a full life. No matter what the starting levels of brainpower and intuition, if we practice thinking clearly, the helix will intensify them to new heights. What we become is a matter of our CHOICE.

Goldratt calls this approach as that of a ‘practical visionary’.

We realize
1. People are good
2. Every conflict can be removed
3. Every situation, no matter how complex it initially looks, is exceedingly simple

4. Every situation can be substantially improved; Even sky is not the limit
5. There is always a win-win solution
6. Every person can reach a full life

Laws Of Simplicity

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Laws Of Simplicity

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Simplicity Principles - By Edward De Bono

• You need to put a high value on simplicity
  To get simplicity you have to want to get it. To want to get simplicity you have to put a high value on simplicity.
• You must be determined to seek simplicity
  People quite like simplicity if it does not cost anything but are usually unwilling to invest resources in making something more simple.
• You need to understand the matter very well
  If you do not seek to understand a situation or process, your efforts will be 'simplistic' rather than simple. Simplicity before understanding is worthless.
• You need to design alternatives
  It is not a matter of designing the 'one right way'. It is more a matter of designing alternatives and possibilities, and then selecting one of them.
• You need to challenge and discard existing elements
  Everything needs to justify its continued existence. If you wish to retain something for the sake of tradition let that be a conscious decision.
• You need to be prepared to start over again
  In the search for Simplicity, modify if you can - start afresh if you cannot.
• You need to use concepts
  Concepts are the human mind's way of simplifying the world around. Warning: If you do not use concepts, then you are working with detail.
• You may need to break things down into smaller units
  The organisation of a smaller unit is obviously simpler than the organisation of a large unit. The smaller units are themselves organised to serve the larger purpose.
• You need to be prepared to trade off other values for simplicity
  A system that seeks to be totally comprehensive may be very complex. You may need to trade off that comprehensiveness for simplicity.
• You need to know for whose sake the simplicity is being designed
  A shift of complexity may mean that a system is made easier for the customer but much more complicated for the operator.

Tips for Simplicity

Simplicity Tip Number 1 - Staff at the front line know ALL the answers ALL the time.

Simplicity Tip Number 2 - If managers have a job at all in 2009 it is to make it easy for front line staff to do their job with freedom.

Simplicity Tip Number 3 - Give all the money - YES ALL THE MONEY to front line staff

Quotes on simplicity

"Less isn't more; just enough is more." -Milton Glaser:

"Simplicity means the achievement of maximum effect with minimum means." - Koichi Kawana, architect of botanical gardens

"Things should be made as simple as possible, but not simpler." - Albert Einstein (1879-1955)

"You can always recognize truth by its beauty and simplicity." - Richard Feynman (1918-1988)

"Our lives are frittered away by detail; simplify, simplify." - Henry David Thoreau (1817-1862)

"Simplicity is the ultimate sophistication." - Leonardo da Vinci (1452-1519)

"If you can't describe it simply, you can't use it simply." - Anon

"Simplicity of character is the natural result of profound thought." - William Hazlitt

"Genius is the ability to reduce the complicated to the simple"C.W. Ceran

"Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that's creativity"- Charles Mingus

"The aspects of things that are most important to us are hidden because of their simplicity and familiarity"- Prof. Ludwig Wittgenstein