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One must-read article from KJR

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A headline on HBR’s home page reads, “10 Must-Read Articles from HBR.” The text begins, “If you read nothing else, read these 10 articles from HBR’s most influential authors, covering the essential management topics.”

What follows is this list:

  • Christensen on Disruptive Change: Meeting the Challenge of Disruptive Change.
  • Davenport on Analytics: Competing on Analytics.
  • Drucker on Self-Management: Managing Oneself.
  • Goleman on Emotional Intelligence: What Makes a Leader?
  • Kaplan and Norton on the Balanced Scorecard: Putting the Balanced Scorecard to Work.
  • Kanter on Innovation: Innovation: The Classic Traps.
  • Kotter on Change: Leading Change: Why Transformation Efforts Fail.
  • Levitt on Marketing: Marketing Myopia.
  • Porter on Strategy: What Is Strategy?
  • Prahalad and Hamel on Core Competence: The Core Competence of the Corporation.

At least they didn’t include Nicholas Carr’s embarrassing “IT Doesn’t Matter.

Imagine you’re on an executive search committee, helping select your company’s next CEO. You ask a candidate to list the ten most important factors in achieving sustainable business success. The candidate makes no mention of information technology, operational excellence, customer relationships, let alone a skilled, committed, and engaged workforce.

Do you (1) add the applicant to your list of finalists; (2) end the interview immediately so as to avoid wasting any more of your own precious time; or (3) find ways to encourage your strongest competitor to hire the yutz?

You’d think the Internet never happened. When the nation’s leading business journal has so little insight into the workings of successful enterprises that it fails to include any of these four issues in its top ten list, it’s time to ask whether the Harvard Business Review matters.

True story: Not that many years ago, we had a client … a very large client … whose information technology was a mess, and that’s being mean to the word mess. Its use of IT was extensive; its technical architecture was what you would expect if every project was handled as cheaply as possible so as to maximize the directly measured business return on investment. Coincidentally, many of its business processes were improvised kludges.

None of the company’s top executives were remotely concerned about either issue.

After quite a bit of digging we determined the root cause: The first layer of management in the company that had any responsibility for internal operations was separated from the CEO by two other layers. IT’s primary value is enabling efficient operations, so if nobody in a position of influence cares about efficient operations, the lack of interest in effective IT is unsurprising, if unwise.

My reason for bringing this up: Even before the economy fell apart we in IT were swimming in hazardous waters. The Internet’s newness had turned into business as usual. Technical know-nothings had convinced many top executives the Y2K problem was (1) a hoax, and (2) the result of incompetence rather than sound business judgment. (Notice the “logic”? “It wasn’t a problem, and the problem it wasn’t was caused by incompetence.”) Soothing voices provided reassurance that information technology really wasn’t all that important after all.

Then the economy collapsed, and there we were with our bare faces hanging out — a mostly fixed expense, because none of us had thought through a subtlety: The ability to scale is exactly equal to an inability to shed costs quickly. (If this isn’t clear: Systems that scale up well have high fixed and low variable costs. Costs that don’t rise much with increasing volume don’t drop much with decreasing volume.)

Add one more ingredient and our whole industry starts to look seriously vulnerable: When something goes wrong, most people, most of the time, look, not for root causes, but for someone to blame.

That’s how it was with Y2K: Never mind that in the 1970s and 1980s, when most of the systems that needed remediation were built, the cost of storing a four-digit year would have been so astronomical that no business executive would have approved the decision. Mere facts and logic rarely matter when there’s an opportunity for a blame-fest.

And that, very likely, is what we’re going to be in for in the near future, if we aren’t already in the middle of it.

We’ve built highly scalable, manageable, and recoverable systems. The consequence of scalability, manageability, and recoverability is significant investment in infrastructure. The consequence of infrastructure investment is an inability to quickly shed costs.

The only cure for blamestorming is prevention, which means it’s time for you to pay lots of attention to relationship management and effective persuasion.

Because you don’t have to be victimized by human nature and general trends. But if you don’t take positive steps to circumvent them, you will be.

Comments (1)

  • Bob,

    A brilliant insight, even in hindsight: scalability equals inability to shed costs. May I quote you? (That’s just a courtesy, of course: I WILL quote you, with attribution of course – it’s too good to keep to myself).

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