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|In: Industry Commentary|Last Updated:

Nitpicking is fun, but pragmatism pays the bills.

Last week’s column, which deconstructed the notion that CIOs should run IT as a business, was fun, but it might have been more self-indulgent than useful.

The column, if you missed it, listed eleven definitions of “business” and demonstrated that none of them makes sense as a basis for running an IT department. But running IT like a business doesn’t require you to define it as one, Louis Sullivan’s dictum that “form follows function” notwithstanding.

After you’ve finished singing, dancing and playing the tuba, running IT like a business means negotiating “service level agreements” (SLAs) for what you do and instituting a system of charge-backs to the rest of the business to pay for it.

Negotiated SLAs are contracts between IT and the departments IT serves, and are just plain silly.

Contracts are how businesses manage relationships with their customers, so if you are to run IT as a business, this is what you must do.

Which brings up the question, what happens if you fail to live up to one of your negotiated SLAs? In business, this would result in financial penalties, withheld payments, binding arbitration, or lawsuits.

Just how stupid would a business look if Manufacturing took IT to court for failing to live up to an SLA? This isn’t an easy question to answer because “stupid” isn’t easily quantified, nor is there a unit of measure for it. If stupid was electricity and we measured it in volts, I’m pretty sure this would reach Taser levels.

Charge-backs, in contrast to SLAs, do have one thing going for them — they vastly simplify IT governance. If, for example, Marketing wants to re-plumb the company website with a content management system (CMS), you have no worries. Marketing signs up for the cost and charge-backs give you the budget you need. You hire staff, engage contractors or bring in a systems integrator and everybody is happy.

Not really. What really happens is that your staff based its CMS recommendation on what would integrate best with the rest of your technical architecture, scale without major reconfiguration, and allow granular administration to avoid opening interesting holes in your information security.

The Marketing Director, being a prudent steward of her departmental budget, obtains three competitive bids. All are lower than your estimate.

Of course they are. Because your staff failed to run IT like a business. They are running IT like a department, responsible for managing the company’s information assets. And so you lose the Marketing Department’s business to a competitor.

It isn’t the Marketing Director’s fault. IT isn’t alone in this nonsense. If IT is to be run as a business, so is every other shared service department in the enterprise, Marketing included. Marketing doesn’t want to lose the Dental Accessories business unit’s account to an outside agency, so it has to keep its costs as low as possible.

And the race to the bottom continues.

CEOs who organize the enterprise so its shared services departments act as independent businesses have forgotten a basic engineering principle … that optimizing the parts sub-optimizes the whole and vice versa (“Optimizing the organization, Keep the Joint Running, 10/27/2003).

Specifically, the company’s shared services organizations, when run as businesses, lose their authority to preserve the integrity of essential resources. In the case of IT it’s the information architecture. In the case of Marketing it’s the corporate image and the meaning of the brand. In the case of Human Resources it’s the policies that protect employees from bad managers while allowing managers to deal with non-performing employees without the risk of ending up in court.

And so on.

No question, the idea is seductive. CEOs, for understandable reasons, are likely to have a strong faith in the power of markets to regulate themselves efficiently without the need for outside controls or guidance. That being the case, turning the enterprise into a marketplace sure seems easier than the hard work of instituting the governance processes, difficult choices and consensus building that are otherwise required. As is so often the case, trying to avoid hard work doesn’t lead to brilliant results.

Marketplaces don’t require all of this because they don’t have a purpose. They are simply spaces where entities that do have purpose interact in complex ways.

Companies have a purpose. Marketplaces don’t. Turning a company into a marketplace misses this essential difference.

In the end, running IT as a business … and the enterprise as a marketplace … is an attempt to avoid the need for governance processes, difficult choices and consensus building.

Another name for these activities is leadership. Done right it’s hard work.

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|In: Leadership|Last Updated:

Asked if the study of creation could provide any insights as to the nature of its Creator, the great biologist J. B. S. Haldane replied that clearly the Creator has ” … an inordinate fondness for beetles.”

Coleopterans account for about a quarter of all animal species on this earth. Mammals, in contrast, contribute about a quarter of a percent of all species. Don’t feel bad. By other measures I’m sure we human beings are more important.

Humans dominate all other species (except, perhaps, for some viruses and bacteria, along with ants, spiders and the aforementioned beetles) because of our ability to think: To make tools, to plan, to transfer skills and knowledge to our progeny.

That’s how humans dominate other species. Individual humans dominate other humans through their social skills. These two facts explain most of human history: We win through intelligence. I win through what Daniel Goleman calls “emotional intelligence.”

This is why most businesses fail to learn from their successes, as explained in detail in the last several editions of Keep the Joint Running: Learning from success is good for the company but not necessarily for those who run the company.

Emotional intelligence is a vital quality for effective leaders. The problem arises when they decide to value emotional intelligence more than tangible skills, knowledge and logical decision-making in the organizations they lead. It’s how organizations start down the sad path to what my business partner calls “mediocracy.”

It needn’t be so. As evidence I submit this tale from a regular KJR correspondent:

I recently finished a six month job rotation as manager of our Service Desk (formerly “Helpless Desk” according to our users).

The prior manager measured performance on a strict count of tickets handled, weighted by priority. Since we can’t reward by dollars (union shop), we use perks like window cubes, preferred schedules, and first choice on vacations as incentives.

The top performer for the 13 quarters prior to my arrival was an individual who I really didn’t see doing anything. The quarter ended and he was again the top man. I decided to find his secret to success in an effort to raise everyone else’s game. So I started analyzing his tickets.

His method was simple. Every single call he took was labeled Critical. If he took a ticket originally handled by someone else, he upgraded it. If he got repeat calls from the same user with the same problem, each was a new ticket. He closed out every ticket within two hours, regardless of whether the problem was handled or not. We measured volume, so he delivered volume.

However, when he trained someone new, he always preached completion, follow-up, and thorough documentation — in short, how the job really should be done. He gamed the metric both ways (boost my numbers, lower your numbers). And we rewarded him for it.

I changed the rules and the measures. Those answering the phones started with the question “Is this a problem we have worked on before?” and reopened the old ticket instead of writing a new one. They wrote all tickets and graded their priority. They assigned the tickets and those handling them did not have authority to change the priority. I measured who got things fixed “once and for all” rather than incident volume.

Lo and behold, the top performer fell immediately into the bottom 10%. In the next quarterly survey of our effectiveness, users rated service 20% higher than ever previously. I was offered the position permanently (and declined it).

Our “top” performer left due to “absenteeism problems.”

I left my successor a plaque that read “Be careful what you measure. You’ll get it.” (It’s from one of your columns on metrics — credit where it’s due.)

My successor went even further. He rewards the people who identify patterns of problems and solve them, for individual recognition. He did away with the perk system in preference to a team system. His metrics are number of tickets, number of reopens, time from receipt of call to start of work, and customer satisfaction.

He also tracks the number of calls received to prevent gaming the first number by not writing tickets. The desk is way up in satisfaction, and he definitely is on the right track.

Oh, and he still uses the manual written by the former top performer to train people.

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