Cognitive Enterprise – Page 20 – IS Survivor Publishing

The Cognitive Enterprise

We’re waiting on the proofs for The Cognitive Enterprise (Bob Lewis and Scott Lee, Meghan-Kiffer Press). It should be available in a week or two. To whet your appetite, here are some excerpts from the Introduction:

People, process, technology.

When running a business we have to think in these terms, or so we’re told by those who tell us such things. We’ve said such things ourselves.

But while they say “people” first, most often these business experts actually put process in first place. Technology comes in second, playing an important supporting role.

People, when they finally make an appearance … mostly represent irritating contributors to organizational change resistance. Something that must be overcome.

It’s really PROCESS, Technology, people.

While dehumanizing, this perspective worked pretty well for the industrial age of business …

Organizations “designed by geniuses to be run by idiots” was pretty much the game plan for the industrial age. Instead of operating through practices that were as smart as the smartest practitioner, businesses operated according to processes designed with a focus on simplification and standardization. These aren’t bad things in themselves, but they’re unfortunate in how they encourage employees to disengage their brains when they enter the building.

Businesses built to this model — call it the “industrial model” — are anything but cognitive. They’re nothing like an entity that pays attention to the world around it, evaluates itself and its changing situation, and continually adapts …

Even companies that aren’t in the Industrial business of creating lots of identical copies of things have, to their detriment, adopted practices designed for companies that are, because that’s “best practice” — a phrase that should, in your loyal authors’ opinion, be taken out and shot …

For more and more businesses, the industrial perspective and the hidden assumptions it rests on are obsolete. A constellation of forces are making them an impediment to success …

Before we get to that, there’s one hidden assumption that has to go by the wayside immediately. It’s the assumption that businesses are just like people only bigger …

They aren’t. Nor are they merely the sum of the individual human beings who work in and for them, any more than you are merely the sum of your intestines, spleen, brain, and so on …

Human beings are more than their component parts. Businesses are, too. They’re an artificial life form, created by human beings but non-human in their anatomy, physiology, and behavior. Among the differences, two stand out:

Humans are presumptively moral. Businesses are demonstrably amoral. We rightly assume most of the people around us, most of the time, aren’t going to behave in ways that are excessively nasty … the systems set up to enforce [our laws] are scaled to the assumption that people who violate them are the exception.

Businesses, in contrast, have as the bedrock principle of their moral code their fiduciary responsibility to their shareholders …

Human beings think before making decisions. Businesses, in contrast, aren’t intrinsically cognitive entities …

The closest equivalents to human-style thinking businesses have are the governance mechanisms that in principle make some business decision-making independent of the foibles of the individual human beings involved.

But governance is often window-dressing, with actual decision-making the result of horse-trading among the human beings who are supposed to be acting in the corporation’s best interests. It’s also commonly slow and cumbersome, unsurprising given that the fundamental building block of most governance is the committee …

But enough of that … our goal isn’t to bore you to death. It’s to provide practical guidance on making an organization behave more like an intelligent, purposeful organism and less like a directionless ecosystem.

Consider the difference between an organism and an ecosystem and it will be clear. Organisms act as a whole. As entities they make decisions, whether they’re as simple as an amoeba or as complex as Homo sapiens.

Ecosystems are just as complex as organisms … more … but don’t act with purpose … any “decision” an ecosystem makes is the accidental direction set through the “invisible hand” of all the plants and critters that live in it.

Most large enterprises are more like ecosystems than organisms, hence the old phrase, “It’s a jungle out there” …

A cognitive enterprise is one that acts more like an organism — one where business decisions are about the success of the business in its environment.

The point and purpose of this book is … to make the business, if not truly cognitive in the sense of being an entity capable of human-style thinking, at least an entity that mimics it in rudimentary but useful ways.

That’s what this book is about: How the hidden assumptions that led to the wholesale dehumanization of large enterprises are less and less valid, what the new circumstances are that are supplanting them, and what to do about it all.

* * *

Sorry. I know book excerpts don’t make for the best reading. But my wife and I took a road trip this weekend and I didn’t have time to write a real column.

Next best is better

As a general rule, businesses should organize work into well-defined processes when the goal is creating large numbers of identical or nearly identical outcomes, as when Volkswagen needed to install the software that conned the EPA into hundreds of thousands of identical diesel Passats, Beetles, and Jettas.

Designing the software? That’s more of a practice.

As it turns out, there’s a third way to organize work that can, in some situations, give you the best of both worlds — the scalability of business processes without losing too much of the flexibility you get from business practices. We’ll get there in a minute.

But first, closure. The heating coil showed up Tuesday. Tracking number? Never got one. The service tech showed up Thursday and installed it … but didn’t need it, as he already had the replacement part in his truck. He was also kind enough to reverse the charges for the heating coil that was damaged in transit and delivered to North Carolina.

Thanks to all who offered empathy, sympathy, and advice for last week’s account of our adventures in Customer Elimination Management (CEM) and the Six Stupid Methodology so often used to implement it.

Underneath the six stupids enumerated last week is a single root cause: An intense desire to dumb down work until any gerbil can handle it. It’s a fundamental underlying assumption of well-designed business processes: Execute the steps in the proper sequence and quality automatically happens.

Cooks follow processes — recipes — to make meals. Chefs, in contrast, are practitioners of the art of haute cuisine.

Trying to turn customer service into a fixed set of steps and instructions is a recipe for customer elimination, as a certain unnamed retailer demonstrated to yours truly in the Case of the Burnt Out Dryer.

And “case” is the operative word: When a process has failed and customer service is needed, either (1) the customer service representative resolves the problem during the initial contact; or (2) the situation enters … or at least should enter … the realm of case management.

Case management is an example of a hub-and-spoke practice — a practice in which one person owns the situation and calls on whatever business processes, relationships, or resources are needed to resolve it. Had the first person we contacted in the course of attempting to repair our dryer assigned a case manager, it would have been a far smoother and satisfactory experience — admittedly a low bar to hurdle, but still.

Enter “Next Best Action,” which should probably be called “best next action,” but that ship has already sailed.

Very briefly, it’s a way to combine decision trees, rules-based AI, internal customer knowledge, additional customer knowledge gleaned from the social web, process tracking, and predictive analytics. The result is a system that replaces a fixed sequence of one-size-fits-just-a-few process steps with a flexible collection of possible actions, driven by a system that figures out what most logically should happen next.

In the case of our dryer repair, a next-best-action system would have learned that UPS redirected the initial part shipment from its initial destination in Minnesota to North Carolina due to in-transit damage, immediately ordered a replacement part, and notified us of the situation … my wife by text and me by email because it knows our preferred contact channels.

Having ordered the part it would have monitored the case for status changes, notifying us again when UPS picked up the part and assigned a tracking number.

And, it would have set a timer. When it expired and no tracking number was forthcoming, it would have assigned a human case manager to take it from there. Next best action doesn’t eliminate the need for human intervention. But it can narrow it down quite a bit.

Which leads to this potentially uncomfortable question:

Next best action is real. You can implement it before your competitors and take customers away from them, or you can implement it later and lose customers to them.

The question: Is your IT organization … your developers and business analysts … ready to implement it?

Let’s go one level deeper: Even if next best action isn’t in your future, something else new, different, and more sophisticated probably is.

Is your IT organization equipped to recognize it, incubate it, and put it into production?

We’re in the era of pervasive technology and IT has only three choices:

Lead, follow, or wonder what happened.

* * *

My expertise in next best action is distinctly limited. For a more in-depth account, look here.

Or, wait for the soon-to-be published The Cognitive Enterprise, in which next best action has a prominent part to play. My co-author, Scott Lee, has been implementing next best action since being part of GM’s OnStar design team more years ago than he’s willing to admit.