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|In: Process Management and Improvement|Last Updated:

“Who are you going to believe?” Groucho Marx famously asked, “Me or your own eyes?”

The Groucho Question came to mind as I read an intriguing, if conspiracy-oriented opinion piece by James Schmitz Jr., a senior economist at the Federal Reserve Bank of Minneapolis. Schmitz’s contention is that home-building is trapped in 19th century technologies and methods that have prevented productivity increases in that sector for a matter of decades. (“Homebuilding must modernize,” StarTribune, 5/2/2021).

His solution: “Rather than manufacturing homes in factories, they are constructed outside, with a centuries-old technology sometimes called the “stick-built” method.”

He’s the “Me” part of the Groucho-ism. As one who consults on and writes about matters of organizational effectiveness, I found his contention appealing.

As the owners of a downtown condominium who, by HOA mandate had been required to have our balcony door replaced … twice; the first replacement having been problematic … my wife and I recently had the opportunity to see Schmitz’s theory applied in actual reality (and isn’t it strange to live in an era where I have to specify which reality I’m writing about).

We were Groucho’s “… or your own eyes,” as we watched two clearly expert individuals remove the offending door panels and replace them with (presumably) more serviceable ones. To get the job done they had to deal with perhaps six situations that required significant expertise and ingenuity.

It occurred to me that while the door panels had been manufactured in a factory – they were the result of a well-defined process – their installation was clearly and unavoidably a practice.

Why this matters to you: Here in KJR reality we’ve frequently discussed the difference between processes and practices; processes being how work gets done in factories, with their repeatable, predictable steps; practices being how work gets done in hospitals and law offices, where no two cases are ever exactly alike and work must be adapted to each specific situation.

We consultants frequently advise clients to turn case-by-case kinds of work into metaphorical factories so they can perfect their techniques and get results that are more repeatable and predictable. I’ve been guilty of this myself, although I hope with enough qualifiers that I haven’t overpromised the ease and simplicity of the result.

The differences between process and practice aren’t “mere” semantics, not that there’s anything truly mere about semantics in the first place. It’s also fair to say that to the extent it’s possible to redefine how work gets done so it’s less of a craft or practice and more of a manufacturing-like process, defect rates and incremental costs will, in most cases, decrease.

It’s just easier said than done. To turn any craft or process into a factory-like process, a key aspect of the transformation is to view each step in the work as responsible for reducing the variability or, looking through the other end of the telescope, increasing the predictability of what those responsible for the next step in the work will face.

If you’re building a house that means getting started by (based on my extraordinarily limited understanding of the trade) clearing and grading the lot, laying the foundation, and fixing variations in ground compressibility to avoid surprises when pouring the slab and laying cinder block.

When building an application it means (among other things) clearly defining the architecture and coding standards, writing consistent user stories, and determining interdependencies to avoid surprises when, depending on the application architecture, coding each module, service, microservice, or what-have you.

Bob’s last word: When we envision a factory we envision a conveyor belt that carries identical items to each step in the work.

When we envision most of what IT does for a living … or when we envision building a house … we don’t envision anything remotely like that.

Bob’s sales pitch: Looking for help improving the practice of improving business practices and processes? Here’s where to contact me so we can start a conversation.

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|In: Organizational Effectiveness|Last Updated:

In the mid-1990s I managed PCs and networks for a mid-sized enterprise. We managed maybe 10 gigabytes of networked storage (I’m working from my personal carbon-based memory, which isn’t all that reliable), which in round numbers might have cost us $10,000.

That’s when I participated in a Computer Associates focus group. CA was trying to sell the participants … sorry, it was trying to gain insights from the participants … about how to market its new LAN storage management solution.

The solution in question would supposedly give me the same capabilities my mainframe counterparts had – when a processing job ran low on storage it would spin off some jobs to tape backup in order to free up storage so the job could complete.

Privately, I was embarrassed – we weren’t running any batch processes on our network that might run out of storage, but I didn’t want to admit we were so unsophisticated. So I asked how much this marvelous technology might cost us. $50,000, the CA representative proudly told me.

Then I asked why spending $50K to manage 10 GB of storage made more sense than spending it to quintuple our storage so it would never run low in the first place.

And, as Arlo Guthrie said in a different situation, they all moved away from me on the Group W bench.

In 2006, Amazon launched AWS’s predecessor, the Amazon Elastic Compute Cloud. If there was a magic moment when cloud became a thing, that was it.

In rough, round numbers, between then and now, the cost of IT processing plummeted, from about $10/GFLOP to $0.1/GFLOP, a hundredfold decline.

The cost of storage experienced similar declines. In 2006, across all kinds of memory, IT spent about $10/GB. Today the number is $0.1 per GB, a remarkably similar decrease.

In 2006, cloud economics seemed to make sense to the various IT punditries who pundited about such things. But between then and now the cost of computing infrastructure has, it appears, declined by two orders of magnitude.

In case you’re wondering, yes, I did try to track down cloud pricing trends between 2006 and the present but wasn’t successful. At a guess, reductions in cloud computing costs have probably been commensurate with those of the underlying processing and storage they provide. And anyway, for this week’s purposes, I’m not sure it matters.

We’re not exactly revisiting FinOps and last week’s question of whether it’s important or just one more case of solving a five buck problem with a fifty buck solution.

The point: As the underlying costs of computing infrastructure continue to shrink, the value of carefully managing them shrinks in proportion.

Which gets us to this week’s more general question: Do the costs of governance, controls, and oversight of all kinds deliver enough value to warrant their cost?

It’s like this: Boards of directors aren’t free. Directors are compensated for their time, much of which consists of reviewing reports written for their consumption, which production also isn’t free.

The process of producing, reviewing, negotiating, and producing budgets takes immense amounts of management time and effort, not to mention the time and effort involved in comparing actual spending to spending budgets. Budgeting isn’t free either.

Stripped down to their essence, what governance and controls should be about is encouraging good decision-making (governance) and effective business action (controls).

For example, an IT Steering Committee will generally decide which of all possible projects IT will actually undertake (governance) and, when IT undertakes them, that the projects are properly managed so they deliver their intended results (controls).

What governance and controls too often become are stifling, choking bureaucracies whose primary purpose is to put managers on the defensive.

No, wait, that’s their secondary purpose. Their primary purpose is, as is the case with all bureaucracies, self-perpetuation.

So this week’s advice is simple and straightforward: Hold all governance and controls bodies to the same standards they hold everyone else to: They must be as efficient as possible and only solve problems that are important enough to be worth solving.

Bob’s last word: Researching this week’s column, surely, I said to myself, someone must have researched the very simple and basic question of whether organizations benefit from a positive return on their investments in governance and controls.

Maybe someone has, but if so I was unsuccessful in tracking down anything relevant.

Makes you wonder, doesn’t it?

Bob’s sales pitch: I’m widening the net. If you’re aware of any research along these lines, pass it along and you’ll get credit, plaudits, and kudos from the KJR community for your act of public service.

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