All Posts in Organizational Effectiveness

|In: Organizational Design|Last Updated:

An ongoing debate fostered by Stewart Alsop rages over when we’ll unplug the last mainframe. (Does this mean there are debates alsoped by Ed Foster? Inquiring minds want to know.)

Back in the good old days, microcomputers processed eight bits, minicomputers sixteen, and mainframes thirty-two. Then progress happened. The laptop computer I’m using to write this column has more raw processing power, and even with lowly Windows/95 crashes less often than the IBM 360/158 I used in 1980.

Stewart has concluded we’ll never unplug the last mainframe. I’m forced to agree, because mainframe isn’t a class of technology, it’s a state of mind. The mainframe mentality – central control – has gained renewed popularity.

Sherman, set the Wayback Machine for 1980. Apple computer dominates the fledgling personal computer market with a 6502 microprocessor, a 40-column screen, and VisiCalc. Accountants flock to this puppy. Why? Because it makes them independent of Data Processing, that’s why.

Well, progress has overtaken us:

  • Various forms of .ini files have made it impossible for end-users to be self supporting, just as fuel injection spelled the end of home car care.
  • Local Area Networks means our formerly independent systems now plug into a shared resource, and we may even load software from central file servers.
  • Electronic Mail and shared directories mean we ship files back and forth, which in turn means we have to agree to common file formats.

Progress is just dandy. In this case it means more powerful systems that are easier to use and provide more value than ever before. The price?

The combination of interconnectedness and maintenance complexity has given central IS a logical reason to regain the control it lost when PCs hit their growth curve in the mid-1980s.

Many IS departments now forbid end-users from loading software into their PCs – only IS-approved standards may be used. That’s fine if IS has a standard – if your employer uses WordPerfect, why should you insist on using WordPro? – but it makes no sense when IS provides no tool and forces users to do without.

Another example of the trend: Not all that long ago, I heard several senior IS executives talk about the importance of getting control over all the “hidden code” that had come into being over the past ten years in their enterprises. The code in question? Formulas in spreadsheets.

Yes, these people seriously believed it would be in their companies’ best interests if IS gained control over the formulas embedded in the various and sundry spreadsheet models employees had created to help them do their jobs.

Why? Two reasons. First, some spreadsheets go into production, serving as crude database management systems that keep track of departmental information. Second, IS supposedly has a far better understanding of how to create consistent “business rules” in ways that encourage code re-use and logical consistency than the end-users who keep on re-inventing the wheel in the various spreadsheets they build.

While clearly absurd (why IS should have any more to say about the contents of an electronic spreadsheet than it does over one created with graph paper, pencils and calculators is beyond me) the trend back to central control is gaining force.

Yes, it’s absolutely true that end-users use spreadsheets to manage databases, using the wrong tool for the job and creating maintenance headaches downstream. I use a screwdriver to open paint cans, for that matter. There are no “Paint Can Tool Police” to stop me, and if I bend the screwdriver, that’s my business.

Duplication of effort is a price companies pay for empowered employees who act independently. Inconsistent spreadsheet formulas are simply the electronic consequence of diverse perspectives about the business.

And IS isn’t all that good at consistency. It manages multiple databases. Equivalent fields in different databases usually have different formats, inconsistent values, and often, subtle differences in the semantics of their definitions.

The personal computer was a key enabler of employee empowerment. Resist the trend back to mainframes. Give end-users as much freedom as you can.

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|In: Leadership|Last Updated:

You’re a total loss for your employer.

I’m psychic. I sense your thoughts. Without ever having met you, I know this fact: you are, in fact, a total loss.

Okay, I cheated. I don’t have to know anything about you, your work habits, your productivity or your employer’s SIC code. All I have to know are a few basics from the Generally Accepted Accounting Principles (GAAP), the rule book by which all accountants live.

When a company buys a computer, the accountants debit cash and credit tangible assets. The balance sheet doesn’t change at all. One kind of asset, money, has simply changed into another kind of asset, a computer.

When a company pays your salary, on the other hand, the accountants debit cash and credit expenses. Assets go down and expenses go up. You appear on the Loss side of the Profit and Loss statement.

Don’t blame your employer. Don’t blame the accountants. If you have to blame anyone, blame Pacioli, the Italian who invented modern accounting several hundred years ago.

After a brief flirtation with less tangible forms of management, much of American industry seems to have moved back to managing by the numbers. This has its good side, because companies really do have to turn a profit or they stop being employers except to attorneys specializing in Chapter 11 proceedings.

It has, of course, its downsize … uh, downside … well, I guess I was right the first time.

Accounting systems are an important tool for managing an organization, just as a hammer is an important tool in debugging a computer program (it may not be effective, but it can be very satisfying). Well-run organizations use their accounting systems to keep score. I grew up as a Chicago Cubs fan, so I know what happens when nobody really cares about the score. You have fun, but you never go to the World Series.

Accounting systems have two big drawbacks as guides for making critical strategic decisions. The first is pretty simple: they’re the map, not the country.

Everyone knows the map is not the country. This cliche points out an obvious characteristic of maps: they leave information out. If they didn’t, they wouldn’t be maps – they’d be countries.

Accounting systems leave out lots of information. They don’t track employee skills. They have nothing to say about customer loyalty. They’re mute on the quality of the latest advertising campaign, although they can report its cost to the penny.

Managing an organization using only the numbers generally leads to a lack of investment, because many critical investments, like employee training, preventive maintenance, and research and development (and yes, if you manage IS you need to fund some research and development) go by the wayside, victims of accounting’s lack of descriptive power.

Accounting systems have a second deficiency, too: they have no ability to reveal causal relationships. Preventive maintenance may lead to lower repair bills. You’ll never demonstrate this on a Profit-and-Loss Statement. Employee training may lead to more effective workers. Since the chart of accounts has no entry for employee effectiveness, the gains lack visibility.

Your new router may have forestalled a major outage. It doesn’t matter – your accounting system can’t book the value of events that never happened.

The moral of this little story: manage to the numbers, but never manage by the numbers.

Internet Update

In the Internet Collapse vs Free Enterprise match, the score is one to one. Bob Metcalfe gets a point from Sprint, which has started to kick some IP addresses off its network during periods of peak load. It beats collapse, I guess, but somehow, monitoring the on-ramp of a freeway, kicking off all the Fords doesn’t seem like brilliant engineering.
My point comes from MCI, which has announced a massive upgrade because it expects larger profits from the increased capacity.

The consensus of the InfoWorld Electric Forum on the subject (www.infoworld.com): traffic jams and outages yes, complete collapse no.

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