All Posts in Strategy and Tactics

|In: Organizational Effectiveness|Last Updated:

The collapse of world communism means we no longer get to hear political candidates refer to one another as “commie pinkos”, “communist dupes”, or the ever-popular “Marxist”. Now, we get to hear about the character issue, the term “liberal” is bandied about as an epithet, anyone we don’t like becomes a Nazi, and everyone involved seems to be searching for issues worthy of an attack on their opponents.

I miss the old days.

One of the principle differences between Marxism and Capitalism is their theory of value. Karl Marx proposed the Labor Theory of Value, while Capitalism promotes the Market Theory of Value.

The Labor Theory of Value, typical of Marxist economics, has a curiously ethical flavor to it. Value, says Marx, comes from the effort needed to transform raw materials into finished product – that is, it’s the workers who create value.

Capitalism, pragmatic as always, says that the market, through the dynamics of supply and demand, establishes value. The market, of course, is nothing more or less than the aggregate behavior of all actual and possible customers. Customers define value in a capitalist economic system.

Customers define value, which irritates movie critics (who usually sneer at anything lacking subtitles or including an explosion and car chase), computerphobes (who complain about feature bloat, claiming nobody uses program options I use every other day), and software engineers who deride those who care more about features than internal architecture.

The idea that customers … real paying customers, not “internal customers” … define value is one of the three great rules of management. (The other two? Form Follows Function and Align Everyone to a Common Purpose.)

I’m not a big fan of the internal customer concept. It strikes me as a metaphor that’s been extended past its useful purpose.

When you’re redesigning a process, you need to look at who sends work in and who receives the work you send out. Why? You define the specifications for the work that comes in to you, and the recipient of the work you create defines the specifications you use to define your product. In that sense, whoever receives the work you create is your customer, whether it’s an employee in your company, a department in your company, or an external customer.

So far, so good. “Internal Customer” is a useful shorthand for whoever creates the specifications. Unfortunately, nobody can ever seems to limit the application of a metaphor, so in short order, people started to believe that internal customers are always right, just like external customers. Some people in accounts-payable departments even believe vendors are their customers, since vendors receive the work they create.

Internal customers lack the defining characteristic of real customers. They don’t pay you. That means they don’t define value, nor does a transaction with an internal customer give you the wherewithal (money) to provide the service they ask for. And that, in turn, means they’re not always right.

The internal customer metaphor also violates the third great rule of management: align everyone to a common purpose. It takes companies to the opposite extreme, inducing severe myopia. When employees believe in internal customers, they look no further than the needs of the next person in line. Only a few employees worry about the needs of real paying customers.

Here’s what I recommend as an alternative: everyone in the organization should understand their role in providing value to real paying customers – the big picture. If you’re in Accounts Payable, you’re trying to minimize overhead while maximizing cash flow, thereby helping sell products and services at an affordable price. Human Resources? Help managers develop a motivated, skilled, high-morale workforce.

Information Systems? How does Information Systems provide value to real, paying customers? Traditionally, we do so by helping everyone else in the company be more effective in their roles. That, in turns, helps the company increase the value it can deliver.

The world, however, has changed. Now we have a more direct role to play. Have you started to play that role?

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|In: Leadership|Last Updated:

Quite a few years ago, I briefly joined a subcommittee of a national telecommunications managers association. The subcommittee’s issue: Telecommunications as a Strategic Resource. (“Telecommunications, in this context, means voice communications technology.)

The first twenty minutes of the meeting consisted of a bunch of telecom managers explaining how important telecommunications is to the organization, and on techniques for communicating this fact to senior management. The short version: if a company loses dial-tone it has a big problem, so telecommunications is strategic.

Because I doze off in meetings if I don’t occasionally speak, I offered a suggestion: “If we want to be viewed as a strategic resource, maybe our first step should be making sure we are a strategic resource.”

As I said, I joined only briefly. They never told me the time and place of the next meeting.

As a character in E.E. “Doc” Smith’s science fiction novels used to say, “We can’t all play first-chair violin. Some of us have to push air through the tubas.” Not everything we do is strategic. Sometimes we have to settle for importance.

IS has three distinct, important roles to play. Borrowing from military and game theory, we can call them Strategic, Tactical, and Logistic contributions to company success.

Logistics is the art of making sure the troops have everything they need to win. It includes getting them to the battlefield on time, making sure they have food and ammunition … all those little details that matter so much when two armies are trying to kill each other.

Translated to the business world, logistics includes everything that supplies employees with the basics they need to do their jobs – telephone service, voice and electronic mail, perhaps a word processor and spreadsheet. Stuff like that. Logistic services don’t add value so much as their absence subtracts value. They’re like plumbing – it’s not strategic, but if the pipes break you have a big mess on your hands.

Tactics covers the detailed maneuvers that have to be orchestrated to win a particular battle. Napoleon, for example, was a master tactician, noted for his ability to pin an opposing force in place through a feint to the front while having his cavalry attack from a different, unexpected direction, confusing his enemy and ultimately destroying it.

In business, tactics includes all core processes and the applications that support them. Do you have an order-entry call center? Improving how you run it gives you a tactical advantage. Do you use a workflow/imaging/document management system? If so, you’re probably using it to tactical advantage. In fact, everything you do to improve the business you’re in today has to do with either logistics or tactics. IS expends most of its time and attention in pursuit of its logistic and tactical roles in the organization. As it should. You have to survive until the future gets here, after all.

How about strategy? That deals with larger-scale objectives. Is your company market, product, or competency driven? That’s a strategic decision. Does it try to define market dynamics, or does it look for unexploited market niches? Does it compete on price or does it try to support high margins through exceptional service? Does it innovate, or perfect and integrate the innovations of others? All of these are strategic issues, as are decisions regarding what new product categories, markets, or competencies will be needed to thrive in the future.

IS has a vital role in helping companies achieve strategic goals. You take the first step, of course, when you understand the difference between IS’s strategic role and its logistic and tactical roles. You take the second when you take the time to understand and internalize the company’s strategy.

That’s when you’re ready to engage in a dialog with your company’s leadership to mutually decide what new technologies, technical capabilities, applications and infrastructure the company will need to achieve its strategic goals.

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