The relevant user groups for targeted IT Investments (part 1)

Cut access to Face­book? Roll-out the iPhone? Deploy wikis and blogs? All are invest­ment deci­sions and all should be based on cold eco­nomic analy­sis. They rarely are. For a sim­ple fact: the end-users are either indis­crim­i­nately put in one sin­gle bag (“the Employ­ees”) or they are put into the exist­ing orga­ni­za­tional boxes. Both approaches are wrong and usu­ally result in mis­un­der­stand­ing and wrong investments.

What is needed is to slice and dice the users pop­u­la­tion accord­ing to a few sim­ple eco­nomic prin­ci­ples. This allows to accu­rately sur­face the dif­fer­ent busi­ness cases and make an informed choice when choos­ing to invest or to pass.

Let’s look at it in a three­fold post:

• what typolo­gies can we use to dis­tin­guish employ­ees’ eco­nomic sit­u­a­tion (part 1)?
• what are the rel­e­vant groups that appear (part 2)?
• what guide­lines for action can be deducted (part 3)?

This goes right against Minto’s Prin­ci­ples but I want to split this piece in three and in that order. Should be the exception.

When faced with an IT Invest­ment deci­sion, execs tend to look at the pos­si­ble user in 2 spe­cific ways: 1) the aver­age Employee (an arti­fact). The invest­ment is made on this basis and suits infra­struc­ture invest­ments (invest in Email?). 2) the explicit orga­ni­za­tion of jobs, func­tions, busi­ness units, etc. Here, it’s suited for appli­ca­tions that will be used only by spe­cific posi­tions (think CRM, SAP, etc.).

But this approach is also used when decid­ing to invest in so-called Enter­prise 2.0 appli­ca­tions, like blogs, wikis, etc. and will lead to wrong deci­sions because the eco­nomic sit­u­a­tion sof the employ­ees are not the same and the invest­ment deci­sions should there­fore be unbundled.

So what lenses do you use to see your user pop­u­la­tion in a dif­fer­ent light ? I pro­pose 4:

Cor­po­rate speci­ficity

Are the main goals of an employee spe­cific to the orga­ni­za­tion or are they generic? Generic here means that if the employee is tak­ing the exact same job in another orga­ni­za­tion, he would gen­er­ally oper­ate in the same way. We focus on the goals here, by oppo­si­tion to the skills and tools.

A worker using a in-house devel­oped soft­ware to per­form an exclu­sive ser­vice to a client: cor­po­ra­tion spe­cific goals. An employee in most of the sup­port func­tions, like HR, has mostly generic goals ((s)he would do the same 90% of the time in another organization).

A busi­ness unit man­ager, though pos­sess­ing generic man­age­ment skills, still has a corporate-specific func­tion 90% of the time. Sup­port func­tion man­agers have most of their goals inter­nal but still generic: a con­se­quence is that they need to learn from the out­side. To be clear, think about the strat­egy part of the job. Take a CIO, 75% of the strate­gic agenda is the same in sim­i­lar orga­ni­za­tions. Take a busi­ness unit leader, very lit­tle will be (if it is, time to worry).

Trans­for­ma­tional, Trans­ac­tional, Tacit

Sources: Com­pet­i­tive Advan­tage from Bet­ter Inter­ac­tions, The McK­in­sey Quar­terly, 2006; The Next Rev­o­lu­tion in Inter­ac­tions, The McK­in­sey Quqrterly, 2005.

John Hagel syn­the­sized this typol­ogy of work types as follows:

• Trans­for­ma­tional – “extract­ing raw mate­ri­als or con­vert­ing them into fin­ished goods” – exam­ples cited include “min­ing coal, run­ning heavy machin­ery, or oper­at­ing pro­duc­tion lines”
• Trans­ac­tional – “inter­ac­tions that unfold in a gen­er­ally rule-based man­ner and can thus be scripted or auto­mat­ed” – exam­ples of trans­ac­tional jobs include cashiers, office clerks, truck dri­vers and accountants
• Tacit – “more com­plex inter­ac­tions requir­ing a higher level of judg­ment, involv­ing ambi­gu­ity, and draw­ing on tacit, or expe­ri­en­tial, knowl­edge” – exam­ples of tacit-intensive jobs include retail sales peo­ple, cus­tomer ser­vice rep­re­sen­ta­tives, reg­is­tered nurses and gen­eral managers

Note we are at the activ­ity level here: nearly every job is com­prised of a mix % of the 3 types of work.

Knowl­edge Manip­u­la­tion / Decision-Making

Con­cen­trat­ing on the tacit inter­ac­tions cat­e­gory, we need to dis­tin­guish between two very dif­fer­ent focus:

Knowl­edge Manip­u­la­tion focused: employ­ees need to come up with cre­ative ways to solve com­plex prob­lems. This requires them to gather vast amount of infor­ma­tion, exchange it, share it, col­lab­o­rate on it with co-workers both inside and out­side of the orga­ni­za­tion, etc. R&D is the per­fect exam­ple here, but strate­gists, ana­lysts and so on, are as well. The main empha­sis is on new knowl­edge cre­ation and dissemination.

Deci­sion Mak­ing focused: employ­ees need to mainly digest knowl­edge and act on it. Lit­tle knowl­edge cre­ation is involved, cre­ation is not the main focus, action and deci­sion is.

Gen­eral exam­ple: Think a man­ager (decision-making focus) and her cab­i­net (knowl­edge manip­u­la­tion focus).

Drucker’s exec­u­tive scale

I admit the name might (will) change but it cap­tures clearly the con­cept. Drucker makes a series of good points about who is an exec­u­tive (The Effec­tive Exec­u­tive, 1966). One key point:

Every knowl­edge worker in a mod­ern orga­ni­za­tion is an “exec­u­tive” if, by virtue of his posi­tion or knowl­edge, he is respon­si­ble for a con­tri­bu­tion that mate­ri­ally affects the capac­ity of the orga­ni­za­tion to per­form and to obtain results.

Drucker’s def­i­n­i­tion rightly encom­passes a vast array of posi­tions. I want more gran­u­lar­ity: I’m dis­tin­guish­ing between the exec­u­tives based on the level at which they shape the future of an orga­ni­za­tion (level of Drucker’s effectiveness).

In the phar­ma­ceu­ti­cal indus­try for exam­ple, the employ­ees in R&D, respon­si­ble for cre­at­ing new prod­ucts, are much higher on the exec­u­tive scale, than, say, the sales force, which is nev­er­the­less exec­u­tive, albeit at a lower level. Think about it this way: the sales force can con­tinue to do what it does, the cor­po­ra­tion won’t be impacted severely. If R&D doesn’t come up with new prod­ucts, end of the game. This is how Drucker puts it:

[…] The chemist in the research lab­o­ra­tory who decides to fol­low one line of enquiry rather than another one may make the entre­pre­neur­ial deci­sion that deter­mines the future of his com­pany. He may be the research direc­tor. But he also may be — and often is — a chemist with no man­age­r­ial respon­si­bil­i­ties, if not even a fairly junior man. […] And this holds true in all areas of today’s large organization.

Of course, both are nec­es­sary, but the scale at which a decreased per­for­mance will impact the orga­ni­za­tion are dif­fer­ent. You can think about this as a mul­ti­plier as well.

Using those four lenses, the “users pop­u­la­tion” takes all kinds of shades (16 for those who don’t like per­mu­ta­tions). In the next post, we’ll describe the rel­e­vant ones (not 16!) for IT invest­ment decisions.