Ride Your Bicycle Forward

Organisations with a merit and ranking system are like bicycles being pedaled backward.

 

In the 1950s, W. Edwards Deming, then a relatively unknown statistician, conducted seminars among Japanese companies as part of the American effort to rebuild that country’s post-war economy.  

In these seminars, Deming reportedly used the process diagram shown below, to illustrate the systemic nature of a business’s processes. 

 

The diagram showed how the various parties: suppliers, production, ‘quality control’ (inspection), consumers, research, and others, fed into each other and back in one grand system of production. 

 

Despite the diagram’s deceptive simplicity, it was conveying a message that is both deep and shallow. It was a shallow message because everyone who knew anything about operations knew what it was showing. Yet the message was also very deep because the diagram confronted everyone by asking why they did not act as if they knew that. 

 

Deming made the point that because these functions depended on each other in a systemic way, they must be managed together, as a single system. To manage these functions separately, as if they were not dependent on each other is a path to institutionalised dysfunction.

 

In our modern world of systems thinking, processes management, and post the chaotic period of the 1990s ‘re-engineering’, the reminder Deming wanted to deliver can feel anachronistic.  Not only does the diagram look old, it feels old.  It would not be surprising if a modern audience today reacted to this diagram with a: 'Duh'. 

 

Duh indeed, because by this time we all should all know that. And yet it seems we  don’t.

 

So what is the big deal about Deming’s diagram?  While no one seriously questions its truth, many big companies – precisely the ones that really need to internalise this message – are still operating the business in a backward way.

 

We can illustrate the situation by imagining we were given a bicycle, and then shown how a bicycle should run, and yet we proceed to ride it backwards. 

 

In organisations where a merit and ranking system pervades, where an employee’s ‘performance’ is annually ‘assessed’ by their supervisor,  employees become forced to consider their supervisor as their most important customer.  Employees have no option but to direct all their actions and energies to figuring out what numbers the supervisor is tracking and make sure they meet those numbers, to the subjugation of other considerations.  

 

Supervisors themselves need to please their managers, and so treat their managers as their customer, always thinking: “how am I going to be ranked?”  The situation goes on -- the managers need to please their vice presidents; the vice presidents need to please their executives; executives need to please the CEO; the CEO need to please the board.  The board need to please the shareholders, often fund managers. Fund managers need to please their bosses, in a grand system of brown nosing.

Nowhere in all this is the poor paying customer, the source of the company’s income.  No, that's not entirely true.  The customer does sometimes pop up now and then, but only to the extent where they complain thereby represent a risk to the merit and ranking of employees, or where they give praise and enhance the merit and ranking of employees, or where they can be used to further please that most important of customers, the person higher up in the organisation.

This backward operation of the forward system cannot be undone without a transformation -- a deep, difficult, transformation that demands sustained struggle.  Initiating this transformation, and even more important, sustaining such a transformation will require an unbelievable level of courage, focus, and determination.  A constancy of purpose.

Organisations who are able to operate their forward systems in the right direction will eventually benefit. Once they do start moving forward, it will be easier and easier, kept in motion by a reformed cultural inertia,  to operate the system, understand it, speed it up, improve it, and even accelerate it.  They will have realised how far, FAR better it is to ride a bicycle forward.

The New Risk

In the world of risk management, even the most basic things can get confusing.  When it comes to basics, it’s hard to think of a notion more basic than what ‘risk’ is. 

One of these is the distinction between a risk and the event that triggers the risk.  You can see a little bit of the confusion through the risk management standards.  The AS/NZS 4360:2004 standard considers risk as ‘the chance of something happening that will have an impact on objectives'.  Clearly, risk is closely related to, if not actually, an event (‘something happening’).

Compare this with the newer ISO 31000:2009 standard, which is not only an international standard, but also succeeds the AS/NZS 4360:2004 (i.e., the next version of AS/NZS 4360:2004 is ISO 31000:2009). Here, risk is ‘the effect of uncertainty on objectives’.  It is no longer an event.

Now, this very succinct definition also manages to be very confusing -- there are various discussions in LinkedIn about what it actually is trying to say. 

What then, is the difference, between an event (or a circumstance) that brings a consequence versus a risk the brings a consequence? The key to understanding risk is to focus on the word ‘objective’. Start with the objective. What do you want to achieve? This is the starting point. Literally, without an objective, there is no risk.

Once you have determined your objectives (there can be more than one), think of the various outcomes that deviate from that objective.  The third step is to consider the consequences of those various outcomes.

Let’s work through an example.  Suppose you have a job interview, and you identified your objective to be: arrive at the appointment on time.  What are the various deviations?  You can arrive 5 minutes late, 10 minutes late, 30 minutes late, 10 minutes early, and so forth.  What is the consequence of arriving 10 minutes late?  How about 30 minutes?

You can the look at the different possible events, circumstances, or situations that can cause the deviations: traffic, getting lost, underestimating the time needed for travel, forgetting something and having to go back, running out of petrol, having a car accident, etc.

After identifying possible causes, analyse them and implement mitigation plans for the ones that might be more likely, such as traffic, or underestimating the travel time required.  By mitigating the various events, you are reducing the chances of not being able to arrive on time.

You can also mitigate the risk.  But since risk is not an event, you cannot mitigate it from happening.  Instead you mitigate its consequences. So you mitigate the possibility of the deviation from occurring by addressing the events that can cause the deviation, and you mitigate the consequence of the deviation.

	Old World	New World
Risk	An event, or situation, or circumstance	The deviation from your objective
Consequence	The impact of the event, or situation, or circumstance	The impact of the deviation (regardless of what caused the deviation)
Risk Event	An event that brings about the risk	An event that causes a deviation

Woody Allen’s Success Formula

How can you be successful?  How can you attain what you want?

According to film director Woody Allen, “80 percent of success is showing up.” What did he mean? Perhaps he meant that luck plays a considerable part in success (80%).

In my own life, I look back and I see many instances where a successful phase of my life can be traced back to being began at the right place at the right time.  It is not enough of course to be at the right place at the right time.  You have to be the right person. But let me focus on being at the right place.  The place does not have to be a physical location.  Being at the right place also means having the right qualifications -- being there.

For example, if there is a need for an experienced PRINCE2 lecturer, someone who has that experience is already at the right place, using my additional meaning for being there.  They only need to show up at the right place physically.

What am I trying to say?  Maybe it's that in order to be able to show up, you need to plan ahead:

• Determine where you want to show up.  Let's say you want to work for NASA as a rocket scientist.
• Plan how you will show up.  What can you do to achieve the status of someone who CAN be a rocket scientist.
• Execute your plan for being there.  Work hard.
• Show up. Be sure to present yourself at every opportunity for being hired as a rocket scientist

Remember:  It's not the most qualified who gets the job; it's the most qualified among those who show up.  It's not those who show up who gets the job; it's the most qualified among those who show up