Improving management’s vision of the realities of business : Processes or Networks?

improving Management's vision of business realitiesIn response to our initial post, C.R. asked for more details on how IT distorts management’s vision of reality. Given the work and resources that have gone into enterprise applications over the last two decades, he asks, why doesn’t IT feed back a true image of how we work? If the daily statistics and scorecards provided by today’s business applications don’t seem to “ring true”, what can an organization do to improve the quality of the data to better reflect individual customers, projects, and opportunities? To understand this challenge, and to explore potential scenarios to improve enterprise applications, we need to first consider how business applications today represent and aggregate data, then explore the fundamental weaknesses in this logic, and finally investigate other avenues of putting the pieces together.

Enterprise applications, including those dedicated to enterprise resource planning, supply chain management and even project management, and are largely based on the principles of business process improvement. A process can best be understood as a set of activities and tasks that managers group together to meet internal or external client demands. Processes thus have four defining characteristics: their origin can be detected in an organization’s recognition of a client need for a product, service or information, they consume resources, and they have a set cost and produce a benefice that ideally meets the clients’ needs.

Improving business processes requires tracking inefficiencies in how an organization captures market demand, supply or measurement. How are an organizational activities and tasks executed to capture client demands? How can an organization improve its capacity to deliver products and services? How does the organization capture and evaluate costs and benefits? Enterprise applications provide responses to these fundamental questions in allowing management to map the current state of existing processes, implement best practices around ideal designs of how these processes should work, and measure organizational progress to these goals.

The resulting ‘process-centric” view of the organization is often a weak approximation of the reality of business practice, and as such limits the usefulness of enterprise applications. One reason for this is that business process improvement was originally designed for organizations producing standardized physical goods, modeling processes around personalized services and/or information delivery has proven a much more difficult assignment. Implementing business processes assumes that management (or their business partners) understand where an industry or a market is headed, an assumption that is sorely tested today in industries ranging from information services to banking to telecommunications.

Moreover, the notion of “best practices” which assumes that there is “one best way” to build product or deliver services has been widely disputed in organizations that have traditionally put a premium on company culture, customization, and understanding individual customer needs. Finally, improving business processes assumes that the employees and managers involved in the targeted processes agree with organizational objectives, and are willing and able to follow organizational guidelines. In many situations, even this assumption is contested by those that prefer focusing on the realities of their organization and their market (i.e. getting the job done) than complying to unrealistic or unworkable company procedures. For all of these reasons, “process-centric” software most often offers management a highly distorted view of the realities of the workplace.

If we abandon the notion of processes, how can business applications be modeled to provide a more realistic view of work? A growing number of management specialists are underlining the importance of networks in understanding how employees and managers actually get work done. In business, networks are interconnected systems of people that share common interests, beliefs, and goals. Social and business networks are used by workers and managers alike to solve problems, to identify opportunities, to build trust and passion, and make sense of their jobs, organizations and careers. These networks cross organizational boundaries; they are composed of centers of influence (the “hubs”) and are held together by the intensity of personal relationships (the “links”).

If most managers understand the importance of their personal networks, improving networks requires understanding how these networks function and how they can be extended and strengthened. Social researchers have identified a number of defining characteristics of networks that potentially can help mangers improve their effectiveness: “power laws“, “degrees of separation”, “discontinuous change“, “fat tails“, etc. These networks are held together by common beliefs, passions, trust or know-how: in other words non-structured information that largely escapes “process-centric” view of enterprise. The power of networks has fueled the popularity of a new breed of the social media applications: LinkedIn, Plaxo, and Facebook are among the better known examples. Will this new generation of software applications help management improve their business?

One value proposition of such network-centric applications is to shift the focus of attention away from an ideal set of activities and tasks (what we “should” be doing) to how employees and managers actually get things done (what they “are” doing). A second insight of a network based view of business is the understanding that networks are self-structuring; people seek to work with those their share their goals, passions and beliefs. A third point of interest is understanding the importance of “non-structured” data, just because we can’t get passions, trust and know-how into a spreadsheet doesn’t mean they don’t largely influence the way we work. Finally, this line of inquiry reminds us that business is essentially a human activity; technology’s role in business is limited to understanding, uncovering and eventually enhancing the human interaction that defines the nature of “work”. For management and their business partners, these propositions constitute powerful levers to improve the value of information technology.

None-the-less, there certainly is a considerable amount of work to be done before applications like LinkedIn or Facebook help managers improve their jobs, organizations and careers. The metaphors of “avatars”, “friends” and “connections” don’t easily translate into the realities of either commerce or industry. The personal information, photos, and videos available in social media today are certainly interesting, but often of little use in driving a business forward. These applications today are largely hard coded; it is difficult or often impossible for end-users to enrich either the information or the software. These applications capture data on how end-users wish to see themselves, rather than how they actually practice business (or anything else…). Most importantly, these virtual networks don’t elucidate today the passions, beliefs, and goals that define how individual professional networks operate. If network-centric applications provide a glance of how the future of enterprise applications can improve business practice, these images need to be brought into focus.

Lee Schlenker

Dr. Lee SCHLENKER is Professor of Business Analytics and Community Management and a Principal Consultant of the Business Analytics Institute.

Over the last twenty years, he has led dozens of missions for Big 4 consulting groupsin the manufacturing, telecommunications, public works and service industries.

Recognized as an expert for the European Commission in learning analytics, Lee has directed or participated in studies on improving management education in the US, Europe, Asia and the Middle East.

Recipient of the EDSF prize for the use of technology in teaching, Lee currently facilitates various management education courses in Europe and abroad.
Lee Schlenker

3 thoughts on “Improving management’s vision of the realities of business : Processes or Networks?

  1. Thanks for such a nice post.
    I personally think that to learn more about how we work we need to forget for a while “the enterprise”. We need to think about the individual, that one that part of his life is the work and the social relationships developed there.
    When the person moves from workplace to workplace keeps the relationships, experience and of course a set of personal strengths.
    Then I think that understanding the way the individual interacts with others and what is relevant or important for each one is what really matters.
    Knowing how we work is not the solution. Learning how to motivate people and how each person finds solutions to problems is far more interesting.
    If we could move that concept to the working environment then we could find really interesting information that will help each person to know him or herself and for the organization to learn where to position each person for achieving better results.

    An application that tracks the history of interests and the evolution of them is certainly a powerful thing. What is important and missing is to measure the relevance of each topic or interest for each individual that participates in the network.

    Give a check on: “Strengths Finder 2.0”.

    Kind regards,

    Jose Antonio

  2. Electricity, Energy, Vibration and Frequency is all part of Profiting in business. Being a serial entrepreneur I’ve realized that having a system increases everything in your business. Using Strategic Mindset, and something called The Covert Matrix – Results by Design.

    Can Frequency really build your business?

    To higher profits!

    Bill

  3. Pingback: the use of statistics in the workplace

Comments are closed.