Archive for Professional Services

Managing Chaos, or Predicting the Unpredictable

If you want to observe the role of chaos in management theory, help run a sports program! A hockey player, I have helped run a few over the years. Yes, there’s lots about these programs that’s very orderly and top-down, with one exception.

Messy Humans

Typically, hockey programs run on predictable schedules that are the same year-in, year-out. Decision-making is usually fact-based and easy to implement, with clear delegation to a hierarchy of coaches, managers, and staff. But there is always one factor that adds a dose of chaos—the human factor.

A committee might not have proper authority to make decisions; individuals have personal agendas; parents intervene; “referees suck;” and there’s always inappropriate personal relationships, feuds, and ill discipline.

Humans are messy—but in a sports program, authority tends to rest on the shoulders of a director. As long as everyone respects authority, he or she is able to decisively move forward on any issue, either by reference to policy, or experience, or industry standards.

However, according to management philosopher Meg Wheatley, “If you’re interested in creating sustainable growth, sustainable productivity, sustainable morale, you can’t do that through autocracy.”

Document Everything

Simply dictating behavior and outcomes doesn’t work in most cases these days. Well, maybe it does in a hockey program—but Wheatley says you’ll be surprised how self-correcting and complexly adaptable the Army is!

In this interview, Wheatley discusses chaos management theory. Of course, she doesn’t mean that sustainable organizations are anarchic; rather, they have the ability to turn seemingly random events (i.e. the human factor) into patterns that can help them learn and predict outcomes. The Army, notes Wheately, “studies history carefully” and “documents everything.”

But is this approach good for all businesses? Once a hockey coach introduced a new training regimen to my program—small group games—bringing to bear his experience and learning. Other coaches were easy to win over. But parents are results-oriented. They wanted full scrimmages, goals, wins. They resisted, until a collaborative approach was taken and the “whys” and “wherefores” were shared—opening up the learning experience to the parents, who self-corrected and adapted.

Disruptive Change

However, most organizations have more moving parts than a hockey program. And many have much less tolerance for risk and much greater need for process stability—think hospitals or nuclear power plants. Creating a chaotic state might guarantee change; however, its direction cannot be guaranteed.

On the other hand, organizations that thrive on creativity may be better suited for chaos management. Technology firms, for instance, may benefit from disruptive change because they require constant innovation to stay competitive.

And traditional companies may at times benefit from disruptive change for the sake of survival. The print industry is shrinking due to the adoption of dynamic media such as websites, and Kodak’s recent bankruptcy is an example of a print industry firm that failed because its change management was perhaps not disruptive enough.

Pattern Finding

If your change management job is to deliver an expected outcome, perhaps chaos is not the first arrow to reach for. Or it could be if its lessons in pattern-finding are brought to bear. Recall that one discovery of this science is the fractal, the idea that simple, repeatable, mathematical patterns are at the heart of some of nature’s most efficient designs, such as snail shells and leaves.

If chaos management can be used to observe what is occurring as events unfold, and if it can help us react rationally to those unfolding events, then we’re onto something.

Chaos theory also teaches us that events are interconnected, affected by minute external changes—the so-called “butterfly effect.” Perhaps chaos management can help us recognize this interconnectedness and let go of the search for control and certainty, embracing probability, prediction, and forecasting as key management tools.

Leaders, I think, make decisions most successfully when they fully understand the context of the organization—its complexity, risk climate, human behavior, external factors such as politics—and they are even more successful when they monitor responses and act appropriately based on what they learn.

David Beats Goliath with a Rock (Solid Approach to Market Entry)

I recently received some great feedback on my University of Maryland Doctorate of Management paper on “Globalization and the Small-to-Medium Enterprise (SME).”

Despite many challenges, I argue that there remain some tremendous opportunities for SMEs to gain market entry in a global environment through alliances, virtual organizations, and symbiotic relationships with other companies both large and small. At the end of the paper, I included an interview with Ian Bothwell of Rover Technologies, a technology-based SME.

Here’s some of the good advice Ian passed along regarding how to launch technology-based products and services in a global marketplace.

Play the Field: Market in More Than One Segment

“The ability to market your technology to more than one segment is valuable. Multiple segments implies the potential to also scale in a larger market, while the risk of failure is reduced in any one segment. However, switching segments is usually not practical very early in the market entry process, primarily because customer acquisition and product customization costs can be prohibitive.”

Horses for Courses: Find the Right Niche

“A scaling strategy in the face of an established market is extraordinarily difficult, in terms of differentiating oneself and establishing presence and credibility. For SMEs scaling is predicated on finding useful niches and entering with an attractive price/performance and matching customer needs. In Phase Two, upsell the early adopters.”

Jack Be Nimble: Use Size to Your Advantage

“The primary advantage an SME has is its size. There is no market too small or any customer too unattractive. Its agility and willingness to take risks makes it a potent market force. For technology-based products and services, this advantage means being able to adapt to diverse customer needs without incurring significant additional development, testing, or market validation costs. This requires an inherently ‘flexible’ product that can be customized rapidly, easily, and at low ‘delta cost.’”

Pipe Dream: Rapidly Introduce New Products/Upgrades

“In order to scale in a segment, while sustaining first-in-class momentum, you must introduce product improvements in a rapid tempo, usually more than once a year. This calls for a fundamentally superior design concept and flawless execution by the product team. A useful concept here is product line architecture (PLA), which has become the rage with large enterprises in their drive to eke out efficiencies.”

Triumph of the Commons: Design for Rapid Product Evolution

“A well-designed product line embeds a superior design of sufficient abstraction and commonality that it allows for the assembly of a majority of ‘common’ elements along with a small number of unique variations—to yield rapid development of a range of product forms. R&D advances fed into the pipeline allow for variations to take advantage of these technologies first before they are incorporated into the enterprise. This provides a viable implementation framework for a large range of products prior to the market entry of even the first one! Synergistically designed software and hardware provide a powerful foundation for an affordable and efficient PLA to leverage an SME’s agility in order to make a big market impact.”

Fully Baked: Design Agnostic Hardware

“Hardware design needs to be device agnostic to allow for significant upgradeability for emerging technologies that are as yet undefined. Similarly, scalability has to be ‘baked-in’ at the outset, since the PLA supports different products with widely different scaling needs. The use of standard interfaces allows for interoperability of different classes of devices, opening the door to a variety of application concepts with the same hardware framework.”

Reading the Future: Use Services-Based Software

“Software design needs to mirror the abstraction of peripheral devices. Core software design must generalize these device constructs using a meta-framework to define and model them, to allow software to understand device types yet to be developed. A services-based software framework can encapsulate various aspects of product-related functions and allow the development of common and unique services.”