Drips of recreation

We all know that recreation is important for a good life. What counts as recreation varies from one person to another. The other day I discovered the effect of doing "something else". Usually, I am not the one shopping for groceries at our house - I tend to work (sometimes even intensely) until I leave office for the commute back home. The other day I stopped at the grocery store (one of the up-market kinds) to get something nice for dinner. I got some nice fresh food - and a gourmet coffee for the car ride - took about 30 minutes extra out of my schedule. This little break from the daily routine really gave me a lift. So - I am definitely going to look for more routine-breakers - they can really save the day!

Charging.... please wait

Batteries need to be charged now and then to provide energy to our gadgets. Now its vacation time and batteries are working overtime while we are recharging our internal batteries. I've been off to a couple of weeks of vacation time now, and it has been deliberating. Although I feel that I have a good grasp of managing my own work day, some time without thinking about work at all is really good. Lazy days with books, coffee, family and friends has really brought me into a state of mind that the professional world is very efficient at taking away from people. I think it is called harmony.

So... since this is a very nice feeling, I started thinking. How to bring more harmony into the workplace when the vacation is over - to elongate the effect of the holidays? I came up with three bullet points that I will test when I have spent a few more weeks doing absolutely nothing but reading, swimming and relaxing;

1. add some physical activity during the work day (my job is very far from manual labor...), like a walk during lunch time (I know this is a classic, I've just never made myself do it).
2. plan for procrastination... or plan for meaningful breaks duirng the day. Like reading a poem. If you plan for it, it won't make you stressed out.
   
3. cut through during stalled meetings such that you don't have to spend your time there.

When I am back to work I will start to practice this and try to devise a way to judge the effect of it on my own well-being as well as my work day productivity.

Enjoy the holidays!

Fundamentalist perspectives

In this blog we have discussed the use of key performance indicators a lot. These are numbers that can be used to monitor progress towards predetermined goals - and they can be very useful if selected wisely. They do, however, give a shallow view of the situation, but have the advantage of giving a quick overview of the state of affairs. Sometimes, however, a deeper look at things is certainly justified.

It is from this point of view I am thinking of fundamentalist perspectives; these are terms used to describe stock brokers. A fundamentalist among stock brokers is not likely to support a large black beard and be carrying sables around. He us much more likely to be wearing something from Gucci and talk about taking the fundamentals into account when valuing stocks. With fundamentals we understand such things as financial standing of the company to be traded, general market conditions, the weather, season, the company's manager's ability to implement change and so on... On the other hand, there are other stock brokers, the socalled technical analysts. They try to value stocks and predict the future by looking at how the stock value and some other KPI's have moved in the past. Both of these groups tend to think that the market is not efficient on the short term. The fundamentalist typically thinks the market is efficient in the long run, whereas the technical analyst will tend to explain the market from past trends and mention behavorial finance and the like. We'll save more on this for later.

I think that both these types are fundamentally wrong - but both types of analysis can be useful. In our assessment of general progress we should sometimes move from the technical analysis kind of thinking to thinking in terms of fundamentals - how have my actions effected the important things for me? Am I feeling more happy now, or are the KPI's fooling me to believe I am making progress when I am not? If the KPI's are astray when you start considering fundamentals - you need to select new KPI's that are better aligned with your true goals. One should perform a fundamental walk-through now and then on all projects one is working on, to make sure everything is allright. And, of course, by thinking in qualitative, conceptual terms, bright ideas may even be born!

Avoid the glass roof

Have you ever heard of the glass roof? A lot of mid-level managers with ambitions know what it is, a lot of hard-working engineers know what it is - and it seems inpenetrable. It is the invisible obstacle that stops you from climbing the career ladder within your organization.

Do you have ambitions to climb to the top, or at least to higher altitudes? Most organizations are somewhat hierarchical; only so many positions are available at the top and the number of broilers trying to climb is large... How can you avoid bumping your head against the glass ceiling?

As always - it boils down to strategic thinking. First of all, you need a career vision, a goal. You need to know where you want to end up, why you really want that, and what you are willing to pay to get there (in whatever currency is relevant; time, money, work, lost friends, whatever..). Then, when you know, identify all necessary career steps to get there and make a realistic plan to get there. Identify locations of possible obstacles. Typically, getting from mid-level management to top-level is hard and time consuming. When your plan is clear cut, start implementing it and monitoring progress. With fixed time intervals, ask yourself survey questions such as:

• Am I at the level I planned to be at the current time?
• How did I get here: according to plan, or did something else happen?
• Are the obstacles still the same?
  
• How can I go around or avoid obstacles?

And also, finally, the most difficult question:

• Is my goal at all reachable at an acceptable cost from my current standing?

If the answer to this question is "No" - you need to rethink your strategy. You can stay where you are and be happy with it, or change the situation such that you have a feasible goal. One possible answer would be to switch to another company - or start your own.

If keeping focus is hard - you may resort to tracking numbers. Create your own performance indicators and savor those informal reviews from your subordinates as well as your managers. Always be self-promoting, but also easy going. Get the point? Good luck!

Unplugging for productivity

Stepcase lifehack has a nice story on how to avoid the continuous electronic distractions: unplug your online life. The idea is generally to step away from the computer and stick to pen-and-paper tools. I don't go to those extremes, but here are some favorites of mine for increasing productivity when working morale is low:

• close your e-mail program
• close the office door
• close all applications you are not using on your computer
• do one thing offline: keep an offline to-do list and check each task when its done
• drink high-quality coffee while working
• do not use the computer mouse - the keyboard keeps your attention at work

Try it out the next time you are noticing that your are sliding away from where focus should be; it helps for me at least!

Professional sports are all about bus...

Professional sports are all about business. Transfer sums in European soccer have grown exponentially over the last couple of decades and Real Madrid is about to set an all-time high with its 75 million £ offer on Ronaldo, reported by several newspapers yesterday night (Guardian.co.uk). 75 million pounds is a lot of money, it translates to about 123 million U.S. dollars. According to the Guardian, Manchester United, which is Mr. Ronaldo's employer today, is categorically refusing to sell Ronaldo, treating him like an invaluable asset. Florentino Pérez, the president of Real Madrid, seems to be on a buying rampage to ensure Real gets the best players around. They just signed with Kaka from AC Milan, another substantial contract costing Real 65 million £. The Guardian also inquired by Mr. Pérez about rumors that Real are interested in Liverpool's Xabi Alonso. Mr. Pérez answered that they are not looking in this direction, in spite of Alonso's very good qualities, because Liverpool has not signalled him for sale. 

Now, Mr. Pérez, I find that mighty strange. Liverpool has not signalled that Alonso is for sale, but have they signalled he is not for sale? Not to the best of my knowledge. What about Cristiano Ronaldo? Manchester United has not signalled that he is for sale, but they have for sure made clear that Ronaldo belongs at Old Trafford for a long, long time. Yet, Pérez says the most important thing is to stay friendly to the other European clubs. What is the strategy here? Making these statements, that it is important to stay on friendly terms with one's competitors, as well as saying that Alonso is not in the sight for a contract in Spain, makes Mr. Pérez seem like a mild man at the position of a lion; the president of one of Europe's larges soccer clubs. This mild man picture does, however, not go too well with the liking of a hostile take-over of Cristiano Ronaldo. The interesting thing with this offer is to see what Manchester United does about it; can the club afford to say no to more than a 100 million dollars? Is one man really worth such sums? Real Madrid seems to think so. Now it only remains to see what the executives in Manchester do. If the transfer sorts itself out for Mr. Pérez, for Ronaldo (who has previously said he'd like to move to southern Europe) and for Sir Alex Ferguson, it remains to see how the soccer landscape of Europe could change. Is the transfer going to affect the power positions in Europe? A lot of money will be shifting hands; think of all the recruitment programmes you could set up and run with a 100 million dollars! Is Ronaldo really that much worth? With a typical business CEO in charge at Old Trafford, Cristiano Ronaldo would be history in Premier League. What really happens remains to be seen though, because when it comes to decision making, footballers and old-fashioned corporate executives do not think alike.

Why Business Intelligence Software Is...

Most of the large software providers have some business intelligence related offerings. Microsoft offers the Microsoft Dynamics package. IBM is the largest provider of such software. And there are many other smaller options. These software packages share several features:

• they are providing graphics for managers with overviews of key performance indicators
• they aid in selecting KPI's
• they include options for database queries

What they don't do is more important when we are considering how such applications could be improved. They don't tell you whether your key performance indicators are well-aligned with the overall strategy of your organization. They don't tell you which data are most relevant in order to make good decisions. Software can be made in more intelligent ways to support such tasks. 

Let us first take the issue of alignment with strategy. Most of these systems include the concept of balanced scorecards in some form or the other. The concept of a balanced scorecard is well-known among managers because this is now standard material at any business school. The balanced scorecard is supposed to be a snapshot of an organizations current "operating state" and was developed at Harvard in the 1990's by Prof. Kaplan and co-workers (Kaplan, 2001) . The idea is as follows. Any company must be very clear on what its purpose is in order to succeed in a harsh and competitive environment - in other words, you need to know what you want and what you are doing to survive in a free market. When this "company mission statement" is clear and agreed upon, a strategy must be laid out on how the company is practically going to achieve these goals. A very common approach in determining the strategy is to select some business areas to focus on - and then to formulate performance measures within each category. This makes the strategy more manageable and is also the foundation of a scorecard. A typical scorecard looks at the company from a few different angles: 

• the shareholder view,
• internal business processes,
• customer view,
• innovation and learning view.

These are four categories suggested by Kaplan and co-workers - and they seem to fit many organizations quite well, at least those which strive to make a profit for the owners, a.k.a. reguler firms. Within each of these categories, a set of performance measures is selected. These key performance indicators need to provide good information on how the organization is doing in that field and should be closely watched. The problem is just that selecting them can be quite difficult; there are no generally accepted methods to do that and the selection is often done based on intuition and experience. Much better results could have been obtained with mathematical models and optimization methods - formal decision processes that can be implemented in software and that can be updated when there are large changes in the organizations operating environment. 

In order to formalize KPI selection, a mathematical model of the company is needed. Such models can be built based on transaction data, HR data, customer interviews and so on - activities that generate a large business database. Textual information must be translated into numerical forms by appropriate coding setups; methods well-known in statistics. From this large set of data, it is possible to do principal component analysis and end up with a relatively low-dimensional linear model of the data: a model predicting how outcomes change when you change of the aims are applied in your business system. This model, together with a clear definition of the vision, or strategy, in mathematical terms can be used to automatically compute a set of functions of business outcomes that are measured on a regular basis, that are such, that when they are kept close to some pre-determined values the company will perform well and according to strategy. Such an approach would create KPI's that are as closley aligned with the strategy as possible with the available business information: a huge improvement over the common situation today where the strategic alignment of the preferred KPI sets are questionable at best. 

If such a formal procedure is going to be implemented together with a balanced scorecard system, a performance measure must be established for each of the four categories above (or, generally, the categories in use in the managment system). This could yield a better scorecard implementation. 

The day will surely come when model based KPI designs arrive - a situation longed for by auditing firms - imagine the profits that are possible if you can produce a continuous auditing system: a highly specialized and craved-for software which reduced the need for expensive-to-hire specialist accountants. Continuous auditing is definitely coming, and principal component analysis, database analysis and optimization theory will surely play a big part in this very exciting future of business intelligence systems. Maybe these systems will actually be intelligent, some day. What is needed to reach this situation? Research in applied mathematics, database conversions and a lot of software development. 

Therefore, if you are considering buying a business intelligence system, make sure you are not ending in a vendor lock-in situation with one of the big software houses; the future may come from an entirely unheard-of company: small startups are often the more innovative ones.

References
Kaplan, R. S. "Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part I." Accounting Horizons 15.1 (2001): 87.

Takeaways

• Business intelligence systems are not intelligent
• KPI selection can be automated and aligned with company strategy
• Continuous auditing is possible in the very near future