In recent years an interesting discussion about artificial intelligences presence in our everyday life has started up. It is somewhat un-noticed that we have come to an era where artificial intelligence is starting to take over work, decisionmaking and even jobs that no-one could ever predicted. Here is an interesting TED talk from Ken Jennings who was the best jeopardy player and then was beaten by a super computer. I think this trend is very important, most probably it is un-avoidable and it is important for humankind to notice that. Let us think of a few examples.
The most scary and almost un-noticed example is that of the high-frequency trading on stock markets. Read here more about it. In essence artificial intelligence owned by investment banks and capital funds are driving now over half of the trades on stock markets. So how did it happen that we now have a casino, where computers are playing with our pension money? It never was a conscious decision, it just happened.
Does anyone now how Facebooks artificial intelligence chooses which posts you see on your wall? Are you driving Facebook or is Facebook influencing you and your relations? If posts of some people are constantly on your wall and posts by others are never shown to you then it does influence your relations doesn't it?
But these are just two first examples and there is more. Google is suggesting us things in the search and influencing our choices by doing so. Spotify and Youtube have a significant influence on which music we listen to. But that is just the beginning. What will the future be like? Especially when the interaction between the world and artificial intelligence becomes better and easier. And it will....
Tuesday, April 23, 2013
Tuesday, January 22, 2013
Some Thoughts About Doing SaaS and IT Business on the B2B Market
Arctic Startup published my article about the IT business on the B2B market. I hope you find it interesting reading!
Tuesday, January 8, 2013
How to make it so that people working in a big corporation would feel and work like in a family business?
"How to make it so that people working in a big corporation would feel and work like in a family business?" This is a vital question if one wants to run a successful big corporation. It is the employees who make the difference between good and bad service and success and bankruptcy. If the employees work with the same care and soul like they do in a family business then the chances of success are great. So how to achieve this?
In my experience the maximum number of people in a team that acts like a "family business" is somewhere between 10-20. If the number of people in a team grows over 20 then it becomes hard to keep a 100% one family feeling and a split into smaller units is advisable. So if there are hundreds or thousands of employees then the key question becomes how to organize them. A corporation having such a number of employees is probably offering more than one service or its service can be logically divided into different areas.
The first and the most logical way of organizing a company is around the services. For example let's take an imaginary company offering 5 quite different services ranging from "Home entertainment" to "Sales of gadgets". The way one could organize this company is to have units or divisions that offer these services. For example have the Simpsons family taking care and developing the "Home entertainment" service.
In a setting like this it is quite easy to create "a family business" mood. All you need is to give Homer good management training, set proper goals, let him pick his team and give some time. Everybody in the "Home entertainment" and also other teams knows what is their role at work. The focus is on the service and on the customers. The end-to-end responsibility for the service is in place and the first manager who can address rising problems due to different opinions or personalities is low in the hierarchy. Which is good.
But there are a few downsides to this structure. These are due to the "us-and-them" line being between service teams and they will appear in two ways. The first issue will appear if there is a need or a business opportunity to jointly offer services. For example if there are customers using two or more services and want to use just one Customer Support phone number or the business managers see that offering two services for 1,5 price would be an opportunity. The joint offering demands very much effort in an organization like this because the "us and them" line that lies between the teams needs to be crossed. The second issue are costs. This issue has a real component - for example running multiple customer databases is surely a waste and in the worst splits there could even be multiple offices to house the different teams. There is also an imaginary cost issue. Imaginary meaning that it looks like a savings opportunity but actually is not. For example one might think that if Lisa is visiting the customers and telling them about "Home entertainment" she might as well tell them about Games and sell them some gadgets at the same time. This opportunity is imaginary as enforcing this change either means a lot of training for Lisa or less time at the customer or less expertise from Lisa.
Anyway sooner or later the organization reaches either an economical downturn or a reformist manager who sees that the problems of having service based teams are too big and it is time to reorganize. The answer to all the problems that a service based organization structure has is a function based structure. Something like this:
In this model the teams are organized according to the functions. Lisa and Marge can now sell all the services. The sales process will be therefore effective. (or will it?) Homer, as a seasoned manager, is now head of all the Customer Support, not only the Home entertainment. His goal - offer the best Customer Support for all the services with the least costs and to unify the tools and processes of Customer Support.
By implementing this structure pretty soon all the co-operation problems between services start disappearing and everything will be OK....? Well.... not exactly. If all the teams are working towards their goals and the managers are good in trying to build an in-team "family business emotion" then the in-team processes will become effective, costs will be low, but so will also be the level of service. As no-one is taking care of the end-to-end service then the quality will become low, there will be process brakes. The marketing team would launch a huge campaign at the same time when customer support is laying off people and tech support is changing the platform. Or more commonly - everyone is making their processes effective and no-one is actually developing the service. This will in turn affect the motivation of the employees and one can never have a family business like emotion in an organization model like this. But this is not to say that a model like this is not suitable for some organizations. For example utility companies offering water or electricity and not in the need to keep up with the radical development and competition work probably best and most effective in a structure like this.
So how to make a family business like way of working in a large organization? The truth lies between these two extremes. In an official or un-official matrix structure. (Well I never thought I would propose it. :-)) One could have both groups who are organized according to functions, but also virtual teams that are organized to provide and develop the services or vice versa (does not really matter). The service teams could and must use the function teams as resources and co-operate tightly with them. Perhaps something like this:
In this scheme Homer could be given the authority to build a team of both his team members and get support in the way of contact persons from other teams. It is important though that he can tell all the team members that they are one team and are making the best service for their customers. The team is also fully responsible for the service and cannot blame anyone else for problems.
However some important notes about this and organizational structures overall:
- The simpler the better
- Structure and especially virtual teams should be made according to the people in the company and their will and not vice versa.
- Everyone should have at least one (virtual) team - a family - that works with the same services, topics or problems as (s)he.
- It sometimes might be that the heads of the virtual teams (with no official employees) must be more capable, more energetic and probably even higher paid than some of the line managers. Because if in a setting like this you have a bad line manager then it influences one part of the service and can be fixed by the virtual teams working directly with the specialists. But if you have a weak virtual-team service manager then you lose the whole service together with the family feeling.
And it is in these service based virtual teams that the family feeling can be created and they will be the cornerstones of the organization.
In my experience the maximum number of people in a team that acts like a "family business" is somewhere between 10-20. If the number of people in a team grows over 20 then it becomes hard to keep a 100% one family feeling and a split into smaller units is advisable. So if there are hundreds or thousands of employees then the key question becomes how to organize them. A corporation having such a number of employees is probably offering more than one service or its service can be logically divided into different areas.
The first and the most logical way of organizing a company is around the services. For example let's take an imaginary company offering 5 quite different services ranging from "Home entertainment" to "Sales of gadgets". The way one could organize this company is to have units or divisions that offer these services. For example have the Simpsons family taking care and developing the "Home entertainment" service.
In a setting like this it is quite easy to create "a family business" mood. All you need is to give Homer good management training, set proper goals, let him pick his team and give some time. Everybody in the "Home entertainment" and also other teams knows what is their role at work. The focus is on the service and on the customers. The end-to-end responsibility for the service is in place and the first manager who can address rising problems due to different opinions or personalities is low in the hierarchy. Which is good.But there are a few downsides to this structure. These are due to the "us-and-them" line being between service teams and they will appear in two ways. The first issue will appear if there is a need or a business opportunity to jointly offer services. For example if there are customers using two or more services and want to use just one Customer Support phone number or the business managers see that offering two services for 1,5 price would be an opportunity. The joint offering demands very much effort in an organization like this because the "us and them" line that lies between the teams needs to be crossed. The second issue are costs. This issue has a real component - for example running multiple customer databases is surely a waste and in the worst splits there could even be multiple offices to house the different teams. There is also an imaginary cost issue. Imaginary meaning that it looks like a savings opportunity but actually is not. For example one might think that if Lisa is visiting the customers and telling them about "Home entertainment" she might as well tell them about Games and sell them some gadgets at the same time. This opportunity is imaginary as enforcing this change either means a lot of training for Lisa or less time at the customer or less expertise from Lisa.
Anyway sooner or later the organization reaches either an economical downturn or a reformist manager who sees that the problems of having service based teams are too big and it is time to reorganize. The answer to all the problems that a service based organization structure has is a function based structure. Something like this:
By implementing this structure pretty soon all the co-operation problems between services start disappearing and everything will be OK....? Well.... not exactly. If all the teams are working towards their goals and the managers are good in trying to build an in-team "family business emotion" then the in-team processes will become effective, costs will be low, but so will also be the level of service. As no-one is taking care of the end-to-end service then the quality will become low, there will be process brakes. The marketing team would launch a huge campaign at the same time when customer support is laying off people and tech support is changing the platform. Or more commonly - everyone is making their processes effective and no-one is actually developing the service. This will in turn affect the motivation of the employees and one can never have a family business like emotion in an organization model like this. But this is not to say that a model like this is not suitable for some organizations. For example utility companies offering water or electricity and not in the need to keep up with the radical development and competition work probably best and most effective in a structure like this.
So how to make a family business like way of working in a large organization? The truth lies between these two extremes. In an official or un-official matrix structure. (Well I never thought I would propose it. :-)) One could have both groups who are organized according to functions, but also virtual teams that are organized to provide and develop the services or vice versa (does not really matter). The service teams could and must use the function teams as resources and co-operate tightly with them. Perhaps something like this:
However some important notes about this and organizational structures overall:
- The simpler the better
- Structure and especially virtual teams should be made according to the people in the company and their will and not vice versa.
- Everyone should have at least one (virtual) team - a family - that works with the same services, topics or problems as (s)he.
- It sometimes might be that the heads of the virtual teams (with no official employees) must be more capable, more energetic and probably even higher paid than some of the line managers. Because if in a setting like this you have a bad line manager then it influences one part of the service and can be fixed by the virtual teams working directly with the specialists. But if you have a weak virtual-team service manager then you lose the whole service together with the family feeling.
And it is in these service based virtual teams that the family feeling can be created and they will be the cornerstones of the organization.
Wednesday, November 28, 2012
Modern workforce requirements....at home
There has been a lot of talk about the skills shift in the labour market in Europe and USA. A big part of the simpler jobs are moving to robots, low-cost countries and are being exterminated by more excessive use of materials, standardization, computerization and better processes. There is a very interesting TED talk (Are droids taking our jobs) about how this trend will get more and more powerful.
But have you noticed that the same thing is happening at home? I mean can you even get all the stuff at home working if one of the parents is not a highly educated and experienced technician? For example when I was young the technical problem to solve was sharpening pens. Maybe you needed to sharpen a knife for that, but it was more about hands and less about brains. Now one must struggle with problems like Gmail is not working in a tablet because WiFi gets disconnected. Or reinstalling a telephone, because it cannot connect to the PC maintenance software anymore.
Try to remember how many things we had 20 years ago at home that ran on batteries. Maybe five? Can you even count how many you have today? I think the battery manufacturers have even changed the packages from a pair of AA batteries to a 16 battery box.
As I understand from the Christmas campaigns then the next job at home that will be taken over by robots is hoovering. This is of course good and one must embrace technology! Buy a robot, it is really cool and useful! However when doing so you must recognize that instead of 1h of hoovering a week you will be cleaning, maintaining, re-programming or solving technical problems of the robot-vacuum-cleaner for approximately 1h a month. So like always you save time but you must shift the skills to the next level.
What this also means is that we will face a huge youth-unemployment problem at home as vacuum cleaning is something you can start from the age of 10, but figuring out why the robot is not cleaning is something only a parent with technical education can handle.
But this is not all. Besides technical maintenance and complexity a modern family needs also make sense of all the financial services, insurances, fonds etc. A question like "will I ever get a pension?" is something that you can only answer after thorough economical analysis that do need at minimum an MBA, but more preferably a masters degree of economics.
So happy studying! :-)
But have you noticed that the same thing is happening at home? I mean can you even get all the stuff at home working if one of the parents is not a highly educated and experienced technician? For example when I was young the technical problem to solve was sharpening pens. Maybe you needed to sharpen a knife for that, but it was more about hands and less about brains. Now one must struggle with problems like Gmail is not working in a tablet because WiFi gets disconnected. Or reinstalling a telephone, because it cannot connect to the PC maintenance software anymore.
Try to remember how many things we had 20 years ago at home that ran on batteries. Maybe five? Can you even count how many you have today? I think the battery manufacturers have even changed the packages from a pair of AA batteries to a 16 battery box.
As I understand from the Christmas campaigns then the next job at home that will be taken over by robots is hoovering. This is of course good and one must embrace technology! Buy a robot, it is really cool and useful! However when doing so you must recognize that instead of 1h of hoovering a week you will be cleaning, maintaining, re-programming or solving technical problems of the robot-vacuum-cleaner for approximately 1h a month. So like always you save time but you must shift the skills to the next level.
What this also means is that we will face a huge youth-unemployment problem at home as vacuum cleaning is something you can start from the age of 10, but figuring out why the robot is not cleaning is something only a parent with technical education can handle.
But this is not all. Besides technical maintenance and complexity a modern family needs also make sense of all the financial services, insurances, fonds etc. A question like "will I ever get a pension?" is something that you can only answer after thorough economical analysis that do need at minimum an MBA, but more preferably a masters degree of economics.
So happy studying! :-)
Monday, November 19, 2012
What is the problem with open data initiatives?
Many countries, including Sweden and Estonia, have started open data initiatives in the last couple of years. The goal of these initiatives is to open up publicly owned data for enterpreneurs who can develop services on them and well... make money. However, the success of these initiatives has been only moderate until now. I think the highest success has been with services offering public transport route planning and similar, but mostly the services are more or less only interesting toys. So why is the success moderate? I see several reasons for that:
- The data being opened (for free) is usually commercially un-interesting. It is not the citizen or business registrys that you get access to for free.
- Consumers in general are not willing to pay anything for e-services. It is the businesses that make money with e-services and who are also willing to pay for them.
- The institutions themself, like for example Stockholms Lokaltrafik and also Google, provide very good services on the original data and it is virtually impossible to compete with them.
So what to do? How to give life into the overall idea of open data?
I think the answer is to change the overall notion into providing valuable data, for a fee, to organizations who have legal rights for that. This idea gets also much better if you put it into EU context. I am sure that:
- The Finnish State would be happy to pay much more than the IT integration costs if the Finnish police would get through the X-Road platorm access to the Estonian car registry. And it would also be a win-win situation for the citizens of both countries. (Well if we don't count in Estonian car owners who don't follow parking rules in Finland)
- if you move to another country and want to buy a broadband connection, cable-TV or maybe take a bank-loan then the telco's and banks would be happy to pay for a query to your previous homelands income tax database to check if you are economically viable. You would also be happy to give them that access.
- businesses would be happy to pay for data like addresses, infrastructure maps, people and business data.
So there is lot to win in the open data area. But to make it happen we should focus on more valuable data and the legal and security questions to make it available for the right and only the right parties.
- The data being opened (for free) is usually commercially un-interesting. It is not the citizen or business registrys that you get access to for free.
- Consumers in general are not willing to pay anything for e-services. It is the businesses that make money with e-services and who are also willing to pay for them.
- The institutions themself, like for example Stockholms Lokaltrafik and also Google, provide very good services on the original data and it is virtually impossible to compete with them.
So what to do? How to give life into the overall idea of open data?
I think the answer is to change the overall notion into providing valuable data, for a fee, to organizations who have legal rights for that. This idea gets also much better if you put it into EU context. I am sure that:
- The Finnish State would be happy to pay much more than the IT integration costs if the Finnish police would get through the X-Road platorm access to the Estonian car registry. And it would also be a win-win situation for the citizens of both countries. (Well if we don't count in Estonian car owners who don't follow parking rules in Finland)
- if you move to another country and want to buy a broadband connection, cable-TV or maybe take a bank-loan then the telco's and banks would be happy to pay for a query to your previous homelands income tax database to check if you are economically viable. You would also be happy to give them that access.
- businesses would be happy to pay for data like addresses, infrastructure maps, people and business data.
So there is lot to win in the open data area. But to make it happen we should focus on more valuable data and the legal and security questions to make it available for the right and only the right parties.
Thursday, October 4, 2012
How to avoid development?
All office workers and especially managers know that development and change are very uncomfortable. Changes like new products, new processes, new structures demand extra effort and work. There are usually many loose ends and many new things you need to think of. Perhaps a change would mean cleaning up the mess you currently have in the IT systems, technological architecture or processes. You probably might also need to talk to people that you do not know previously or maybe even don't like. All this is very stressful. So how you as a manager can silence that (annoying) guy with the new bright idea. How to kill the enthusiasm of creating new ways of working? Here are some ways how one can accomplish that:
It all starts by creating a process for incoming development ideas. The process must definitely not start with an e-mail or a phone call to you. No, no, no - that would have the opposite effect. Instead consider the following methods:
- Create a mailinglist for the incoming ideas and accept only e-mails that you receive there. You might be the only person in that list, but accept only e-mails that are sent to the correct mailinglist address not your personal one.
- Create a formular for new ideas. The less changes you want the longer the formular. With this you can also put the task of solving many issues from your shoulders to the "guy with the idea". Ask questions like: Do you have acceptance from that, that and that person/department? or What resources do you need? or Do you have a budget for this? Nevermind, that you have the most experience and information to answer these questions. Put them in the form and if they are not filled then - sorry.
- As a mailinglist is still a pretty easy way for sending ideas you might rather set up a un-userfriendly IT system for that. Go wild and use SAP! Note also that using a complicated process for getting a username and password for that IT system provides another fine way of filtering out those annoying ideas of change. Consider for example outsourcing that to the Helpdesk in India.
- Maybe demanding the idea to be faxed to you would be going a bit too far, but do demand a lot of decision material in the form of a business plan, cost analysis and detailed project plan. Why not throw in a risk analysis, customer and market analysis or a demand for reporting. Here can you a lot of ideas from government agencies that are dealing with subsidies for businesses and organizations.
- Finally, set up a board that decides whether the idea is good or not. Meet no more than once a month. Do limit the time of the meeting and the amount of ideas that get an OK. You could even agree with the neighbouring department that if they say no to an idea then you say no to it and vice versa. So you can always ask: "Have they accepted the idea?"...
Do you know any better methods for fighting corporate progress?
Ehh....if it only wasn't the customers, technical progress and competition.
It all starts by creating a process for incoming development ideas. The process must definitely not start with an e-mail or a phone call to you. No, no, no - that would have the opposite effect. Instead consider the following methods:
- Create a mailinglist for the incoming ideas and accept only e-mails that you receive there. You might be the only person in that list, but accept only e-mails that are sent to the correct mailinglist address not your personal one.
- Create a formular for new ideas. The less changes you want the longer the formular. With this you can also put the task of solving many issues from your shoulders to the "guy with the idea". Ask questions like: Do you have acceptance from that, that and that person/department? or What resources do you need? or Do you have a budget for this? Nevermind, that you have the most experience and information to answer these questions. Put them in the form and if they are not filled then - sorry.
- As a mailinglist is still a pretty easy way for sending ideas you might rather set up a un-userfriendly IT system for that. Go wild and use SAP! Note also that using a complicated process for getting a username and password for that IT system provides another fine way of filtering out those annoying ideas of change. Consider for example outsourcing that to the Helpdesk in India.
- Maybe demanding the idea to be faxed to you would be going a bit too far, but do demand a lot of decision material in the form of a business plan, cost analysis and detailed project plan. Why not throw in a risk analysis, customer and market analysis or a demand for reporting. Here can you a lot of ideas from government agencies that are dealing with subsidies for businesses and organizations.
- Finally, set up a board that decides whether the idea is good or not. Meet no more than once a month. Do limit the time of the meeting and the amount of ideas that get an OK. You could even agree with the neighbouring department that if they say no to an idea then you say no to it and vice versa. So you can always ask: "Have they accepted the idea?"...
Do you know any better methods for fighting corporate progress?
Ehh....if it only wasn't the customers, technical progress and competition.
Monday, September 3, 2012
About saving costs
Saving costs is something every organization needs to do now and then. Usually the focus is on training, travelling, personell, office costs and vendors. However, there are a few areas that usually are overlooked when cutting costs. As these are very important and big costs they definitely demand more attention from the managers.
First - "Projects that get 90% done.... but are not launched". A project that is almost launched is like an "almost goal" in football. The effort has been made - work done and money spent - but there is no use of it. If you look around in your organization I am sure you can find numerous such things. For example:
- Strategies that were worked out by a team and left then laying in the shelf
- New products that were developed, but never introduced to the market
- Process development that was designed, decided on, but not implemented
In many cases the reasons for not doing the last bit are subjective. A person leaving or a change of mind of someone. However the waste created by such efforts should be carefully monitored by the managers and projects that are not going anywhere should be stopped immediately.
Second - "Fighting between people, organization units - us and them". In general grown-ups and children are not that much different. For some years now I have had the possibility to compare relationship issues at work to the issues my two groundschool age daughters have with each other. It is amazing how alike these issues are. Usually they are:
- I want to do this, they want to do that.
- I have done my part and it is a lot more than they have done
- They are stupid and don't know how things really are
At home these fights result in very long "dressing up to go for a walk" time and mostly a higher authority in the form of a mother or a father is needed to get the process going. But imagine how big is the time and money wasted if two specialists or even organizational units substitute co-operation with arguing. Tens of people might spend months on working out information flow, strategy implementation or similar processes to start co-operation whereas the real problem is relationships.
A challenge with the fights between adults is that they are not so visible as the fights of children. People are polite and hide their feelings. So as a manager you really need to look for these fights in order to solve them.
Third - "Non-organizing". Modern organizations are globalized and this means being big and having a complex structure. In this complexity however one easily looses the total end-to-end picture of a process or a product. Things might get also very complicated. The (legacy) IT systems create their own unefficiency-s.
Solving the organizing issues is difficult. It means change, it means learning how things work thoroughly and deciding on the 20% of cases that will not be solved by the new process, but will be handled manually.
All these three areas of costs are difficult to solve and provide results in the long run. However getting them solved provides huge value for the organization and ... these are the most important tasks of the managers.
First - "Projects that get 90% done.... but are not launched". A project that is almost launched is like an "almost goal" in football. The effort has been made - work done and money spent - but there is no use of it. If you look around in your organization I am sure you can find numerous such things. For example:
- Strategies that were worked out by a team and left then laying in the shelf
- New products that were developed, but never introduced to the market
- Process development that was designed, decided on, but not implemented
In many cases the reasons for not doing the last bit are subjective. A person leaving or a change of mind of someone. However the waste created by such efforts should be carefully monitored by the managers and projects that are not going anywhere should be stopped immediately.
Second - "Fighting between people, organization units - us and them". In general grown-ups and children are not that much different. For some years now I have had the possibility to compare relationship issues at work to the issues my two groundschool age daughters have with each other. It is amazing how alike these issues are. Usually they are:
- I want to do this, they want to do that.
- I have done my part and it is a lot more than they have done
- They are stupid and don't know how things really are
At home these fights result in very long "dressing up to go for a walk" time and mostly a higher authority in the form of a mother or a father is needed to get the process going. But imagine how big is the time and money wasted if two specialists or even organizational units substitute co-operation with arguing. Tens of people might spend months on working out information flow, strategy implementation or similar processes to start co-operation whereas the real problem is relationships.
A challenge with the fights between adults is that they are not so visible as the fights of children. People are polite and hide their feelings. So as a manager you really need to look for these fights in order to solve them.
Third - "Non-organizing". Modern organizations are globalized and this means being big and having a complex structure. In this complexity however one easily looses the total end-to-end picture of a process or a product. Things might get also very complicated. The (legacy) IT systems create their own unefficiency-s.
Solving the organizing issues is difficult. It means change, it means learning how things work thoroughly and deciding on the 20% of cases that will not be solved by the new process, but will be handled manually.
All these three areas of costs are difficult to solve and provide results in the long run. However getting them solved provides huge value for the organization and ... these are the most important tasks of the managers.
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