Core Value and Core Competency

The concept of core competency has been a central idea of management theory for many years. The central idea is, that in order to gain competitive advantage an organization must focus its energies on the activities or tasks that will create the greatest customer value. This is the only way in which to generate sustained competitive advantage.

Essentially there are three ideas. First, find out what the customer values, this is what Geoffrey Moore terms core value. Second, organize your company and focus your energies around the activities or core compentencies that deliver core value in the most efficient and effective way possible. Third, leverage core competencies to deliver more core value over time.

This conceptualization closely ties core value to core competency. And clearly, core value comes first. What often happens however, is that organizations will incorrectly place core competency ahead of core value. Companies assume that customers will value that which they already do well. It is a very easy, but dangerous mistake to make.

This happens because all core activities which generate superior value are eventually matched in the marketplace and become what Moore calls context, necessary but not worth a marketplace premium. The force that over time makes core activities into context activities is powerful and cannot be readily stopped. Activities that may have been core, eventually become context. Organizations are structured to deliver not only core but context activities. Groups who may have once been prime movers in core value delivery, but who are now engaged in context activities are not usually willing to recognize this, and give up power and resources to groups focusing on core activities. This is one reason, large corporations often fail, they lack the ability to adjust their core compentencies to deliver core value.

Sign On or Sign Off?

Sign off is the terminology used in many corporate IT departments to signify that project planning, requirements, design, testing and other deliverables have been approved by stakeholders. Sign off implies a hand off of responsibility from party to party and a binding contract with rights, obligations and if necessary, penalties. It often creates an adversarial mindset, and implies some distrust and suspicion.

An alternative terminology is sign on. Sign on is about creating a shared understanding and creating a commitment to reaching common objectives. It is about shared responsibility and accountability. Sign on borrows the idea from contracts that precisely defined expectations and relationships are important, but avoids the trap of using a contract as a club to force parties to live up to agreements. Sign on promotes cooperation, not confrontation.

In many companies, sign on is in fact the common practice, but sign off is the terminology used. To reflect what is actually going on, the term sign off should be used for agreements which are 'binding', and the term sign on used for agreements where there is a shared understanding of common objectives.

Blogs and Learning Styles

People learn in many different ways. Some people learn by listening, some by reading, some by watching, some by doing and some by writing. Some take a top down, big picture approach and some start with details and work up to higher levels of abstraction.

Learning is essential to success in most endeavours these days, so efficient learning is an important skill.

Blogs are often seen as ways to publish information, but for many, blogs are actually a way to learn. Blogs capture thoughts which may not be fully worked out and coherent, but that's fine, if a blog is seen as a thinking tool, rather than the final say on a topic. It should also be remembered, that editing often eliminates useful ideas, and free flowing unedited blogs often leave useful ideas in the text.

I confess that for me, a blog is a thinking, rather than a publishing tool. It allows me to capture some thought and express it. Most thinking evolves, and both the thought and the expression of the thought can change. A blog creates a useful point in time record of some thought, which can later be reviewed and revised.

Now of course, a blog is a public tool, and really you could easily write thoughts privately. However, a blog has a useful role in encouraging complete and coherent entries, since somebody might actually read your blog, and complain if the text is completely rambling and incoherent!

Decisions and Flat Organizations

Recent years have seen a movement towards flat organization structures. One of the reasons that this occurs, is that decision making in flat organizations is often better than hierarchical organization for the following reasons:

1. Its hard to get good decisions made within a reasonable period, if the information required to make good decisions is complex and difficult to make sense of. The domain experts are usually better qualified to make a decision in complex domains.
2. The decision maker is highly motivated to successfully implement a decision. As decisions pass down a chain of command, motivation decreases.
3. Decisions traveling down a long chain of command are often not clearly communicated. The shorter the gap between the decision maker, and the implementors, the more likely the decision will be communicated clearly.

Complex and fast moving environments in particular, require flat organizations. Firms in the technology and Internet markets are prime examples. The speed and quality of decision making in these markets has consequences which are large and immediate. Hierarchical organizations will simply fail against organizations where decisions are made by the front line experts who have the knowledge to make decisions quickly. This is one reason startups do so well in these markets.

When someone is responsible for both making and implementing a decision, their motivation is very strong. Its not necessary to offer many extrinsic rewards, the individual is self motivating. This is the reason it is wise to let people make their own decisions as much as possible. This implies as few management layers as possible.

When decisions are made, the decisions are communicated in two ways: overtly through instructions and covertly through incentives. There are a couple of issues here. Most companies and their managers fail miserably at telling their employees what they want. Most employees end up guessing what they should do. The real motivators are pay incentives and potential promotions. However, actual incentives don't always line up with the intent of the decision. Incentive schemes can be 'gamed' or manipulated to get the rewards without fulfilling the intent behind the incentive. Stock options for executives are a prime example. Boards were trying to motivate executives to increase long term shareholder value, but CEOs ending up increasing the short term stock market price instead.

This is quite a deep and complex topic, which can't be covered in such a brief note. More, in future posts.

Decisions - An Event or a Process?

Decisions are usually either an event or a process.

When a decision is an event, it is simply announced and the expectation is it will be carried out without debate or discussion. The decision tends to be final.

When a decision is a process, discussion and debate are welcome and encouraged. Decisions are subject to change and adjustment.

When a decision is an event:

• Works well when immediate action is required or when the issues are clear cut.
• Can be bold and decisive.
• Can result in highly innovative decisions.
  
• Emphasis is on follow through rather than adjusting course.
  
• Consistent action is what is required.
• The letter rather than the spirit of the decision is rewarded.
• Accepting and implementing the decision is a sign of loyalty. Loyalty is rewarded and disloyalty punished.
  
• Those implementing the decision have low intrinsic motivation. Extrinsic motivation or rewards may be necessary to motivate action
• Debate is not welcome.
  

When a decision is a process:

• Buy-in from participants is very important.
• Intrinsic motivation tends to be high from participants.
• Decisions may be delayed while input is gathered.
• Decisions may change as more participants are engaged.
• Favorable results may be required early, to avoid reopening the decision.
  
• There may be confusion about what the decision is.
• Decisions may be timid as a result of compromises which attempts to satisfy all constituencies. Decision by committee.
• Group think may occur.
• Destructive rivalries may emerge as different groups jockey for a favorable outcome.
  

Note that in the above discussion, the correctness or wisdom of the decision is not that important. Its the way in which the decision is arrived at and announced that matters. This is a shocking statement to those readers who value the correctness of decisions.

Its very common for professional people (engineers, analysts, programmers) to debate decisions which are not in fact subject to further debate. This is a career mistake. Avoid it. Save your arguments for when you are asked for your input. In many organizations, you will only be asked for input, once you've demonstrated loyalty.

Some organizations never let their front line or mid level people inside the decision making process. If you work for such an organization, my advise is to rise quickly or get out quickly, otherwise your lack of access to decision making authority will likely drive you crazy if you have any ambition.