Strategic and Utility Projects

There are two kinds of systems/projects and the differentiating factor is competitive advantage.
One is called Strategic and the other is called Utility.

Utility
• An example of utility project is a ‘payroll application system’.
• In utility projects/systems, the focus is to keep the cost low and avoid disaster.
• Risk: is a risk of commission –doing it wrong.
• Use utility packages and reduce the cost ( compared to building customized systems; remember peoplesoft)

Strategic
• The other kind of system is strategic in nature. It can be any system that provides the competitive advantage to your business.
• In strategic systems, speed and innovation are more important and cost is a lesser consideration.
• Risk is the risk of omission- missing doing it.
• To attain the differentiating factor, follow shorter iterations, use cross functional and high capability teams.

When I heard Martin Fowler talk about this ( December 2010 Chennai, India), following thoughts came to my mind.

# Strategic projects, by their very definition don’t allow us to be focused only on resource utilization and capacity utilization.  These do matter, but we won't be dead if we go above planned limits on these, but can consider ourselves dead if we miss the target.
# This strategic vs utility categorization helps when companies need to do their portfolio planning and assign their limited resources.
# This division need not be a strict dichotomy, since for sure, there may be more categories of projects people can come up with. But if we strictly use the word 'competitive advantage' to define 'strategic projects', and be honest and can make people see the advantages of this approach (without allowing politics to color our decision making), then i am sure we can just do with these two categories.
# If a project is identified as Utility, then the company need not spend the same kind of resources on it like it were a strategic project. Where ever it is possible, company can get to save money by aligning their process in synch with the process definition of commercial off the shelf software (COTS).
# Projects can start as strategic and then become utility or vice versa. this happens when the project no longer provides any competitive advantage.

Influence - The Psychology of Persuasion by Robert Cialdini: Notes to Self

I first came across a mention of this book Influence by Robert Cialdini while reading Taleb's Black Swan. In Taleb's book, i read that Human beings don't consider all the factors available to them in making a decision, but use a single, highly representative piece of the total. We don't every time consider all the factors due to lack of time and also all the decisions that we need to take aren't very important. I was surprised and enthused to explore this further and hence i ended up reading Prof Cialdini's  book.

The learnings from the book are very enlightening, to say the least. It wont be an understatement if i say that the book helps me to look at human interactions and how we take decisions in a different light. What follows below is a condensed version of the notes that i took from the book. This book mentions Reciprocation, Consistency, Social Proof, Liking, Authority, &  Scarcity, and tells us that these single highly representative pieces of information (prompts as the book calls it),normally helps us correctly and we can take decisions without thinking.

But the absence of thinking can be exploited to lead people into making wrong decisions.But we are in a dilemma because we can't afford not to use these prompts as the pace of modern life demands that we frequently use them.Hence it is very important to know when we are using these prompts and where and how we are misled into taking wrong decisions ( for us) and how to avoid being led into such decisions. This book calls people who use the prompts to get decisions they want, as compliance professionals.

Reciprocation rule says that we should repay in kind what other person has provided us. Human beings enjoy a significant advantage because of this rule and we are trained to comply and believe in this rule. Added to this is the fact that people can can trigger a feeling of indebtedness in others by doing an uninvited favors. And we are also trained to repay the person who provided us. One of the other things that we are trained is not to refuse things which are offered as gifts (as otherwise we would end up offending the gift giver).

All the above put together means that we can be manipulated: Since this rule allows one person to choose the nature of the indebting first favor and the nature of the debt canceling return favor, we could easily be manipulated into an unfair exchange by those who might wish to exploit us. And since the society frowns upon some one who doesn't pay back a favor in kind, we are conditioned to be uncomfortable when beholden and want to return the favor as soon as possible. and when we want to return the favor, we don't look to repay exactly in kind and flexible enough within similar action boundaries.

Ever wondered why free samples are provided by merchants?. The free samples come as a gift and engage the reciprocity rule and we many a times end up buying the product

Another variation of this is Reciprocal concession, a technique where two requests are made and when the first request is refused and when the second request which is relatively smaller is made, it is invariably accepted. This is also called the rejection and retreat technique. Imagine the number of times we have given names of our friends to telephone callers or door to door salesman after refusing to buy their service/product.

How not to be influenced: The real opponent is the rule and not the person who invokes the rule. Since we can't reject point blank all favors as we will always come across generous and genuine people as well as people who try to play fairly by the reciprocity rule. Once we understand that the initial offer was not a favor (as per reciprocity rule) but a compliance tactic, we have the option of not returning the favor and saying no.

Commitment and Consistency: We have a powerful urge to (appear to) be consistent with what we have already done/said. Once we have taken a decision or stand, we will encounter personal and interpersonal pressures to behave consistently with that commitment. Those pressures will cause us to respond in ways that justify our earlier decision.

This is because we have been brought up to think that inconsistency is an undesirable personality trait. Society doesnt respect much the person whose beliefs, words and deeds don't match and sees them as indecisive, confused, two faced or even mentally ill. Because it is so typically in our best interests to be consistent, we easily fall into the habit of being automatically so (without thinking), even in situations where it is not sensible to be so.

Like other prompts, consistency is also used to take decision without thinking. But the second more important point regarding consistency is that this automatic consistency functions as a shield against thought. Hence when we are mentally slacking, we can be exploited by those who would prefer that we don't think too much in response to their requests for compliance.

Compliance professionals make their victims agree to seemingly small and trivial requests, because once compliance for a small act is got, this can be used to get compliance on the bigger act - the bigger acts are usually remotely connected to the smaller tasks.

Written statements are also used to get compliance as they are more powerful than oral statements. This is the idea behind the purpose of 'I like this product because....' contest. This contest creates a favorable opinion in people's mind about the product and people need to follow up on the commitment by buying it.

Another instance is getting people to publicly commit to something. More public a stand, more reluctant they will be to change it and hence people need to be watchful about the public commitments that they make.

How not to be influenced:"A foolish consistency is hobglobin of little minds" - Emerson. There are two kinds of signs to tip us off. The first sort of signal occurs in the pit of our stomachs when we realize we are trapped in complying with a request we know we dont want to perform.

The second is by asking this question ' knowing what i now know, if i could go back in time, would i still make the same choice?'. the important part of the question is 'Knowwing what i now know'.

Social Proof: Canned laughter makes audience laugh longer and more often when humorous material is presented and helps to rate the material as funnier that what it actually is. This is an example of social proof at work :)

The principle of social proof states that one means to determine what is correct is to find out what other people think is correct. This principle applies especially to the way we decide what consitutes correct behavior. This tendency to see an action as more appropriate when others are doing it, normally works quite well. Like other weapons of influence, this provides a convenient short cut to determine how to behave ( without thinking), but, at the same time, makes one who uses the short cut vulnerable to the attacks of profiteers. This is exploited in variety of settings

Have you ever wondered why and how #1. Professional beggars always have some coins in their begging bowl? #2. Bartenders' tip jars always have a few dollar bills even at the beginning of the evening?  #3. Advertisers use terms like 'fastest growing' or 'largest selling' to advertise their products?  All these are examples of using social proof in advertising.

How not to be influenced: The key to say no lies in looking at what is being sold/ pushed across for what it is really worth for us, rather than going by what it means to others. Asking a question like ' is this idea really good/correct or is this product what i need?' and removing the influence (many a times made up) of what the society or a group of people think/say about the product/idea.

Liking: Sales happening at tupperware party is one example of 'Liking' prompt at work. Here the liking bond between the friends is used by compliance practitioners to produce assent and hence sell.

As a rule, we most prefer to say yes to the requests of some one we know and like. This simple behavior is used by total strangers to get us to comply with their request. People's responsiveness to physical attractiveness falls into a category that is called Halo Effect. This is because we automatically tend to assign favorable traits, to good looking people, as talent, kindness, honesty and intelligence. Hence the Halo effect of physical attractiveness is regularly exploited by compliance professionals.

Similarity is another area where compliance professionals make use and influence our decisions/opinions. this similarity can be in areas of opinions, personality traits, backgrounds and interests similar to ours.Because even small similarities can be good enough in producing a positive response to another and because a veneer of similarity can be so easily manufactured, special caution in the presence of people who claim to be 'just like you' is very much needed.

Compliment is another area that compliance professionals can use to trick us to take decisions that they want. information that someone likes us can be bewitchingly effective device for producing return liking and willing compliance. When we like some one, we don't think much before we cooperate with them. Hence compliance professionals can make use of cooperation to get answers they want or even manufacture cooperation when it is absent.

Advertisers use good looking models to sell cars and professional athletes are paid to connect themselves to things that are directly relevant to their roles ( rackets, shoes...) or wholly irrelevant ( soft drinks, watches). The important thing for the advertiser is to establish the connection ( positive). it doesnt have to be a logical one, just a positive one.

Food is another area which can be used to increase compliance. That is the reason why politicians and business have taken on to lunch and dinner meetings. Food creates a pleasant feeling and this positive feel can be linked to anything under discussion and can be used to bring about compliance. that is why certain cultures, civilizations insist on not having food till the key decisions are taken.

How not to be influenced: The time to act protectively is when we feel ourselves liking the practitioner more than we should under the circumstance. In such a scenario, undue liking has been produced and then we should caution ourselves to separate the person from the decision and focus on the decision. That is why it is important to be alert to a sense of undue liking for a compliance practitioner.

Authority: We are all trained from birth that obedience to proper authority is right and disobedience is wrong. This is because we (society) gain immense advantage from an widely accepted authority system. confirming to the dictates of authority figures has always had genuine practical advantages for us. but the problem here is that this results in automatic obedience to authority figures (without thinking). This can be exploited by compliance people.

Advertisements using people in white coats with stethoscope is one example of using authority to sell products. Title is another kind of authority that people have to be careful about. Clothes is another kind of authority symbol that can trigger our mechanical compliance.

How not to be influenced: Asking ourselves the following queries can help us to say a No. The first is to ask, when confronted with what appears to be an authority figure's influence attempt 'is the authority truly an expert? The above question is very important as it allows us to focus on a pair of crucial information: the authority's credentials and the relevance of those credentials to the topic at hand.

If the person is really an expert, then the second question that has to be asked is "How truly can we expect the expert to be here?" This is a question of their trustworthiness in the situation. (Think a dentist advertising for a paste)

Scarcity:Have you ever wondered why we have this urge to interrupt an important conversation to pick up a call from an unknown caller? This can be explained by the scarcity principle which says that opportunities seem more valuable to us when their availability is limited. This is because the idea of potential loss plays a large role in our decision making and many people are motivated by the thought of losing something than by the thought of gaining something of equal value.

Scarcity principle's power comes from two sources. #1 We have been taught from childhood that things that are difficult to possess are typically better, we use an item's availability as a shortcut to decide it's quality. #2. When something becomes less available, our desire to possess it becomes more than before ( when it was available in plenty).

Examples of straight forward use of scarcity principle is the 'limited number tactic', where the customer is informed that certain product is in short supply and can't be guaranteed to last long. Related to the limited number tactic is the deadline tactic, in which some official time limit is placed on the customers opportunity to get what the sales person (compliance professional) is offering. Right now is a variant of the deadline tactic much favored by face to face sellers

How not to be influenced: We should ask ourselves what we want from an item, when confronted with scarcity pressures. if we need the thing for the social, economic or psychological benefits of possessing something rare then fine; scarcity pressures will give us a good indication of how much we would want to pay for it - the less available it is, the more valuable to us it will be.

If we want it for it's utility value - it is vital to remember that scarce things do not taste or feel or ride or sound or work any better because of limited availability and decide the value and accordingly a call can be taken.

An article and a couple of thoughts on project management.

I came across an article titled 'The Knowledge creating company' by Ikujiro Nonaka in HBR November 1991. I could relate a lot to the article’s definition of types of knowledge and it's articulation of how some companies are able to do what is needed to take what is inside an individual employee and make it available for the company as a whole. This article’s focus is on Japanese companies like Honda, Canon, Matsushita, NEC, Sharp and a few others.

The companies may or may not be at the same position as when this article was written. But the insights provided by this article are still valid for the innovative companies of this generation like Amazon and Google, companies that weren’t around when this article was written.

What I have given below is my understanding and notes from what I read on “Knowledge Creating Company”.

How some companies create knowledge:Some companies respond quickly to customers, create new markets, rapidly develop products and dominate emergent technologies. Key to this approach is the recognition that creating new knowledge is not simply a matter of processing objective information. Rather, it depends on tapping the tacit and often highly subjective insights, intuitions, and hunches of individual employees and making those insights available for testing and use by a company as a whole.

Mobilizing the knowledge of employees: The key to this process of taking the (tacit) knowledge within an employee and making it available to the whole organization is the personal commitment, the employee’s sense of identity with the enterprise and its mission ( yeah all these are important).

Mobilizing that commitment and embodying the tacit knowledge in actual technologies and products require managers who are as comfortable with images and symbols. The more holistic approach to knowledge at a many companies is also founded on another fundamental insight. A company is not a machine, but a living organism.

Much like an individual, a company can have a collective sense of identity and fundamental purpose. This is the organizational equivalent of self knowledge – a shared understanding of what the company stands for, where it is going, what kind of world it wants to live in, and, most important, how to make the world a reality.In this respect, the knowledge creating company is as much about ideals as it is about ideas. And this fact fuels innovation.

The essence of innovation is to re-create the world according to a particular vision or ideal. To create new knowledge means quite literally to re-create the company and everyone in it, in a non-stop process of personal and organizational self-renewal. In a knowledge creating company, inventing new knowledge is not a specialized activity, but a way of behaving, indeed a way of being, in which everyone is a knowledge worker and also an entrepreneur.

There are two different kinds of knowledge. Explicit knowledge is systematic and formal. For this reason, this can be easily communicated and shared, as in product specifications or a scientific formula or a computer systems.

The other knowledge called Tacit knowledge is not easily expressible and is highly personal. This is deeply oriented in action and in an individual’s commitment to a specific context - a craft or profession, a particular technology or product market, or the activities of a work group or a team.

Tacit knowledge has an important cognitive dimension. It consists of mental models, beliefs and perspectives so ingrained in an individual – so much so that the individual takes it for granted and cannot easily articulate them.

Based on this definition, there are four ways in which knowledge can be created/transferred.

From Tacit to Tacit: Sometimes one individual shared tacit knowledge directly with others. This way the shared knowledge becomes part of his/her own knowledge base. The process that transfers tacit knowledge in one person to tacit knowledge in another person is socialization. It is experiential, active and a “living thing,” involving capturing knowledge through direct interaction. Socialization is primarily a process between individuals.

From Explicit to Explicit: An individual can combine discrete pieces of explicit knowledge into a new whole. But most of the time, this combination doesn't really extend the company’s existing knowledge base any further. Once knowledge is explicit, it can be transferred as explicit knowledge through a process Nonaka calls combination. This is the area where information technology is most helpful, because explicit knowledge can be conveyed in documents, email, data bases, as well as through meetings and briefings.  Combination allows knowledge transfer among groups across organizations.

From Tacit to Explicit: when a person is able to articulate his knowledge, giving it the proper context and defines it under the correct system, the tacit knowledge becomes explicit. The process for making tacit knowledge explicit is Externalization. One case is the articulation of one’s own tacit knowledge - ideas or images in words, metaphors, analogies. A second case is eliciting and translating the tacit knowledge of others - customer, experts for example - into a readily understandable form, e.g., explicit knowledge. Dialogue is an important means for both. Externalization is a process among individuals within a group.

From Explicit to Tacit: When new explicit knowledge is shared throughout an organization, other employees began to internalize it – that is they use it to broaden, extend, and reframe their own tacit knowledge. Internalization is the process of understanding and absorbing explicit knowledge in to tacit knowledge held by the individual.
Knowledge Creation Process:
As mentioned above, each type of knowledge can be converted. When viewed as a continuous learning process, the model becomes a clockwise spiral. And organizational learning depends on initiating and sustaining the learning spiral. (The model is a spiral, not a cycle, because as one “learns” around the cycle, understanding moves to deeper and deeper levels.)


Knowledge Spiral

 In good companies that are successful in creating and sharing knowledge, all the four patterns exist in dynamic interaction. The activities in the Knowledge Spiral take place in different kind of spaces and are conducive to the activities in each of the four knowledge transitions.


Physical - office
Virtual - email, teleconferences and Social networks
Mental - shared experiences, ideas, beliefs
Relationship - people sharing common goals

Enablers for knowledge creation.

1.A Company’s vision. This should be equivocal. This is important as it gives the employees and work groups the freedom and autonomy to set their own goals. If a vision is too unambiguous, it becomes similar to an order. And orders do not foster the high degree of personal commitment on which effective knowledge creation depends.

2. A Company's Strategy. This helps to conceptualize what knowledge to develop.

3. The next enabler is System, which Nonaka describes as networking communities of knowledge, to competitors, customers, related industries, regional communities, and subsidiaries. It also includes the knowledge vision, a knowledge conversion system and processes as well as a knowledge base.

4. The fourth enabler is Structure. One management challenge is to maintain a balance between the fractal organization, which is categorized as self-organizing, capable of great speed and agility, and especially good at socialization and externalization. In contrast is the bureaucracy, with a hierarchy, division of labor and specialization, which is especially good at combination and internalization. Both of these are necessary.

5. The last enabler is Employee. While Frontline employees, senior executives are all important, middle managers have an important role to play. The role of the middle manager is to support, nurture, care about, initiate and complete the knowledge spiral. They play the critical role of bridge between the visionary ideals of the top, and the chaotic market reality of those on the front-line.

Middle managers mediate between ‘what is’ and ‘what should be’ . They have the important role of making reality according to the company’s vision. Middle managers are the true “knowledge engineers” of the knowledge creating company.

To sum it up, True knowledge - actionable understanding - comes from gut-level commitment and belief. Therefore, building and conveying knowledge requires shared emotion, feeling, mental models, experiences, and 'empathy space'.

When i read the article and introspected about it, the following thoughts came to my mind.


Thought#1: Project managers should learn the category of knowledge that they are dealing with and handle it accordingly. Handling Tacit knowledge as Explicit and vice versa can be disastrous to the project.
Thought #2: Project Management Theory is Explicit knowledge and the project manager’s experience gained through years of practice is more of tacit knowledge. While the theory part is easy to learn, the tacit part is acquired through doing the actual work and getting one’s hands dirty. This allows a project/ program manager to learn certain things that are definitely not part of any body of knowledge and are hard to pin down and easily termed as expertise.
Thought#3: Project management is never a standalone act and by it’s very definition involves lot of coordination. The work a project manager does is in the environment provided by the organization. When the environment is not very conducive to convert the tacit knowledge to explicit knowledge or the organization mistakes tacit knowledge to be explicit knowledge or vice-versa, the ability of the project manager to deliver success, (however smart or experienced the person may be), is impacted.