What’s More Important: Strategy, Quality, or Low Costs?

by drjim on June 10, 2008

IOs Must Balance People, Strategy, Processes, and Customers

IOs Must Balance People, Strategy, Processes, and Customers

Here’s a challenge for you: you’ve just been put in charge of an IT department / branch / project because the previous person was unable to make any effective changes. What do you focus on first? Strategy sounds very important and the business side of the house seems to spend a lot of time working on it so maybe you should also. Quality is always a crowd pleaser and that Jack Welsh over at GE sure did a lot with it. Finally, lowering costs will always make upper management smile — even if nothing else gets done at least it will be costing the company less. If you had to pick one and only one to focus on, which one would it be?

If you picked any one of these three, then you were wrong. Focusing on strategy is always fun for us IT folks because it makes everything seem like a big board game. The reality of day-to-day business is that it is performed by real people and how they work. Thinking too much about strategy can cause us to forget this and devastate staff morale quicker than a Chinese earthquake. Leave it to IT folks to turn quality into a numbers game — you gotta love that TQM thing. What’s interesting is that you can get the TQM numbers right, maybe even win the Demming Award and still not meet the needs of your internal and external customers. Finally, lowering costs is always fun to do and generally has great short term impacts. However, experience shows that it causes the people who are actually doing the work to no longer be heard. The few IT staffers who are left after a cost lowering exercise are numb and shell shocked. So much for easy answers.

So let’s think about you new challenge once again, but this time from a different vantage point. Ultimately you are not playing some sort of game that you need to win. Instead, you are trying to perform a very careful balancing act that never ends. But what are you trying to balance? You have four different elements that need to be kept in balance: people / strategy and processes / customers. What so many CIOs and IT managers don’t realize is that it’s not enough to balance just one of these — that would be relatively easy. Instead, to be successful you need to balance ALL FOUR AT THE SAME TIME. Now that’s hard!

So now you know what you have to do. The next challenge is to find out how to do it. But that’s for another post…

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{ 11 comments… read them below or add one }

bahce September 29, 2008 at 5:18 am

I follow you always, this post is excellent.

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Ken Cameron March 20, 2009 at 2:10 pm

Excellent “exercise” and a good answer. As an IT manager, you will always have to balance those four aspects. However, I might add a fifth – budget/cost. My only other comment is that I assume your boss has an opinion what the top priority should be, and I assume you have users who also have an opinion on what your top priority should be, and last, you have your new staff/directs, who might shed some light on what went wrong before you. Does that lead to the statement that “Your top priority is to gather a 360 degree view of what your priorities should be, then put your balancing plan together, present it and get buy-in, then execute.” Of course, along the way, you should always keep your eye out for “quick wins”.

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Dr. Jim Anderson March 21, 2009 at 5:49 pm

Ken: I like your addition – ultimately the budget always controls / constrains what you can or cannot do.

What’s interesting about your second comment is that I’ve worked in a number of IT shops where it really wasn’t clear which of the three the company had selected. In these types of environments, what’s missing is clear leadership. This is when the IT shop has an opportunity to “put it’s money where it’s mouth is” and make a selection and then lead the company forward.

Finally, I agree that more knowledge is always good. However, if you’ve inherited a IT leadership position from someone who was asked to leave, you’ve got to be careful about repeating what they did – it might have been what got them the boot!

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Osvaldo Spadano (Ossy) March 21, 2009 at 7:43 pm

You can focus on Quality, as defined by customers, and make it your Strategy. As you pursue quality the cost will go down. I think it was Dr Demming that said “Good quality costs less…” and that is so true! Yes, quality does not cost more, quite the opposite. So, you do not have to pick one of the above, you can get all of them.

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Dr. Jim Anderson March 24, 2009 at 9:16 am

Ossy: you make a good point. I can’t tell you how many firms I’ve worked for that have NOT seen things this way – they saw extra effort invested to boost quality as being wasted. However, that being said, I think that you do need to work on all three areas; however, because you have limited resources, you are going to have to pick the one that matters the most to your customers and that’s what you can become well known for…

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Victor Mlakov March 22, 2009 at 2:11 pm

I agree with previous comments and like to add one thing. All IT activities should be aimed to support busines goals of the company. These goals should be defined and priotirezied by company top management.
The way how it may be completed depends on the cost and quality. It should be cost effective with acceptable quality. The fact is that quality may be roughly presented by exponential curve. It is practically linear function up to the level of 60-70% of the final level. However when you try to improve quality let say from 80% up to 100% (difference of 20%) you probably need to spend much more money.
The rule of thumb is 80/20 – 80% of result may cost 20% but other 20% of result needs 80% cost.
In addition, when you define the busines goals you should take in accound customer demands (customer satisfaction).

In any case you should find something like golden mean.

Best regards,
Victor

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Dr. Jim Anderson March 24, 2009 at 9:20 am

Victor: yes – it’s the cost of going from 98% to 100% that will sink a company. My favorite example of this comes from the Hershey’s chocolate company. They originally started making 100% pure chocolate treats. However, some smart person realized that this was too expensive. Then they started substituting wax for some of that chocolate and they kept increasing the amount of wax until their sales started to fall. Then they backed off, raised the amount of chocolate just a bit, and knew that they had a winning product. Just goes to show that you don’t have to have a perfect product to do very well…

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Osvaldo Spadano (Ossy) March 24, 2009 at 7:30 pm

When you have an engaged work-force, able and trained to make improvements and sustain them, then continuous improvement and “pursue of perfection” does not cost a penny. On the other hand if you need initiatives, projects, budgets to see things improving for a short period of time, then you need to question what’s going wrong… And when Management start thinking of setting targets, then stop completely because it is going to get worse (e.g. they really do not know how to get it to work).

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Paula March 23, 2009 at 4:19 pm

In my point of view, quality, low cost, processes, and people fall all under strategy. I would have to continue insisting that nothing beats a great, well-defined, and clean strategy.
Yes, there is always the risk of spending too much time on defining the strategy to be followed but this is where strong leadership comes into place.
A team well managed should be able to draw the organizational strategy following leadership vision without wasting time on unnecessary wonderings of brilliant minds.

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Dr. Jim Anderson March 24, 2009 at 9:22 am

Paula: you are right on. You forgot one more step – once you’ve gone to the effort to work out a strategy, you then need to do a good job of communicating it to everyone in the company. It’s not just enough to tell them what the strategy is, you need to go one step further and make sure that they understand how the strategy relates to the job that they do. No easy task!

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Osvaldo Spadano (Ossy) March 24, 2009 at 7:24 pm

I agree, and at the end Strategy Deployment is what matters. Having a rigorous system that allows the execution of the strategy at any level is very important! A management system that engages people at any level is what makes the difference. When the mental-model of the management of an organisation is ahead of the old management models, when managers see themselves as coaches developing many problem-solvers within the organisation, when managers are able to see outside the their own departments and across the company value strea, when managers learn to work on the system with the people rather than on the people… then there is a good chance that the strategy can be well executed.

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