How do you ‘lean’ a business?

In these straightened times, its a great opportunity to review your business processes & establish the foundations for the future.

Never let a crisis go to waste. Rahm Emmanuel (via WSJ)

Lean means taking a fundamental look at your business & driving out waste. Some of these wastes will be obvious (work in progress, re-work, multiple sign off sheets, etc) some of the waste may be harder to identify. There are experts in “Lean” & 6 Sigma Black-Belts, these may work for you, but I would suggest that you begin with a strategic review of your purpose, then consider some systems process modelling that will show how well, or otherwise, you are working towards those strategic proposes. From there you can assign costs and added value to activities to help with cast flow forecasting.

Strategic Purpose

You need to have one.

I was lucky to spend some time with Michael Corbett (Product Box, @productbox) a couple of weeks ago using a fairly new method called the “Business Model Canvass“. We spent a couple of minutes talking about the canvass but it’s such a simple, visual method that we quickly started drawing ideas on the sheet and making connections. It was quite fun to be the ‘client’ and not to have to think too hard about the model but just concentrate on the process.

We looked at a business I was involved with and used the Canvass to work up a representation of the business model. The visual approach quickly distilled the Strategic Purpose (which I can waffle on about for ages) and encapsulated a clear  Value Proposition. The business was a good test of the canvass as it’s not a simple model of taking orders, fulfilling orders, rinse & repeat.

We spent quite a bit of time discussing the stakeholders (or customer segments), activities and relationships. This actually identified a critical Value Proposition that I was completely unaware of. It had certainly not been articulated before.

We also worked out most of the rest of the business model, though without much detail. By lunch time we’d 75% of the business model captured, though not in a form that you could have presented to a third party. However, in a dozen or so post-it notes we’d encapsulated most of a traditional business plan and produced a couple of very clear value propositions that, together with the key partners & customer segments, represented a pretty good Strategic Purpose.

Fleshing out the sketch

Michael then pulled out his trump card – he’d set up a Google Site specifically designed to capture the output from our Business Canvas session. This contained all our notes, diagrams, together with a whole load of background info on the canvass, process, and associated references. Basically, all the information necessary to take the insights gained from the business canvas exercise and turn them into an action plan.

Michael explained that, given that it contains all this information in one place, and that it relates to a new product (or service) that he calls it a ProductBox™. Normally we’d have been working on the Canvass as team of business owners / founders / exec’s prior to launching a new product or service, and the ProductBox is designed to keep that team-work going on line. I just happened to be working with Michael on my own.

After our meeting I logged in to my new ProductBox and took a look at the draft diagrams & notes. Because we’d spent the time drafting the original using paper and pens, it was very easy to start using the on-line diagrams. The associated notes helped to expand the short notes with more detail.

After a couple more hours I’d got quite a detailed business model described. I’d also explored some of the panes in the canvas in more detail and put in some background information and explanatory notes on how things related to each other. One of the drawbacks with simple visual representations is that you often lose critical details, having the Product Box with all the notes kept all those notes together with the canvass. Although I was working on this alone (with Michael keeping an eye on me) the package is a wiki so naturally collaborative if you’re in company with others.

After a couple of sessions I had sufficient detail that I would naturally start using something like IDEF0 to detail the business processes needed to make the canvass work. One feature of IDEF that I really like is the concept of layering processes through parent-child relationships, while the Canvass doesn’t force on you, I can see it being a great complement to other approaches (and the wiki design of the ProductBox would help here also).

The end result (even after a couple of sessions) was sufficiently detailed that I could use the canvas as a map of the business model to describe to others. It’s also a live document that can continue to grow as more contributions are posted.

Michael and I discussed the use of the canvass. I think it’s strength is as a planning tool that very quickly and visually allows people to discuss their business model (without lots of MBA mumbo-jumbo). At first I was a little frustrated at the lack of detail, but I’ve come round to appreciate the simplicity of the presentation framework. There’s a lot more detail under the surface and the Product Box that Michael set up allows for almost infinite details if that’s what floats your boat.

Should you Canvass your business?

What I liked was the holistic view of the business model, and the expressed statement about Value Proposition. Anyone thinking of pitching their business should take a look at this approach, and have a chat with Michael.

Thanks to Michael for his comments on an earlier draft of this post and for introducing me to the Business Canvass and ProductBox.

Social Media Systems (3)

(Update – Swapped Sam’s live UStream with Michael’s recorded YouTube)
This is an expansion on my Brrism talk on Systems Theory and how it can be applied to social media (systems).

If you’re interested in the history of systems theory, General Systems Theory, Bertalanffy, et al, then my previous post touched on that, plus there are good wikipedia pages to read (linked to in this sentence). The first article concentrated on the overview, the next article introduces the Soft Systems approach and I’ll conclude this mini-series with this example application.

But what is it good for?

Over the 30 minutes or so after my talk at Brrism, we worked mainly on the systems description using the CATWOE acronym. As with all systems descriptions and discussions, there were several views, forcefully put.

However, by the end of the very short session we’d arrived at a pretty good consensus opinion. There’s still some work to be done refining the description and it needs to be circulated widely within the Brrism community to gather feedback.

For me the breakthrough came when we agreed that the fundamental transformation that Brrism brings about is multiple ideas / perspectives into calls for collective action. That took quite a bit of work as we didn’t think that Brrism itself was about lobbying for social change, or making B2B connections, or promoting ‘best practice’; however the Brrism community might well do a bit of that after meeting and exchanging ideas!

The next task will be to convert the CATWOE into some rich pictures; but that’s for another day.

If you’re interested in what was actually said in my talk, the video is up on Facebook (sorry, not on an embeddable site, will have to talk to Michael about that). Sam Downie (@samdownie) was streaming on UStream and the slides are on Slideshare.

Social Media Systems (2)

(Update – swapped Sam’s live UStream with Michael’s recorded YouTube)
This is an expansion on my Brrism talk on Systems Theory and how it can be applied to social media (systems).

If you’re interested in the history of systems theory, General Systems Theory, Bertalanffy, et al, then my previous post touched on that, plus there are good wikipedia pages to read (linked to in this sentence). The first article in this mini-series concentrated on the overview, this article will introduce to a particular systems approach and I’ll conclude this mini-series with an example application.

Soft Systems

Humans are particularly complex systems, free will, determinism, etc mean we need some modifications to the above general approach to describing a system that specifically includes humans. This is where Peter Checkland comes in. He was a chemical engineer who realised that many of his industrial chemical systems weren’t behaving as designed, not because the design of the engineering processes were wrong, but because of the people in the system. Unlike previous engineers, who tried to design people out of their systems, Checkland tried to understand how people influenced and interacted as part of the systems. And thus, Soft System as an analytical methodology was born.

Open University, module T552

The first thing that Checkland realised was that the very neat, formal diagrams that were generally used in systems analysis didn’t allow for the messy human element. Rich Pictures are an approach that describes the system with the human elements included.

Rich pictures have the same basic features of any systems diagram (boundary, components, inputs, outputs, transformations, environment) but with some additions.

The first addition is that of Actors, not a wandering group of minstrels, but the people within the system. You can give them names, but its usually helpful to use functional descriptions. The second addition are Clients, the people that benefit from the system. Of course the clients may in large part be the actors, but usually there is a specific group of people that are beneficiaries that aren’t part of the system.

The third addition is that of the Owner. This is often an individual but could be a group, organisation, but is whatever has the authority to abolish or fundamentally change the system. Most online social systems make substantial use of free (as in beer) software, and thus have at least two owner groups; the people that set them up and run/coordinate and the people that provide the free online resources.

The final major addition needed for a rich picture is a description of the perspective being adopted by the people drawing the rich picture itself. Checkland referred to this as Weltanschauung (World View). Is the social system about generating shareholder value, individual self-actualisation, mutual support, environmental salvation…

The role of the Environment in soft systems is more important than just “stuff that’s outside the boundary”. What’s going on in the environment can directly impact the system. A good example might be the launch of annotations for twitter; we don’t know how the new feature will impact the various social systems using twitter, but it probably will.

All of which gives rise to the slightly clumsy acronym: CATWOE (Clients, Actors, Transformations, Weltanschauung, Owner, Environment).

But what is it good for? More >>

If you’re interested in what was actually said in my talk, the video is up on Facebook (sorry, not on an embeddable site, will have to talk to Michael about that). Sam Downie (@samdownie) was streaming on UStream and the slides are on Slideshare.

Social Media Systems (1)

(Update – swapped Sam’s live UStream embed for Michael’s recorded YouTube embed)
This is an expansion on my Brrism talk on Systems Theory and how it can be applied to social media (systems).

There are a couple of benefits of using something like systems theory when designing a social media system, plus a couple of drawbacks. Perhaps most importantly, it helps with the big picture before worrying about API calls, jscript vs php, etc. The main drawback is that is won’t tell you how to make your social media system actually grow and thrive.

If you’re interested in the history of systems theory, General Systems Theory, Bertalanffy, et al, then my previous post touched on that, plus there are good wikipedia pages to read (linked to in this sentence). This article will concentrate on the overview, the next article will introduce to a particular systems approach and I’ll conclude this mini-series with an example application.

What is a System?

The word ‘system’ has become somewhat diluted and it’s meaning confused. However, systems are relatively easy to spot and describe.

Patrick Coin, Feb 1996

Firstly a system has components. A ruler is not a measurement system, it’s just a straight bit of metal or plastic with some marks on it. A feather is not a flight system, it’s very well adapted to direct airflow, perhaps with display markings, certainly helps with insulation, but it’s not a system.

All those components are contained within a boundary. Sometimes that boundary is fairly obvious, like the Yellow-Bellied Sap-Sucker. Sometimes the boundaries are more arbitrary, this website might be considered a system but there’s no physical boundary. Ultimately, the boundary is where you want it to be, but should be relevant to the system you’re looking at. But remember, the wider the system the more complex, too tight and you might not have a system at all!

There is a theoretical construct called the closed system, in reality all systems are open. This means there are inputs and outputs that cross the boundary. What this stuff is that crosses the boundary will depend on the system. You might have information, raw materials, written articles, even abstract concepts like trust. The point is that stuff crosses the boundary and you can describe it.

There is an important caveat to all this stuff crossing the boundary, there has to be a transformation between the input and output. Otherwise you’ve got a pipe! A pipe is not a system.

A communications system is a system because although part of the input (your message) is hopefully the same as the output (your message), there is a pile of associated data about the sender and receiver that is transformed in moving your message to your recipient. There are also internal transformations of the input message through encoders, compressions algorithms, decoders, etc.

Systems are also in a hierarchy of systems that form their environment. My little Sap-Sucker lives in the rainforest that is its ecosystem, that is part of a wider global system, and so on. It also has a digestive system, neural system, and so on down the scale. Systems within systems.

And lastly, but most importantly, systems display something called emergent properties. In social systems this is the law of unintended consequences. Behaviours that arise from the interaction between all the components and sub-systems, variations in inputs, changes in the environment. The point being that you can’t define them all when you analyse the system.

So far, so mechanistic. How do we apply this to social media? More >>

If you’re interested in what was actually said in my talk, the video is up on Facebook (sorry, not on an embeddable site, will have to talk to Michael about that). Sam Downie (@samdownie) was streaming on UStream and the slides are on Slideshare.

Blast from the Past

Unfortunately I can’t be at this months Brrism (sorry Micheal @kobb). However, one of the topics will be around ancient scrolls of wisdom (or anything over 5 years in Internet time).

Which got me thinking about what I was up to 10 years ago.

At the time I was a junior PhD researcher at the University of Plymouth. Bizarrely my old homepage is still live, though mercifully I’d updated it in 1999 with fewer flashing GIF’s and roll-over image maps, though the obligatory animated email gif is still there (the email isn’t live however).

A large part of my research (1997-2000) was looking at systems theory as it applied to ‘human activity systems’, so I’m going to cheat (slightly) and reference some work that wasn’t directly about Social Media (or even web-based technologies). Though I was based in the School of Computing, my background is in engineering and the research group was mostly engineers, economists and psychologists. We were interested in how systems theory could be applied to particular social groups (mostly engineering companies in this case) and in particular the processes that those social groups used to achieve certain aims (generally converting some specification into a manufactured product). However, I believe there is good reason to think that much of that research can be applied to social media application in other business endeavours.

Squared Circle Mosaic: Fibonacci Spiral with Hue Twist - Uploaded on January 27, 2005 by krazydad / jbum

Prof Peter Checkland (Lancaster University) is a Chemist that worked in industry on complex engineering problems and eventually moved to the most complex systems of all, those involving humans (unfortunately his seminal work is a book, 1981, not an online article).

Systems are generally recognised by some fundamental principles;

  • Boundaries – there’s a bunch of stuff that’s “inside” the system, and a bunch of stuff that’s “outside” the system (there will usually be an argument over where to draw the boundary but that almost defines the fact that you’ve got a system)
  • Inputs and outputs – stuff crosses the boundary, this can be physical or non-physical [you can have a ‘closed’ system but they’re generally rather boring and hypothetical]
  • There’s some transformation, i.e. difference, between the inputs and outputs
  • There are components within the system; a single component is not a system
  • Systems are nested; within large systems are smaller systems

and most importantly

  • Emergent Properties – you can’t describe the performance of the system just by analysing the component parts

Checkland is important because he was one of the first people to try and describe the messy company and organisational situations he was working within from a systems perspective (building on much of Bertalanffy‘s work between 1934 & 1969) . He identified boundaries and within those boundaries the sub-groups that actually made the company work. He identified information and flows of power within the organisation, and across those boundaries. He was able to sketch out the ‘actual’ human activity system, rather than the business or computer information system. It was the systems characteristic of emergent properties that led to them not performing as planned, and gave rise to the law of unintended consequences (previously identified in social sciences by Robert Merton (1936) but not explained).

But what does this mean for the social media strategist?

Well it means that, despite our shiny shiny toys, there is quite a bit of good research and clear thinking about how people work in groups and in particular how we can design such systems. No matter how carefully we design them, there will be emergent properties; but that doesn’t mean we shouldn’t design them in the first place.

There will always be boundaries, some stuff will be “inside”, some stuff will be “outside”. You don’t want everything to be “inside“; even planet earth isn’t a closed system.

Stuff needs to cross your system boundary, and it needs to be transformed en-route to becoming an output. I put my details into Facebook (as do 350m others) and a whole bunch of RSS feeds, and I get a ‘useful’ homepage about my ‘friends’. I can put photos, comments, stories, whatever in, and people can further transform them with additional comments, links to other people, etc. True, you can’t automagically get that data out of Facebook, but you can log in and read what’s there. And reading what’s there is one form of taking information out of the Facebook system, as are social networks, etc.

Of course there are lots of component software chunks and sub-systems within Facebook. Each casual game on Facebook is its own system, nested within Facebook. Each fan community is a nested system. Each discussion board is, potentially, a sub-system, nested within a fan page, nested within Facebook, nested within the Internet, etc. Depending on where you draw the boundary, everyone that’s on Facebook is also part of the system…

And of course there’s a ton of emergent behaviour that wasn’t predicted (or predicable).

So what can we do about/with it?

The first thing to note is that, from my experience, most people aren’t very good at meta-cognitive thinking about systems theory. That is, they are used to living within systems (social, organisational, leisure) but they don’t actually spend a lot of time thinking about those systems, and even less thinking about how they are thinking about them.

This means that people will usually try to apply existing social behaviours and norms to on line systems, and if that doesn’t work they get frustrated/angry/disillusioned/etc. You either build your on-line social media system exactly like ‘real’ world (but then why would anyone be interested in your system?) or educate people  into the operating of the new system. That’s why all games have tutorial / training built in.

In order to develop a training programme you need to understand, and be able to communicate, the designed purpose and functioning of your system. One way to do this is draw a picture of it, not a UML diagram or a wireframe, but a human activity system diagram. You don’t need to use any ‘standardised’ modelling nomenclature, so long as you and your team understand it and it covers the basics above.

Michael, Rick Chapman, and I spent some time recently thinking about modelling social media systems. We tried to cover the basics, without employing a formal systems modelling methodology. Its not perfect but I think it’s a good start.

You should know where the boundaries are, what the expected information flows are going to be, the transformations and components that will do the transforming, and what the wider emergent property will be. That will all change once the system begins to operate but at least you’ll have a blueprint and can either take action to bring the system back into the original concept or decide to take things in a different direction.

We did quite a lot of this within my old research group, and its surprising how good a consensus you can arrive at for generic systems diagrams.

This early draft is far from ‘perfect’ but I think there is something of value if you’re building, or thinking about social media, to have a model similar to this in your toolbox to refer to.

Conclusion & Caveat

In conclusion, some thinking time about the network you’re trying to build is valuable. The tools you employ should come afterwards; twitter is not a social media strategy. There are lots of good, well established frameworks to think about social networks, systems of activity, etc. You don’t need to follow slavishly the minutia of their particular quirks and peculiarities but you should understand why they are there and why you are ignoring them.

The caveat: feedback loops are a feature of systems. The huge difference that digital technologies have brought is the near frictionless feedback loop. There is almost no transactional cost to publishing a comment and for that comment to then be republished to +350m people (it happens both automatically via services like posterous and twitter-bots, and through the retweet/comment feature in all social media services), and re-re-published endlessly. That is something that we haven’t modelled effectively yet. The good social media marketeers amongst us know how to achieve this, even if they don’t fully understand the why.

To finish first, first you have to finish

Uploaded on November 26, 2006 by Manzabar
Uploaded on November 26, 2006 by Manzabar

With the econoclapse in full effect, most companies are cutting back, trimming the fat, stopping non-essential spend. Which is good, but what if the budget you’re about to slash is the one that’s keeping you alive?

The trouble with businesses is that once they get bigger than a couple guys with laptops in a Starbucks (and sometimes even before then) they get complex. When you have to do lots of things more than once, you tend to set a routine, because this helps save time and money and ensures consistancy.

The trouble with people is that (with a couple of exceptions, I’m not one) they can only cope with 7±2 ideas at a time. Which means lots of fudging and scribbled notes to remember for next time. Unfortunately, decisions get forgotten and when times change, who knows which of those routines are the ones that are critical and which were the nice-to-haves because someone at a masterclass suggested all well run businesses applied a 15 point check list to Quality Assurance…

Setting up automatic routines/reports/etc on Remember the Milk, or Basecamp doesn’t get away from the problem, it just automates it.

Uploaded on November 5, 2006 by vivisquare
Uploaded on November 5, 2006 by vivisquare

What you need is a picture of how your business works. The series of inter-linked activities that between them represent your unique business. Something that’ll allow you to hack’n’slash at your business in theory and diagrammatically before actually making a change that’ll piss of your best customer.

What you need is a business process model.

What you don’t need is a legion of McKinsey consultants. At the most profound level, process models are diagrammatic representations of the systems that make your business function. Boxes and arrows. Easy.

There are two simple things to remember with process maps (OK, there are a couple more but to get started in a blog post…); 1) the ICOM is your friend; 2) decompose where sensible.

Integration Definition for Function Modeling (IDEF0) Box Format
Integration Definition for Function Modeling (IDEF0) Box Format

There are lots of methods for developing business process models, I quite like IDEF0 (its what I used in my research work, it’s simple and robust, which is handy when developing models ‘on the fly’; there aren’t to many things to remember – back to the 7±2). The basic unit of the IDEF0 method is the ICOM; which stands for Inputs, Controls, Outputs & Mechanisms.

This basic unit forms the basis for modeling the business. As always there are two general approaches to generating a model, top-down or bottom-up. Bottom-up generally involves stapling yourself to an order and recording every activity that happens between the customer placing the order and the end of the cycle (either payment or receipt of goods). In larger companies this is how you find out how things actually work, rather than how the ISO9000:2000 manual says they work.

Top-down is often easier to explain how the method works. At the top level, there a 3 things that all businesses do, Manage, Operate and Support the business. You can decompose the Operate Process into Get Order, Fulfill Order, Develop New Product, and Support Product. Then start with Get Order, what does this involve? What controls how you get orders, what outputs are generated to enable you to fulfil those orders, what mechanisms do you use to make all this happen, what triggers the process in the first place?

Keep breaking these actions down until you get to the smallest unit of actionable work. When you get to ‘pour water into teacup’ you’ve gone too far! 🙂

The idea is to be able to remove, combine, move, change an activity and be confident that there are no unexpected impacts that aren’t captured by the diagram.

Uploaded on July 22, 2006 by jodigreen
Uploaded on July 22, 2006 by jodigreen

It doesn’t have to be a long draw-out process, you can sketch quickly with pen and paper and have a reasonably good set of diagrams after a couple hours. You also don’t need to model every..single…process in the business, just the ones you’re looking at.

Providing every box has an output, control and mechanism and that if you’ve decomposed a box the arrows that touch that box are represented in the child diagram; then you’re good to go.

Now if you cut an activity you’ll be able to see the wider impact. You can see which activities to combine and which are obsolete.

You can have a look at other businesses and see how they handle those processes, and copy them (best practice and all that). Rather than just cut’n’paste’n’hope you can figure out how processes fit together.

Plug the savings into your cash flow forecast, see what effect it has, rinse, repeat until you’ve looked at everything.

Whilst you’re plugging through the accounts, check every line against the business model; where does it fit in, which process does it relate to, does it add value or costs?

Key activity indicators of successful companies

What makes successful companies different? What a great research question, and one that the University of Strathclyde posited a couple years back. They followed up with 37 companies, in 8 EU countries and gathered over 1,000 stories (interview descriptions of processes and activities).

Catherine Maguire from Strathclyde was presenting their findings. They began with the CIM-OSA model of business processes (one I’m very familiar with as it formed a good chunk of my research career). Turns out my supervisor was on the advisory panel for this work also, small world!

Basically, CIM-OSA identified three key processes that all businesses do: Manage, Operate, and Support. The research focus has been around Operate (and to a lesser extent Support). The research group I was with in Plymouth did most of the early work developing a reference model for the Operate Process. Catherine was looking at the Manage process.

Being a very industry orientated researcher (probably why I wasn’t very good as an academic) I always suspected that the actually process maps were less interesting that the activities and practices they represented. In my own research I concentrated more on these activities and the social systems around them, than the formal modelling (drawing boxes & arrows).

Catherine’s group has now confirmed what we all ‘knew’ but hadn’t ‘proved’. The actual processes in successful companies are the same as for less successful companies. Successful companies are a bit more integrated; the big difference is in the “how”.

Hugh MacLeod from The Hughtrain
Hugh MacLeod from The Hughtrain

Or as the song goes, “It ain’t what you do it’s the way that you do it”…

There are a hundred+1 jobs to do when you’re running a business, and they’re all important. Fulfilling Orders and Getting Orders (to use process speak) are probably the most important, but I was talking to a HR exec a couple nights ago that insisted that hiring the best people was the most important because they’d then make the business work (might have been a vested interest there).

So where do you start?

The more successful companies were generally more mature in all their Manage activities but Strathclyde did find that there were around 15 activities that seemed to differentiate more successful from less successful companies.

What Catherine’s research has found is that given equal resources, and for their 37 companies, higher maturity in these 15 activities was a reliable indicator of a successful company. Catherine flashed the activities up on screen and they were largely around communication (as I’d expect) but I didn’t get a chance to write them down, hopefully I’ll be able to update this post shortly with that list.

I did ask if they’d looked at how the Manage Processes that these activities represented subsequently interacted with the Operate Processes. From a business change perspective you’re generally presented with a whole load of symptoms operationally and have to analyse your way back to root causes. This research could really help by making explicit some of the implicit links that are learned from practice.

I’m following up with Catherine to see if I can reproduce that list of Activities here together with links to the online tool they’ve developed to help companies self-rate themselves.

Personally I can’t hold 15 things in my head simultaneously; what 5 activities are embedded in your organisation that differenciate you from the competition?