On the disconnect between business intelligence and strategic decision-making
One of the stated aims of business intelligence (BI) systems is to support better business decision making in organisations (see the Wikipedia article on BI, for example). However, as I have discussed in an earlier post, the usefulness of BI systems in making decisions regarding complex or ambiguous matters is moot. Quoting from that post:
…many decisions [in organisations] have to be made based on incomplete and/or ambiguous information that can be interpreted in a variety of ways. Examples include issues such as what an organization should do in response to increased competition or formulating a sales action plan in a rapidly changing business environment. These issues are wicked; among other things, there is a diversity of viewpoints on how they should be resolved. A business manager and a sales representative are likely to have different views on how sales action plans should be adjusted in response to a changing business environment. The shortcomings of BI systems become particularly obvious when dealing with such problems.
This brings up the question as to how is BI actually used in organisations.
Quoting again from my earlier article:
BI systems are perfectly adequate – even indispensable – for certain situations. Examples of these include, financial reporting (when done right!) and other operational reporting (inventory, logistics etc). These generally tend to be routine situations with clear cut decision criteria and well-defined processes. Simply put, they are the kinds of decisions that can be programmed.
Typically programmed decisions are made when checking on or monitoring business activities. I would hazard a guess that BI applications are generally used to carry out such routine monitoring of business processes (and take rule-based corrective action, if necessary) rather than in making complex decisions. To use a phrase coined by James March, BI applications are used in surveillance mode rather than decision mode.
Unfortunately most BI vendors are yet to address this gap. Most new features that vendors come up with operate in surveillance mode rather than decision mode – that is, they help organisations track (and correct) performance rather than decide on complex/uncertain matters. Thus, despite vendor claims to the contrary, BI is still used as a means to measure and manage operational matters rather than to make strategic decisions.
Incidentally, this is also true of over-hyped new areas such as Big Data and Predictive Analytics.
Big data refers to a set of technologies and techniques that are useful when analysing large volumes of fast-changing, unstructured data to make operational decisions. For example, commercially available big data products such as splunk can monitor vast numbers of unstructured server logs in real time and tell you what corrective actions need to be taken (an operational decision) but they cannot tell you what IT investments you should make over the next five years (a strategic decision).
Predictive analytics refers to a wide range of techniques that are used to identify patterns in past data in order to make predictions about the future events. However, the predictions made using such techniques can only be as good as the underlying mathematical models. Consequently, success in predictive analytics depends crucially on knowing the key variables that govern the phenomena of interest. Identifying these variables can be difficult, if not impossible, in the case of business decisions because of human factors (intentions, motivations etc.). As Gregory Piatetski-Shapiro puts it in this article, “Predictive analytics can figure out how to land on Mars, but not who will buy a Mars bar.”
So, the question arises: what do BI vendors need to do in order to facilitate decision-making on complex matters?
To answer this we need to take a brief look at the process of decision-making. The traditional view is that the decisions are made by working through the following steps:
- Identifying available options
- Understanding the consequences of each option.
- Rating options based on preferences for those consequences
- Selecting an option (based on rules and ratings)
However, as I have discussed in a post on the nature of decision making in organisations, in the case of complex decisions not only is it hard to identify all options and their consequences, even preferences and/or selection rules may change as one’s knowledge of the options improves. As a consequence, such decisions necessarily involve informal reasoning – a deliberative process that takes into account partipants’ values and beliefs, in addition to logic and “hard facts”. The important point, as Tim van Gelder notes in a brilliant post entitled, The missing “I” in BI, is that none of the BI suites in the market support informal reasoning. The lack of support is especially strange because there are well-known techniques such as Issue Based Information System (IBIS) and Argument Mapping that can be used to facilitate and capture such reasoning.
This gap does not matter in the case of operational decisions as the choice is made on the basis of straightforward (or programmable) rules, as in steps 1 through 4 above. However, the situation is different in case of complex or non-programmable decisions such as those that are made in the face of uncertainty. In these cases the lack of support for facilitating, capturing and storing decision rationale becomes a huge handicap.
In summary: Currently available BI tools are good for operational rather than strategic decision-making because they do not offer any support for the deliberative process that is needed to make complex decisions in the face of ambiguity or uncertainty. The adage, “data doesn’t make decisions, people do” is particularly true for strategic decisions, but it appears BI vendors are yet to recognise this.
Acknowledgement:
This post was inspired by a recent comment on one of my earlier posts on business intelligence.
“Strategic alignment” – profundity or platitude?
Introduction
Some time ago I wrote a post entitled, Models and messes in management, wherein I discussed how a “scientific” approach to management has resulted in a one-size-fits-all approach to problem solving in organizations. This is reflected in the tendency of organisations to implement similar information technology (IT) systems, often on the “expert” advice of carbon-copy consultancies that offer commoditized solutions.
A particularly effective marketing tactic is to advertise such “solutions” as being able to help organisations achieve strategic alignment between IT and the business. In this post I discuss how the concept of “strategic alignment” though seemingly sensible, makes no sense in the messy, real world of organization-land. My discussion is based on a brilliant paper by Claudio Ciborra entitled, De Profundis? Deconstructing the concept of strategic alignment. The paper analyses the notion of alignment as it is commonly understood in the context of IT– namely as a process by which IT objectives are brought in line with those of the organization it serves.
Background
The paper begins with a short chronology of the term strategic alignment, starting with this highly cited paper published by Henderson and Venkataraman in 1993. The paper describes the need for alignment between business and IT strategies of companies. More importantly, however, the authors detail a “Strategic Alignment Model” that purports to “guide management practice” towards achieving alignment between IT and the business. However, as Ciborra noted four years later, in 1997, it was still an open question as to what strategic alignment really meant and how it was to be achieved.
Fast forward 15 years to 2012, and it appears that the question of what strategic alignment is and how to achieve it still an open one. Here are some excerpts from recently published papers:
In the abstract to their paper entitled, Strategic Alignment of Business Processes, Morrison et. al. state:
Strategic alignment is a mechanism by which an organization can visualize the relationship between its business processes and strategies. It enables organizational decision makers to collect meaningful insights based on their current processes. Currently it is difficult to show the sustainability of an organization and to determine an optimal set of processes that are required for realizing strategies.” (italics mine)
Even worse, the question of what strategic alignment is is far from settled. It appears that it means different things to different people. In the abstract to their paper entitled, Reconsidering the Dimensions of Business-IT Alignment, Schlosser et. al. state:
While the literature on business-IT alignment has become increasingly mature in the past 20 years, different definitions and conceptualizations have emerged. Several dimensions like strategic, intellectual, structural, social, and cultural alignment have been developed. However, no integrated and broadly accepted categorization exists and these dimensions are non-selective and do overlap…
This begs the question as to how meaningful it is for organizations to pursue “alignment” when people are still haggling over the fine print of what it means.
Ciborra dealt with this very question 15 years ago. In the remainder of this post I summarize the central ideas of his paper, which I think are as relevant today as the were at the time it was written.
Deconstructing strategic alignment
The whole problem with the notion of strategic alignment is nicely summarized in a paragraph that appears in Ciborra’s introduction:
…while strategic alignment may be close to a truism conceptually, in the everyday business it is far from being implemented. Strategy ends up in “tinkering” and the IT infrastructure tends to “drift”. If alignment was supposed to be the ideal “bridge” connecting the two key variables [business and IT], it must be admitted that such a conceptual bridge faces the perils of the concrete bridge always re-designed and never built between continental Italy and Sicily, (actually, between Scylla and Charybdis) its main problem being the shores: shifting and torn by small and big earthquakes….
The question, then, is how and why do dubious concepts such as strategic alignment worm their way into mainstream management?
Ciborra places the blame for this squarely in the camp of academics who really ought to know better. As he states:
[Management Science] deploys careful empirical research, claiming to identify “naturally occurring phenomena” but in reality measures theoretical (and artificial) constructs so that the messiness of everyday reality gets virtually hidden. Or it builds models that should be basic but do not last a few years and quickly fall into oblivion.
And a few lines later:
…practitioners and academics increasingly worship simplified models that have a very short lifecycle….managers who have been exposed to such illusionary models, presented as the outcome of quasi-scientific studies, are left alone and disarmed in front of the intricacies of real business processes and behaviors, which in the meantime have become even more complicated than when these managers left for their courses. People’s existence, carefully left out of the models, waits for them at their workplaces.
Brilliantly put, I think!
Boxes, arrows and platitudes
Generally, strategic alignment is defined as a fit, or a bridge, between different domains of a business. To be honest it seems the metaphor of a “bridge” seems to distract from reflecting on the chasm that is allegedly being crossed and the ever-shifting banks that lie on either side. Those who speak of alignment would do better to first focus on what they are trying to align. They may be surprised to find that the geometric models that pervade their PowerPoint Presentations (e.g. organograms, boxes connected by arrows) are completely divorced from reality. Little surprise, then, that top-down, management efforts at achieving alignment invariably fail.
Why do such tragedies play out over and over again?
Once again, Ciborra offers some brilliant insights…
The messy world, he tells us, gives us the raw materials from which we build simplified representations of the organization we work in. These representations are often built in the image of models that we have learnt or read about (or have been spoon-fed to us by our expensive consultants). Unfortunately, these models are abstractions of reality – they cannot and must not be confused with the real thing. So when we speak of alignment, we are talking of an abstraction that is not “out there in the world” but instead only resides in our heads; in textbooks and journal papers; and, of course, in business school curricula.
As he says,
…there is no pure alignment to be measured out there. It is, on the contrary, our pre-scientific understanding of and participating in the world of organizations that gives to the notion of alignment a shaky and ephemeral existence as an abstraction in our discourses and representations about the world.
This is equally true of management research programs on alignment: they are built on multiple abstractions and postulated causal connections that are simply not there.
If academics who spend their productive working lives elaborating these concepts make little headway, what hope is there for the manager who to implement or measure strategic alignment?
Is there any hope?
Ciborra tells us that the answer to the question posed in the sub-heading is a qualified “yes”. One can pursue alignment, but one must first realize that the concept is an abstraction that exists only in an ideal world in which there are no surprises and in which things always go according to plan. Perhaps more importantly, they need to understand that implementations of technology invariably have significant unintended consequences that require improvised responses and adaptations. Moreover, these are essential aspects of the process of alignment, not things that can be wished away by better plans or improved monitoring.
So what can one do? As Ciborra states:
…we are confronted with a choice. Either we can do what management science suggests, that is “to realize these surprises in implementation as exceptions, build an ideal world of “how things should be” and to try to operate so that the messy world that in which managers operate moves towards this model….or we suspend belief about what we think we know…and reflect on what we observe. Sticking to the latter we encounter phenomena that deeply enrich our notion of alignment… (italics mine)
Ciborra then goes on to elaborate on concepts of Care (dealing with the world as it is, but in a manner that is honest and free of preconceived notions), Cultivation (allowing systems to evolve in a way that is responsive to the needs of the organization rather than a predetermined plan) and Hospitality (the notion that the organization hosts the technology, much in the way that a host hosts a guest). It would take at least a thousand words more to elaborate on these concepts, so I’ll have to leave it here. However, if you are interested in finding out more, please see my summary and review of Ciborra’s book: The Labyrinths of Information.
…and finally, who aligns whom?
The above considerations lead us to the conclusion that, despite our best efforts, technology infrastructures tend to have lives of their own – they align us as much as we (attempt to) align them. IT infrastructures are deeply entwined with the organizations that host them, so much so that they are invisible (until they breakdown, of course) and even have human advocates who “protect” their (i.e. the infrastructure’s) interests! Although this point may seem surprising to business folks, it is probably familiar to those who work with information systems in corporate or other organizational environments.
A final word: many other management buzz-phrases, though impressive sounding, are just as meaningless as the term strategic alignment. However, I think I have rambled on enough, so I will leave you here to find and deconstruct some of these on your own.
The system and the lifeworld: a note on the gap between work and life
Introduction
Regardless of how much we enjoy our work, there is a distinct disconnect between our professional and personal/social lives. A major reason for this gap is the (perceived) degree of control we have over what we do in the two spheres: in the former, we generally do as we are required to, even if we don’t agree with it; in the latter we (generally) follow our own interests and wishes.
In this post I explore the gap between the two worlds using the ideas of the social theorist and philosopher Juergen Habermas. My discussion draws upon a couple of sources: a short and very readable book by James Finlayson entitled, Habermas: A Very Short Introduction and a considerably heavier (but very enlightening) text by Mats Alvesson and Hugh Willmott entitled, Making Sense of Management: A Critical Introduction.
Communicative and strategic action
Juergen Habermas is best known for his theory of communicative rationality, wherein he argues that rationality (or reason) is tied to social interactions and dialogue. In other words, the exercise of reason ought to occur through open debate that is free from the constraints of power and politics. For a more detailed discussion of communicative rationality in an organisational setting, see my post entitled, More than just talk: rational dialogue in project environments or Chapter 7 of the book I wrote with Paul Culmsee.
Habermas terms collective actions that arise as a consequence of such dialogue communicative action. These are cooperative actions based on a shared understanding of the particular issue under consideration. The point Habermas makes is that many (most?) of the collective actions that we undertake in our work lives are not communicative because they are aimed at achieving a particular outcome regardless of whether or not there is any shared understanding about the objective or the means by which it should be achieved. Habermas terms such actions strategic.
To sum up: actions that are carried out in the professional sphere are invariably strategic, whereas those that are performed in the social/personal sphere can be communicative.
The system and the lifeworld
As mentioned in the first line of this post, our day-to-day lives are played out in two distinct spheres: the social arena which comprises our interactions with family and society at large, and the professional and administrative sphere in which we work and/or interact with institutional authority. Habermas refers to the former as the lifeworld and the latter as the system.
The lifeworld is the everyday world that we share with others. This includes all aspects of life barring organised or institution-driven ones. For example, it includes family life, culture and informal social interactions. In short: it is the sphere within which we lead much of our social and personal life. The lifeworld is based on a tacit fund of shared meanings and understandings that enable us to perform actions that we know others will comprehend. Thus day-to-day actions that we perform in the lifeworld are generally communicative in nature.
In contrast, the system refers to common patterns of strategic action that serve the interests of institutions and organisations. System actions are essentially driven by money and power. To put it somewhat crudely, the system uses money and power to manipulate individuals to achieve its own (i.e. the system’s) aims. These generally do not coincide with aims of individuals. The term instrumental action is used to describe actions via which individuals are manipulated in this way. Clearly, such actions are related to strategic actions, since they are aimed at achieving specific ends, regardless of whether or not there is a common understanding underlying the objectives.
The relationship between the system and the lifeworld
Historically, the system arose from prevailing social conditions of the late 19th and early 20th centuries. The system is therefore embedded in the lifeworld. This wouldn’t be a problem if it weren’t for the fact that the system grows at the expense of the lifeworld , or in Habermas’ words, colonises the lifeworld. The verb evokes images that are quite appropriate: at a personal level, many people struggle to find that mythical balance between their work and personal/social lives, and in most cases it is a losing struggle because the former intrudes upon, invades and eventually takes over the latter.
This has little to do with personal choice. Although there are those who would say that we are free to opt out of the rat race, the truth is that most of us aren’t. To understand how things come to be this way, one has to recognise the role that power and money play in the colonisation process. These foster a self-interested “rational” attitude towards value which makes people amenable to being manipulated. Those who hold power and purse-strings can thus exert undue influence on the decisions of stakeholders while bypassing consensus-oriented communication (or rational dialogue) that is characteristic of the lifeworld. The lifeworld is thus devalued and becomes less and less important in the daily lives of people.
The colonisation of the lifeworld results in several dysfunctions that are all too evident in modern-day professional life. At the workplace this can manifest itself through a general sense of alienation from organisation, and a lack of shared meaning of its purpose and goals.
Critics of the Habermasian view sometimes argue that the modern day organisation is more enlightened – for example, HR departments are now aware of the need to foster an appropriate culture that focuses on employee inclusiveness, empowerment and similar feel-good themes. However, as Wilmott and Alvesson warn in their book, the concept of organisational culture is but an insidious means of control that aims at getting employees to think in ways that the organisation would like them to (also see this paper by Wilmott – if only for its truly memorable title…)
The problem with management practice
Notwithstanding the fact that there are islands of enlightened management, it would not be a stretch to say that many managerial strategies and actions serve to perpetuate, even grow the system at the expense of the lifeworld. As Alvesson and Willmott state in their book:
Within the rationality of the system individuals are treated as numbers or categories (e.g. grades of employees determined by qualifications, or types of clients determined by market segments), and more generally as objects whose value lies in reproducing the system….
However, the instrumental logic of the system – i.e. the logic which “justifies” the manipulation of individuals – is ultimately self-defeating. As Alvesson and Willmott note:
The devaluation of lifeworld properties is perverse because the instrumental rationality of the system depends on the communicative rationality of the lifeworld, even though it appears to function independently of lifeworld understandings and competences. At the very least, the system depends upon human beings who are capable of communicating effectively and who are not manipulated and demoralized to the point of being incapable of cooperation and productivity.
The central problem of present day management practice is that this issue remains largely unaddressed.
A way forward?
To be fair, it is impossible to achieve open dialogue in the sense of Habermas at the level of, say, an organisation. Nevertheless, as Paul and I discuss in our book, it is eminently possible to approximate it in smaller settings over short time periods. In case you don’t have a copy of our book at hand, see our paper entitled, Towards a holding environment: building shared understanding and commitment on projects, for a detailed case study illustrating this point.
Before going any further, I should state clearly that the approach we propose is but one of many. One does not have to use any particular technique or approach, all one needs is the possibility of engaging in genuine dialogue with those who have a stake in the issue under consideration. This needs an environment that is (relatively) free from power, politics and other constraints that come in the way of open, honest discussion. Although it is impossible to create such an environment at an organisational level, it is quite possible to approximate it at on a smaller scale – say, for example, in a one-on-one interaction or even a workgroup discussion.
Interactions that occur in such a holding environment are a step forward from present day practice because they acknowledge the existence of the lifeworld, something that has long been denied by mainstream management.
Summing up
In their book, Alvesson and Wilmott use the metaphor of organisations as structures of communicative interactions. In our paper and book, we invoke an alternate metaphor coined by Terry Winograd and Fernando Flores: organisations as networks of commitments. Genuine commitments are possible only when people’s concerns and aspirations are heard, acknowledged and acted upon. And this is possible only via communicative or open dialogue.
In closing, I reiterate my main point: although it is impossible to create an environment that encourages genuine dialogue at the level of an entire organisation, it is certainly possible approximate it on a smaller scale. The importance of this cannot be overstated, for although one cannot change the system overnight one can bring it closer to the lifeworld, one interaction at a time.
Eight to Late 