SMART goals and philosophy

In Why Businessmen Need Philosophy, Dr. Harry Binswanger identifies the ultimate CEO in your life is your philosophy.  What does that mean in practice?  Take goal-setting.  Based on what I understand about philosophy, I would suspect that an ideal approach to goal-setting would be based on your values - clearly identified, objectively defined, and do not contradict reality.  How does Objectivism relate industry best standards for goal-setting - to create SMART goals (Specific, Measurable, Attainable, Relevant, Time-bound)?  Below, I discuss specific quotes from Rand that relate to these best practices...

Read the updated version on Reason for Success.

IT Governance

Here's a topic that I've been struggling to conceptualize lately.  What does information technology (IT) governance mean and why is it important?  This is another of my thinking out loud posts, so please feel free to offer any helpful suggestions for improving my understanding.

IT governance stems from the concept of business governance.  And the term governance is borrowed from the political concept of governing a nation.  When governing a nation, the government sets and establishes the freedoms and constraints on individual action and decision making.  I'm not saying this is the best definition of government, but it is my working premise.  Similarly, business and IT governance set the context for decision-making in organizations by setting freedoms and constraints.

Governance in both these contexts is differentiated from management and strategy.  Strategy can be described as the long term goals and objectives of an organization.  Established by the executives, this vision of the company's future drives lower level tactical and operational objectives.  Management involves the implementation of these long-term goals and objectives.  It involves the directing the people and resources so as to achieve the desired goals efficiently and effectively.  In my understanding of governance, it provides the framework for how to make management level decisions.

For example, a strategic goal may be to facilitate IT growth through outsourcing partnerships with major consulting firms.  At the managerial level, the expectation would be that decisions that require IT growth should strongly consider outsourcing partnerships.  The problem comes from ensuring that managers throughout the organization enact the strategic goal in similar and congruent fashions.  The solution to this problem is developing a governance board the creates frameworks for decision-making and reviewing major decisions to ensure compliance.  In the case of outsourcing partnerships, the governance board might establish policies for reviewing consulting companies in an objective and systematic way to ensure that the best partnership is established, that the existing partnerships are given full consideration, and that the IT solution is congruent with the overall strategy.  They may further review outsourcing proposals to ensure they meet the appropriate criteria and constraints.

Every organization will govern IT in unique ways.  Some will be very strict and require every new IT project to be approved by an IT governance board.  Some will only require medium and large project approval, say projects over $100,000 budget.  Some organizations will have primarily business managers on the IT governance board, while other organizations will stock the board with primarily IT managers.  Some organizations will have very weak governance, enabling local decision-making with few constraints, while other organizations will have a strong centralized governance.

IT governance becomes an essential part of an organization as it grows too large for a single person to confirm and direct the implementation of strategy by managers.  While the traditional hierarchical management structure works for simple strategies, the sprawl of today's organizations makes for radical differences in implementation of IT resources unless a governance board directs and reviews lower level decisions.  Furthermore, efficiency from economies of scale can only be gained when the entire organization uses the same IT infrastructure, which is only possible if a centralized decision making unit provides the necessary framework.

Not that all is rosy using governance boards.  There can be problems when governance boards become so restrictive that business units end up adopting new technologies that are not best for them, even if the technology is best for another business unit.  I saw an example of this at one of the consulting projects I worked on years ago.  Our client had adopted SAP's ERP system.  While we were implementing our proprietary project management system, their governance board was questioning whether they should scrap our project and use SAP's project management system.  However, the business unit with whom we were working strongly recommended against using this ERP module because it did not met their business needs.  We finished implementing our software before this disagreement was resolved, but articulates what I see as a potential problem with governance boards.

As part of this process in understanding IT governance, a colleague and I will, over the next couple years, start a research project looking at IT governance, particularly a subset called data governance, in a variety of organizations.  Some of the research questions we want to answer are: What, if any, are the relationships between governance structures and management practices?  What, if any, are the relationships between governance structures and methodology?  What, if any, are the relationships between governance structures and external regulations?  Since my colleague and I are both IT ethics researchers, our larger research question will be how does ethical and political theories influence data governance structures?  And how do those structures enable or prohibit ethical decisions in organizations?  We may also explore how various ethical perspectives of senior executives impact the choice of governance boards or how the ethical perspectives of the governance board impacts the choice of directives.  There are a number of angles we can pursue that should hopefully enable a better understanding of the role of ethics in IT organizations and suggest best practices for enabling organizational success.

Parenting as managing

Apparently, my post on productivity with kids has become the all time favorite for my blog (Thanks for all the plugs). So I though I might follow it up by digging a little deeper into the idea of parent as manager.

Let me start with a quote from my favorite writer in management. In his chapter on Motivating for Peak Performance in The Practice of Management, Drucker discusses how motivation through fear is not effective in industrial society.

"Responsibility - not satisfaction - is the only thing that will serve."

And in the next paragraph he adds:

"One can be satisfied with what somebody else is doing; but to perform one has to take responsibility for one's own actions and their impact. To perform, one has, in fact to be dissatisfied, to want to do better."

The managers job, in short, is to encourage employees to take responsibility for their job. For an employee to take responsibility for their job, a manager must construct an environment where the employee is not meet with road blocks but with opportunities to excel. Drucker lists four ways to empower the "responsible worker".

"They are - careful placement, high standards of performance, providing the worker with the information needed to control himself, and with opportunities for participation that will give him a managerial vision. All four are necessary"

As a parent interested in raising a "responsible" child, I find our job is essentially the same. Take for instance, the first criteria. Careful placement of your child entails guiding your child to find the goals that will best challenge his abilities by avoiding goals that are too difficult or are too simplistic. I would not enroll my 3 year old in a calculus class because it is well beyond his abilities. I would also not set a goal for him to crawl, as he mastered that years ago. Finding age-appropriate games, activities, and studies may sound intuitive to most parents, yet I've found I often underestimate what children can accomplish.

Many years ago, while working at a camp, I was pushing canoes into the lake when one of the campers, a petite 6 year old girl offered to help. These canoes, partially buried in the sand, were not trivial in launching. I stood back, a bit amused by her offer, but willing to let her try. And I watched in amazement as she dug her heals into the ground, threw her entire weight into the canoe, and pushed something twice her weight out of the wet sand into the water.

You would think that after witnessing this girl do such a thing, I would be better at not underestimating my kids abilities. Yet, I am still amazed over and over again what new skills my kids have learned.

Last week, my 3 year old came up stairs with two vitamins in his hand and said, "Here sister, I got you a vitamin." Apparently, he climbed up into one of our cabinets, opened up the vitamin bottle (I thought they were supposed to be child proof?), and removed two vitamins for himself and his sister.

Never underestimate!

Careful placement also entails observing and responding to your child's needs and personality in appropriate ways. My son for instance is a people person. He loves (demands?) to work and play with other people. Often times it doesn't even matter if you are playing with him, just as long as you are in the room. At school, he sometimes gets frustrated when the other kids want to do their own thing and don't want to play with him. My daughter, on the other hand, has no problem doing her own thing.

Working within their personality, it is much easier to establish a positive approach to parenting that encourages them to become the adult they want to be. I would not push my son into solitary activities as it would be pure torture for him. However, my daughter may easy enjoy those types of activities.

The second criteria, high standards of performance, does not mean that standards must be set by the parent. It does not mean drilling a child on his multiplication tables or belittling them if they do not succeed. What it does refer to, however, is that as parents, we should encourage our children to perform to the best of their abilities. Whether it is doing chores, interacting with playmates, practicing an instrument, building a lego castle, riding their bikes, learning their letters, or anything else, high standards should guide the effort.

Often, children adopt their own high standards when playing that often amaze adults. With other tasks, like chores, part of the job of a parent as manager is to ensure the jobs are completed to a set of standards. The point of standards, however, is not that they are intrinsic to the job or in any way disassociated from the end product. Rather, standards are a way of objectively identifying what should be done, with a direct tie to reality as the judge.

Well, this post is already longer than I originally intended, so I'll save the other two criteria for a later post.

Railroad Tycoon

Lately, my son and I have started playing Railroad Tycoon II. The business concepts are little too advanced for him, so we both get a little frustrated at times. He just wants to buy trains, load up any cargo he wants and then watch them run. That would be great, except the game is highly dependent on money. Its easy to be unprofitable if not careful. So I keep intervening to help him make a profit so he can keep playing. At this point, he understands the need to make money, but not how. He also needs help controlling the mouse as he doesn't have the dexterity to control it well enough yet.

I really like this game. The business concepts it covers sounds like the core curriculum in most business colleges - supply and demand (economics), logistics, operations management, accounting, finance, and strategic management. I've always been intrigued by computer games that could be used for education. Railroad Tycoon (and as far as I know the other two tycoon games - Zoo and Roller Coaster) would be an excellent for intro to business students. Wouldn't it be really cool to have to learn about business by running one in a game? It could be part of the class credit. In order to pass the class, you would have to grow your business to $20 million in 10 years.

Why I love Drucker

In a previous post, I have recommend Peter Druker's The Practice of Management. In my opinion, he is by far the best business writer to have lived. One of the things I love about Drucker is his clarity. Take for instance his definition of business purpose:

"There is only one valid definition of business purpose: to create a customer. "

Whether or not you agree with this definition, there is no question what his definition is. In the next paragraph, he goes on to say:

"Markets are not created by God, nature, or economic forces but by businessmen. The want they satisfy may have been felt by the customer before he was offered the means of satisfying it. It may indeed, like the want for food in famine, have dominated the customer's life and filled all his waking moments. But it was a theoretical want before; only when the action of businessmen makes it effective demand is there a customer, a market."

Drucker directly ties the purpose of business to reality. His objectivity makes Drucker stand head and shoulders above the rest. He writes in a style similar to Ayn Rand. He makes bold statements, but proceeds to justify his statement with analysis of reality and identifying the essentials. He explores all the major options (God, nature, economic forces, and businessmen) and proceeds to explain why it must be businessmen that create markets, hence customers. It is the actions of businessmen, of creating products where none existed previously, that creates the market.

Beyond just the clarity of his writing, is the recurring message throughout his works that management requires reason. Take, for instance, his excellent summary of production:

"Production is not the application of tools to materials. It is the application of logic to work."

In this one sentence, Drucker challenges philosophers of the Marxist persuasion by relating the role of thinking managers to productivity. An unthinking brute swinging a sledge hammer is not being productive. They are merely swinging a sledge hammer. It takes a mind, applying logic to work, that transforms a chunk of metal into a V8 high performance engine.

While not perfect philosophically, Drucker has done more good for businessman than all of the Harvard MBAs of the last century. In the 1950s, he identified the need for management by objectives...a trend that caught on in the 1980s. By thinking in essentials and applying reason to observations of reality, Drucker became a visionary that executives like Andrew Grove (Former president of Intel) says "Peter Drucker is a guiding light to a whole lot of us. When I see an article of his I drop everything else and read it on the spot." Now that says a lot.