Tag Archives: uncertainty

Innovation Metrics

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“We are going to start measuring innovation,” Samuel announced.

I gave him a raised eyebrow.

“Yes, we believe our competitive advantage is our ability to innovate and bring new products and variations of products to the market, so we think it is important to measure it,” Samuel added.

“When you were working on your efficiency program, you developed metrics to determine improvement,” I said. “Why do you think your metrics worked well in those circumstances?”

It didn’t take Samuel long to ponder. “We had a system, and we worked to make that system predictable. When we determined what we wanted to control, the metrics just fell into place. Any variation was quickly identified and eliminated.”

“Pay close attention to your words,” I replied. “You were working in a system with predictability, control, seeking to eliminate variation. You now want to create a system of metrics to do just the opposite. Innovation is hard pressed to be systematic, certainly unpredictable, sometimes outside the bounds of control and designed to encourage variation. Just exactly how do you intend to measure that?”

Timespan of Uncertainty

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“You know, that’s really the most difficult part,” Taylor explained. “I have to make decisions today that might not come into play for another year. I have to make decisions. I have to make commitments. Sometimes, I even have to gamble.”

“What makes it so difficult?” I asked.

“It’s the uncertainty of what might happen. It’s the uncertainty of the future. Our projects are complex, you know, detail complex. But the real complexity comes from the uncertainty.”

Timespan of Discretion

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“Your goal is to make it all happen according to your schedule?” I continued. “Sounds easy. Can’t you just make up a schedule and tell everyone they have to follow it?”

Taylor chuckled and shook his head. “I wish. No, my schedule has to meet the Contractor’s schedule and it has to mesh with all the sub-trades on the job. And most importantly, my schedule has to be tight enough to match the budget and man-hours in our original estimate. There are a thousand things that have to go right. By the way, we have 30 other projects that will happen during this same twenty two months.”

“So, let’s talk about the decisions that go along with your goal. Every role has decisions that must be made. That’s the work that must be done. Your effectiveness in managing this schedule depends on the decisions that you make. When I look at the Timespan of your goals, I also look at the Timespan of your decisions, your Timespan of Discretion.”

Longest Project

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“Tell me, what is your longest Timespan goal?” I asked.

Taylor sat across the conference table. He was in charge of project scheduling. At any given time, his company has 30-35 projects in play. Some of the projects only last 4-5 weeks. Others last 12-15 months. Yet, every project is important. No details can be dropped, no matter how small.

“What do you mean?” Taylor asked. “I work with a Project Management software. I spend time meeting with all the Project Managers, looking at their contracts, their change orders, the deadlines in their project segments.”

“What is your longest project?”

“The longest one, is the Phoenix project. We got the contract last week. I have already been looking at it for a couple of months though, ever since it came through our estimating department. It’s a big project and we had to see if we could even mobilize to do it. Twenty two months is the schedule.”

“And what is the goal, what is your goal?” I asked.

“At the end of the project, all of the materials showed at the job site, all the crews showed up to do the production. The equipment required, whether we own it, or rented it, was on-site. All the trades that we had to coordinate, everything happened according to my schedule. That’s my goal.”

Looming Uncertainty

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“While timespan helps us understand the capability required for the role,” Pablo explained, “it also applies to the CEO.”

“I’m listening,” I replied.

“The cause of many organizational issues start with the CEO. Sometimes, in the pursuit of growth, the organization outgrows the timespan capability of the founder. It’s not just headcount or revenue growth, the company could step afoul of a regulatory issue, or an unexpected quality problem.”

I nodded, “I have seen that.”

“When the organization outpaces the capability of the CEO,” Pablo continued, “often he or she will clamp down, contract the size of the business. While this may relieve the CEO, provide the appearance of being in control, it can also create issues for those people around the CEO. Some may possess capability in the same band as the CEO and see their own initiatives constricted. This constriction will painfully trickle its way down the organization. In the CEOs effort to bring the company within the illusion of control, budgets may become unnecessarily limited, capital expenses may be delayed, key hires postponed. All of this is caused by the looming uncertainty, with which the CEO can no longer cope. An organization can grow no larger than the comfort level of the CEO.”

The Measure of Complexity

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“Would you agree,” Pablo asked, “there are some simple problems that most people can easily solve?”

I nodded, “yes.”

“And, would agree that as problems become more complex, some people struggle?”

Again, I nodded, “yes.”

“So, how do we measure the complexity of any decision, the complexity of any problem?”

“I suppose,” I started, “it would have to do with the number of variables in the decision, difficult enough for those variables we know about, even more so for those variables we do not know about.”

“And, how would you define a variable, start with one we know about,” Pablo prompted.

“A variable would be something we anticipate, and we don’t know for sure which way it’s going to go,” I replied.

“Like the weather,” Pablo stated. “We anticipate it is going to be cloudy, but we don’t know for sure if it is going to rain.”

“Yes,” I said, not sure where Pablo was taking me.

“And, how do you know it’s cloudy?” he asked.

“I looked outside, no sunshine. Observable, visual evidence, I can see it.”

“But, you don’t know if it is going to rain? Do you take an umbrella?”

“I suppose I might. A minor annoyance if it doesn’t rain, and a handy thing to have if it does,” I assumed it was a smart response.

“So, in the face of uncertainty, you make a decision based on something that is observable right now. Would you make the same decision a half-hour from now?” Pablo baited.

“It looks pretty cloudy, I believe a half-hour from now, I would still take an umbrella,” I hedged my bet.

“So, in a short timespan, you believe you have enough evidence, in spite of the uncertainty, to make a decision to take an umbrella?”

I nodded, “yes.”

“How about a week from now?” Pablo’s eyes shifted and he grinned.

“Well, who knows, a week from now if it will even be cloudy, much less rain?” I asked.

“So, one week from now is less certain than a half hour from now?”

Again, I nodded, “yes.”

“Is it possible to measure the uncertainty of any decision using timespan?” Pablo stopped and rested.

Anything That Can Go Wrong

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From the Ask Tom mailbag –

Question:
I am still struggling with the concept of time span. You say that time span indicates complexity. How?

Response:
Don’t overthink this fundamental concept. Life is about uncertainty. It is like the weather and the stock market. There is always uncertainty.

Combine this level of uncertainty with our intentions (goal directed behavior) and you observe the consternation of the ages. This is not a matter of going with the flow, but trying to get something done, achieve a goal, create an accomplishment. Elliott describes this as the “time span of intention.”

In spite of our best intentions, the longer it takes to achieve the goal, the more time life has to be unpredictable. The shorter time it takes to achieve the goal, the less time life has to happen, the less opportunity for some circumstance to come in sideways and blow everything up.

Time span is about contingencies. Time span becomes a calibration tool that allows us to precisely measure the impact of uncertainty in our best laid plans.

Step back and remember Murphy’s Law. Anything that can go wrong, will go wrong. How long do we give Murphy to play?

What is Competence?

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Andrew was beside himself. “How could this happen?” he exclaimed. “We had that bid locked down. That was our contract. We literally worked for 16 months to position ourselves. We built the infrastructure. We built the relationships with the customer at all the levels. Then one guy gets promoted and we get a form letter saying that our contract has been terminated, thirty days notice.”

“What do you think is the problem?” I asked.

“I don’t know, sometimes I think my whole team is incompetent. To let this slip through, when we worked so hard for it.”

“Do you really think your team is incompetent?” I followed up.

Andrew shook his head from side to side. “No. Heaven’s no. What am I thinking? To every person on the team, I wouldn’t trade a single one. They are all A players. I just don’t know what happened.”

“Sometimes, when we think about competence,” I replied, “we think it is our ability to control the parts of the world that cannot be controlled. Events of the world will occur in spite of us. So, what is competence?”

Andrew was listening, but not sure if he liked what he heard. I continued.

“The Boy Scout motto is Be Prepared. Competence is not the ability to control the uncontrollable. Competence is the ability to control ourselves in the face of uncertainty. Be prepared. Be prepared for uncertainty. It is a matter of mental fitness.” -Tom

The Uncertainty of the Future

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“You look absorbed in something,” I observed.

Abbe looked up from her desk. “Yes, I have this project coming up. Never worked on a project like this before. Don’t know anyone who has worked on a project like this before. Risky. Not devastating risk, but this project could go sideways fast.”

“And?” I asked.

“I am trying to think about projects we have completed in the past that could help me figure out this new project,” she replied.

“Looking for patterns in past projects will only help you so much. It helps you understand the past. But we live, going forward into the future. And we cannot predict the future. There is uncertainty and ambiguity. Planning helps, but even the best plan rarely survives its train-wreck with reality. We cannot control the future. The best we can do is be clear about our intentions. And prepare ourselves for that uncertainty.”

Predictability and Uncertainty

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“I understand how we calculate profit, but what does that have to do with my organizational chart?” Derrick asked.

“You design a predictable profit into your price, but what is it that keeps your profit predictable when you actually deliver your product or service?” I replied.

Derrick was thinking. “It becomes predictable when we are able to do the same thing over and over, the same way, with the same methods, in the same amount of time, with the same amount of scrap.”

“And how do you make all that happen over and over?”

“Well, we have designed a system and we train everyone to work the system.”

“And so, if something is happening with the predictability of your profit, what’s wrong, where do you look?” I continued.

“Something has to be wrong with the system,” Derrick nodded.

“So, where do you look?” I insisted.

“We should try to find out what’s wrong with the system.”

“Remember, I said that your problem is seldom a what, almost always a who?”

Derrick grinned. “So, that’s why you want to look at the org chart.”