Nicolai Andler
Tools for Project Management, Workshops and Consulting
Nicolai Andler graduated from the Technical University of Berlin with a combined Masters of Commerce and Masters of Chemical Engineering degree with distinction. The Technical University of Berlin is one of the few universities that have a faculty for systems engineering, which is the science on which this book is partly based. He also holds a Master of Management degree from the French Graduate School of Business in Toulouse (Grande Ecole Supérieure de Commerce de Toulouse – MBA equivalent) with a specialization in ‘management of multinational groups’ and ‘international business strategies.’ Before founding his own company, the Ignite Group, Nicolai Andler was a senior consultant with an IT and CRM consultancy for several years. Prior to working in the IT consulting field, he had freelance experience in management consulting in Europe and several years of management consulting (business transformation projects focusing on business process reengineering and supply chain improvements) with an international management consultancy in South Africa. He has worked with clients in the financial services (retail banking, life insurance, and employee benefit), public sector (education, revenue and customs, government agencies), waste management, chemical and petrochemical industries.
Acknowledgement This book would not have been possible without the direct and indirect help and support of many individuals. I would like to formally express my appreciation and gratitude to Tom Roegner, William van Zyl, Dominique le Roux, Harry Schmitz, Louis Stanford, Dr. Dirk D. Müller, Michael Gold and Dr. Hans-Otto Naumann for their constructive feedback, suggestions and support. Their contributions have influenced the book substantially. Finally, I would like to dedicate this book to my parents, Elisabeth and Erwin Andler, for their love, trust, support and never-ending faith in me.
Tools for Project Management, Workshops and Consulting A must-have compendium of essential tools and techniques
by Nicolai Andler
Second revised and enlarged edition, 2011
www.publicis-books.de Complete ebook edition of Nicolai Andler, „Tools for Project Management, Workshops and Consulting“, ISBN 978-3-89578-370-8 (Print edition) 2nd edition, 2011
ISBN 978-3-89578-671-6 Publisher: Publicis Publishing © Publicis Erlangen, Zweigniederlassung der PWW GmbH
Brief contents/Overview of tools
The author’s rating is based on his subjective perception of ease of use and effectiveness (‘added value for time invested’).
Advanced experience/ skill required
Average experience/ skill
Easy; just try it!
Purpose of category
Tools or technique name
Page
Ease of use
Effectiveness
Define situation/ problem
Problem definition Problem tree Reverse the problem Hypotheses Hypothesis tree Competing hypothesis Issue tree Influence matrix Fishbone or Cause-effect tool Black box IS – IS NOT Stakeholder analysis Stakeholder map Stakeholder expectation management Stakeholder influence matrix Stakeholder accordion Stakeholder swapping Context diagram tool Silo view tool Helicoptering Mind map
50 56 60 61 63 66 67 70 72 74 77 79 84 87 89 91 93 95 99 101 102
Information gathering
Information gathering plan Interview Tripod Octagon Focus groups Questionnaire Survey/field study – dipstick Direct observation (DILO) Delphi or expert panel Desk research/database research 5 Whys Climate assessment
110 111 113 114 115 117 119 121 123 123 125 125
5
Brief contents/Overview of tools
Purpose of category
Tools or technique name
Page
Ease of use
Effectiveness
Creativity
Brainstorming Cardstorming tool 6-3-5 tool Nyaka Bionic Attribute listing Morphological matrix Merlin technique/Osborn checklist Lotus blossom Irritating words Mental provocation Introduction to alternative creativity tools
130 132 134 135 136 137 138 139 143 144 146 147
–
–
Information consolidation
Pareto (80:20) ABC tool Information matrix Card sorting Affinity diagram tool Venn diagram Force field
150 153 155 157 158 160 162
Goal setting
Objectives tree Goal hierarchy Charter Goal catalogue SMART goals Goal grid Well-defined outcomes 3 P statements SNAP
167 169 172 174 176 178 179 181 182
Organisational analysis
Organisational structure Diamond grading tool Org structure versus process Span of control Organisational assessment Powergram
190 195 196 198 200 201
Technical analysis
Architectural decomposition view Logical data relationship Functional decomposition Process analysis Entity relationship diagram Technology and systems landscape Requirements catalogue Logical and functional system modelling
204 206 208 209 213 215 217 219
Strategic analysis
Value chain analysis Critical success factor (CSF) SWOT and TOWS Life cycle 5 Forces Competitor analysis Environmental analysis (PEST) Strategic market group Customer segmentation
222 226 230 237 242 246 250 252 256
Strategic development
Business matrix Product/market mix Strategic development options Strategy matrix
260 264 268 273
6
Brief contents/Overview of tools
Purpose of category
Tools or technique name
Page
Ease of use
Effectiveness
Decision making
Decision tree Perspectives3 Argument balance Polarities tool Swap sorting tool Pair ranking Nominal group tool 100 Points Utility analysis Cartesian coordinates Cross of beliefs Vroom Yetton Risk analysis Prioritisation matrices
281 283 284 286 287 288 290 291 292 294 296 297 299 305
Project management
Project contract LogFrame Project roadmap/programme Work breakdown structure Gantt chart Project work plan Project environment analysis Project structure Project management roles and responsibilities Project communication plan Accountability matrix (CIDA) Stakeholder communication Workshop guideline Expectation review tool Booz ball evaluation Six thinking hats Action steps and reviews Project management skills radar
318 321 327 329 333 334 335 337 339 342 346 348 350 352 353 354 355 357
Checklists and questions
Check questions for a project start Check questions to review ideas and qualitative information Check questions to define the current situation – diagnostic Check questions to define goals and objectives Check questions during an analysis Check questions during decision making Check questions for the project initiation phase
360 361
361
362 363 364 365
366 366
368 369 370 371 371 372 373 374
Scenarios (‘shopping list’ of tools)
Author’s top 10 tools Good practice for project and problem definition Project planning and definition Strategic analysis Org analysis and org design Organisational restructuring Feasibility study System development Strategy workshop Business process improvements
7
Application areas of each tool (At the end of the book, there is an alphabetically sorted overview.) Name of tool or technique
Page
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
Org. analysis
Technical analysis
Strategic analysis
Decision Project making management
Problem definition
50
Problem tree
56
Reverse the problem
60
Hypotheses
61
Hypothesis tree
63
Competing hypothesis
66
Issue tree
67
Influence matrix
70
Fishbone or Cause-effect tool
72
Black box
74
IS – IS NOT
77
Stakeholder analysis
79
Stakeholder map
84
Stakeholder expectation management
87
Stakeholder influence matrix
89
Stakeholder accordion
91
Stakeholder swapping
93
Context diagram tool
95
Silo view tool
99
Helicoptering
101
Mind map
102
Information gathering plan
110
Interview
111
Tripod
113
Octagon
114
Focus groups
115
Questionnaire
117
Survey/field study – dipstick
119
Direct observation (DILO)
121
Delphi or expert panel
123
Desk research/database research
123
8
Application areas of each tool
Name of tool or technique
Page
5 Whys
125
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
Org. analysis
Technical analysis
Strategic analysis
Decision Project making management
Climate assessment
125
Brainstorming
130
Cardstorming tool
132
6-3-5 tool
134
Nyaka
135
Bionic
136
Attribute listing
137
Morphological matrix
138
Merlin technique/Osborn checklist
139
Lotus blossom
143
Irritating words
144
Mental provocation
146
Pareto (80:20)
150
ABC tool
153
Information matrix
155
Card sorting
157
Affinity diagram tool
158
Venn diagram
160
Force field
162
Objectives tree
167
Goal hierarchy
169
Charter
172
Goal catalogue
174
SMART goals
176
Goal grid
178
Well-defined outcomes
179
3 P statements
181
SNAP
182
Organisational structure
190
Diamond grading tool
195
Org structure versus process 196
Span of control
198
Organisational assessment
200
Powergram
201
9
Application areas of each tool
Name of tool or technique
Page
Architectural decomposition 204 view
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
Org. analysis
Technical analysis
Strategic analysis
Decision Project making management
Logical data relationship
206
Functional decomposition
208
Process analysis
209
Entity relationship diagram
213
Technology and systems landscape
215
Requirements catalogue
217
Logical and functional system modelling
219
Value chain analysis
222
Critical success factor (CSF)
226
SWOT and TOWS
230
Life cycle
237
5 Forces
242
Competitor analysis
246
Environmental analysis (PEST)
250
Strategic market group
252
Customer segmentation
256
Business matrix
260
Product/market mix
264
Strategic development options
268
Strategy matrix
273
Decision tree
281
3
Perspectives
283
Argument balance
284
Polarities tool
286
Swap sorting tool
287
Pair ranking
288
Nominal group tool
290
100 Points
291
Utility analysis
292
Cartesian coordinates
294
Cross of beliefs
296
Vroom Yetton
297
10
Application areas of each tool
Name of tool or technique
Page
Risk analysis
299
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
Org. analysis
Technical analysis
Strategic analysis
Decision Project making management
Prioritisation matrices
305
Project contract
318
LogFrame
321
Project roadmap/ programme
327
Work breakdown structure
329
Gantt chart
333
Project work plan
334
Project environment analysis 335
Project structure
337
Project management roles and responsibilities
339
Project communication plan 342
Accountability matrix (CIDA) 346
Stakeholder communication 348
Workshop guideline
350
Expectation review tool
352
Booz ball evaluation
353
Six thinking hats
354
Action steps and reviews
355
Project management skills radar
357
11
Foreword
This book is of the kind you always wanted but didn't think would or could ever exist: the universal field theory of problem solving. My experience in science (Chemical Engineering) and business (management consulting) over the years has led me to believe that the world of problem solving approaches, methods, tools and techniques is infinite and wobbling. I found during my own struggles in professional life that the only salvation was to make do with the tricks I had come across more or less by happenstance. Nicolai Andler, indoctrinated by systems engineering and equipped with an admirably systematic mind, has taken upon himself to get order and structure into this conglomerate of problem solving tools and techniques. To do this, he has based himself on his mental model of a stepwise iterative problem solving process correlated with 10 categories of tools. He scanned the universe of tools and compiled them intelligently in this book so that it has become a real encyclopaedia for problem solvers of all kinds. It is amazing and comforting to see how this book creates such clarity about the ramifications in the problem solver's mind. And it is hilarious to realize how straightforward dealing with problem and project situations can be. The author also spells out a warning: tools and techniques require skills and experience in order to be used appropriately and effectively. Cognitive and methodical competence is one thing – social and implementation competences are the other critical ingredients of problem solving mastery. In this respect, Nicolai Andler's book is a treasure of operational information, both for people who have long been into the practice of project management and consulting, as well beginners in need of a roadmap.
Prof. Dr.-Ing. Tom Sommerlatte
12
Preface
‘Most ideas on management have been around for a very long time, and the skill of the manager consists in knowing them all and, rather as he might choose the appropriate golf club for a specific situation, choosing the particular ideas which are most appropriate for the position and time in which he finds himself.’ (Sir John Harvey-Jones) This book developed as a result of my requirement to have a simple, comprehensive and well-structured repertoire of tools for my own consulting activities. Whenever I wanted to ‘pull the rabbit out of the hat’, I used to waste time browsing through previous project work to find things I had done previously. In order to avoid having to ‘reinvent the wheel’ each time, I developed my own ‘cheat sheet’ – a list with names of tools to prompt and remind me of what was ‘available’. While developing and implementing an ‘internal consultancy and project office’ project for a client, the idea emerged to share my compendium of tools with the client and train the employees in the use and application. Since then, this document has undergone many revisions. My exposure to many different disciplines, e.g. psychology, economics, engineering, systems thinking, strategic management, organisational design, coaching, counselling, change management, organisational behaviour, customer relationship management, systems analysis and design, and IT architecture and communication has shaped and influenced the collection of tools in this book. For the 2nd edition, client feedback, workshops and trainings provided many ideas for improvements. Most of the categories have been edited, tools have been upgraded and expanded, and many good tools have been added. Collaboration with other consultants made it clear that there was a lack of tools for the accurate definition of problems. Consequently, eight new tools for the ring-fencing of problems have been added to the situation definition category. The tools in the various overview tables and categories are now listed in a descending order – basically in the order/sequence that you would naturally apply them. Additional overviews such as the ‘Andler best-pratice list of tools’, a TOP 10 list of the most preferred tools and an overview of project management planning and scoping tools have been added. There are 23 new tools in this edition, giving a total of 119 tools, as well as an additional tool category (chapter 3.4 ‘Information consolidation’) and three additional business scenarios in the ‘tool shopping list’ section (chapter 9 ‘Annex B – Scenarios and tool lists’). The book has established itself as lecture material for various studies and programmes (e.g., MBA Management Consulting) across the world. An increasing number of 13
Preface
SMEs, bigger consultancies and in-house consulting units are using it to upskill their employees. Other disciplines are also aware of the book’s practical and pragmatic value – in particular for a wide variety of problem solving situations. My heartfelt thanks to all the readers and users of the book who, through their purchase, have contributed to its global distribution and provided great feedback, which helps to improve the book. As the author, I have a wish: Help me establish this book as an international standard so that the work of all problem solvers, consultants, project managers, trainers and other related professionals becomes easier, better and smarter. Please refer to it, use it, distribute it and provide me with ideas to improve it. And if you think that I have misrepresented intellectual property or missed a valuable alternative reference or source: please contact me at
[email protected]. For the latest updates and related service offerings, visit www.NicolaiAndler.com.
Capetown, February 2011
14
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Nicolai Andler
Table of contents
Brief contents/Overview of tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Application areas of each tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1
Introduction to the concept and application of this book . . . . . . . . . . 20 1.1 1.2 1.3 1.4 1.5 1.6
2
Structure of this book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How to use the book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The target audience of this book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The scope of this book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Skills and competencies for your personal development . . . . . . . . . . . Clarification on methodologies, models, tools and techniques . . . . . .
Problem solving approach and application . . . . . . . . . . . . . . . . . . . . . . 26 2.1 Problem solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Different problem solving processes and approaches . . . . . . . . . . . . 2.1.2 The problem solving process used in this book . . . . . . . . . . . . . . . . 2.1.3 Mental thinking levels during problem solving . . . . . . . . . . . . . . . . 2.1.4 The author’s assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.5 Macro logic project cycle – micro logic problem solving cycle . . . . . 2.2 Categories of tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 How to select the right tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Overview of tools (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Where ‘in’ the problem solving process am I? (B) . . . . . . . . . . . . . . . 2.3.3 Checklist for problem solving processes to identify required tool (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 What is the right category? (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.5 How to compile the shopping list (scenario for workshop, E) . . . . .
3
20 20 21 22 22 24
26 27 28 32 33 35 37 42 43 44 44 44 44
Diagnosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.1 Definition of a situation/problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Problem definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Problem tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Reverse the problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.4 Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.5 Hypothesis tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47 50 56 60 61 63 15
Table of contents
3.1.6 Competing hypothesis (N) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 3.1.7 Issue tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 3.1.8 Influence matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 3.1.9 Fishbone or Cause-effect tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 3.1.10 Black box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 3.1.11 IS – IS NOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 3.1.12 Stakeholder analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 3.1.13 Stakeholder map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 3.1.14 Stakeholder expectation management . . . . . . . . . . . . . . . . . . . . . . . . 87 3.1.15 Stakeholder influence matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 3.1.16 Stakeholder accordion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 3.1.17 Stakeholder swapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 3.1.18 Context diagram tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 3.1.19 Silo view tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 3.1.20 Helicoptering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 3.1.21 Mind map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 3.2 Information gathering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 3.2.1 Information gathering plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 3.2.2 Interview (unstructured) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 3.2.3 Tripod (mixed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 3.2.4 Octagon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 3.2.5 Focus groups (unstructured) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 3.2.6 Questionnaire (structured) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 3.2.7 Survey/field study – dipstick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 3.2.8 Direct observation (DILO = day in the life of) . . . . . . . . . . . . . . . . . 121 3.2.9 Delphi or expert panel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 3.2.10 Desk research/database research . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 3.2.11 5 Whys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 3.2.12 Climate assessment (structured) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 3.3 Creativity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 3.3.1 Brainstorming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 3.3.2 Cardstorming tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 3.3.3 6-3-5 tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 3.3.4 Nyaka (defect analysis) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 3.3.5 Bionic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 3.3.6 Attribute listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 3.3.7 Morphological matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 3.3.8 Merlin technique/Osborn checklist . . . . . . . . . . . . . . . . . . . . . . . . . 139 3.3.9 Lotus blossom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 3.3.10 Irritating words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 3.3.11 Mental provocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 3.3.12 Introduction to alternative creativity tools . . . . . . . . . . . . . . . . . . . 147 3.4 Information consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 3.4.1 Consolidation of qualitative and quantitative information . . . . . . 148 3.4.2 Pareto (80:20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 16
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Table of contents
3.4.3 3.4.4 3.4.5 3.4.6 3.4.7 3.4.8
4
153 155 157 158 160 162
Goals and objectives setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10
5
ABC tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Card sorting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Affinity diagram tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venn diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Force field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goal-setting criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Objectives tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goal hierarchy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goal catalogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SMART goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goal grid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Well-defined outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 P statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SNAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
166 167 169 172 174 176 178 179 181 182
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 5.1 Organisational analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Organisational structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 Diamond grading tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Org structure versus process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.4 Span of control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.5 Organisational assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.6 Powergram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Technical analysis (system, process, data, technology) . . . . . . . . . . . . 5.2.1 Architectural decomposition view . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 Logical data relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.3 Functional decomposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.4 Process analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.5 Entity relationship diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.6 Technology and systems landscape . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.7 Requirements catalogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.8 Logical and functional system modelling . . . . . . . . . . . . . . . . . . . . 5.3 Strategic analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Value chain analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.2 Critical success factor (CSF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.3 SWOT and TOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.4 Life cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.5 5 Forces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.6 Competitor analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
188 190 195 196 198 200 201 204 204 206 208 209 213 215 217 219 221 222 226 230 237 242 246 17
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5.3.7 5.3.8 5.3.9 5.3.10 5.3.11 5.3.12 5.3.13 5.3.14
Environmental analysis (PEST) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic market group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Product/market mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic development options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategy matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
250 252 256 259 260 264 268 273
6 Decision making (incl. evaluation, prioritisation) . . . . . . . . . . . . . . . . 276 6.1 Introduction to decision making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Decision making process steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 Selection table for decision making tools . . . . . . . . . . . . . . . . . . . . . 6.2 Decision tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Perspectives3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Argument balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Polarities tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Swap sorting tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 Pair ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Nominal group tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 100 Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10 Utility analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 Cartesian coordinates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 Cross of beliefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 Vroom Yetton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14 Risk analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15 Prioritisation matrices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
277 279 279 281 283 284 286 287 288 290 291 292 294 296 297 299 305
7 Project management tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 7.1 Project management – activities, processes and tools . . . . . . . . . . . . . 7.1.1 Key project management activities and tools . . . . . . . . . . . . . . . . . 7.1.2 Brief glossary of key project management terms . . . . . . . . . . . . . . . 7.1.3 Warning sign of project risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Project contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 LogFrame . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Project roadmap/programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Work breakdown structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Gantt chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Project work plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 Project environment analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 Project structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 Project management roles and responsibilities . . . . . . . . . . . . . . . . . .
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311 311 311 316 318 321 327 329 333 334 335 337 339
Table of contents
7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19
8
342 346 348 350 352 353 354 355 357
Annex A – Check Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360 8.1 8.2 8.3 8.4 8.5 8.6 8.7
9
Project communication plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accountability matrix (CIDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stakeholder communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Workshop guideline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expectation review tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Booz ball evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Six thinking hats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Action steps and reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Project management skills radar . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Check questions for a project start . . . . . . . . . . . . . . . . . . . . . . . . . . . Check questions to review ideas and qualitative information . . . . . . Check questions to define the current situation – diagnostic . . . . . . . Check questions to define goals and objectives . . . . . . . . . . . . . . . . . Check questions during an analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . Check questions during decision making . . . . . . . . . . . . . . . . . . . . . . Check questions for the project initiation phase . . . . . . . . . . . . . . . .
360 361 361 362 363 364 365
Annex B – Scenarios and tool lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10
Author’s top 10 tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scenario: Good practice for project and problem definition . . . . . . . . Project planning and definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategic analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Org analysis and org design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organisational restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Feasibility study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . System development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Strategy workshop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business process improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
366 366 368 369 370 371 371 372 373 374
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 Application areas of each tool (in alphabetic order) . . . . . . . . . . . . . . . . . 379
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1 Introduction to the concept and application of this book
1.1 Structure of this book The book starts with a brief introduction (chapter 1) to the competence model on which this book is based, as well as the book’s particular focus: improving the methodical competence as part of an individual’s personal development. Chapter 2 explains the concept – categories of tools and techniques aligned to a problem solving process – followed by a description of how to use the book most effectively and efficiently. How to search, identify and select the appropriate tool is described in section 2.3 together with an example of a compilation of tools (‘shopping list’ to prepare a workshop). Additional scenarios of typical business situations and a suggested compilation of appropriate key activities, tools and techniques (‘shopping lists’) can be found in chapter 9 on page 366. The section 2.3 “How to select the right tool” on page 42 also provides a selection tree (‘how to find a tool’) for further directions. The subsequent four chapters represent the four problem solving process steps. The sub-chapters contain the relevant categories of tools and techniques. For example, ‘diagnosis’, the first problem solving process step in chapter 3 contains the three tool categories ‘define the situation’ (chapter 3.1), information gathering (chapter 3.2), and creativity (chapter 3.3) in the sub-chapters. This structure enforces process thinking along with the knowledge of which tool is most likely to be needed and used in which problem solving process step. Alternatively, the brief content section at the beginning of this book allows direct access to all categories of tools.
1.2 How to use the book Either browse through. Look for what you know and what you still want to know more about. Several techniques might be familiar to you in some way or another. Build on this familiarity and combine old and new. If you are relatively new to this field, you might want to read it cover to cover to gain an overview of what is available. As a more experienced user, you might want to dive into those points that attract your interest – perhaps more complex techniques and new approaches. If you are looking for a specific tool, go to section 2.3 “How to select the right tool” on page 42. 20
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1.3 The target audience of this book
Use this book as your toolbox. Every experienced user has his own well-developed toolbox of his personal favourite tools and techniques. This book is designed to provide you with valuable tools and information to create, develop and enhance your own toolbox over time. Be innovative, open and creative. You might find additional applications for some of the tools somewhere else or with a different objective. Take on new ideas and perspectives to enhance your portfolio of tools and please write to me (
[email protected]) with the new ideas and tools you have discovered so they can be included in future editions of this book. Author’s note: I use ‘he/his’ for simplicity reasons only. Please substitute with ‘she/her’ wherever appropriate.
1.3 The target audience of this book A large number of business people have made use of consulting work in recent years: they have either been exposed to consultants on the job, or were responsible for hiring them. At the very least, however, they would have heard of consulting work and results through somebody they know. Not often, though, is the consultant’s job really understood. We are currently in a business phase where people enquire about, even question and study at depth, the apparent ‘magic and secrets of consulting’ in order to demystify, better understand and be able to question what consultants are doing, in order to potentially do the job themselves. A typical customer of this book is: • A practising consultant who wants to find other tools and techniques to complement his portfolio and to have a source of reference • An employee in an internal consulting department (the new trend!) who wants to study and learn the portfolio of tools • A manager who wants to know more about the ‘secret consulting weapons’ and the consulting buzz-words and techniques • An individual who wants to solve business problems himself without the use of an external consultant • A business student who wants to learn some smart and effective tools for his (case) studies or who is interested in systems thinking or management consulting • Hopefully lecturers and teachers who want to expand their knowledge beyond the ‘BCG matrix’ and include this approach in their lectures • Not an absolute beginner
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1 Introduction to the concept and application of this book
1.4 The scope of this book This book is intended as a practical and simple collection of tools and techniques that are ‘ready-to-use’ without having to study for hours and plunge into the depths of theory and science. The ‘IS – IS NOT’ tool (see figure 1 and chapter 3.1.11 for more details around the tool) defines ‘what is in and out of scope’ of this book. Most consulting books deal with the setting up and running of a consultancy – not this one! This book only deals with the tools and techniques you will need and could apply during (consulting) projects, problem solving situations, workshops, etc. Therefore, it is the toolbox for the job itself.
This book IS NOT about Promoting and selling in consulting
Start-up advice How to become a consultant THIS BOOK IS ABOUT Leadership Consultant-client relationship building Change management and resistance Implementation
Product development and marketing in consulting Finance and presales in consulting
Problem-solving processes Listing and explanations of tools and techniques
Engagement and relationship building
Academic or scientific perspective of the consulting business Negotiating and contracting in consulting and business
Figure 1 ‘In’ and ‘out of scope’ areas of this book
Two decades ago, Peter Block pointed out that ‘techniques are not enough’ in his famous book Handbook of Flawless Consulting. Although he is still right today, I am sure that knowing more of the right tools and techniques and being able to apply them does not harm either.
1.5 Skills and competencies for your personal development The overall intention of this book is to help with your personal development, in particular enhancing your cognitive and methodical competence. What makes up a competence? Three things influence and shape a competence: • Talent – natural qualities, innate abilities or endowment in some field or activity or something you are born with. 22
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1.5 Skills and competencies for your personal development
• Skills – abilities you can learn, study, or acquire through training, e.g. accounting skills. • Experience – the accumulation of knowledge or skill that results from direct participation in events or activities. It is the application of theory in the practical world and the resulting learning. All three together – talent, skills and experience – build a competency. Human Resource and personal development professionals distinguish between four different types of competency (see figure 2). • Functional competence – skill and knowledge in a certain subject or field, e.g. in marketing, finance, sales, engineering, combined with experience and industry related knowledge, e.g. automotive. This competency is tangible and measurable in terms of degrees and years and is normally documented on your CV. • Interpersonal competence – typically ‘people’ skills or ‘soft’ skills, e.g. social interactions, team leadership or conflict resolution. The key concept in this area is ‘emotional intelligence’. • Cognitive and methodological competence – the systemic knowledge and ability to apply rational analytical logic, tools, techniques, etc. • Implementation competence – the ability to take responsibilities and implement tasks successfully.
Competences for personal development
Talent Skills Experience
• Functional competence – skills and knowledge in a certain subject or field, e.g. in marketing, finance, combined with experience and industry related knowledge, i.e. automotive Competences
• Interpersonal competence – typically ‘people’ skills or ‘soft’ skills, i.e. social interactions, team leadership or conflict resolution • Cognitive and methodological competence – the systemic knowledge and ability to apply tools, techniques, etc. • Implementation competence – the ability to take responsibilities and action
Figure 2 Four competences of personal development – the focus is on the cognitive and methodical competency
This book focuses on the cognitive and methodological competency. In order to enhance your current repertoire, the book provides a comprehensive list of tools and techniques. Instead of just listing them in any kind of order, the approach
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1 Introduction to the concept and application of this book
Concept of the book Problem solving process
Competences for personal development
Categories of tools
• Functional competence • Interpersonal competence • Cognitive and metho• dological competence
Focus of this book
a Define situation
s
Diagnosis
Gather info
Creativity
Goal and objective setting
Consolidate information
Goal setting
d
Analysis
Org. analysis
Technical analysis
f Strategic analysis
Decision making
Decision making
Tools and techniques
• Implementation competence Project management - project governance
Figure 3 Competences and the concept of this book
combines a simple 4-step problem solving approach with relevant categories of tools. Each category lists the tools that are most likely to be required and needed while working through each specific process step. Figure 3 shows how the competency-model and the concept of this book relate to each other.
1.6 Clarification on methodologies, models, tools and techniques This book’s centres of attention are tools and techniques. I try to follow KISS (= Keep it simple, stupid). In order to free up the book of academic ballast, the underlying theories and models have not been scientifically proven. Terminology and abbreviations can sometimes be useful, but are often rather counter productive when it comes to explaining business and consulting terms to outsiders (figure 4). Consultants tend to use ‘TLA’s’ (three letter acronyms) to simplify, but also to avoid having to explain the content behind it. Ask them, if you don’t understand the business jargon! It is likely that you are not the only individual who should ask questions – even the speaker might not really know what he is talking about.
Theory
Concepts Methods Frameworks
Structures
Models
... Methodology
Tools and Techniques
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Figure 4 Underpinning for tools and techniques
1.6 Clarification on methodologies, models, tools and techniques
I do not wish to engage in a discussion about the underpinnings of the selected tools and techniques. Theory came first and somehow, via a variety of models, structures, frameworks, etc., tools and techniques resulted. A tool or technique provides guidelines on how to apply and carry out certain tasks. Author’s notes Whatever name or term you use and how you define it: It needs to work successfully for you. That is all that matters. The main purpose of tools and techniques is to provide you with a structure for your thoughts and actions. The tools do NOT replace your own intuition, lines of thought, and critical dialogue with the topic. Use tools as a stimulus and suggestion and customise them according to your needs.
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2 Problem solving approach and application
The basic concept on this book is to provide a compendium of tools and techniques typically used in a project management, consulting or workshop environment. A problem solving process is used as a framework around which all categories of tools and techniques are grouped, in order to be able to deal with all issues or problems in every domain of your business life. This book brings together tools and techniques to enhance your methodological competency while focusing on the interdisciplinary areas of strategy, organisational structure, information systems, and project management. The underlying concept of this book is a universal problem solving process consisting of four steps (diagnosis, goal setting, analysis and decision making). This problem solving process is applicable to any type of problem and situation. Tools and techniques, which have a similar purpose are grouped into the same category. So, the overarching framework is the problem solving process, which is discussed in the next section (chapter 2.1). The tools and techniques ‘rank beneath’ the problem solving framework in nine different categories.
2.1 Problem solving When solving a problem, we normally want to achieve more than just getting rid of some unacceptable situation. More often we are also trying to achieve some other more desirable state. Theoretically speaking, we’re trying to move from the problem state to the solved state (see figure 5). We do so by crossing what is called ‘the solution path’. It seems obvious that if we do not focus some of our attention on the solved state, the likelihood of attaining it is diminished. Unfortunately, the problem state is what often attracts most of our attention.
Problem state
Solution path
Figure 5 Problem solving and the solution path
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Solved state
2.1 Problem solving
This book enhances the ‘solution path’ by providing all the required tools for the job on hand, but this is only the preparation for the implementation. It is important to avoid falling into the analysis paralysis trap – the operational work starts with the implementation and not with the completion of the planning and analysis. How do we typically address problems in organisations and management? We try to make them go away – quickly. But there are many options available, even though we rarely consider them. ‘There are three ways of dealing with problems: they can be resolved, solved and dissolved. • To resolve a problem is to find a means that satisfies it well enough. • To solve a problem is to find the optimal means. • To dissolve a problem is to redesign the relevant system or its environment so that the problem is removed. Dissolution requires more creativity than solution, and solution more than resolution.’ (Ziegenfuss 2002). This ‘dissolution’ refers to a more fundamental deep rooted (root cause) approach, which is in line with the approach being taken in this book and the reason for the tool category ‘creativity’. Ultimately, the aim of problem solving is action, and solving problems requires action steps as well as investigation beforehand. That means to engage in problem solving is to search for a solution. To actually solve a problem is to implement the solution that has been found and to demonstrate that it works.
2.1.1
Different problem solving processes and approaches
Problems must be considered in terms of their linear or iterative nature. There is a certain level of linearity required in solving all problems. However, given the nature of modern science, business and society, problems are not necessarily solved in a linear fashion only. The complexity of the context in which a problem exists may require constant feedback and acknowledgement of a variety of influences simultaneously impacting on the problem. It may therefore be necessary to integrate an iterative approach or process, to maximise feedback from the environment. There are probably hundreds of problem solving processes, but most of the approaches are very similar, regardless of the technical field of origination. Typically problem solving approaches or models vary in the number of steps and terminology, but the basic intention is mostly the one displayed in figure 6: • What is wrong? Identify the problem. • How should it be? Determine the ‘ideal’ situation. • What can I do and how best to do it? Determine the preferred solution (and establish an action plan). 27
2 Problem solving approach and application
N W
E S
Determine the preferred solution
1. Where am I?
2. Where do I want to go? Determine the ‘ideal’ situation
Identify the problem
4. Which path do I take?
3. How do I get there?
Figure 6 Fundamental problem solving approach
The picture on the right in figure 6 uses the metaphor of a journey to represent the basic problem solving approach following no. 1 to no. 4. Comparison of different problem solving approaches (excursion) The following excursion is intended to provide an overview of different problem solving approaches from different disciplines and areas although they all follow the same basic principal. Figure 7 starts from the top with a systems engineering approach with its typical steps of problem solving followed by implementation (Haberfellner, Nagel et al, 1994). Depicted below are different approaches typically used by consulting companies. The three examples represent a combination of problem solving approaches together with project life cycle approaches. Further down are more humanistic and ‘people-orientated’ approaches typically used in psychology, therapy, counselling, change management and coaching.
2.1.2
The problem solving process used in this book
Multiple problem solving process approaches, including the typical tools from various disciplines, have been amalgamated into the one used in this book and highlighted by the grey shaded process step boxes in figure 7. This means the approach includes tools, e.g. from counselling, in the change management section and in the goal setting section; or coaching tools in the decision making sections; IT and business analysis tools in the systems analysis section, etc. In addition, elements of a humanistic problem solving approach were combined with a systems engineering approach and merged into the specific problem solving process used in this book.
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2.1 Problem solving
Systems, analytical approach
Problem solving steps
Systems engineering approach
Info gathering
* Consultancy
Define problem
Goal definition
Synthesis
Build solved state
Specify the solved state
Optimisation
Trouble shoot the problem
Design solution
Analysis
Identify means of change
Settle on course of action
Reconcile restrains, constraints
Problem solving approach this book is based on
Diagnosis
~ Counselling approach
Analysis
Goal setting
What is going on? (diagnosis)
~~ Psycho analytical approach
# Coaching model
Conclusion
## Coaching model
Analysis
Assess effective ness
Adjust future action
Decision making
What solutions make sense for me? (options analysis and decisions)
How do I get what I need or want? (action steps)
Action
Goal alignment
Goal setting
Take action
Delivery
Insight
Option assessment
Prepare plan, schedules
Delivery
Analysis and design Hypothesis
Implementation
Evaluation
** Consultancy *** Consultancy
Unstructured, philosophical, humanistic approach
Info processing
Implementation steps
Testing
Realities (diagnosis)
Options (analysis)
Endurance
Plan action
Way forward (decisions)
* Distance Consulting (Fred Nickols), ** Gemini Consulting, *** Bossard Consulting, # Togaine (The Foundation), ## Whitworth’s Grow model, ~ G. Egan, ~~ C.G Jung
Figure 7
Overview of different problem solving approaches
As displayed in figure 8, there are four basic problem solving process steps. It is important to understand the different purposes of each of the steps to become familiar with the underlying logic of why a certain category is associated with a specific process step. The following section defines the four problem solving process steps and their purposes.
1. Diagnosis Identify and define the problem
2. Goal setting Determine the ideal solution and set goals
Establish an action plan 4. Decision-making Evaluate, prioritise and make decision about the best solution 3. Analysis Understand the situation, generate options and solutions
Figure 8 The book’s problem solving process that displays the iterative aspect of the process
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1. Diagnosis – Understand the problem Has the problem been formulated, defined and properly understood? At the outset of the problem solving process it is important to define or formulate the problem. The problem may be complex and vague. Thus, the specific problem to be addressed must be clearly understood. During the first process step (diagnosis), the objective is to identify the problem clearly to avoid generating solutions to issues peripheral to the real problem. Considerable time and effort can otherwise be spent in addressing a particular symptom of a problem rather than the problem (root cause) itself. Thus, in the critical first step of the problem solving process, it is necessary for the problem to be properly defined and clearly understood in terms of boundaries, characteristics, functions, and limitations. The tool categories ‘information gathering’, ‘creativity’ and ‘define the situation’ empower you to do exactly that. See the introduction to chapter 3 for more details. 2. Goal setting – Determine the ideal outcome and set goals Once the problem has been understood, diagnosed and defined, the second step (goal setting) of the problem solving process can start, during which the intended outcome is outlined and described. It is not necessary to stick to this sequence, although the quality of the goal setting will improve due to more insight derived from the previous process step. Different terms, e.g. ‘To-Be, target, blue-sky, objectives, desired state, goals, etc.’ are used to describe basically ‘where we want to go and how it should look’. 3. Analysis – Understand and analyse the situation, generate options and develop solutions Once goals have been defined, the third step of the problem solving process can start, during which alternative solutions to the problem are generated. This stage is complete once you have generated and developed appropriate solutions and recommendations that resolve the problem and meet the expectation regarding the goals that have been set. 4. Decision making – Evaluate, prioritise and make a decision The purpose of the fourth step of the problem solving process is to help you with all aspects of evaluating, ranking, rating, prioritising, risk evaluating and comparing in order to make a decision and to implement the best solution. The stage is complete when an appropriate solution has been selected and agreed upon. Implementation – Establish an action plan and do it This aspect, which seldom receives sufficient attention, consists of the implementation plan and the action steps needed to achieve the selected solution. This is a
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very important part of the process, often requiring a return to a previous stage and a revision of initial ideas and intentions. In completing the problem solving process it is necessary to ensure that aspects covered during the previous stages are addressed in the implementation plan. Tools associated with the preparation of recommendations, action plans, Gantt charts, and other implementation preparation are mostly covered in the project management/project governance tools section. Although the process in figure 6 may appear to be somehow linear and sequential, any of the four steps can – or even should be – returned to and readdressed if new information or opportunities become available during a later stage, as is shown in figure 8. Another important aspect to consider during the course of a problem solving exercise is the type of thinking that should be applied depending on the problem solving phase (see table 1). The analysis phase requires a divergent type of thinking: explore different directions for many (im)possible solutions, accept all ideas and alternatives, defer judgement or evaluation, then discuss, combine, and improve ideas, and when exhausted move to a convergent thinking style. With convergent thinking, you establish categories of alternatives, develop evaluation criteria and, avoid premature closure and keep your eyes on the objective, list strengths and weaknesses and select the best alternative or idea (this sums up the decision making process).
Table 1 Be aware of the required 'type of thinking' for the current problem solving phase (Glass, 1996, Management Masterclass, amended by author)
Problem solving process step
Type of thinking
Warning – Most common pitfalls
Diagnosis
Integrative
Taking a narrow, functional view or being too broad to generate effective responses.
Goal setting
Visionary and pragmatic
Only top-down or bottom-up thinking – no coordination and agreement between topmanagement and operational level on realistic objectives.
Analysis
Divergent
Starting out looking for the ONE correct answer/solution. Shooting down solutions that appear logical.
Decision making
Convergent
Allowing politics, ego and emotions rather than logic to decide the outcome. Continuing to be creative, without applying sufficient analysis and judgement.
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This book is about tools and techniques. Why spend all this time on problem solving? The problem solving process is the overall framework or skeleton. Each stage of the problem solving process usually requires specific types of tools or techniques. Therefore similar tools are grouped into the same category. This category is assigned to the problem solving process step where its tools are usually required. To provide further clarity, a symbol (figure 9) is used to indicate during which process step the tool is usually required or recommended. In the example below, the dark shade of the first box represents the first process step ‘diagnosis’.
Figure 9 Symbol for categories, this one is for the first step ‘diagnosis’
2.1.3
Mental thinking levels during problem solving
You should consider the following three (3) thinking levels and two (2) time dimensions when you are busy with problem solving. See figure 10 for the logic and sequence. • Instrumental level – How? – What are the means? • Functional level – What? – What is the function and task? • Meaning/purpose level – Why? – For what purpose? The two time dimensions are the present tense (=As-Is) and the future with the desired future state (=To-Be). Figure 10 depicts the combination of the above-listed
Present IS
Future SHOULD Goal setting
Purpose – justification level – Why? What is the use? What for?
3
4
Functional level – What?
2
5
Instrumental level – How?
1
6 Analysis and solution seeking
Diagnosis – Define situation
Figure 10 The problem solving thinking levels overlap with the problem solving process steps (Source: Haberfellner) 32
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2.1 Problem solving
thinking levels and time dimension as the problem solving, thinking-level model, which supports and is aligned with this book’s problem solving process. This model suggests that you and your thinking should be ‘on the right/relevant level and time dimension’ in every phase of your problem solving activities in order to apply the tools with the right mindset, attitude and understanding. Figure 10 shows three of the four problem solving steps in the three different shades of grey. During problem solving, you would typically run through the depicted six process steps spread over the three levels and two time dimensions. This concept is similar to the tool ‘Logical and functional system modelling’ (chapter 5.2.8), which is based on a very similar logic and is typically used for system modelling and as a creativity technique.
2.1.4
The author’s assumptions
Before I elaborate further on the problem solving process on which this book is based, I suggest that you explore and understand my intellectual, mental and economic approach, point of view and my resulting assumptions. Let’s use the example of an artist and his art to illustrate the point. It is essential to understand the context, situation, epoch and socio-economic conditions of an artist to truly understand and interpret his art. Similarly, I share my intellectual, mental and economic underpinning so that you can understand my rationale for selecting specific tools and perhaps make better choices when you need to do so. As a more business and tools-related topic, let’s use an organisation as an example to demonstrate my approach and viewpoints. What assumptions do you have regarding an organisation’s function? Simply speaking: How do you think an organisation works? You could, for example, assume the following: • A company is like a machine: As long as the input is right, and every cog is well oiled and aligned, the right output will be created ‘automatically’ through proper planning. This would be a systemic approach. • A company is like an organism: The situation, context, circumstances and needs are permanently adjusting, adapting and responding to external change. Change is the (resulting) response reaction to an externally triggered event; hence, change is not an internal pro-active initiation. Change therefore balances the external circumstances and the internal needs of groups and individuals. Measures are re-active, situational and difficult to foresee, plan and standardise. There is no one best way. This would be a responsive, interconnected approach. • A company is like a political system: The politics and powers of the various interest groups dictate what happens, how the organisation is run and in which direction. Besides the formal structure, there are informal networks of interest 33
2 Problem solving approach and application
groups and informal collaboration between groups and individuals. These connections are not congruent with the organisation’s existing structure. Decisions regarding the limited resources in an organisation are made by negotiating and bargaining, using all possible political means and measures. (Source: Gareth Morgan (1986) Organizational Metaphors. In: Cameron/ Green. Morgan defined a total of 8 metaphors for an organisation.) Normally, an individual will choose an approach and a set of tools based on his personal assumptions, understanding of his environment, and context in order to find the best match. Following the same logic, I reveal my assumptions that led to the selection of tools in this book: • Assumptions regarding the systems engineering approach: A structured and standardised course of action (approach) helps better define and resolve any given problem. You can evoke successful results, or at least significantly increase the likelihood of such results, through proper preparation and a structured approach. This viewpoint/assumption underpins the selection of tools in the tool category ‘situation definition’. There are two sub-aspects for the systems engineering approach: – The rational systems engineering approach: A structured mental model can reduce complexity and increase understanding with the help of tools that divide, structure, connect, group, etc. The rational systems engineering approach asks: What is the issue? What are the objectives? How can this be achieved? – The psychological systems engineering approach: The focus is not (only) on the technical solution, but rather on the human aspect. The moment human beings are part of a system, they influence the system, the incorporated problem and solution. A momentum develops that influences the solution. The psychological systems engineering approach asks: Who has a problem? What does he want? What are his reasons for wanting this? • The methodical approach: This approach primarily asks about the As-Is, the To-Be and the solution path. Tools and models are not the solution, but the skilled use of methods and tools can increase the quality of the resulting solution. The solution still lies with the person and not with the chosen tool. Regard this as a warning from me and not as an assumption or mental approach. You should avoid glorifying tools as the solution – they are just the means to an end. • The critical/sceptical humanistic approach: A solution’s success never really depends on finding a brilliant technical solution, but rather depends on the ability to overcome political power struggles, personality clashes and vendettas. Hence, there is a need for tools that reveal the hidden, informal elements of an organisation so that those personal emotional expectations and obstacles can be addressed. 34
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• Homo politicus approach: Human beings use informal networks, connections and alliances to advance their personal interests and for their own benefit, even if this is to the detriment of a project or others. Hence, there is a need for tools that identify and address such alliances and forces. (Source: Haberfellner et al. 1994) You now know and should understand my approaches and related assumptions. They will allow you to assess, appraise and judge the available tools so that you can select those that are the most appropriate for you and your situation. But remember, you must be aware of the limitations, prerequisites and opportunity costs of the tool you will use.
2.1.5
Macro logic project cycle – micro logic problem solving cycle
How is the problem solving cycle related to the project cycle? You should always be aware that several simultaneous processes and activities are running within a project at any given time, and that each of them belongs to one of the three streams: • Project cycle – on a macro level, the project cycle serves as a phased approach and a framework to develop, deliver and implement a solution. • Problem solving cycle – serves to resolve the problem and find a solution. • Technical activity cycle – contains and describes the core technical activities and tasks that shape the project and give it its characteristics, for example, a housing development project’s construction tasks, the lab research tasks in an R&D project, and the assembly tasks of an aircraft prototype project. The technical activities define the nature of the project, whilst the two other cycle activities could be similar in the above-mentioned examples. For example, the basic tasks in a kick-off meeting (project cycle task) would be similar in all three of the examples. Macro logic project cycle The number of project cycle phases comprising a project is largely dependent on the type of project, its complexity and its business significance. The name of each project cycle phase is of secondary importance; these names are often dependant on the industry, company, the nature of the project, and the chosen project management methodology (e.g. PMBOK, PMI, Prince2, etc.). The default results-orientated macro project cycle phases – based on the classic waterfall logic – are: 1. Pre-study 2. Main study/specification 35
2 Problem solving approach and application
3. Detailed study/design 4. Build/development 5. Implementation and hand-over 6. Project closure Alternative and more recent macro project cycle models are based on a logic according to which several cycle phases are either combined and merged, or extended through an additional phase (e.g. a pre-feasibility study), or several phases overlap – meaning they run in parallel. Another aspect to consider is the iteration of project cycle phases, often in combination with the overlapping of phases, which are iteratively repeated (e.g. Agile PM). Micro logic project cycle Within each project cycle, there is a set of typical re-occurring project management activities. This means that each macro project cycle contains – amongst other activities – those four micro project cycle steps. These steps are process orientated: 1. Initiation 2. Planning 3. Implementation and monitoring (incl. steering, control, communication and documentation) 4. Closure Figure 11 shows where the micro project cycle steps partly overlap. Source: Hagen Management GmbH, www.pm-handbuch.com
Cycle start
Cycle end
Implementation and monitoring
Initiation
Closure
Planning
Project idea
Project contract
Project plan
Figure 11 Micro logic project cycle
Micro logic problem solving cycle – results-orientated thinking logic for the problem solving cycle The micro problem solving cycle addresses the problem resolution – often as part of a bigger project. The problem solving cycle is most important and relevant 36
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2.2 Categories of tools
Closure
Closure
Planning
4. Decision making
Implementation
1. Diagnosis
2. Goal setting
3. Analysis
Implementation
Project closure
Initiation Planning
3. Analysis
Initiation
Implementation
1. Diagnosis
2. Goal setting
4. Decision making
Figure 12
Implementation
1. Diagnosis
2. Goal setting
Initiation Planning
Implementation
1. Diagnosis
Planning
Planning
Planning Implementation
Micro problem solving cycle (Results orientated)
Initiation
Implementation and hand-over
Closure
Initiation
Build
Closure
Initiation
Micro project cycle (Process orientated)
Detailed study/ design
Closure
Main study/ specification
Pre-study
Closure
Macro project cycle (Results orientated)
2. Goal setting
3. Analysis 4. Decision making
3. Analysis 4. Decision making
Overview of the above-discussed micro and macro cycle
during the first two or three macro project cycle phases when most problems are resolved by a standardised problem solving approach. Figure 12 gives an overview how the three cycles fit together. So why and how are the cycles related and relevant? All tool categories in this book – besides the project management category – support the problem solving process cycle, whilst the tools in the project management category obviously support the (micro logic) project management cycle activities. So, do you require a tool for a project management or problem solving activity? This distinction can admittedly be tricky, especially at the beginning of a project. Many tools from the category ‘define situation’ are also often used for (micro logic) project management activities. Ultimately, this distinction is merely academic, it is far more important that you know which tools to use and why. Figure 13 provides an overview of the activities and tools for both cycles: the project management cycle (focussing on planning) and the problem solving cycle (focussing on defining the situation). The diagram shows which activities run in parallel/concurrently and how these activities depend on one another and how the output becomes the input of a related activity. The diagram also indicates which tools I suggest for each activity. A similar overview is provided in table format in Scenario: Good practice for project and problem definition (section 9.2) on page 366.
2.2 Categories of tools As displayed in figure 14, tools and techniques have been assigned to one of the nine different categories according to their purpose.
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Project management > planning Project initiation
Problem solving > diagnosis > define situation
Aktivity
Project contract, LogFrame HL project plan
Tool reference
Business Case Feasibility study see Scenario
Project formation and definition Program Plan
Problem definition
Project contract charter
Scope definition
Definition of project goals and objectives LogFrame charter
Problem definition Problem tree
Is – Is Not Black Box
Project expectationsExpectation management
Project results and key areas
Stakeholder definition Stakeholder analysis
Project WBS
Stakeholder map, etc.
Project activities plan
Hypotheses definition
Project task list
Hypotheses Hypothesis tree
Project activities schedule
Project environment analysis
Gantt project plan
Project resource plan
PEA
Context definition Context
Project roles definition
Project responsibilities
CIDA Matrix Project roles
Project roles Project organisation
Definition of project risks Risk analysis
Other project planning activities
Project definition report (PDR)
Project contract Project definition
Figure 13 Activities and tools for the project management cycle (planning) and the diagnosis phase of the problem solving cycle
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2.2 Categories of tools
Problem solving process steps:
Categories of tools:
Tools and techniques:
1. Diagnosis
1. Define situation • Problem definition • Problem tree • Reverse the problem • Hypotheses • Hypothesis tree • Competing hypothesis (N) • Issue tree • Influence matrix • Fishbone or Cause-effect tool • Black box • IS – IS NOT • Stakeholder analysis • Stakeholder map • Stakeholder expectation management • Stakeholder influence matrix • Stakeholder accordion • Stakeholder swapping • Context diagram tool • Silo view tool • Helicoptering • Mind map
2. Gather information • Information gathering plan • Interview • Tripod • Octagon • Focus groups • Questionnaire • Survey/field study - dipstick • Direct observation (DILO) • Delphi or expert panel • Desk research/ database research • 5 Whys • Climate assessment
2. Goal setting
3. Creativity • Brainstorming • Cardstorming tool • 6-3-5 tool • Nyaka (defect analysis) • Bionic • Attribute listing • Morphological matrix • Merlin technique/Osborn checklist • Lotus blossom • Irritating words • Mental provocation
4. Consolidate information • Pareto (80:20) • ABC tool • Information matrix • Card sorting • Affinity diagram • Venn diagram • Force field
5. Goal setting • Objectives tree • Goal hierarchy • Charter • Goal catalogue • SMART goals • Goal grid • Well-defined outcomes • 3P statements • SNAP
4. Decision making
3. Analysis
6. Organisational analysis • Organisational structure • Diamond grading tool • Org structure versus process • Span of control • Organisational assessment • Powergram
7. Technical analysis • Architectural decomposition view • Functional decomposition • Process analysis • Entity relationship diagram • Logical data relationship • Technology and systems landscape • Requirements catalogue • Logical and functional system modelling
8. Strategic analysis • Value chain analysis • Critical success factor (CSF) • SWOT and TOWS • Life cycle • 5 Forces • Competitor analysis • Environmental analysis (PEST) • Strategic market group • Customer segmentation • Strategic development • Business matrix • Product/ market mix • Strategic development options • Strategy matrix
9. Decision making • Decision tree • Perspectives3 • Argument balance • Polarities tool • Swap sorting tool • Pair ranking • Nominal group tool • 100 Points • Utility analysis • Cartesian coordinates • Cross of beliefs • Vroom Yetton • Risk analysis • Prioritisation
10. Project management Project management category:
• Project contract • LogFrame • Project road map/programme • Work break down structure • Gantt chart • Project work plan
• Project environment analysis • Project structure • PM roles and responsibilities • Project communication plan • Accountability matrix (CIDA) • Stakeholder communication
• Workshop guideline • Expectation review • Booz Ball evaluation • Six thinking hats • Actions steps and review • Project management skills radar
Figure 14 Overview of the problem solving process steps and the relevant categories of tools
Situation definition (section 3.1) The purpose of the tools in the category ‘situation definition’ is to describe and characterise the current situation, context and environment. It often overlaps with the beginning of a project or initiative in terms of setting boundaries and understanding the ‘As-Is’. Information gathering (section 3.2) – tools from this category can be used in the process steps 1 (Diagnosis) and 3 (Analysis) The purpose of the tools in the category ‘information gathering’ is the vital preparation for most other activities. Having sourced relevant information enables us to broaden our horizon; invites new points of views and is the basis for the analysis step.
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Creativity (section 3.3) – tools from this category can be used in the process steps 1 (Diagnosis) and 3 (Analysis) The purpose of the tools in the category ‘creativity’ is to ‘think outside the box’, discover different ways of thinking and new ideas and potential solutions; in particular during the ‘To-Be’ activities of the analysis phase, when innovative thinking to find better solutions is required. Information consolidation (chapter 3.4) – tools from this section can be used in the process steps 1 (Diagnosis) and 3 (Analysis) The purpose of the tools is, as the name implies, the aggregation and consolidation of information. The information might originate from either information gathering activities or from creativity activities. The tools in this category will help you consolidate and display information. Note that the focus is on qualitative information and that this category does not contain many tools for working with quantitative information, which are of a statistic nature. Goal setting (chapter 4) The purpose of the tools in the category ‘goal setting’ is to define the future and desired end state, once everything is accomplished as planned. These tools (and the activities of applying the tools) are crucial for the success of the whole exercise, because goal setting provides direction and hopefully a measurable improvement (‘before-after difference’). Goal setting is about ‘where do we want to be and what should it look like’. Analysis (chapter 5) An analysis is an investigation of the components of a whole and their relations in making up the whole. The purpose of the tools in the category ‘analysis’ is to investigate the current situation, use the information gathered, and to draw a conclusion in order to develop a solution that improves the situation and enables you to achieve the set goal. The ability to investigate and develop appropriate solutions is dependant on a certain level of interdisciplinary competency. The category ‘analysis’ has a special function. It is based on the fact that each type of analyis is of a special nature and requires therefore a special set of tools and techniques. As a result, the analysis category has been divided into 11 interdisciplinary analysis modules as depicted in figure 15. For example, strategic problems and issues call for the use of tools that are particularily suited to those strategic issues. Figure 15 also depicts an area labelled ‘knowledge areas’. The concept is that each interdisciplinary analysis module is linked to at least one knowledge area. Each knowledge area contains more background information and research. You will often find related products and services offered by the management consulting
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2.2 Categories of tools
industry. Whilst this book does not address those areas any further, it is important to understand that those interdisciplinary modules and knowledge areas are inter-dependant and connected. Of the totality of the 11 interdisciplinary analysis modules, this book concerns details of the three grey-shaded modules displayed in figure 15 and describes them in more detail below. Organisational structure – analysis module (section 5.1) The purpose of the tools in the category ‘organisational structure’ is to analyse changes related to an organisation and its structure and to investigate options for improvement. Technical (information systems and technology) – analysis module (section 5.2) The purpose of the tools in the analysis category ‘information systems and technology’ (= technical analysis) is to investigate how – typically in a business environment – functional business requirements can be understood, described, defined, and translated into a technical language for further development and implementation. Therefore, most of the tools in this category define, describe and document aspects of a system – data, events, process, technology – for later development and improvement. Strategy – analysis module (section 5.3) The purpose of the tools in the analysis category ‘strategy’ is to examine current and future opportunities inside and outside the given system in order to improve and maintain a sustainable and superior position in a business context. Most of these tools are closely linked to strategic consulting work to achieve a competitive advantage for a company, although these tools are not restricted to a business setup. Decision making (chapter 6) The purpose of the tools in the category ‘decision making’ is to evaluate, prioritise, compare, and understand the rationale and motivation in order to prepare for the decision making. Project management/project governance (chapter 7) The purpose of the tools in the category ‘project management/project governance’ is to support the problem solving process – which is often part of a project-based setting – with tools pertinent to project management to ensure an effective and efficient management of project related activities.
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Cross functional disciplines
Financial and auditing Equity-, risk-, tax-, debt-, management
Succession planning Interim management, etc
Start up, turn around, restructuring Evaluations, audits, etc
Technology, R&D, Innovations
Operations management
BPR, ABC, ISO audit, quality, six sigma
VoIP, KM, CRM, DRP, etc
Information systems and technology (IT)
HR, personal development and leadership
Attract, develop, retain, coaching etc
Kanban, JIT, etc
Supply chain management
Gather info
Strategy
Gather info
Decision making
M&A
Analysis
Intellectual property, etc
Goal setting
Creativity
Growth, Scorecard, etc
Knowledge areas linked to interdisciplinary analysis
4. Decision making
3. Analysis
Creativity
Organisational structure
Interdisciplinary analysis modules
Define situation
Lean, Profit Centre, MBO, etc
Categories of tools
2. Goal setting
1. Diagnosis
Problem solving process steps
Project management – Project governance Change management
Figure 15 Overview of the concept and its components in the context of this book (relevant areas are shaded in grey)
The cross-functional discipline ‘project management/project governance’ is depicted across the entire length of the problem solving process (see figure 15) in order to imply that those project management processes and tools are used across functions, areas and across the whole problem solving process. The importance of project management is emphasized through the fact that it has developed into a business function and profession of its own over time.
2.3 How to select the right tool A common question is: ‘How do I know what I need? How do I know which category is relevant for me?’ The selection of an appropriate tool essentially follows the logic depicted in figure 16. The decision tree depicted in figure 17 directs you how to search, identify, and select the right tool using a number of ‘help functions’ in the book. You may use it to determine the situation that is applicable. Then follow the directions given under A to E and where to go in this book.
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2.3 How to select the right tool
1. Identify your problem solving process step
Categories of tools
2. Identify and select your tool category
1. Diagnosis
Define situation
Gather information
Creativity
2. Goal and objective setting
Consolidate information
Goal setting
3. Analysis
Org. analysis
Technical analysis
4. Decision making
Strategic analysis
Tools and techniques
3. Select your desired tool
Figure 16
Problem solving process
Project management – project governance
Tool selection logic – how to find the right tool
I know which tool to use?
What to do and where to go?
I know which process step I am ‘in’?
Yes
Tool selection:
A
Go to the ‘overview of tools’ table on page 5 to 7 or the ‘application areas’ table on page 8 and 9 and select the required tool.
B
Go to section 2.1 ‘Problem solving’, review your situation and identify your problem solving process step. Then continue with D.
C
Go to ‘Annexure A – check questions’ to identify your problem solving process step and/or missing activities and applicable tools. Then continue with D.
D
Go to ‘Categories of tools’ (section 2.2) and choose amongst the categories that apply to your process step; then continue with A or go to the relevant category to choose a tool.
E
Go to ‘Annexure B – scenarios’, identify the most applicable scenario and choose your desired tools; or go to the section of the relevant category of tool to choose alternative tools.
No
No
Yes
Figure 17 Select the right option for you to find the right tool (Tool selection decision tree)
2.3.1
Overview of tools (A)
The Overview of tools section starting on page 5 provides you with a table of all categories, the name of the available tools, the page number and two ratings to facilitate the selection. The first score is for ‘ease of use’. I also provide my personal opinion with regard to the perceived effectiveness (‘added value for time invested’) in the second rating. An alternative table (Application areas of each tool) that provides an overview of all tools and the areas where the tool could also be useful and applicable starts on page 8. This table caters for the fact that the classification and assignment of one tool to one specific category is often not clear-cut and distinct.
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2.3.2
Where ‘in’ the problem solving process am I? (B)
If you don’t know where ‘in’ the problem solving process flow you are currently and therefore don’t know which category might be relevant to identify a tool within the category, then go to the Problem solving process in section 2.1 to determine where you are in the problem solving process and what potentially you might potentially need.
2.3.3
Checklist for problem solving processes to identify required tool (C)
During each step of the problem solving process, important questions should be addressed and answered. The questions in annex A ‘Check questions’ provide a guideline to ensure that all critical aspects receive the necessary attention. The complexity of the problem influences what tool should be used. It also determines the amount of attention, time, resources and effort each of these process questions requires to address the issue satisfactorily. Only if those questions have been answered – through the completion of certain tasks – can the problem solving process be taken to the next stage. The tools and techniques provided play a vital role in finding the answers to these questions. Start by using those questions, which can highlight areas you overlooked and need to address. The check questions can help you to identify the required tool or technique.
2.3.4
What is the right category? (D)
If you know the process step of the problem solving process you are ‘in’, then this should provide you with an idea of the most appropriate category in which to find the required tool. Go to the Categories of tools section 2.2 to review and determine the right category for your process step. Then either continue with Overview of tools section on page 5 or go directly to the chapter of the relevant category to choose the right tool for you.
2.3.5
How to compile the shopping list (scenario for workshop, E)
To further illustrate how to use and apply this book, I compiled various scenarios and added a list of suggested tools and activities for each to be found in the annex B (chapter 9). Below is an example scenario for a project initiation workshop including the selection process: Imagine you were asked to facilitate a workshop and all you know is that various people from different departments have been requested to work together on this project for the first time. You also know that the project was set up in a very short
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2.3 How to select the right tool
time frame and that the earmarked project manager had subsequently left the company. 1. You want to ensure that everybody really understands the problem this project is supposed to fix. IS – IS NOT tool (chapter 3.1.11) from the ‘define situation’ section to define the problem and start the communication in the team. 2. Once you have discussed the project brief, you want to check if additional or different people should be involved as the broader audience of this project. Stakeholder map (chapter 3.1.13) from the ‘define situation’ section to identify who you should interview, check expectations with and liaise with during the project. 3. The project brief appears to be single-sided and narrowly focused on one particular solution. You want to check if everybody perceives it similarly and if there aren’t other drivers influencing the symptoms. Force field tool (chapter 3.4.8) from the ‘creativity’ section to ‘wake up’ and obtain some new perspectives. 4. After you have amended the project brief with additional deliverables and activities, you want to look at the project objectives and goals. SMART goals setting tool (chapter 4.6) from the ‘goal setting’ section. 5. You move to the reality of things and want to define action steps. Work breakdown structure and activity plan tool (chapter 7.5) from the ‘project management’ section. 6. What if everybody walks away and nothing happens as planned? Define clear accountabilities and not just tasks based on the activity plan. CIDA accountability tool (chapter 7.12) from the ‘change management’ section 7. The end of the workshop has come and you might wonder how people are feeling about the plans and decisions made. Check with them using the 100 points (chapter 6.9) tool from the ‘decision making’ section to evaluate and receive feedback.
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2 Problem solving approach and application
Example of a ‘shopping list’ of tools for a workshop
Problem solving process steps:
Categories of tools:
Tools and techniques:
1. Diagnosis
1. Define situation • Problem definition • Problem tree • Reverse the problem • Hypotheses • Hypothesis tree • Competing hypothesis (N) • Issue tree • Influence matrix • Fishbone or Cause-effect tool • Black box • IS – IS NOT • Stakeholder analysis • Stakeholder map • Stakeholder expectation management • Stakeholder influence matrix • Stakeholder accordion • Stakeholder swapping • Context diagram tool • Silo view tool • Helicoptering • Mind map
2. Gather information • Information gathering plan • Interview • Tripod • Octagon • Focus groups • Questionnaire • Survey/field study - dipstick • Direct observation (DILO) • Delphi or expert panel • Desk research/ database research • 5 Whys • Climate assessment
2. Goal setting
3. Creativity • Brainstorming • Cardstorming tool • 6-3-5 tool • Nyaka (defect analysis) • Bionic • Attribute listing • Morphological matrix • Merlin technique/Osborn checklist • Lotus blossom • Irritating words • Mental provocation
5. Goal setting
4. Consolidate information • Pareto (80:20) • ABC tool • Information matrix • Card sorting • Affinity diagram • Venn diagram • Force field
4. Decision making
3. Analysis
6. Organisational analysis
• Objectives tree • Goal hierarchy • Charter • Goal catalogue • SMART goals • Goal grid • Well-defined outcomes • 3P statements • SNAP
• Organisational structure • Diamond grading tool • Org structure versus process • Span of control • Organisational assessment • Powergram
7. Technical analysis • Architectural decomposition view • Functional decomposition • Process analysis • Entity relationship diagram • Logical data relationship • Technology and systems landscape • Requirements catalogue • Logical and functional system modelling
8. Strategic analysis • Value chain analysis • Critical success factor (CSF) • SWOT and TOWS • Life cycle • 5 Forces • Competitor analysis • Environmental analysis (PEST) • Strategic market group • Customer segmentation • Strategic development Business matrix • Product/ market mix • Strategic development options • Strategy matrix
9. Decision making • Decision tree • Perspectives3 • Argument balance • Polarities tool • Swap sorting tool • Pair ranking • Nominal group tool • 100 Points • Utility analysis • Cartesian coordinates • Cross of beliefs • Vroom Yetton • Risk analysis • Prioritisation
10. Project management Project management category:
• Project contract • LogFrame • Project road map/programme • Work break down structure • Gantt chart • Project work plan
• Project environment analysis • Project structure • PM roles and responsibilities • Project communication plan • Accountability matrix (CIDA) • Stakeholder communication
• Workshop guideline • Expectation review • Booz Ball evaluation • Six thinking hats • Actions steps and review • Project management skills radar
Example ‘shopping list’ for a workshop 1. Define our problem (IS-IS NOT) 2. Who to contact and include? (Stakeholder map) 3. What are the driving forces?(Force field)
4. Define the future (SMART goal setting) 5. What needs to be done? (WBS) 6. Who is accountable for what? (CIDA) 7. What do you think about our choices ? (100 points)
Figure 18 Sample compilation of tools for a workshop
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3 Diagnosis
In a typical business environment, there are many issues or problem areas, including those mentioned below. (Source: Harris, amended by the author) • Dysfunctional organisational structure • Poor financial control • Interpersonal conflict • Lack of quality control • Weak management or leadership • Safety risks • Marketing inefficiency • Poor communication • Tactical misjudgement • Lack of vision • Non-competitiveness • Unresponsiveness to customer demand • Failure to adapt to new technology • Insularity • Fear of change The above list is just an exemplary and arbitrary selection of typical symptoms in today’s business world. The next section will focus on diagnosing and defining the situation for a better understanding of the problem, root causes, background and context.
3.1 Definition of a situation/problem Perhaps the best-known step in the problem solving process is the one most people think of as the first step: ‘define the situation and problem’. This is probably the most misunderstood and poorly executed step in the process. For many people, ‘define the situation and problem’ means simply to provide a written definition or statement of the problem. There is much more to it than that. To define means to establish boundaries, to encompass, to enclose, to locate, to isolate, to
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distinguish, to differentiate, to set apart. To define the problem state (or the solved state) means, at the very least, to do the following: • To establish boundaries and to outline (locate) • To give distinguishing characteristics and to differentiate (isolate) • To state the nature of and to describe precisely (articulate) • To state the meaning of and to provide a definition (explicate) (Nickols, 1994) Definitions of the problem state or the solved state are rarely crystal-clear up front. Clarity typically develops over time. In many cases, the definition of a problem may be considered complete only after the problem has been solved. Until then, it is a shifting, evolving, changing part of the process. The first step in the problem solving process is the ‘diagnosis’ – process step. One starts typically with the tools from the category ‘define the situation’, followed by ‘information gathering’ tools in order to investigate and search for information (see figure 19 and table 2). Sometimes, in addition, creativity tools come into play to promote the ‘outside the box thinking’ and a ‘bigger picture’ view of the situation in order to have a better understanding of the root causes to the problem.
Problem solving process step
Categories of tools
Diagnosis
Define situation
Gather info
Creativity
Figure 19 The three categories of tools during the diagnosis phase
Although ‘definition of a situation/problem’ is a good step with which to begin the problem solving process, it is only a starting point and must be revisited on a regular basis. The situation definition (= diagnosis of the situation) identifies four different points of view/perspectives. Remember these different perspectives during your diagnosis activities. Keep asking yourself: Which tool is best for this specific perspective? 1. The system-orientated perspective – examines and structures the situation in terms of functions, systems components, sub-systems, elements, boundaries, the environment, etc. Note that the term ‘system’ does not refer to a hardware or infrastructure system or technology. 2. The root cause-orientated perspective – analyses and defines the symptoms as well as the underlying root causes and explores related and relevant aspects.
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3.1 Definition of a situation/problem
3. The solution-orientated perspective – defines the boundaries of the As-Is and the To-Be solution, thereby opening the space for potential solutions. The real search for a potential solution happens later during the analysis phase, which is the third step in the problem solving cycle (see chapter 5). 4. The future-orientated perspective – arises naturally from the preceding steps and perspectives, which lay the foundation for the short, medium and longterm view of the future. Typical considerations from a future-orientated perspective would be questions such as: What will the future be like if there is no intervention? What are the boundaries and conditions that should be considered? (Source: Haberfellner) This first category ‘situation definition’ starts by listing tools that focus on the problem statement, then continues with tools that deal with stakeholder aspects before listing tools that define the context and the wider situation.
Table 2
Select your tools from the category ‘define situation’
Category
Tool or technique name
Page
Ease of use
Effectiveness
Define situation/ problem
Problem definition Problem tree Reverse the problem Hypotheses Hypothesis tree Competing hypothesis (N) Issue tree Influence matrix Fishbone or Cause-effect tool Black box IS – IS NOT Stakeholder analysis Stakeholder map Stakeholder expectation management Stakeholder influence matrix Stakeholder accordion Stakeholder swapping Context diagram tool Silo view tool Helicoptering Mind map
50 56 60 61 63 66 67 70 72 74 77 79 84 87 89 91 93 95 99 101 102
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3.1.1
Problem definition
What is the problem? The whole discussion is confusing and overwhelming. Intention (Why and when do I use it?) Your first diagnosis activities as part of a problem solving initiative should ideally be the clear ring-fencing and definition of the problem as well as differentiating between the root cause, the symptoms and the effects. The problem definition is the other diagnosis activities’ point of departure. Purpose (What does it do?) The problem definition consists of two parts: The preliminary definition of the problem – this is often part of the initial project brief/assignment – and the more detailed structuring and ‘dissection’ of the problem, sub-problems and relevant aspects. This second part is best done with the help of tools such as Problem tree (chapter 3.1.2), Hypothesis tree (chapter 3.1.5) and Issue tree (chapter 3.1.7). Instruction (How do I do it?) • The main objective of a typical problem definition workshop is the exploration. What is really the problem? Phrase the problem statement in such a way that everybody can comprehend it without further clarifying questions and explanations. • Define the current situation and context of the problem and the surrounding aspects with the help of the 7 criteria listed below: 1. Point of departure and brief problem description: Describe the current As-Is situation, circumstances and known issues. For example: ‘a 40 % revenue decline in the last 12 months in the core franchise business due to a change in consumer eating behaviour as well as new fast-food franchise competitors.’ 2. Project brief: What is the project assignment about? What is the stated objective? Use plain, jargon-free English to describe the initial project objective, which is presumably intended to remedy the problem situation. For example: ‘Grow the US market through the introduction of a new franchise concept in the health(ier)-food sector over the next 12 months.’ 3. Decision makers/stakeholders: Who are the sponsors and relevant decision makers of this project (idea)? Who are the stakeholders responsible for the relevant areas? For example: ‘The franchise business development director, CFO, head of market research, etc.’ 4. Success factors: What are the prerequisites and assumptions for success? For example: ‘Quick market entry, first-to-market and product-to-market turnaround times.’ 50
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5. Performance indicators and decision criteria: What are the criteria and indicators to measure and evaluate the project progress as well as the project outcome? These could be, for example, market share %, productivity increase, cost saving %, revenue, etc. 6. Boundaries and limitations: What are the acceptable ‘go and no-go’ areas for potential solutions and/or the project? What are the existing boundaries, for example, the budget, intellectual property, existing supplier agreements or alliances, immovable assets, etc.? An example of limitations could be that the core business and existing clients mustn’t be cannibalised, while, by the same measure, existing franchisees mustn’t be affected either. 7. Scope: What is included in the problem/project scope and what is ‘out of bounds’? Which areas and aspects, for example, the geographic production sites, products, markets, customer segments, production methods, etc. are included? • Document your findings and conclusion. Make sure that the relevant stakeholders review, approve and sign this document. Watch out for those typical mistakes and avoid them: • Be cautious with vague statements. Inaccurate descriptions of problems can lead to confusion and will obscure the real picture. Examples of inaccurate problem statements are: – The employed machines are not efficient. – Poverty is the issue. – The training intervention does not work. – Management is incompetent. • Avoid judging and/or criticising individuals, departments or a specific group of individuals, which causes unnecessary conflicts. Examples of inappropriate statements are: – Employees are incompetent and unqualified. – Management refuses to support the initiative. – The marketing department does not perform and deliver. • Resist the temptation to jump to the solution before properly understanding the problem. Signs of premature conclusions about the causes and the appropriate solution are statements such as “due to the lack of…, inadequate…, inappropriate …, insufficient ….” The example statements below are not problem definitions but rather preconceived opinions about the root causes of the problem and the ‘obvious solution’: – The lack of appropriate employee training … 51
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– A lack of fertiliser and water pumps for the crop fields … – Insufficient medical equipment … – Inappropriate procedural guidelines … • Avoid falling into the trap of generalising the problem statement and ending up with a ‘one size fits all’ statement which clouds the real circumstances and root causes. Be as specific as possible. Statements like the ones below are not useful: – “The problem is the bad school education.” – It is better to ask: “What type of schools? In which region? Are there exceptions and, if so, where?” – “High absenteeism rates are the causes.” – Rather ascertain: “Who and how? Under which circumstances? Where is absenteeism high and where is it low?” – “High speed driving causes accidents.” – Rather refine and clarify through questions such as: “Where is this true and not true? What are the circumstances and conditions for each? How is this measured? Where is this relevant and where not?” • The problem (that everybody is talking about) is not always the problem (that you are supposed to address and then resolve). • Avoid the ‘herd mentatility’ and stop following others blindly. You might be tempted to overlook information or select data based on the ‘preconceived group consensus’, which you might be tempted to follow. Guideline for the problem definition: • Use tangible, measurable facts and figures to illustrate the problem. Instead of maintaining, “The training intervention does not work”, you could say, “60 % of the participants would not recommend this training to their colleagues”. Instead of blaming “inefficient machines”, you could say, “The reject rate of 20 % is too high, hence 20 % of the manufactured parts cannot be used and require costly reworks.” • When you maintain that behaviour is part of the problem, be aware that you may be inherently subjective. Make sure that you use facts and numbers to ‘prove’ the behaviour that you have observed. Instead of using labels such as “incompetent employees”, rather use tangible statements like, “During the last 2 months, 8 of the 10 employees either submitted their reports late or the reports contained mistakes.” • Describe the observable problem and do not interpret or provide your suggestion for a solution. For example, “a lack of pesticides” is not the problem, but rather “the vine fretter that eats the vines, which then die.” So, don’t describe the fact that the presumed solution has not been implemented (a lack of pesticides) as the problem statement. Describe what you can observe. 52
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• Ring-fence the problem and then narrow it down. Pinpointing where the problems are will avoid a ‘one size fits all’ intervention. Identifying where problems occur will help provide insights into the context, practices and malpractices, skills and behaviours of stakeholders. Instead of maintaining, “the problem is the bad school education”, rather define the problem as, “Government high schools in rural areas (villages < 25,000 inhabitants) have a school dropout/truancy rate of 20 % compared to the average of 5 %. 67 % of these pupils have had no form of education or income for at least 18 months.” (Note those facts are just sample statement, not based on actual statistic facts.) Tips and suggestions • Once you have completed the first snapshot of the problem, continue to refine the problem definition. Use the tools described in detail on the following pages: – The Problem tree (chapter 3.1.2) divides the problem into its sub-elements and components and determines the causes and effects. Basically, the problem explores the ‘what’ – what is the problem? What are the root causes and effects? For example, what are the reasons and root causes for the decline in revenue? – The Hypothesis tree (chapter 3.1.5) focuses on and builds up an argument or conclusion and helps you test your hypotheses and scrutinise of your assumptions. The tool deals with the ‘why’ – why do we have this problem and (why) are the assumptions regarding the problem and root cause correct? (Why) Should we either increase the sales volume or increase the price to increase the revenue? – The Issue tree (chapter 3.1.7) helps with the identification of potential ideas and options to tackle the problem. The tool asks ‘how’ – how can we produce the desired outcome? How can we increase the revenue? • Use the section on the ‘Mental thinking levels during problem solving’ (chapter 2.1.3) to remind you of the appropriate instrumental and functional mental focus. • Many people find problems somehow negative and prefer dealing with the positive and exciting part, which is the solution. Avoid jumping onto the solution-hunting bandwagon when you facilitate such a discussion. Check your subconscious assumptions and beliefs about the problem’s root causes. Which are really facts and which are just your opinions? • Use the FOG rule. Distinguish between the following three aspects when, for example, defining a problem. Mark/tag your information with one of the three labels: F, O, G (on the index cards when facilitating a workshop). Or use Post-it® notes of different colours. Then work on transforming opinions and assumptions into facts.
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– Facts – are known and accepted facts and realities that can be measured and proven and are undeniably known to be true and accepted. It depends on you and the amount of time you want to invest to prove that your facts are truly facts. – Opinions – are mostly information you find or gather. They are the thoughts of people and have not been verified or proven to be facts, or most people do not consider them to be facts. The biggest problem is that many people believe their opinions are facts. So, distinguish between facts and opinions and clearly mark them as such. – Guesses – are unacknowledged or unproven ideas that are commonly accepted as not being facts, but rather unsafe assumptions. These guesses and assumed information can be the result of a creativity exercise and can sometimes be very valuable and insightful. Don’t ignore the rough diamond! (Source: Straker) • Rational or emotional? There are two thinking dimensions and it is important to know in which one you are operating. Both dimensions are important and valuable, so make sure you ‘cross-pollinate’ and leverage them. – The rational dimension deals with the structuring, boundaries, logic chains, and identification of drivers, success factors, defects, root causes, effects, etc. – The emotional dimension examines the following aspects (Source: Haberfellner): • How did the problem develop? • What has been done so far? • What seems to be the problem? • What would be the best, ideal solution – think blue sky, no limits … • If you were allowed a pipe dream/wishful thinking, what would this be? • Where else does the problem lie? • Is there another way of looking at this? • What have you not taken into consideration? What is it you are ignoring or not thinking of? • Don’t forget that each person, department and company is unique. They are not all the same, don’t have the same problems and are not in exactly the same situation. • Remember: Every individual, area, locality and organisation is unique. Even though there are similarities and patterns, not all of them have the same
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problems or are in the same situation. Once you have located where the problems lie, start your analysis. Prepare a Problem tree (chapter 3.1.2). • The focus and objective of the Problem definition tool is to define the problem. Conceptionally, the equivalent tool focussing on the project definition is, however, the Project contract tool (chapter 7.2). Be aware of the potential overlaps illustrated in section 9.2 ‘Scenario: Good practice for project and problem definition’. Example: Problem definition – (fictitious) new Healthy-Fast-Food business strategy, based on the example above Table 3
Problem definition example
Problem definition: Successful new strategic business area Situation and brief problem description
40 % revenue decline in the last 12 months in the core franchise business due to a change in consumer eating behaviour as well as new fast-food franchise competitors
Project brief
Grow the US market through the introduction of a new franchise concept in the health(ier)-food sector over the next 12 months
Decision makers/stakeholders
Franchise business development director, CFO, head of market research
Success factors
Quick market entry, first-to-market and product-to-market turnaround times
Performance indicators and decision criteria
Market share of a min. of 25 % in the next 36 months. Break even within 36 months.
Boundaries and limitations
The core business and existing clients mustn’t be cannibalised and, equally, the existing franchisees mustn’t be affected either.
Scope (in scope)
US market, new product development, new production technologies, new franchise concept, new distribution channels
Cross-reference to related tools in this book Problem tree (chapter 3.1.2), Hypotheses (chapter 3.1.4), Hypothesis tree (chapter 3.1.5), Reverse the problem (chapter 3.1.3), Issue tree (chapter 3.1.7). Source: Straker, Haberfellner, Woodrow
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3.1.2
Problem tree
What is a problem? What occurred first and what was simply the result of this? What is the root cause and what the result? What is the trigger and how does it trigger? The conversation is too congested and confusing. Intention (Why and when do I use it?) A problem tree is particularly useful when you are confronted with a new problem and unknown situation. The problem tree tool helps you to ring-fence a problem as well as to divide the problem into its component parts. It also helps you understand the difference between the root cause and the effect. A problem tree can also help explain a project's rationale because it links the project goal – phrased in terms of a challenge or a problem (e.g., revenue decline) – to what the project is going to deliver (e.g., develop a new product range or build manufacturing capacity). This tool is similar to the Fishbone (Ishikawa) diagram used in quality management circles and the stream analysis diagram used in organizational development (OD) diagnosis. Purpose (What does it do?) • A problem tree is a hierarchical tree structure. The trunk represents the problem, the roots represent the root cause and the reasons for the problem. The branches represent the resulting effects and consequences of the problem (figure 20).
Effects and consequences
Further effects
Further effects
Further effects
Effects
Core problem
Root cause
Root cause
Figure 20 Problem tree
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Effects
Core problem
Root causes
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Root cause
Root cause
Root cause
Root cause
3.1 Definition of a situation/problem
• The objective of the problem tree tool is to define all those components and elements in order to examine them in isolation and independently without becoming overwhelmed by the complexity and interdependence. • A problem tree asks the questions: ‘What’ – What is the problem? What are the reasons for the problem? What are the consequences of the problem? Regarding the example, that means: What is the problem? > Revenue decline! What could the reasons and root causes of the decline in revenue be? • Note that sometimes the problem tree only displays one side of the tree structure, for example, only the root causes (= roots) or only the effects and consequences (= branches). Instruction (How do I do it?) • Start by ‘simply’ placing the original (draft) problem statement in the middle of, for example, a flip chart. You might need to work on further clarifying and outlining the problem before everybody is ready to move on. Don’t aim for perfection but keep the project objectives and assignment in mind. The project objective and problem statement might end up being incompatible. Ideally, you have an existing problem definition on which to build (see Problem definition (chapter 3.1.1)). • Now ask the ‘What’ questions. What are the direct reasons for and root causes of this stated problem? Write the comments on Post-it® notes or index cards. Write one comment per card. Place the cards in a MECE consistent hierarchy that resembles a tree structure. The (root) causes become the roots in the tree diagram and their argument logic flows towards the trunk, which represents the problem statement. The Mutually Exclusive and Collectively Exhaustive (MECE) rule is vitally important when building the tree hierarchy: – Mutually Exclusive: Statements don’t contradict or overlap. If two or more reasons/causes exist for a problem and the one cause is not the ‘predecessor’ or cause of the other, then those causes are on the same level. For example, the following three groups are incorrect: monkeys, fish and mammals. Correct would be: fish and mammals. Those two groups are mutually exclusive, but not complete. – Collectively Exhaustive: All statements together on a lower level are complete and fully represent the next higher level. Using the above statement, the correct and complete groups would be: fish, birds, reptiles and mammals all represent vertebrates (excl. bacteria). • Then continue by inquiring about the results and effects. ‘What are the effects and consequences of the stated problem?’ Follow the same MECE logic as described above. However, this time, the statements (cards) lead away from the problem. 57
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• Don’t try to identify and represent every possible cause or effect immediately. Focus on grouping the relevant ones in a MECE consistent logic. Try to narrow this down and ideally end up with three to a maximum of five options on each level, so that you don’t lose your overview. Example of a problem tree for a water development project Figure 21 shows a problem tree for a water development project, containing a high number of root causes which have to be looked at from two perspectives: There is water – there is no water.
Morbidity
Epidemics and diseases
Reduced productivity
Restricted and impacted economy
Effects
People get sick due to water shortage
Core problem “There is water”
Can’t afford water
Root causes
Not potable, as not clean enough
People get sick due to poor water quality
There is not sufficently potable water in XY
No access rights to water
Industry suffers under water shortage
“There is NO water”
Can’t get to the water
Just not enough
Waterprices are prohibitively high (monopoly)
Drinking water has been polluted
Beyond the border
Unsurmountable geographic location or distance
Demand supply
Too low income
Water has never been potable
Monopolistic/ dictatorial access control
Reserves dried up
Insufficient reserves
Water treatment is excessively expensive
Insufficient cleaning/treatment
Private or corporate property
Natural reserves too deep, small, etc.
Excessive demand/ consumption by industry
Re-pollution of water after treatment
Figure 21 Water shortage – problem, causes and effects
Tips and suggestions • When you are drawing a problem tree, there may be several ways to dissect and partition the problem. The way you choose will affect the way you view the problem and can either reveal or obscure critical issues. For example, instead of drawing your problem tree (for the problem ‘decline in revenue’) with an organisational hierarchy (by business unit), you might want to look at it from a functional perspective (production, sales, marketing, research) or from a product portfolio perspective. • Check if you have been too generic in your statements. Are the listed root causes and effects really relevant and applicable? • Don’t overdo this exercise – remember the 80:20 rule. 58
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• Mark the index cards (or diagram boxes) that are relevant and part of the project scope accordingly. Document the project scope further and use the IS – IS NOT tool (chapter 3.1.11). • Don’t assume that the deductive logic of your insightful problem tree is selfexplanatory. You need to explain (and thereby test) your logic and point out your conclusions to others. • The quality of your problem tree is heavily dependent on the input quality and the right stakeholder involvement; hence, make sure you invite the right individuals to your workshop, even if it requires you to run several workshops to obtain the right input. • Use the workshop context to leverage the existing stakeholders and start building relationships with and between them. Make sure that each stakeholder takes an insight or learning from the session. • If you struggle to create a group consensus about the causes of the problem, then introduce voting. You could use the Nominal group tool or the 100 Points Tool. Alternatively, obtain consensus on a variety of selected problem causes and continue to develop the problem tree with these. Then revisit the ones you didn’t take into consideration and repeat the exercise with them. • The ‘branching’ logic of the problem tree tool is similar to the Fishbone or Cause-effect tool (chapter 3.1.9). Does this work better for you? This tool is sometimes also called a stream analysis in the organisational design/development sector. Also see figure 43 on page 98. Related trees: Problem tree Hypothesis tree
Issue tree Objectives tree
• To get from the problem tree to the hypothesis tree you need to use the problem tree’s root cause statements and translate these statements then into a hypothesis. • The issue tree emerges logically from the hypothesis tree. Use the stated hypothesis, which describes the assumed rationale, and ask yourself: How can we fix this problem? • A problem tree tends to have a negative connotation due to its focus on problems. You can turn this around by switching the problem tree statements around. This creates an Objectives tree (chapter 4.2). • Don’t mix ‘what’ and ‘how’, nor use them on the same level: – What = Root cause or effect
Problem tree
– Why = Assumption regarding potential solutions and related causes
Hypothesis tree
– How
Issue tree
= Measures and options
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Cross-reference to related tools in this book Problem definition (chapter 3.1.1), Fishbone or Cause-effect tool (chapter 3.1.9), Influence matrix (chapter 3.1.8), Objectives tree (chapter 4.2), LogFrame (chapter 7.3). Source: Straker, Haberfellner. The problem tree is an integral part of the ZOPP approach championed by the GTZ (www.gtz.de) and many European development organizations (e.g. www.dfid.gov.uk).
3.1.3
Reverse the problem
I want to approach the problem from an unconventional perspective. Intention (Why and when do I use it?) If you want to ensure that you have not overlooked any aspect or if you want to examine the situation from an unconventional perspective, this tool uses a reverse logic: If I know exactly what I don’t want, then this helps me to define what I want. This tool can also help you to test your logic and conclusions with regard to already planned/anticipated solutions. The tool can also function as a great trigger to generate creative ideas and uses a similar logic as the Mental provocation creativity tool (chapter 3.3.11). Purpose (What does it do?) Focussing on the opposite of the original problem, turns the original problem into a desired state. When you examine the opposite of what you want, you will obtain better insight into the original problem situation, which will prompt different ideas. Instruction (How do I do it?) (Note: I have decided to continue to use the ‘water problem’ for consistency reasons throughout this chapter and, in particular, to explain this tool, as the ‘water problem’ example provides a very suitable degree of complexity for the tools’ description. Unfortunately, this tool creates macabre and morbid example scenarios. Please forgive this as consistency was given priority.) • Phrase the problem in a simple statement (e.g., people get sick from bad quality water). Note that the problem is that people get sick, not the cause, which is the bad quality of the water. • Paraphrase the original problem statement into the exact opposite (e.g., what could be done so that even more people will get sick from bad quality water?).
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• Ask yourself which activities could help you achieve the objectives (of your inverted problem state)? (Such activities could be targeted poisoning, sabotaging the water treatment plants, destruction of water dams, prohibition of water filter sales, etc.) • What would be the consequences and effects of these activities? (e.g., congested hospitals, increased morbidity, disabled water supply infrastructure, decreased labour force, increased sick leave days, decreased productivity and outputs, etc.). • What could be beneficial and advantageous about this? Again, forgive the following macabre conclusions. A positive point could, for example, be the longterm relieve of the social security system and medical aid funds due to rapidly increased morbidity, an increase in orders for the construction and water treatment industry, the population’s increased environmental awareness of water-related educational initiatives, environmental and recycling opportunities, etc. • You could use the Brainstorming tool (chapter 3.3.1) to develop potential ideas further. Tips and suggestions The Reverse the problem concept is sometimes also used as a creativity technique that reverses the ‘challenge’ and thereby creates alternative and creative perspectives. An alternative name for the tool is the Headstand method. Cross-reference to related tools in this book Problem tree (chapter 3.1.2), Issue tree (chapter 3.1.7), Brainstorming (chapter 3.3.1). Source: Woodrow
3.1.4
Hypotheses
I have been in a similar situation before and I have a pretty good idea about the problem. I don’t want to waste time and reinvent the wheel on this. I want to use my experience and even intuition. Intention (Why and when do I use it?) Hypotheses are based on experiences, intuition and knowledge of similar problems and intended to understand a situation or an opportunity in greater detail without spending unnecessary time and effort on the investigation.
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Purpose (What does it do?) • The hypotheses approach helps to focus the analysis on satisfying its purpose – by testing the assumptions of the hypothesis and nothing else. Therefore it saves time by focusing on the data that confirms or disproves the hypothesis, rather than carrying through a time-consuming assessment of all available information. • It prevents ‘analysis paralysis’ and ‘data overload’. Instruction (How do I do it?) • Form a hypothesis about the most likely reasons for the identified problem and the symptoms associated with it. ‘Decide what you think is going on’. Use other tools to identify the problem and its root causes, such as the fishbone tool. • Decide how you will tell the ‘story’ – develop an argument logic based on your insight, experience, assumptions and intuition. • Decide what data you need to collect and how to provide the evidence. • Don’t rush forming hypotheses. Do your assessment of the problem and the basic processes, etc. until you are certain you understand the situation and your previous experience and knowledge is applicable. Then establish assumptions, which become hypotheses. Tips and suggestions • Don’t be too ‘sure’ about your assumptions and hypothesis. Try to disprove your assumption, rather than just trying to confirm that ‘you were right again’. This tool is about saving time and effort, not about being stubborn or glorifying yourself. So don’t fall in the confirmation trap by only seeking information that confirms your hypothesis. Example of a hypothesis ‘The sales force spends more than 40 % of its time on non-value-added activities.’ Cross-reference to related tools in this book Fishbone or cause-effect tool (chapter 3.1.9) or the IS – IS NOT problem tool in chapter 3.1.11.
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3.1.5
Hypothesis tree
I want to structure my assumptions and preconceived opinions so that I have a better overview and can see how they relate. Intention (Why and when do I use it?) The Hypothesis tree tool is best suited if the user has prior knowledge and experience with the problem area and topic. The Hypothesis tree saves time by helping you to focus on the relevant aspects and most likely root causes and/or solutions. The Hypothesis tree helps you plan your (project and problem solving) approach. The tool identifies the relevant areas and assumptions, on which you then focus, and helps you to address and prove what is right or wrong instead of undertaking a full-blown diagnosis. Purpose (What does it do?) • The Hypothesis tree displays the range of potential solutions in a tree structure diagram. • The Hypothesis tree starts with a statement that reflects the assumption about the problem and the assumed solution. (Note that in contrast to the hypothesis tree, the Issue tree (chapter 3.1.7) on page 67 starts with a question. This question is the central point of departure on the left side of the tree diagram from which the various solution options develop.) • Each ‘why’ statement connects each level of the hypothesis tree with its precursor statement and should reflect your rationale and line of argument. Each ‘why’ statement (on the left) is detailed and explained by the sub-hypothesis statement on the right side (= all sub-hypotheses on the lower level provide an explanation and justification for the ‘why’ statement on the level above). • A hypothesis statement could, for example, be: ‘To avoid water-borne diseases and fatalities, you should only drink safe water.’ An alternative hypothesis statement could be: ‘We can drink water if we avoid polluting it, purify it appropriately and ensure appropriate access.’ A sub-hypothesis that further details an aspect of the above hypothesis statement is: ‘The use of good water filters helps keep water germ-free and renders it potable.’ Can you think of other hypothesis statements? • Don’t forget that the hypothesis statements are not facts, but rather assumptions and educated guesses based on your insight into and experience with the topic. This is the positive aspect of these merely being your opinions. You don’t have to justify them right now. Your further diagnosis will prove them right or wrong.
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Instruction (How do I do it?) • You should be able to build on an existing Problem tree (chapter 3.1.2). If not, it might be useful to create one now to ensure that your hypothesis tree is aimed at the right problem. • Use your understanding of the existing problem and its root causes to identify and deduce relevant conclusions and the most applicable solutions, e.g., environmental pollution and poor waste water treatment are significant contributors to poor water quality. • Use the Hypotheses tool (chapter 3.1.4) to learn more about how to phrase hypotheses. • Be aware of the difference between the hypothesis tree, which shows assumptions about solutions, and the Hypotheses tool (chapter 3.1.4), which describes assumptions concerning the root causes of a problem. Both are useful applications – but with a different focus. • Use the following logic to phrase your main hypothesis: ‘In order to achieve XYZ (the goal/objective), the company/individuals should do ABC. The activities ABC describe appropriate solutions to resolve the problem and address the root cause.’ • The next lower levels describe the reasons and rationale that justify why this would help address the problem. • As mentioned before, the Hypotheses tool and the Hypothesis tree require a certain level of understanding and prior knowledge regarding the topic and potential solutions in order to formulate insightful and purposeful hypotheses. Obtain access to such knowledge and review and test your Hypothesis tree with experts.
Hypothesis
Why?
Why?
Reason Reason Reason
In order to achieve ..., the company should do ...
Reason Reason
Reason
Reason Reason
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Figure 22 Hypothesis tree
3.1 Definition of a situation/problem
Tips and suggestions • The starting hypothesis should be an action or task orientated, for example: “To achieve XYZ, the company should do …”. • Ask yourself whether the statements on all levels answer the question ‘why’, which is again phrased as a hypothesis. • Also consider adding possible counter-arguments and alternatives to your hypothesis tree. Check arguments that deal with the ‘why not’, which you should also take into consideration. • The MECE principle should apply to all logic trees; hence, also to the hypothesis tree. Check if the ‘parent’ statement on the left is consistently and completely covered by the child statements on the right. See the Problem tree tool for more details on the MECE principle. Example Hypothesis tree applied to the water problem – also compare with the Problem tree and Issue tree examples.
Why?
Hypothesis
Why?
Old supply pipes contaminate purified water
The water system's functioning supply pipes prevent subsequent contamination and loss of clean water
To have clean potable water, there should be a water and waste water treatment infrastructure.
A functioning sewage pipe system prevents pollution of the environment
Functioning waste waster treatment infrastructure provides potable water
Functioning supply pipes prevent leakages
Broken sewage pipes lead to diseases due to sewage water Functioning sewage pipes allow waste water to be recycled and reused
The public trusts the provided water quality, hence consumes it The existing water can be added to the water cycle/system again (no loss) A functioning water treatment capabilitiy is a cost effective way to provide potable water
Figure 23
Hypothesis tree of the default water example
Cross-reference to related tools in this book Problem tree (chapter 3.1.2), Issue tree (chapter 3.1.7). Source: www.pm.portal.ph 65
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3.1.6
Competing hypothesis (N)
Am I prejudiced? Am I objective about my hypothesis? I want to test whether I have omitted certain perspectives and hypotheses. Intention (Why and when do I use it?) Use this tool to check if you have overlooked certain hypotheses or not sufficiently verified them (and which ones). Are the hypotheses consistent and robust? Purpose (What does it do?) The competing hypothesis tool uses your main hypothesis and, in a matrix layout, cross-validates other relevant and competing hypotheses against the main hypothesis to check for consistency and validity. Instruction (How do I do it?) • Note your assumptions, guesses and speculations regarding the reasons for the problem under investigation. Phrase these as hypotheses (use Hypotheses tool (chapter 3.1.4)) and place your primary hypothesis in the top cell of the column ‘primary hypothesis’ of table 4. In this case, the assumed reason for the poor water quality is ‘Waste water treatment is insufficient’.
Table 4
Competing hypotheses for the poor water quality example Primary Hypothesis
Facts and evidence
Competing hypotheses
Waste water treatment is insufficient
Environmental pollution
Old water pipes
Resistant bacteria infestation
Increase in newspaper reports regarding waste water problems
+
+
+
-
Increase in sales of water filters
+
+
+
+
Increase in hospital sick days due to e.coli
+
–
–
+
Reoccurrence of cholera cases in recent years
+
?
–
+
Decline in ground water levels
–
–
–
–
Increased use of fertilisers
+
+
–
–
Good sanitary and hygiene practices are not adhered to
–
–
–
+
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3.1 Definition of a situation/problem
• Now think about the relevant facts and prove points that support your primary hypothesis. Write down each supporting fact or evidence in the first column of the table. Each of these facts or evidences heads a separate row. • Ignore your own opinion at this point and add other possible hypotheses for the same problem on top of the other columns which are labelled ‘competing hypotheses’. Do not select more than 3 to 5 other hypotheses • Review the facts and evidence in each row and consider these in the light of each hypothesis in the columns. Does the ‘evidence’ support the hypothesis or prove it wrong? Use + or – to mark each cell. • The most relevant hypothesis and the one most likely to be true might not be the one with the most ‘+’, but potentially the one with the fewest ‘–’. Check this yourself. Cross-reference to related tools in this book Hypotheses (chapter 3.1.4), Hypothesis tree (chapter 3.1.5). Source: Woodrow
3.1.7
Issue tree
I don’t want a wild brainstorming; I would prefer a structured discussion of potential problem solving ideas. Intention (Why and when do I use it?) The Issue(s) tree tool helps you to identify and structure potential ideas and options on how to approach a problem. The tool deals with the ‘how’ – how could we approach and solve the problem and what are possible options? For example, ‘How could we increase the revenue?’ or ‘How could we ensure potable water for everybody?’. The Issue tree tool does not define and ring-fence the problem – use the Problem tree (chapter 3.1.2) for that task – but creates a logic and hierarchical structure to explore and display potential options and problem solving ideas. By answering the implicit questions of the Issue tree, you can find out if your assumptions are correct. This means that an issue tree is ideally used in conjunction with a Hypothesis tool and the Hypothesis tree (chapter 3.1.5). An issue tree is a series of questions that you should be able to answer to prove your underlying hypotheses right or wrong. An issue tree can also help you identify the relevant questions that you need to answer; hence, the tool helps refine and focus your approach on the relevant information gathering activities.
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Purpose (What does it do?) • The issue tree is similar to the Problem tree (chapter 3.1.2) but is solution orientated. Remember, the problem tree is root-cause and effect orientated. This implies that the issue tree is based on a solid understanding of the problem and, ideally, on an existing Problem tree, which provides the structure and hierarchy from which to derive and develop ideas and possible solutions. • The purpose of the issue tree is not the creative solution finding, but rather the constructive and logic-building process. Each step or level (= branch) is built upon the previous hierarchy and further refines it by asking: ‘How could you solve the problem – what are the resulting options?’ Each solution is further divided into its sub-solution elements. • As with the other logic trees, compliance with the MECE principle is vital to produce a quality outcome. Mutually Exclusive: statements don’t overlap. Collectively Exhaustive: all child statements on a lower level cover the parent statement fully. Instruction (How do I do it?) • Before you start, use the Problem definition (chapter 3.1.1) to ensure proper understanding of and clarity on the topic. It is often difficult to properly define the core problem. If possible, use an existing Problem tree (chapter 3.1.2) or Hypothesis tree (chapter 3.1.5). • Ask yourself, which statements need to be true and correct so that your hypotheses are proven right. For example: How could we solve the water problem? What are the possible options? Which ones are most suitable and most likely to be useful and effective? • As with all MECE compliant logic trees, all the child answers should together answer the parent question on the next level. Using the default water example, this would be as in the following. If there were three possible answers (solution options) to the question on how to obtain potable water, the three solution options could be: avoid environmental pollution, treat sewage water and treat water before personal consumption. The question on the next lower level could be: How could I treat water before consumption? The possible solution options that represent a complete MECE representation of all the possible options which exhaustively answer the above question could be: – Physical-mechanical treatment – Physical-chemical treatment – Biological treatment – Special and other treatments and procedures Drill down further on every question and the resulting answers until you reach a satisfactory answer. 68
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3.1 Definition of a situation/problem
How
How
Option 1.1
Option 1 Option 1.2
How could we ....
Option 2.1 Option 2
Option 2.2
Option 3 Option 3.1
Figure 24
Issue tree diagram
How
Physicalmechanical treatment
How
Precipitation Coagulation Sedimentation Diaphragm Filters
How could one treat and process water before consumption?
Physical-chemical treatment Ion exchange filter Desinfect, e.g. with clorine
Biological treatment
Biological reactors Enzymatic treatment
Special and other treatments or procedures
Figure 25
UV light Energetic treatments
Issue tree – How could you treat water before the consumption?
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Tips and suggestions • The Issue tree tool can also be useful at the beginning of a project to identify and divide the work areas basically, like the Work breakdown structure tool (chapter 7.5). It can also help with structuring the project communication (also use the Project communication plan (chapter 7.11). Cross-reference to related tools in this book Problem tree (chapter 3.1.2), Hypothesis tree (chapter 3.1.5). Source: Rasiel, GTZ, DFID.gov.uk
3.1.8
Influence matrix
Intention (Why and when do I use it?) The influence matrix tool displays complex cause-effect relationships; hence, is suitable to help you investigate and define problems and complex, multidimensional correlations where one item has a relationship with at least two others. Purpose (What does it do?) The influence matrix tool displays the root cause and effect graphically. It sometimes includes quantities, which help you to assess each cause and effect entity’s relevance and impact, and possible intervention means. Instruction (How do I do it?) • Write down all the root causes in the first column. • Write down all the effects and consequences in the top row. • Now assess the strength of each root cause’s impact on the listed effects. Use an ‘x’ to indicate a correlation between the two elements and mark the cell. • Alternatively, you could use numbers to make it more quantifiable. 0 = no influence, 1 = weak influence and correlation, 2 = strong impact. Then calculate the subtotal of each row. The number represents the influencing strength of the specific root-cause element. The column subtotal indicates how much this element is affected. Example of an influence matrix in table format Table 5 gives an example without quantification, concerning the direct and indirect influence of stakeholder groups and environmental conditions on relevant business factors.
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3.1 Definition of a situation/problem
Table 5
Influence matrix Effects = Impact on
Prices
Market position
Margins/ rebates
Etc.
Root cause = Influence and impact from Marketing
Environment Unions
Sales
Image
etc.
Tips and suggestions • Also compare the Context diagram tool (chapter 3.1.18) for other illustration options. • An Influence matrix is limited to a two-dimensional display of relations. If you want to display more complex relations, you may also use the diagram shown in figure 26. The fact that this is no ‘standard matrix’ gives prompt evidence that the each group is brought into relationship with each other group.
3
Project manager
2 4
0
1
1
Finance & controlling
4
1
2
Project admin
0 2
1
2
0 0
0 1
0
0 1
0 1
0
Marketing Project office
0
0
IT
1
0
6
0
0 External consultants
2
2
1
0
Sponsor
2
1
Steering committee
Figure 26 Influence matrix – Frequencies of communication interaction between project members
Cross-reference to related tools in this book Problem tree (chapter 3.1.2), Fishbone or Cause-effect tool (chapter 3.1.9), Issue tree (chapter 3.1.7). Source: Haberfellner
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3.1.9
Fishbone or Cause-effect tool
Intention (Why and when do I use it?) The fishbone or cause-effect chain tool (also sometimes called Ishikawa or root cause analysis) provides a visual map of the factors (causes) that contribute to a particular problem (effect) and is best used while exploring a given problem at an early stage or during the analysis phase to ‘dig deeper’. Purpose (What does it do?) It helps to identify, explore and display all possible causes related to a problem and to furthermore discover the root causes and show dependencies amongst causes and underlying drivers. In other words, it is the graphic illustration of the relationship between a problem or goal (the effect) and its underlying contributors (the root causes). It also enables a team to focus on the core of the problem, and not on the history of the problem/symptoms. It creates a snapshot of the collective knowledge or information gaps around a problem and displays this graphically. Instruction (How do I do it?) • Generate or define the major causes needed to build the cause-effect diagram. • Write the ‘effect’ statement in a box on the right hand side of the diagram/flipchart. Check that everybody agrees on the problem. Include as much information as possible in order to be precise. The backbone of the ‘fish’ is drawn across the paper with a number of leadings going off it, each to a smaller box containing the category of a possible cause, the ‘major cause’. • Ask ‘Why does this happen?’. This question is repeated until the team runs out of causes. For each deeper cause (‘sub-cause’), continue until you obtain a better understanding. Use the 5 Whys (chapter 3.2.11) tool to gather more information and identify the hidden or unknown root causes. • Possible ‘sub-causes’ are written against the lines of each category. • Be flexible with the naming of the major cause ‘bones’. There is no perfect set or number of categories: – A production process traditionally has the following categories: machines/equipment, materials, tools, and people. – A service process traditionally has the following categories: policies, plant, procedures, and people. – Generic categories often found in both are: environment, measurements, communication, and timing.
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3.1 Definition of a situation/problem
– You can also use the major steps of a current business process flow in place of the major cause categories. – Another typical generic set of categories is: manpower, machinery, materials, money, and method, as displayed in figure 27.
People
Machine
Problems
Money
Material
Methods
Figure 27 Most problems have their root causes in one of the four areas as displayed above
Tips and suggestions • Place an enlarged fishbone diagram in a public place in the company and provide Post-it notes for people to contribute and post causes and solutions. • An inversion of the fishbone is the solution-effect analysis, where you place the possible solution in a box on the left, draw a horizontal line from it towards the right, with further lines leading from this to display possible consequences and effects, in figure 28.
Effects
Consequences
Solution
Consequences
Figure 28
Effects
Solution-effect variation to the fishbone tool
Example of a general risk fishbone Figure 29 shows a more complex example of a fishbone, an extract from a risk management project. Sometimes a fishbone tends to become confusing, so you have to think thoroughly about what to display.
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Political Image Economic climate Environment Brands
War zones Crude oil price Espionage Financial markets Natural disasters
Political system Reputation
Government
...
Tax system ... ...
...
Product profitabiltiy
Standard of living
Fraud Global economy
Culture
Stock exchange
Labor market
Wealth levels Social Skills levels
Indebtedness Financial
Figure 29 An example of the contributing causes and drivers that effect ‘risk’
Cross-reference to related tools in this book Mind mapping (chapter 3.1.21), 5 Whys (chapter 3.2.11). Source: Harris, Markham. The Fishbone or Cause-effect tool – also called the Ishikawa diagram – was developed by Kaoru Ishikawa.
3.1.10 Black box I want to understand what is happening. The whole situation is becoming too muddled. I am losing the overview. Who/what is providing input and output? Intention (Why and when do I use it?) The black box tool can reduce the complexity of a situation or a problem. A typical situation is during the beginning of a project, when one tends to struggle with the complexity and multiple aspects and stakeholders of the problem. The focus is on the system (not meant in a technical context) and its interactions with the external world only. Again, the black box is not a focus on how the inside of the black box functions, but what is around it and what (not how) interacts with the black box. Purpose (What does it do?) • By defining the system as a black box, one should only focus on the interactions (input/output flow) with the outside world of the ‘system’ or situation and not worry about the inside of the black box. • It reduces complexity as one is not distracted about the ‘how, where and what’ of the inside of the black box. Defining the inside is a separate exercise. You will find several tools for it further down.
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Risks
3.1 Definition of a situation/problem
Instruction (How do I do it?) • Define the situation/problem as a ‘black box’ (figure 19 with harvesting potatoes as example). The issues or problem under consideration is inside this black box, therefore not ‘visible’. • Identify all the input and output flows. Flows could be for communication, information, queries, materials, and requests by systems or based on human interaction. Consider all data, resources, info, processes, etc. (see figure 30). • Think about dependencies and reactive flows (a request from the black box that triggers an input as a reaction).
Potatoes
Energy flow Potatoes seedling
Rejects Harvesting potatoes
Information flow
Figure 30
Haulm Admixture
Harvesting potatoes as example for a black box
Tips and suggestions • The activities to gather relevant information for similar tools, e.g. context diagram, stakeholder map or entity relationship tool (ERD) may overlap although varieties in depth. • The tool that uses the opposite logic is called the ‘spotlight’ tool, as it puts the issues of concern in the ‘spotlight’. You focus on the inside of the black box without worrying about where and how this ‘box’ interacts with the external environment. Examples of black box diagrams The black box diagram in figure 31 shows the situation analysis for a purchasing department. It contains all elements of the contemplated system. The elements outside of the system interact across the system boundaries with the subsystem defined for this situation and thus are not part of the situation under examination. Figure 32 shows a family pizzeria business as a black box. The Black box shows relevant input and output aspects whilst not displaying (ignoring) the pizzeria business that is under investigation. Cross-reference to related tools in this book A context diagram (chapter 3.1.18) is a more detailed version of the black box diagram in which the inside of the black box is explained, detailed and documented
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Black Box Production
Suppliers
Procurement
R&D
Inventory
After sales service
Logistics/ distribution ow
a fl
Dat
ERP system
System boundary
Purchase order system QA
Inventory system Production
Controlling MRP system
System under investigation
Nothing inside the black box should be defined and displayed
Figure 31 Example of a black box for a purchase order system within the procurement department)
Food and beverage supplies
Black Box
Revenue and creditcard receipts
Customers and supplies
Image, reputation and brand name
Financial and capital resources
Waste and unused food provision
Secret family recipes
Traditional family pizzeria business
(Un-)happy customers
Stuff and employees
CO2 Footprint
Energy and other supplies
???
Systems
Figure 32 Example of a pizzeria business in a black box view
as well. The context diagram considers more than just the input/output relations like the black box does. Other tools to consider at a later stage are stakeholder map (chapter 3.1.13) and the entity relationship diagram (ERD) (chapter 5.2.5). Source: Systems engineering (Haberfellner, Nagel et al. 1994)
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3.1.11 IS – IS NOT I want to distinguish between what is relevant and what is not. It is sometimes easier to define something by defining what it does not entail. Intention (Why and when do I use it?) To clarify and define the scope of a problem, e.g. amongst team members during a workshop. • This tool will steer you in the right direction, however IS – IS NOT might not work with very complex problems. • To isolate a problem or to clarify the true nature of a conflict between groups or individuals, this tool depends heavily on good communication and open communication channels. • The tool is also very useful to discuss and then define the scope of a project during a project initiation workshop and to illustrate the scope and boundaries during a project kick-off meeting. Purpose (What does it do?) • It shows what is inside and outside of the scope. • By clarifying what IS NOT part of the problem, the remaining issues are more likely to be the relevant IS problem. • It works like fishermen trapping a school of fish with their net. The right size fish will remain in the net, the smaller ones (‘not the problem’) will slip through the net. • The tool displays the project scope (what is in and what is out) either in a simple picture or in a table. Instruction (How do I do it?) • Use a flipchart and have two columns for IS and IS NOT. (Draw the diagram later). • Ask the workshop participants a series of questions pertinent to their situation, e.g. ‘Where and when does the problem happen? How does it happen? What processes and people are involved?’ • Review your data with the team and agree weather it belongs to the IS or the IS NOT column and refocus their attention to the problem. • Like the clarification of the problem and the parts that contribute and those that are not relevant for the problem, clarify and define the project content that is in scope and that which does not belong to the project (out of the project’s scope). Either use the same diagram logic or use a table with the two headings ‘in scope’ and ‘out of scope’, as it is shown in table 6. 77
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• Ask yourself: what the project should be addressing (or should in this project phase) and what (area, topic) will explicitly not be addressed and covered. Example: In/Out of project scope in a table format Table 6 gives an example of what topics may be in or out of scope when a new ERP system is to be implemented. The table focuses exclusively on the area of procurement, other areas have to be examined separately. Table 6
In and out of scope
Implementation project for an ERP system – procurement area IS (In Scope)
IS NOT (Out of Scope)
• Costs centre allocation
• Centralisation of procurement
• BPR of the procurement process
• Inventory and stock level management, incl. re-order levels
• Review of the procurement roles and responsibilities • System and people resource situation in the procurement area
• Review of the performance indicators in the procurement and stock department • Budget of procurement department
• System implementation
Tips and suggestions Verify the root cause of the problem using the Fishbone or cause-effect tool (chapter 3.1.9) to ensure that the identified problems are not just symptoms, and to understand the root causes. Use other creativity tools to explore and discover symptoms and root causes. Example of the definition of a service level problem in a call centre Figure 33 shows the relevant and the non-relevant problems of a call centre.
IS NOT Call centre system
Bonus system Service level IS the problem
No. of call centre agents
Skills level of call centre staff
Back-up staff
No. of calls
Team leadership Measurement and control system
Customer complaints management IS NOT
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Figure 33 IS – IS NOT diagram
3.1 Definition of a situation/problem
Cross-reference to related tools in this book Fishbone or cause-effect tool (chapter 3.1.9). Source: Butler
3.1.12 Stakeholder analysis Who are my stakeholders? The project team members and sponsor; ok, but who else? How do I identify them? Definition Stakeholders are those individuals who have a vested interest, share or stake in a given outcome. They might not only affect, but also be affected by the outcome. They influence – in whatever form – not only the results, but are also influenced by the results; hence, they are – in the widest sense – participants who positively or negatively influence the outcome. Intention (Why and when do I use it?) You need to know whom to involve, consider and interact with during your problem solving and project activities. Stakeholders are always present. It is important to not just identify them, but to also position and understand their needs and expectations in order to interact with them effectively and appropriately. Otherwise, you are setting yourself up for complaints and frustration at a later stage. Purpose (What does it do?) The stakeholder analysis is the foundation and prerequisite for all other stakeholder tools. It provides you with the process steps to identify stakeholders and to further understand and deal with them. Digression on stakeholder roles Project stakeholders are individuals and organisations which are actively involved in the project, or whose interests may be positively or negatively affected as a result of project execution or successful project completion. The project management team must identify the stakeholders, determine what their needs and expectations are, and then manage and influence those expectations to ensure a successful project. Stakeholder identification is often especially difficult. For example, is an assembly line worker, whose future employment depends on the outcome of a new product design project, a stakeholder? Key stakeholders on every project include: • Project manager: the individual responsible for managing the project.
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• Customer: the individual or organisation that will use the project product. There may be multiple layers of customers. For example, the customers for a new pharmaceutical product may include the doctors who prescribe it, the patients who take it, and the medical aid that pays for it. • Performing organisation: the company whose employees are most directly involved in doing the work of the project. • Owner or sponsor: the individual or group within the organisation that provides the financial resources, in cash or in kind, as well as the political support. In addition to these, there are many different names and categories of project stakeholders – internal and external, owners (content owner) and sponsors (budget owner), suppliers and contractors, team members and their families, government agencies and media outlets, individual citizens, temporary or permanent lobbying organisations, and society at large. The naming or grouping of stakeholders is primarily an aid to identifying which individuals and organisations view themselves as stakeholders. Stakeholder roles and responsibilities may overlap, for example when an engineering firm provides financing for a plant it is designing. Managing the stakeholders’ expectations may be difficult because stakeholders often have very different objectives that may come into conflict, e.g.: • The manager of a department that has requested a new management information system may desire low cost; the system architect may emphasize technical excellence, and the programming contractor may be most interested in maximizing its profit. • The vice president of research at an electronics firm may define new product success as state-of-the-art technology; the vice president of manufacturing may define it as world-class practices; and the vice president of marketing may be primarily concerned with the number of new features. • The owner of a real estate development project may be focused on timely performance; the local governing body may desire to maximise tax revenue; an environmental group may wish to minimise adverse environmental impacts; and nearby residents may hope to relocate the project. Instruction (How do I do it?) – Tool option A • Identify all stakeholders – use your experience and creativity to think about possible stakeholders. Use prior work and tools you have used, such as the Black box (chapter 3.1.10) where you look at relevant individuals who are part of the input or output flow. You could also use the domino logic (sometimes called network analysis). Start by asking your known stakeholders for their advice and suggestions regarding whom else they would recommend involving. Then continue and repeat.
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3.1 Definition of a situation/problem
• Group stakeholders together into groups (if and when suitable) – and then assess which stakeholder groups influence and/or are being influenced by the project or investigation. For example, the population of a nearby village are stakeholders of an airport landing strip extension project even though they are not part of the project team. Ask yourself: Who is missing in my group? • Prioritise the stakeholders (in each group) – ask yourself if the individuals are relevant and legitimate for the investigation. Use the Stakeholder influence matrix (chapter 3.1.15) to evaluate their relevance. • Assess and define the influence area of each stakeholder – so that you understand for which area the specific stakeholder becomes relevant and why. For example, public reputation work, company internal resourcing, approval of budget, etc. • Define the influences that drive stakeholders – Influences from and power games by other stakeholders influence your stakeholders. Identify those drivers and the direction of impact. For example, the manager’s influence on your team of stakeholders and the resulting conflict of interests if they report to two different ‘bosses’. In a project context, also use the Project environment analysis tool (chapter 7.8). • Determine the level of involvement and contribution – assess if and how the stakeholders are involved and how they contribute. Is there an obligation to, for example, become involved, to report to, to request permission and authorisation? Use the logic of the Accountability matrix (CIDA) tool (chapter 7.12). • Categorise the stakeholders – either by type of involvement, direction of influence (positive/negative), relevance and importance, strategic interest groups, etc. • Determine the To-Be-expected stakeholder behaviour – evaluate which stakeholder is going to display what type of behaviour and what kind of tactics. Who will take one of the exemplary roles of: supporter, rebel, strategist, leader, team player, good cop – bad cop, tyrant. • Define the strengths and weaknesses of each stakeholder – which strengths and benefits do each stakeholder harbour and how can they contribute and be used on the project? Also use the Stakeholder influence matrix (chapter 3.1.15). • Define communication topics – define the content, topics and themes that are relevant for the interaction with the stakeholders within the project context and within the project environment. Use this in conjunction with the Project communication plan (chapter 7.11). • Identify supporters and impeders – identify and assign the stakeholders on the basis of each communication topic. Define the required approach to further interact with each stakeholder group. Be aware that the same person can be a
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supporter in the one topic and an impeder in another topic, so don’t pigeonhole people prematurely. • Establish expectations – establish the expectations of key stakeholders using the Stakeholder expectation management tool (chapter 3.1.14) to understand and compare their personal wishes and concerns. • Decide on pro-active and preventive measure – define action steps for, for example, communication plans, change management activities, etc. • Define plans for reactive actions – use the To-Be-expected behaviour you have identified previously and define plans, which can be an action if undesired stakeholder behaviour becomes a reality. (Source: PMI – amended by the author) Tips and suggestions • Beware of focusing on stakeholders with similar objectives and interests. This massive imbalance can backfire at a later stage. It is often useful to have a mix of stakeholder interests to be forced to demonstrate a transparent process and be continuously challenged throughout the project. • You could use the Powergram Tool (chapter 5.1.6) or the Project environment analysis (chapter 7.8) to display the power dimensions and political constellations of your stakeholders. Instruction for stakeholders’ stakes (How do I do it?) – Tool option B In a similar manner to the above process, assess the roles and positions of all relevant stakeholders but in this case, investigate in more detail to ensure you understand the consequences of the ‘influence vs. importance’ matrix or the stake-
Table 7
Template for a stakeholders’ stakes table
Stakeholders’ stakes (tool option B) Stakeholders
Name, organisation/unit Name, organisation/unit Name, organisation/unit
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Goals, motivations, interests, demands
Impact/ influence of stakeholder
Importance to and impact on project
Role in project
Stakeholder’s strengths
Stakeholder’s weaknesses
Win-win strategies
3.1 Definition of a situation/problem
holders’ strengths or weaknesses, their role on the project versus in the organisation, etc. and how to apply appropriate win-win strategies to deal with those stakeholders (table 7). You can in addition use the stakeholder scoring table (table 8) to ‘calculate’ the rating of the stakeholder. The higher the score, the more important and valuable the stakeholder is and the higher the level of required attention and ‘looking after’ has to be. Use the Stakeholder influence matrix (chapter 3.1.15) to develop an even better understanding and strategy to deal with stakeholders.
Table 8
Template for a stakeholder scoring table
Stakeholder scoring (tool option B) (1 = low, 5 = high, excellent) Stakeholders
Level of interest
Level of influence
Level of impact
Level of support
Project sponsor
12345
12345
12345
12345
e.g. technical expert
12345
12345
12345
12345
e.g. customer service
12345
12345
12345
12345
e.g. distribution manager
12345
12345
12345
12345
Total
Mitroff identified seven categories of stakeholder ‘views or perspectives’ that can help to develop an ‘inclusionary net’ of interested people. • The imperative approach identifies stakeholders who feel strongly enough about an organisation’s proposed policies or actions to act on their feelings. • The positional approach identifies those stakeholders who occupy formal positions in a policy-making structure, whether internal or external to the organisation (e.g. government). • The reputational stakeholder is a sociometric one. It entails asking various knowledgeable or important individuals to nominate those who they believe have a stake in the system. • The social participation approach identifies individuals or organisations as stakeholders to the extent that they participate in activities related to a policy issue. • The opinion-leadership approach identifies only those who tend to shape the opinion of other stakeholders. • The demographic approach identifies stakeholders by characteristics such as age, gender, race, occupation, religion, level of education, etc. 83
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• The focal organisation approach seeks to identify the individuals and organisations that have important relationships with the focal organisation (see the stakeholder map example, chapter 3.1.13). Cross-reference to related tools in this book Stakeholder influence matrix (chapter 3.1.15), Project environment analysis (chapter 7.8), Accountability matrix (CIDA) (chapter 7.12), Project communication plan (chapter 7.11), Stakeholder expectation management (chapter 3.1.14), Powergram (chapter 5.1.6). Source: PMI (amended by the author)
3.1.13 Stakeholder map This initiative is getting bigger and bigger – there are more and more people to speak to. I want to make sure that I include all players and do not forget anybody. Stakeholders are those individuals, who have a vested interest, share or stake in a given outcome. They might not only affect, but also be affected by the outcome. Intention (Why and when do I use it?) To understand which stakeholders are part of the scope and whether they belong to specific interest groups and therefore need to be involved in a project or initiative. The stakeholder map is a powerful tool during the set-up phase of a project as it helps to understand the bigger picture and who is part of the (political, financial, etc.) game. Purpose (What does it do?) It displays all stakeholders who influence (affect) and are affected by the project and its intended outcomes. Instruction (How do I do it?) • Assess which stakeholder group influences the project and which stakeholder group is affected by the project and its intended outcome, e.g. the residents of an airport runway extension project. • Take into account which stakeholder groups are ‘in’ and ‘out’ of scope with regard to this project and indicate this in the diagram, e.g. using different shades or layouts of boxes or circles. This information helps, e.g. to compile a list of people to interview for information gathering purposes. • Group the stakeholders into logical groups, e.g. all internal stakeholders by department on the left in your diagram, all third parties on the right, etc. 84
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Tips and suggestions • Use the stakeholder map to actively manage the expectations of each stakeholder group once you have identified the different groups. See the stakeholder analysis tool chapter 3.1.14. • Also cross-check and compare all your stakeholders with your black box (chapter 3.1.10), entity relationship (ERD) (chapter 5.2.5), and context diagram (chapter 3.1.18) to ensure consistency and completeness. Cross-check for missing information by comparing one diagram with another. This improves the quality of your work. Nothing is more embarrassing than your customer or senior reminding you at the end of a project phase that you have not identified or forgotten a key stakeholder. Examples of stakeholder map for a project Figure 34 shows, which of the stakeholders are inside and outside of the project. Stakeholder groups may be identified more specifically than in this illustration. Figure 35 displays another option for a stakeholder map, giving more detailed informations about ‘Who are the internal, who are the external stakeholders? To Executive Committee
Shareholders
Board of Directors
Financiers
XY project
Press
IT
Public society
Marketing
Industry
Sales
Suppliers Stakeholders for the XX Project
Relationship/ PR
Current clients
Customer service
New clients
Sales admin
Management
External affairs/legal
Employees
HR
Competitors
Unions/trade associations
Political government
Agencies
Regional representatives
Out of scope Project scope
Figure 34
Stakeholders who are ‘in and out’ of scope
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which functional area do they belong? Are they more or less important (or: which priority do they have?)’ Table 9 represents the same information. Whether you prefer the representation as a figure or a table, depends on your personal preferences or on the context of the stakeholder analysis.
Internal Stakeholders External Stakeholders
Name
Function/area Marketing
Head of Marketing
Head of Communication
IT
IT Director
IT Support
Procurement
Finance Director
Procurement Director
Customer
Manager Call Centre
Manager Customer Service
External IT
Production
Manager Production
Manager Assembly
Distribution
Region A
Community D
Director Sales
Sales force
Manager Warehouse
Manager Vendor Management
Name
Bereich/Segment Gov/administration
Political party C
Unions
Union X
Competitors
Competitor A
Competitor B
Competitor D
Clients
Corporate clients
SME clients
New clients
Public/other
NGO Environment
Union Y
1. Priority
Population in county X
2. Priority
Out of scope
Figure 35 Stakeholder view in diagram form. Equivalent to table 9
External Stakeholder
Internal Stakeholder
Table 9
Stakeholder map in table format. Equivalent to figure 35
Function/area
1. Priority
2. Priority
Out of Scope
Marketing
• Head of Marketing
• Director sales
• Sales force
• Head of Communication
• Regional manage sales
• IT Director
• IT Support
• Finance Director
• Manager Warehouse
• Manager Vendor Management
IT Procurement
• Procurement Director Customer Service
• Manager Call Centre
• Manager After Sales Service
• External IT
Production
• Manager Production
• Manager Assembly
• Distribution
Segments
1. Priority
2. Priority
Out of Scope
Gov/administration
• Region A
• Community DC
Union
• Union X
• Union Y
• Competitor A
• Competitor D
Competitors
• Competitor B Clients
• Corporate clients
Public/other
• NGO Environment
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• SME clients
• New clients • Population in county X
3.1 Definition of a situation/problem
Cross-reference to related tools in this book Project environment analysis (chapter 7.8), Stakeholder influence matrix (chapter 3.1.15), Accountability matrix (CIDA) (chapter 7.12). Source: PMI, Silberman
3.1.14 Stakeholder expectation management Everybody agrees to common objectives, but later all complain that the solution is not what they thought it would be. I want to ensure that I understand each individual’s agenda and can manage his expectations – if I choose so. Intention (Why and when do I use it?) Every time, information is communicated, the receiving individual ‘decodes’ the information according to his ‘filter’ of experience, knowledge, beliefs, cultural background, current needs, etc. The internal future orientated response or conclusion that is often not communicated, could be called expectation. Starting an engagement with a stakeholder analysis tells us whom we will have to attend to during the project and problem solving process. Stakeholders are always present – but at first they must be identified, and their values and position must be understood, otherwise their needs will only be met by chance. Purpose (What does it do?) The stakeholder analysis captures the relevant expectations and reservations of all stakeholders and documents and communicates these in a simple way. Each individual stakeholder has a different understanding, perspective and interpretation of a project. If expectations and reservations have been understood at the outset, pro-active communication can correct unrealistic hopes, and problematic issues can be dealt with before damage and disappointment manifest themselves. Instruction for a stakeholder analysis table (tool option A) (How do I do it?) • Use initiation meetings to ask every key stakeholder about both expectations and reservations and document them immediately afterwards in a table (table 10). Ideally check your understanding with the stakeholder during the meeting and review your documentation with each individual at a later stage. • Explore: – The project in terms of its goals, the proposed scope (which is often not clearly defined), the process, the outcome, or any other project content related issues. – The stakeholders’ own role and involvement in the project. – Other peoples’ involvement in the project or whether there are any stakeholders that have been overlooked or incorrectly included. 87
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Table 10
Template for a stakeholders’ analysis table
Stakeholder analysis (tool option A) Stakeholders
Expectation
Reservations
Name, organisation/unit Name, organisation/unit Name, organisation/unit
– Reservations (‘= Resistance’) – previous projects might have followed a similar process or tackled a similar problem. Investigate why similar previous attempts failed, so you can avoid the same mistakes. Keep in mind that there are often factual and non-factual reasons. – The current process or system that will be changed by the implementation of the project. Which aspects of the current system are good, and what may be improved? Which aspects do not work well? This is not about specifying the details, but rather about getting their opinion on the table. Tips and suggestions • Try to avoid getting too detailed and drawn into a conversation about a low level problem. This exercise can bring very political and emotional issues to the surface. Be prepared to ask, listen and document, and try not to comment. • Ensure that the key stakeholders understand each others’ expectations right now. This is a sensitive and potentially highly political task. Do some research on the key players – so you can avoid certain mine fields – but ensure that you manage unrealistic expectations as soon as possible. Otherwise they become ‘time bombs’ that will explode, latest at the final performance meeting. • Identify conflicts of interests amongst stakeholders related to the problem/initiative and help to build a coalition to enhance the likelihood of success. • You should not share all of the details with every project team member, because some of this information may be too sensitive. • There are many cases, in which it is not possible to speak to each stakeholder, and there are many cases, where stakeholders have ‘a hidden agenda’ they will not speak about, sometimes not even knowing about these targets themselves. In such cases, you have to use hypotheses again. Cross-reference to related tools in this book Organisational structure chapter 5.1.1 and other stakeholder related tools below. Source: Ziegenfuss, Mitroff, Fleischer, Silberman
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3.1.15 Stakeholder influence matrix Intention (Why and when do I use it?) The tool is helpful when assessing the potential influence of various individuals on the successful implementation of the proposed change/project. Purpose (What does it do?) • Political awareness and stakeholder influence may be defined as the process of being aware of the political map around you, and of your own and others’ influence over the political and organisational environment. • It defuses organisational politics and makes sensitive issues discussable. • It helps to clarify the power positions on both sides and to actively make critical decisions. Instruction (How do I do it?) • Identify who you believe the key stakeholders are at any phase. • Evaluate whether these stakeholders have high, medium or low influence on the issues in question. You need to abstract this from their general influence in the organisation. Investigate their influence – to what degree can they exert influence on the change process due to their position/power? This influence could be either supportive or constraining depending on their attitude. • To examine the likely impact, consider the aspects of their attitude – will they be supportive or unsupportive, resistant or open to the proposed changes, for or against or idling in neutral? • Examine the overall stakeholder picture to see what the impact and conclusion is from it. • Include the stakeholder influence diagram in your assessment to determine how to ‘move’ and reposition the various stakeholders in relation to your current position of influence. Tips and suggestions • Identify areas and stakeholders you can most easily motivate, either by adding a new incentive for action, or by removing an unnecessary turn-off. What is the possible bait to make something irresistible in order to motivate positively? What is the one big turn-off which, if removed, might make it possible to motivate someone? (This is sometimes a separate tool in itself ‘turnons/turn-offs’) • Regarding the stakeholder influence diagram: If you do not have sufficient power to carry out things, either find a bigger source of power for yourself, or find some stakeholders within the organisation who can do this for you.
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• Also use the Powergram tool (chapter 5.1.6) or the Project environment analysis (chapter 7.8) to display the power dimensions and political constellations of your stakeholders. Example of a stakeholder grid and a stakeholder influence diagram Figure 36 shows both a stakeholder influence diagram and a stakeholder grid. Depending on the stakeholder’s position in each of these diagrams, action has to be taken or not.
Stakeholder influence diagram
Stakeholder grid
High
Coalition
Low
High
Stakeholder’s attitude
Stakeholder’s influence
For / er / ov ion g in at din W bor buil a ll n co litio a co
Neutral
Leave alone
Distract or fragment
Against Low
Low
Our influence
High
Stakeholder’s influence
Figure 36 Stakeholder grid and a stakeholder influence diagram
Alternative stakeholder evaluation matrix Figure 37 shows a different kind of diagram, helping to evaluate and compare the stakeholder’ positions. In this context, importance means how intensively the initiative affects the stakeholders.
Stakeholder evaluation matrix
A
B
Low
C
D
Low
High
Influence
High
Importance
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Figure 37 Stakeholder evaluation matrix: influence versus importance
3.1 Definition of a situation/problem
What kind of stakeholder is found in which quadrant of the stakeholder evaluation matrix (figure 37)? • A – Stakeholders with high influence, who can therefore affect the outcome, but whose interests are not the target of the initiative. This group of stakeholders may be a source of significant risk and require monitoring and management. Key stakeholders may be managed by being consulted or informed (see the CIDA tool – chapter 7.12 for details on ‘consult’ vs ‘inform’). • B – High influence or impact and high importance stakeholders will require good working relationships to ensure their support; they provide the basis of the coalition of support. • C – Stakeholders with low influence or importance may require limited monitoring. • D – Stakeholders of high importance to the initiative but with low degrees of influence will require special initiatives if their interests are to be protected. Cross-reference to related tools in this book Stakeholder map chapter 3.1.13, or Stakeholder analysis – Expectation management chapter 3.1.14. Source: Grundy, Elkin
3.1.16 Stakeholder accordion What is the role of the organisation and the individual in a team and what can I and the team expect from both? Intention (Why and when do I use it?) Good team functioning is essential and the common understanding of role and expectations of each individual and the organisation is a vital aspect of it. Whenever a team is set up, use this tool to ensure everybody is clear about expectations by and about them. Purpose (What does it do?) By providing both dimensions of a team – individual and organisational – the team can learn what is expected from it and what the team has to deliver to the organisation and the individuals. Instruction (How do I do it?) It is important to maintain parallel placement of the terms as shown in figure 38. If you start by asking ‘What do you (person) require (1) from the organisation to
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be part of the team?’ the reciprocal question is ‘What does the organisation expect (6) of the team members who work in a team?’ • Ask in pairs 1-6, 2-5, 3-4 – ‘play the accordion from both sides’ (see numbers on template). • Person requires (1) from the team: the lowest level of this term marks the bottom line needs that a person will not forgo to work on the team (e.g. to obtain a sufficient quality of work life). • Person requests (2) from the team: what the person asks of the organisation, realising that compromise is necessary to work on the team (e.g. work hour flexibility to meet family commitments). • Person brings (3) to the team: the capabilities the person has, e.g. knowledge, skills, and attitudes that contribute to team competencies. • Organisation supplies (4) to the team: what the organisation gives to the team members to do their jobs (e.g. office space, computer). • Organisation requests (5) from the team: what the organisation asks of the team members, realising that compromise is necessary for a team to operate (e.g. work overtime hours). • Organisation expects (6) from the team: the lowest level of this term marks the bottom line needs that the organisation will not omit to have the team operate (e.g. job performance). Template for a shareholder accordion Figure 38 shows the basic version of a stakeholder accordion. With some creativity, this tool can be made even more powerful by using additional questions.
1
2
3
4
5
6
Requires from
Requests from
Brings to
Supplies to
Requests from
Expects from
T E A M Person
Figure 38 Stakeholder accordion
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Organisation
3.1 Definition of a situation/problem
Cross-reference to related tools in this book Stakeholder analysis – Expectation management (chapter 3.1.14), Accountability matrix (CIDA) (chapter 7.12). Source: Silberman
3.1.17 Stakeholder swapping I want us to understand each others’ perspective instead of wasting time managing conflicts or politics. Intention (Why and when do I use it?) Originally used in conflict management and mediation, stakeholder swapping is an excellent interactive tool to engage all stakeholders, kick-start communication and broaden each other’s perspective when a situation is stuck and nobody wants to move from their position, or in situations where unknown stakeholders are involved and political game play is dominating the discussions. Purpose (What does it do?) Stakeholder swapping lessens the adversarial, promotes partnership, changes perspective and opens communication through the ‘role play of swapping stakeholder roles and identifying the underlying drivers of ‘fear’ and ‘needs’. Instruction (How do I do it?) • Use a Stakeholder map (chapter 3.1.13) to ensure that you have invited all relevant parties. • Ensure the commitment of all participants (‘Yes, I am prepared to try to find a solution’) and create a centred environment (don’t seat stakeholders opposite each other e.g. in a U-shape, but mix them by forming a circle). • Define the issue, topic or project aspect that needs closure in objective terms – do not identify a person/group as the issue (possibly use IS – IS NOT chapter 3.1.11). • Use a large piece of paper and draw a circle in the middle in which to write the issue, with the stakeholders in separate sections (see example in figure 39). • Stakeholders B to E state their needs (wants) and fears (don’t wants) as if they were in the place of stakeholder A. So, all stakeholders play the role of A based on their individual assumptions of what A’s role is and what A’s needs and wants would be. Then stakeholder A states what he wants (or needs) and what he does not want (or fears).
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• Repeat for stakeholders B to E and notice the differences in assumptions each stakeholder holds. • Take notes of each individuals’ comments and assumptions. The power of the tool lies in the revealing of those assumptions and different perspectives that become evident by swapping the roles. Tips and suggestions • Establish common ground – in particular, in conflict situations – by listing the things you share, exploring similarities that may be described in different ways and building a sense of partnership from which to consider areas of difference. • Sometimes it is difficult to uncover what the ‘needs and fears’ of each stakeholder are. Needs include interests, values, hopes, desires and wants. Fears include anxieties, worries and concerns – those things for which we are motivated to move away – whether may it be realistic or irrational. • The needs (and fears) identified should be used for working with goals according to chapter 4. • You might want to explore options for solutions while you have all stakeholders together, if time and audience permit it. Example for stakeholder swapping diagram Figure 39 shows an example for a stakeholder swapping diagram. The question or problem to be solved lies in the centre. What do you want? - Needs What don’t you want? - Fears
Stakeholder A
Stakeholder E
Issue Topic Project
Stakeholder C
Stakeholder D
Stakeholder B
Figure 39 Stakeholder swapping diagram
Cross-reference to related tools in this book All stakeholder related tools in this chapter (chapter 3.1.13 to chapter 3.1.16, to a smaller extent chapter 3.1.18 to chapter 3.1.19). Source: Crum 94
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3.1.18 Context diagram tool Who is interacting with whom, doing what, using which kind of infrastructure? I want to see a little bit of process, people, information flow and interaction, but a flow chart is too technical and I lose the overview. Intention (Why and when do I use it?) To understand the complexity of a situation and how several entities and systems relate to each other. The diagram shows the ‘bigger picture’ and the context of a project or situation. While a stakeholder map relates more to people and groups, a context diagram also displays technical or content entities, e.g. a call centre or HR policies that would need to be considered in the context. The context diagram can also be used under its alternative name “Relationship diagram” to display connections and relationship between various entities. Contrary to – hierarchical – tree structure diagrams, contextual diagrams – including diagram types as the Mind map (chapter 3.1.21) or the Entity relationship diagram (chapter 5.2.5) – do display the elements in a non-linear, organic, map-like structure. Purpose (What does it do?) • To assess a situation, entities and/or dependencies in a similar fashion to a mind map (chapter 3.1.21) but in a more structured and interconnected way. It provides a simple systems view and should focus on the question ‘Which essential components and/or systems (of this business) are relevant here?’ • A context diagram supplies a non-hierarchical version of a mind map, therefore just a simple download of related information that is relevant in this specific context (or project/system). • To display the context and how all entities are related. Instruction (How do I do it?) • List all entities inside and outside the problem areas and identify the dependencies between them. An ‘entity’ stands for anything that is relevant and needs to be considered in the context of the problem/system/initiative, e.g. departments, external suppliers, a major system, set of policies, websites etc. • Assess the data and information flow between all entities (and systems). Although one assesses the data and information flow, one does not necessarily have to display it. This may be rather done in an ERD (entity-relationship diagram). • Ask: ‘With what does the entity interact/where is it integrated and what information is passed on during the interaction?’ • Draw links between all entities (if desired or helpful). 95
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• Determine if the entities are of relevance for this context. If yes, they are ‘in scope’, otherwise they are ‘out of scope’, but can still be displayed, then ‘in scope’ entities may be highlighted by coloring or hatching. • Verify with relevant stakeholders for accuracy and completeness. Remember that your work consists of facilitating the process, not necessarily knowing all the content. Tips and suggestions • Set up templates in your preferred drawing software application (e.g. MS Visio) to standardise the drawing symbols for entities, etc. • Use an entity relationship diagram (chapter 5.2.5) for a more technical systems orientated view. • Double-check for completeness with your stakeholder map (chapter 3.1.13) and black-box diagram (chapter 3.1.10), which should already exist. Update them as well, if required. Examples and variations of context diagrams Below are variations of context diagrams. The first one (figure 40) displays all elements, aspects, entities and if they are in or out of scope. The second one concentrates on how things are interconnected (figure 41). The third diagram (figure 42) displays how you could further refine the network relations by adding ‘+/-’ and arrows on the connecting lines between the relevant elements.
Vision/ mission
Corporate culture
Corporate identity
Public
Marketing
Suppliers
Brand PR/External affairs
Customer service
RM
Advertising agencies Event management
Management MIS/reporting
Performance targets
Shareholder information
Out of scope
Context of Communication
Inbound/ outbound communication
Customers
Advisory council
Content HR policies
Messages
Feedback loops
Channels Corporate information
External/internal Kommunikation
Code of conduct and company procedures
E-business Communication procedures
In scope
Figure 40 Context diagram – what is in scope, what is out of scope? 96
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Customer segmentation
Forums
Legal framework/ obligations
Service level agreements
Knowledge base/sources
Product development
Call centre reference guides
Hotlines
Mailing houses Merchandising
Sales admin/ support
3.1 Definition of a situation/problem
Financial situation of individuals
Religion
Government
Education
Non-financial drivers for individuals
Cultural drivers and behaviour
Ethics
Psychological profile
Public press HR Morals Tribal and family links
Fraud Risk
Management and leadership style
Vision and mission
Police Policies, procedures, guidelines
Corporate culture Systems
Audit
Financial industry regulations
Holding
Audit and forensic associations
Audit and forensic systems
Security systems supplier
Audit and forensic industry
Context diagram – interconnections on a risk management project
Engagement in environmental protection initiatives
+
+
-
Strict environmental laws
+
Education level
+
+
Average income level per capita
-
+
Condition of the sewage, waster and water systems
-
Water prices
Existing water reserves
+
Water quality
Environmental protection awareness
Costs for environmental protection measures
Environment scandales
-
-
-
Water-born diseases
-
Figure 41
Financial industry association
-
Impact on economy
Figure 42 Network relations diagram relating to the ‘water problem’ theme in this category
Tips and suggestions • Prepare default drawing symbols with your preferred drawing program (e.g., MS Visio, Smartdraw, etc.) to standardise your diagrams. • For more technical or system-orientated situations with data flows, rather use an Entity relationship diagram (chapter 5.2.5) or a Logical data relationship tool (chapter 5.2.2). 97
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• You can also use a context diagram to depict your (project) goals and the underpinning goal drivers and levers. The Goal hierarchy tool (chapter 4.3) is based on that logic and displays it hierarchically. If you want to display the correlations between the activities or causes and the desired goals or outcomes, you are getting close to a problem tree’s (chapter 3.1.2) logic although
Low productivity Prohibitively expensive treatment
Sick people Low income level
Unsurmountable geographic location or distance Epidemics and diseases Water not potable
Water prices too high (monopoly) Demand > supply
Insufficient reserves
Dictatorial government
Insufficient treatment of water Infrastructure not functioning
Excessive demand or consumption by industry
Reserves dried up
Figure 43 Useful variation for a multi-dimensional display of influential root causes as well as for the display of material or information flows
Unsurmountable geographic location or distance
Dictatorial government
Insufficient reserves Water reserves are exhausted
Excessive demand or consumption by industry Water prices too high (monopoly) Monopolistic structures
Low productivity Prohibitively expensive treatment
Not functioning sewage pipes
High morbidity/ diseases
Low education level
Not functioning waste water treatment system Poor water quality Low income level
Figure 44 Goal interdependences displayed in a stream analysis diagram
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its hierarchical tree structure is replaced by a flat, organic map structure in a context diagram. Use arrows to indicate the element that influences others. This diagram, as it is shown in figure 43, is often called a stream analysis diagram. • Instead of displaying the elements/entities in a logical, sequential order, you could arrange them in a circle and show all the existing connections by means of arrows pointing towards and coming from elements. The element with the most arrows may become your focus area. This form of display (figure 44) is often used for material or data flows and stock/material inbound and outbound flows. Source: Mizuno
3.1.19 Silo view tool I want to show the potential for more integration within this organisation; everything is fragmented and in isolation. Intention (Why and when do I use it?) The silo view is a simple tool that helps to understand and display the degree of isolation and integration of business units within an organisation. The lack of integration is a typical root cause of symptoms like poor communication, and data integration, process interruption, long lead times, poor service levels, long turnaround times, etc., which are highlighted in a silo view. Purpose (What does it do?) A silo diagram displays the groups, areas or entities that work in isolation. A silo can represent a product/service area, system, business process, database, software application, organisational departments, etc. Instruction (How do I do it?) • Identify all major processes and systems in all business areas (product or service silos) across an organisation or area. Assess who has access to it and who shares and who works in isolation. This isolated area then becomes a silo. • Decide on a matrix structure that reflects the business and shows the silos. Show shared systems or processes cutting across the silos. • Test how for example a customer request would be dealt with and how potential silo boarders are causing problems. This tool is closely linked to the organisational analysis tool section (chapter 5.1).
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Tips and suggestions Old legacy systems or structures are often the origin of a silo environment. Systems and technology sometimes enforce the old status quo. Particularly after reorganisations these roots should be identified by systems, departments, processes, etc., as sometimes only departments have merged or door signs changed, but not the process or system. Example of a silo view
Silo
Silo
Silo
Silo
Figure 45 shows a silo view for a financial services organisation. Does this look familiar in comparison with an organisation you know?
Home loan
Accounts
Credit card
Investments
Customer data base
Customer data base
Customer data base
Application system
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Admin
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Figure 45 Silo view diagram
Cross-reference to related tools in this book Organisational structure (chapter 5.1.1) as well as the org design versus process tool (chapter 5.1.3).
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3.1.20 Helicoptering We are stuck in our corner. If we could fly and see everything we need to from above, what would we see? Intention (Why and when do I use it?) • In order to cope with organisational change situations or to emphasise the need to see the bigger picture and to avoid getting bogged down with details – rather rise above the event and be detached. • To unlock a messy situation. Use the helicopter thinking idea of lifting of the ground and leaving your situation behind to focus on the really important and vital stuff. Purpose (What does it do?) • Helicopter thinking invites one to see different perspectives and view points, e.g. competitor actions, regulatory plans, trends in neighbouring and related industries. • It helps to anticipate new and perhaps less likely events, issues and threats. The NLP discipline calls this dissociation. Instruction (How do I do it?) • Prior to strategic sessions, use a helicopter thinking diagram to emphasise the need to see the bigger picture. Draw a sketch of the current scenario from a helicopter perspective (bigger picture view) to illustrate the point. • Ask: ‘If there is only one choice, what is it that you want? What is it you can see from up here that is really still relevant and what other new things can you suddenly see as well?’ • Draw a picture of your situation and explore your view and perspective from different ‘altitudes’. Picture yourself in the cockpit seat and visualise the ‘bigger picture’. This is also a team communication exercise that works well in conjunction with creativity tools like the force field tool. • Document your strategic options in a matrix e.g. (Argument balance – chapter 6.4) while exploring new options and seeing new perspectives. • Pay at least as much attention to external forces as to internal politics and your internal environment. Tips and suggestions Combine this exercise with creativity techniques to discover more new perspectives.
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Cross-reference to related tools in this book Decision making tools (chapter 6). Source: Brown, Grundy, Harris
3.1.21 Mind map I want to brainstorm and need to take notes at the same time, but my thoughts are too fast and unstructured. Intention (Why and when do I use it?) • To identify the structure and all aspects of any kind of problem and as an alternative tool to a context diagram (chapter 3.1.18) or even the fishbone (cause-effect) tool (chapter 3.1.9). • To structure a self-brainstorming, e.g. of a project plan, strategy concept, holiday or wedding preparation etc. • To organise information and ideas for reports, memos, letters, novels or poems, ‘to do’ lists, presentations, meetings, brainstorming sessions, managing projects, grocery lists, vacation planning, journaling, note taking ... In other words for anything that deals with people, information or problems. • Try it the next time you need to write a memo, prepare a meeting agenda or are trying to get a bird’s eye view of a complex project. Purpose (What does it do?) • It shows all aspects and sub aspects (or causes and sub causes) of any kind of problem you model in a logical and graphical structure. • It is a non-linear way of organising information and a technique that allows you to capture the natural flow of your ideas while applying associative thinking. Instruction (How do I do it?) • Our linear, left-brain education system has taught us to start in the upper lefthand corner of a page. However, our mind focuses on the centre. So mind mapping begins with a word or image that symbolizes what you want to think about, placed in the middle of the page. • Mind mapping is simply a brain dumping process that helps stimulate new ideas and connections. Start with an open, playful attitude. • As ideas emerge, print one or two word descriptions of the ideas on lines branching from the central focus. Allow the ideas to expand outward into
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branches and sub-branches. Put down all ideas without judgement or evaluation. • Your brain works best in 5 to 7 minute bursts. So capture that explosion of ideas as rapidly as possible. Key words, symbols and images provide mental shorthand to help you record ideas as quickly as possible. • Break through the ‘A4 mentality’ that says you have to write on white, A4 sized paper with black ink or pencil. Use ledger paper or easel paper or cover an entire wall with butcher paper, the bigger the paper, the more space for ideas you will have. Use wild colours, fat coloured markers, crayons, or skinny felt-tipped pens. • Put everything down, that comes to mind, even if it is completely unrelated. If you're brainstorming ideas for a report on the status of eagles in Canada and you suddenly remember you need to pick-up your cleaning, put down ‘cleaning’. Otherwise your mind will get stuck like a record in that ‘cleaning’ groove and you'll never generate those great ideas.
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• If ideas slow down, draw empty lines, and watch your brain automatically find ideas to put on them. Or change colours to re-energize your mind. Stand up and mind map on an easel pad to generate even more energy.
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• Sometimes you see relationships and connections immediately and you can add sub-branches to a main idea. Sometimes you don't, so you just connect the ideas to the central focus. Organisation can come later; the first requirement is to get the ideas out of your head and onto the paper. Tips and suggestions • Alternatively, you can use the technique with magnetic boards or post-it notes. The requirements are the same as for brainstorming (chapter 3.3.1). • Use coloured or dotted lines between related elements of different branches to show the connections. Example of a mind map Figure 46 shows an example of a mind map displaying details that have to be kept in mind when planning a product launch. In this example, branches of the mind map have been developed up to three levels. Cross-reference to related tools in this book Mind-maps are great to display the context of a problem or situation or even system. Mind maps are also useful when working on improving cross-functional business processes with groups of people. However, for a more systems orientated view, use an entity relationship diagram (ERD) (chapter 5.2.5). Sources: www.mindmanager.com, www.inspiration.com, www.peterussell.com, www.buzan.com. Tony Buzan is the originator of mind mapping.
3.2 Information gathering ‘Information gathering is a key element of problem solving and the key prerequisite for any analytical work. Finding relevant facts and assessing opinions effectively and efficiently is the main purpose of information gathering in order to create insight for a better diagnosis and understanding of the current and potential future situation. However not just any data will lead to effective analysis. Analysis must be based on information, not just on raw data. For example, a list detailing the ages of every householder in a region over the last 10 years is data, not information. The insight of the changes that have taken place in those households over time – the trends – is, however, information. It allows an understanding of the context or situation and can form a valuable input.’ (Source: Russell-Jones 2002) The data set collected in order to respond to the user’s requirements needs to be assessed against several criteria before you can see the information and draw reliable conclusions. A criterion is accuracy – to recognise that not all data is of equal
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quality. Assess data sources for accuracy and reliability – identify the data’s originator in order to assess reliability. Be sure you can trust your information (sources) and that you can stand behind your conclusions in a presentation when people start to question and doubt your data sources. (Source: Fleischer 2003) The data/information research theory differentiates between primary and secondary data sources, qualitative and quantitative data as well as the time aspect of how up-to-date the information is. Is the focus of the data gathering therefore on the past, present or future? In the typical business context, you will mainly find yourself dealing with the two following constellations of information gathering activities: • Primary data source – contemporary focus – collaboratively/interactive (e.g., interviews, observations, etc.) • Secondary data source – past tense – on your own (e.g., desk research. statistical analysis) An important aspect when choosing the right information-gathering tool is the nature of the results you require. Do you want to have measurable, comparable, and tangible results (e.g., quantitative data in the form of yes/no answers, numbers, etc.)? Or are qualitative data in the form of free text opinions, statements, unstructured answers to open questions such as ‘What would you do differently if you were the boss?’ sufficient? Beforehand, you therefore need to consider the way you want to analyse and use the resulting data in order to, for example, prove your hypothesis or justify your findings. Tips for information gathering A few general points might be useful to remember all the information gathering tasks: • Distinguish between ‘need to know’, ‘nice to know’ and ‘who cares about knowing’ items and data when sourcing information. • Collect information on different layers, so as to understand both the appearing problem and the underlying problems (top layer), the perceptions about how others are contributing to the problem (second layer), and how an individual person sees his own way of contributing to the problem in the way of ‘What is your role in the problem?’ (third layer). • Assess the organisational and managerial climate in which your findings will be received. • Deal with resistance of the client in sharing information with you. • Reduce the volume of data to a manageable size of insightful information. • The known rule always applies: ‘garbage in -> garbage out’ (during the analysis phase).
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• Volume does not equal quality. • Understand bias: sources often have different reasons and intentions for supplying the data. • Recognise the inevitable existence of gaps and blind spots. • Use creativity – however not when interpreting data. • Make the discovery exciting for your audience – avoid dry, academic research if you want buy-in. • Know when and why to use the various information gathering tools. • Know when to stop searching/analysing to avoid the ‘analysis paralysis’ – apply the 80/20 rule to your investigation. • Use the hypothesis tool (chapter 3.1.4) to focus and be most efficient. Sources: Fleischer, Block, amended by author Figure 47 displays the different means of obtaining information – not all of which are covered in this book – either by yourself or through interaction with others. Interactive sourcing of information often requires a certain structure to guide the process for both parties and helps improve the quality of the data. The unstructured tools rely more on your ability to guide the process, to interact with the parties involved, to extract the relevant information and to manage the relationship. The structured tools have ‘built-in’ instructions, such as a questionnaire with an implied manual on what to do. Once you have collected all the relevant information, the analysing of the data starts. The tools in chapter 3.4 ‘Information consolidation’ deal with this aspect of grouping, structuring and consolidation of information. This book does not
Information gathering
On your own
Unstructured* • Desk research • Database and statistic research • Internet research
Collaborative
Structured* • Questionnaire • Gallup climate assessment • Sample testing
Unstructured* • Interviews • Tripod • Panel and forum discussions • Survey/field study • Observation/DILO • Delphi/expert • Octagon • Scenario technique • 5 Whys
* Note that “structured” or “unstructured” refers to the information gathering process. Also take the aspect of primary/secondary information source and qualitative/quantitative information into account.
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Figure 47 Tool options to gather data and information
3.2 Information gathering
provide more details on (statistical) data analysis and data mining. Search the literature for terms like probabilities, statistical distributions, data plotting, extrapolations, correlation and regression, statistical tests, measurements, charts, sensitivity analysis, prognoses, etc. Structured or unstructured tools Figure 47 differentiates between structured and unstructured tools: • Structured tools are those that steer, structure and control the information gathering process. A questionnaire, for example, should be defined and structured in such a way that the user can fill it out without any further help. A structured tool reduces support and instruction time, therefore allowing the sample size and scope to be the broadened. Structured tools often lead to comparable, structured and quantifiable results. • Unstructured information gathering tools are rather flexible and unstructured in their approach and use, and often ‘change on the fly’. An interview, real-time observation or a desk research can, for example, suddenly take a new direction. Consequently, unstructured information gathering tools tend to create rather qualitative results, which are more difficult and time consuming to consolidate and to statistically analyse. Nevertheless, unstructured approaches (with qualitative results) can be very important. Think of this useful open interview question: ‘What would you do differently if you were the boss?’ The information gathering process therefore determines if a tool is structured or unstructured. The resulting data determine if the tool provides qualitative or quantitative information. Structured tools tend to create more quantitative information. Regardless of the kind of information you seek – whether you examine the information flow, infrastructure, people’s attitude, etc. – there are a few general steps for information gathering that might be useful: 1. Identifying the appearing problem – presumably you have done this already while working with tools in chapter 3.1 ‘Definition of a situation/problem’. As we know, the appearing problem is usually only a symptom of the real problem. The purpose of the data collection is to elaborate and broaden the perspective. 2. Select dimensions and scope of the investigation – relevant questions need to be developed and a limited number of them has to be selected. Get content experts’ advice on formulating and phrasing so you can extract the desired data. Limit yourself to a maximum of 20 questions. 3. Decide on the audience – the stakeholder tools in chapter 3.1 help to decide on the audience and what levels of the organisation will be included in the data collection, and how many individuals/groups. Be aware of a vital com107
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ment from P. Block (Flawless Consulting): ‘Remember that asking people questions creates expectations that they will get feedback on the results.’ People will expect that there will be improvements from your initiative. You need to manage these expectations upfront and prepare yourself for all kinds of reaction. If you do not intend to feed back the findings to those involved, you should be prepared for possible negative reactions and possible lowering of morale as a result. 4. Decide on the appropriate data gathering tool – use figure 47 or table 11. The tool depends on the scope of your enquiry – the time available, support by management, severity of problem and other resources available. Do not over-commit and over-invest. 5. Collect data – apply the tool/technique and collect data until it starts to get repetitive and boring. 6. Concentrate the data and reduce to a manageable size, then analyse and identify patterns and valuable data and consolidate the data into useful information. Develop an insight: ‘So what does this information mean? Knowing this now, what is/will be different? Which part of this information is important and to whom?’ Areas to ask questions about could be: • Objectives – What are the goals of the group and the persons you talk to, goal clarity and goal agreement, desired outcome, items to agree on, specific results, key data, areas of improvements? Compare your findings using the tools from chapter 4 ‘Goals and objectives setting’. • Subgroups – What are the relationships between affected and problem affecting groups, inclusions and exclusions, conflicts and support? • Support – Who supports whom and how (often done through silent approval)? • Evaluation – Do people know what is expected of them and whether they meet the expectation? What are the norms and the processes of getting feedback and evaluation? • Gender roles – What are the roles men and women play in this organisation and what impact does this have on the problem? • Figures – What are the numbers and facts, min, max, averages, trends, volumes – whatever you can measure? Obtain copies of documents. • Documents – Be aware of the different types of document (‘input’, e.g. list of items, ‘filed’, e.g. price list, ‘output’, e.g. purchase order). • Procedure – Be aware of the different types of procedure (‘normal’ – what people do to carry out a normal job, ‘control’ – what people do to prove that they have done the job, ‘exception routines’ – errors, seasonal peaks).
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• Status, authority, power and domination – How do people with different status, authority or power work the problem? How do the differences show up and what impact does this have on the problem, on people’s attitudes and potential solutions? Is the situation being dominated by one or many individuals, and what is the impact? Are they affecting or being affected by the problem? • Decision making – How does the decision making happen, what are the different roles and do people get their viewpoints considered in a decision? • Management information – How are resources identified, progress monitored, movement evaluated, and problems identified? • Leadership style – What kind of formal and informal leaders exist, how can their attitudes be perceived and what is their impact on this problem? • Conflict – How is conflict being managed, confronted, allowed, smoothed over, compromised, forced, ignored or suppressed? • Attitudes about this project and your involvement – Understand people’s attitudes about a problem and what they think of your involvement in trying to solve the problem. Source: Peter Block, Flawless Consulting, amended and expanded by author The aim of the tools in this chapter on information gathering is not to obtain employee performance related information for scorecards, employee performance appraisals, or competency developments, but rather to obtain business related information. However, these tools can be customised to suit those purposes as well, although there are more specific tools (e.g. 360° feedbacks) available. Table 11 presents an overview of all information gathering tools described in this chapter.
Table 11
Select information gathering tools
Category
Tool or technique name
Page
Ease of use
Effectiveness
Information gathering
Information gathering plan Interview Tripod Octagon Focus groups Questionnaire Survey/field study Direct observation (DILO) Delphi or expert panel Desk research/database research 5 Whys Climate assessment
110 111 113 114 115 117 119 121 123 123 125 125
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3.2.1
Information gathering plan
Which tool and which questions to prove what? And who does what, when and how? A structured approach would be helpful here! Intention (Why and when do I use it?) Whenever the information gathering situation is complex and you feel overwhelmed by the options of tools, I recommend using an Information gathering plan to guide your approach. Purpose (What does it do?) The Information gathering plan is a table that provides you with an overview of all the relevant information and activities so that you can project manage those activities. Instruction (How do I do it?) • Use the introduction section to prepare and inform yourself about the different criteria for selecting the right tool. • Answer the following questions and add the results to the table: – What are the hypotheses you are trying to prove (if you use the hypothesisdriven approach and the Hypotheses tool (chapter 3.1.4))? – What data do you need to prove your hypotheses and other assumptions? – Which of the data are facts, opinions or guesses? Remember the FOG rule from the Problem definition (chapter 3.1.1). – Which of the data are indispensable? Separate the must-have from the niceto-have data. – What are the logical conclusions that you want to draw? What is the purpose? Is the assumed correlation valid and is the conclusion correct? Would the data really prove the assumption/hypothesis and thereby the conclusion? – How detailed must the data be? – When do you need the data? – How much time and effort can you afford to spend on this? – Where, how and through whom could you obtain the data? – Who could undertake the data gathering? – Do you have all necessary resources? Do you have the decision-making power, the right to delegate, statistical analysis knowledge, budget, etc.? – Transfer and add the identified activities from this Information gathering plan to your Work breakdown structure (chapter 7.5) or Project work plan (chapter 7.7). 110
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Example of an information gathering plan Table 12 presents an information gathering plan for a marketing department, based on the question whether it is possible to improve revenues by increasing sales through better explaining the product to customers. Table 12
Information gathering plan
Underlying hypotheses/ Assumptions
Therefore relevant, required data
Why? (Purpose)
Tool to use
Where and who? (Whom to get data from)
When? (Time span)
Performed by whom? (Accountable) (CIDA Tool)
A lack of an educational programme
As-Is of existing situation/ programme
Calculate market/ revenue potential
Data base research
Programme director
CW 12 (Calendar week)
P. Meyer
Marketing and education improves revenue
% of existing customers who lack proper product knowledge
Lacking product knowlFocus edge impacts the buying group decision, hence revenue. Improve educating capabilities of marketing
Customers, prospects
CW 13-14
A. Peters T. Cow
Customers like the product
Customer feedback
Align product strategy and development
Interview
Customers
CW 12
A.Peters
Employees lack the relevant knowledge
Trainings/skills level of employees
Find out training needs and HR measures
Questionnaire
Employees
CW 16
P. Meyer
Comment
Tips and suggestions It is not unusual to discover gaps and holes in your Information gathering plan and actual needs whilst executing your plan. Be flexible, allow for iterations and adjust your plan accordingly. Cross-reference to related tools in this book Work breakdown structure (chapter 7.5), Hypotheses (chapter 3.1.4).
3.2.2
Interview (unstructured)
Our meetings do not allow me to obtain the desired level of information – people are not attending, playing politics or just chatting. Intention (Why and when do I use it?) • An interview is an ideal way for obtaining information when it is needed from people other than those attending your meetings, or • When information can be gathered more efficiently on a one-to-one basis (where people can drop their masks and guard) and/or when a meeting is too short to collect all the information.
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Purpose (What does it do?) An interview is a verbal, direct and instantaneous exchange of information between a limited number of individuals where one person asks questions and the counterpart responds in order to provide the requested information from his perspective. Instruction (How do I do it?) • Consult chapter 3.2’s ‘Guidelines for information gathering activities’ for details on procedure and enquiry areas. • Plan your agenda (logistics, desired outcome, items to agree on, specific results, key data, areas of improvement, etc.). Once you have identified the interviewees, work your way down from the higher management level. Ensure that you know who you will be interviewing and that you know what their function is, e.g. what an account manager does. • If you do not carry out the interviews alone, determine who leads the interviews and asks questions; agree on additional functions (taking notes, individual improvement area to be observed, enquiry regarding the second/third layer only, etc.) • Ensure logistics are in place – timely invitations, availability of large enough rooms, equipment in working order, etc. • Start your interview by introducing yourself concisely and clearly: ‘who you are, where you are from, why you are here and what you want’. • After the interview, debrief with your interview colleagues, evaluate your results and amend your approach if required. Tips and suggestions • Although most interviews are face-to-face, one-to-one interchanges, there is significant value in having two interviewers per interviewee. The second interviewer can focus on taking notes, observation and quality control the conversation, providing feedback about the facilitator/interviewer performance as well as the interviewee’s body language and his perception as an observer. Ensure you do not create a ‘good cop – bad cop’ atmosphere where the interviewee feels investigated and threatened. • Consider telephonic interviews as an alternative – when combined with a questionnaire for interviewees to prepare themselves – these can often be effective as well. • Make sure that you know enough about the subject to engage the interest of the interviewee – don’t use interviews for your basic grounding unless you have no other alternative. Do some desk research (chapter 3.2.10) beforehand.
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• If you have a large number of interviewees, then use the focus group chapter 3.2.5 tool instead. • Do not argue, criticise, or make assumptions and do not make promises to the interviewee. • Ensure you get permission from the interviewee to quote them (by name), as well as permission from managers to interview their employees. • Do not assume that interviewees will trust you and open up immediately, because they may be worried that there is a hidden agenda, they might say what they think you want to hear or they might try to trip you up. • Make interviewees feel important and that you value their views. • Always take clear notes and then write up the results immediately after the interview, as you will soon forget who said what.
3.2.3
Tripod (mixed)
I wonder if the gathered data is congruent, reliable and consistent from within and outside the company. Is top management’s perception on what to focus on justified? Intention (Why and when do I use it?) The tripod interview or questionnaire helps to obtain three different perspectives regarding the same topic (like a tripod) and to check on accuracy, consistency and correlation of information. Purpose (What does it do?) The tripod interview or questionnaire is a technique whereby three different stakeholder groups (e.g. top management, supplier/customer and operational employees) are asked the same questions in order to check if all stakeholders have the same perceptions and judgements – top management’s perceptions differs often significantly. Instruction (How do I do it?) Consult the guidelines for information gathering activities (section 3.2) for procedure and enquiry areas. Depending on the issues of your investigation, prepare a questionnaire with the relevant specific (closed) questions (to check your hypothesis). The questionnaire allows you to compare the different answers regarding the same question. Also prepare time and space for some interview-style open-ended questions to obtain comments and feedback.
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Tips and suggestions After the critical success factors for the business have been identified, a powerful question to ask is: ‘How good are we in this area?’ and ‘How important is this area for the success of our business?’ Compare the responses from the three different stakeholder groups. Cross-reference to related tools in this book Interview (chapter 3.2.2), Critical success factors (chapter 5.3.2).
3.2.4
Octagon
I would like to understand the soft, intangible factors of the company and get a quick overview of them. Intention (Why and when do I use it?) The octagon is an excellent instrument to obtain an overview of the eight (= octagon) key organisational aspects (‘feeling for the climate’) of an organisation; therefore it is best used when working in/with an unknown company or environment. Purpose (What does it do?) The octagon can be used as an instrument for interviews with the top and middle management to ensure that all eight organisational aspects are covered. The octagon will mainly generate qualitative data regarding the culture and the leadership style, and provide a better understanding of relevant stakeholders within an organisation for use in further projects. Instruction (How do I do it?) Use the eight organisational ‘corners’ from the diagram in figure 48 as the basis for your investigation. Then interview the top three management levels in HQ and branches individually, asking them each about each of the eight key organisational aspects. Note that these remain constant. Ask what the individual thinks and feels about each of the eight aspects and what the top three things are they would change if they could. Look for patterns and insightful comments, which you may be authorised to quote. Keep track of the sources for your credibility. Example of an octagon diagram The diagram in figure 48 displays some sample statements with regard to the eight organisational aspects.
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“Clients? Distribution looks after them.”
Customer orientation Human capital
Vision “Somewhere framed on a wall.”
“A few great people, just not enough of them.”
Leadership style
Strategy “When the board goes away for a weekend and comes back with a fancy presentation.”
“One mistake is okay, but not two.”
Structure
Competitiveness
“We have great orgcharts, but nobody knows where they are.”
Culture
“Our products are so great, we don’t have to know what the competitors do.”
“Only engineers really understand our business.”
Figure 48
Octagon
Cross-reference to related tools in this book Interview (chapter 3.2.2) and tripod tools (chapter 3.2.3), stakeholder related tools (chapter 3.1.13 to 3.1.17) and organisational analysis tools (chapter 5.1). Source: Bossard Consulting
3.2.5
Focus groups (unstructured)
We need to collect a lot of information from a large number of people and departments in a short period of time. One-on-one interviews would be ideal, but unfortunately we do not have enough time. Intention (Why and when do I use it?) Focus groups are used in many contexts, from market research for product development to organisational change management. Often the groups are external user or customer groups. Focus groups are not recommended as a source for quantitative or statistical information, but are excellent in providing qualitative information. For example when you want to evaluate ideas or hypotheses, test how specific decisions are perceived within the organisation, or gather information from a larger number of people in a short period of time. Focus groups can reach those at the bottom of the organisation who might otherwise not be contacted. Focus groups also add another dimension of mobilisation and help ‘take the temperature’ of the organisation at the shop floor’; they also help to paint a picture of whether the different layers of the organisation are aligned. Alternatively use the tripod tool (chapter 3.2.3). 115
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Purpose (What does it do?) • A focus group is simply a small homogenous group of people (8 to 12 persons; e.g. suppliers, customers, users, or employees from a specific department) who get together with a facilitator to consider a topic. Often there are several focus groups within the same organisation, or they are part of the same process or investigation, so that findings for those groups can be compared and contrasted. The synergy of group discussions can create more input, ideas, concerns and perceptions than one-on-one discussions. • The exposure to an external user group and their requirements provides ideal test market feedback, if the focus group is appropriately set up. Instruction (How do I do it?) • Consult the guidelines for information gathering activities (section 3.2). What information is needed, why is it needed and how will it be used? • Construct 5 to 6 groups of 8 to 12 people. You might want to mix your focus groups and have some homogeneous and some from a cross-section of the organisation, including secretaries, clerks, union members (if applicable), shop floor members and supervisors. This way, you can bring the groups together several times during a project life cycle. Each session is 60 to 90 min and requires one facilitator and one observer to take notes. • Prepare your agenda, which should comprise of: introduction, purpose, structure outline, introduction of participants (use the workshop guidelines in chapter 7.14). • The focus group needs to be moderated with considerable skill to get the best out of the participants. Key ingredients include a warm welcome, good atmosphere, and clear and friendly explanation of how the focus group members can help; a structure that guides the group through a discussion of e.g. customer experience, while allowing the conversation to flow and invite contributions from all. Another important aspect is the ability to get people to distinguish between their feelings, impressions, expectations and actual experiences. Optional questions and feedback technique for a focus group: • Prepare three separate flip-charts each titled ‘start’, ‘stop’, ‘continue’ and ask the questions, noting the answers on the corresponding page. ‘What do you like about what XY is doing/how it is operating? = CONTINUE ‘What should we stop doing to help us improve XY?’ = STOP ‘What new things should we start to do to improve XY?’ = START Use clustering or meta-plan® tools to arrange feedback on sticky post-it® notes.
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• Distribute post-it® notes and ask the participants to stick their comment regarding the following question on a flip chart when they are on their way out: ‘If you were in a lift with top manager XY and could tell him one thing to improve (your most pertinent issue), what would it be?’ Tips and suggestions • It is normal to pay focus group attendees for their effort in attending. It is also a good way of developing relationships with current and prospective stakeholders/customers. Food and beverages also give the meeting a better atmosphere. • Focus groups can be tape recorded and transcripts prepared so as to provide a great deal of insight into the details of the relationship from the users’/customers’/suppliers’ viewpoint. • One useful way of using a focus group perspective is to develop a ‘customer journey’ (if it is a customer focus group), which describes the ideal customer experience or relationship step-by-step and entirely from a customer viewpoint. • Ensure that the focus group will receive a feedback summary at a later stage.
3.2.6
Questionnaire (structured)
Intention (Why and when do I use it?) When you want to gather information in writing from a large group of people in a short period of time, a questionnaire can be an inexpensive option requiring less effort to collect quantitative and qualitative information or a combination of both. The limitations are due to the one-way communication that can hinder precise data collection and can render unpredictable results. On the other hand, a questionnaire requires little preparation time, particularly for larger groups. Purpose (What does it do?) A questionnaire allows you to obtain written responses to specifically defined questions that are pertinent to the enquiry topic, e.g. staff performance, project closure reviews, customer opinion, or research projects, and can enable easy statistical analysis if closed-ended questions are used. Instruction (How do I do it?) • Consult the guidelines for information gathering activities (section 3.2). Determine the purpose and audience, what information is needed, why it is needed and how it will be used and communicated.
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• Design the questionnaire. It requires considerable expertise and experience to develop questions that are meaningful, clear, comprehensible and not too intrusive. The questions must be seen to be worthwhile. Choose between closed-ended questions (‘I feel respected at work’ -> which will lead to either yes or no) or open-ended questions (‘How do you feel when you are at work?’). Open-ended questions gather a much wider range of information than do closed-ended ones, but are much more difficult to be analysed statistically and to be summarised. • Establish the logistics around the distribution and collection of the questionnaire (communication channels, email/print, feedback, deadline, contact details for queries, etc.). When developing your questionnaire, respect the following guidelines: • Ask only one thing at a time. • Use a simple, easy-to-understand language – no jargon. The shorter, the better. • Ask questions that are relevant and applicable to the whole audience – note exceptions. • Do not phrase your questions in a way that would presume or predict a response through e.g. leading questions (‘Don’t you think that ….’). Instead, provide impartial alternative options to answer. • Top down approach – start with the most general and simple and least controversial questions. • Provide a structure and group questions into related categories. • Make the questionnaire as exciting and user-friendly as possible – you may even add drawings and explanations. • Include a covering letter that clearly outlines the purpose, recipients of the questionnaire, deadline for returns, overview of categories, and contact details in case of problems. • Test your questionnaire on a small sample group before distributing it. Possibly use a focus group (chapter 3.2.5) to design and test your questionnaire. Tips and suggestions • Rating scales are a sensitive issue in questionnaires and surveys. It is best to use a scale that seeks to determine whether the individual experiences levels can be described as ‘excellent, good, moderate’, or ‘poor’. Ensure you provide an equal number of positive and negative responses. • The most widely used scale in survey research is the Likert scale. A typical response scale is 1 to 5 or 1 to 7. When responding to a Likert questionnaire item, respondents specify their level of agreement to a statement in the way
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of: 1 = strongly disagree, 2 = disagree, 3 = undecided, 4 = agree, 5 = strongly agree. These odd-numbered scales have a middle value, which is often labeled ‘neutral’ or ‘undecided’. It is also possible to use a forced-choice response scale with an even number of responses and no middle neutral or undecided choice. In this situation, the respondent is forced to decide whether they lean more towards the agree or disagree end of the scale for each item. Decide if you want to allow a ‘neutral’ option. • If you want to produce questionnaires or conduct surveys on a regular basis, you would be well advised to either do some reading or take a course or work in association with an expert in that field. There are pitfalls, including the possibility of bias in the results through badly designed questionnaires and incorrect use of data interpretation techniques. • Expect a response rate of around 30 % as an indication that your questionnaire is well designed for the target audience.
3.2.7
Survey/field study – dipstick
Intention (Why and when do I use it?) A survey is a technique to collect data from a number of people for a comparative study, e.g. when a new project is planned, to prove the needs and demands of the customer, etc. Surveys can be used anywhere inside or outside an organisation in order to tell you more about the perceptions people have about the business, service levels, branding, quality, value-for-money, etc. The customer perceptions are reality – hence enough reason to investigate and study them if time and resources permit. Surveys can be an inexpensive way to test a product, can be used with large number of people and help identify satisfied and dissatisfied customers or employees. Purpose (What does it do?) A survey uses various techniques and media such as interviewing, questionnaire, product samples, direct mailing etc., to test the perception and experience the target individual has with regard to the enquired topic. Other survey techniques are telephonic or postal questionnaires, mystery customer (trained personnel contact the organisation as if they were customers/suppliers and rate its performance against a set of criteria), or an ‘exit’ interview, where customers are asked to rate and comment on the experience as soon as they complete a purchase/transaction, e.g. outside the store. Instruction (How do I do it?) The key principles for planning a survey are:
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• Consult the guidelines for information gathering activities (section 3.2) for procedure and enquiry areas. • Decide what to measure and how often. Consider whether you will invest in regular and frequent surveys to become able to compare the findings from different surveys, see trends and keep the momentum. • Determine the group to be studied. • Decide on the survey technique as described above. • Design questionnaires (see figure 49 and chapter 3.2.6 Questionnaire (structured) and mainly use multiple choice questions to obtain ratings of satisfaction with service and/or other factors the customer regards as important, and additional information necessary to classify customers, activities, behaviours, opinions, etc.
Antithesis
Strongly
Strongly
Value
Mediocrity
a
s
d
f
g
h
Excellence
Apathy
a
s
d
f
g
h
Enthusiasm
Egocentrism
a
s
d
f
g
h
Teamwork
Mistrust
a
s
d
f
g
h
Trust
Drudgery
a
s
d
f
g
h
Fun
Incompetence
a
s
d
f
g
h
Mastery
Ineffectiveness
a
s
d
f
g
h
Results
Figure 49 Values survey
• Compile your results in chart form using a Pareto chart (chapter 3.4.2), a histogram or other statistical tools that will provide clarification. Tips and suggestions A particular type of survey is the dipstick survey – ‘dipping’ into the current situation and extracting a snapshot of the moment regarding customer satisfaction, values, behaviours, activities, etc. Like the Climate assessment (structured) tools chapter 3.2.12, the dipstick survey can be used for climate survey purposes but also for client/customer surveys. Figure 49 shows an example of a questionnaire used for a survey for ‘values held in a project team’. The people taking part in this survey just have to mark values with a cross.
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4.0 Learning & Growth
3.0
2.0
1.0 Joint team working
Figure 50
Personal development
Team development
Adherence to quality of life
Leveraging existing knowledge
Learning/development dipstick survey
Figure 50 shows values for a periodic dipstick survey of the development of a project team. The eight values for each of the five surveyed soft factors indicate how the team has developed during a certain period of time.
3.2.8
Direct observation (DILO = day in the life of)
I wish I knew what the employees spend their day doing. Intention (Why and when do I use it?) A DILO (= day in the life of) observation is an ideal tool to gain an understanding of the business and activities of an organisation and its employees at the beginning of an intervention or project. Purpose (What does it do?) • A DILO is an all-day observation that gives a real-time view of a period of time in the life of management, operations or just an individual’s work life. It analyses two dimensions: concern for tasks (work) and concern for people. • It helps to understand and quantify how people spend their time (adding value, non-adding value), to identify opportunities for improvement in specific target areas, to obtain hard data when data needed is not available or there is a concern about the validity of existing data. • DILOs also expose you to the organisation’s real world at a root level to understand their activities.
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• Observations help to understand what the results will really be, and further validate your findings. Instruction (How do I do it?) • Determine which operational area/department you want to visit. Prior management approval is a must. • Contact the target person of the DILO to set the date, time and logistics, and provide a briefing to the person. • Prepare your visit (consult the guidelines for information gathering activities (section 3.2). • Minimize disruption of the subject’s work demands. • Take detailed notes of issues and time components, use examples in narrative form and use complete sentences. • Summarize information while it is fresh in your mind. • Tell a story of how the day unfolds (write a readable narrative). • Document times and assign each task to predefined categories of tasks, e.g. admin, calls, meetings, supervision, breaks, travel, etc. Use the same standard templates for all DILO. • Sub-total the times at the end of each page, and total the times at the end of the write-up. • Calculate the percent of total for each category at the end of the write up. • Review your write-up with a colleague; refine per their direction; develop a story. Tips and suggestions • Identify the responsible manager ahead of time. • Look for strengths as well as weaknesses. • When you do a DILO on a shift, do one on all shifts to ensure validation of findings. • Remember your subject is giving you their ‘best’ day. • If the DILO is conducted with a non-manager or non-supervisor, review the findings with the manager or supervisor to determine if the observations were typical for the people reporting to him. • From an improvement point of view, it is sometimes useful to identify and distinguish tasks that could be standardised, delegated or rationalised.
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3.2.9
Delphi or expert panel
We struggle to understand the expert jargon; the guys are just in another world, but we need specialist advice. Intention (Why and when do I use it?) Delphi technique may be used to generate ideas where future situations or trends are uncertain or when you need to get information or an opinion based on expert knowledge, or an outsider to address a controversial issue. Purpose (What does it do?) Delphi or expert panels can only be successful when the experts clearly understand the purpose for talking to a group, when they know the current level of understanding of the group, and the parameters and boundaries of the discussions. The terms ‘Delphi’ and ‘expert panel’ are sometimes mixed in the literature – sometimes interpreted as a content expert talking about future scenarios, sometimes it means that input is provided without any face-to-face discussion. Instruction (How do I do it?) Identify the blind sports and black holes in terms of your knowledge gaps, then identify the best source of knowledge: Who would know the answer to this question? But also question whether ‘having a person come to speak to us is the best way for us to gather the information we need’. Carried out informally, the tool simply involves getting a group of relevant experts together to discuss the issues and come up with ideas, so that individual and group opinions are gathered. The formal variation is to use questionnaires that are sent to experts and to analyse their responses. A second round of questionnaires – containing the opinions and questions that have been expressed as a response to the experts’ reply – will be sent back to the experts for clarification and until a conclusion is reached. This technique does not require face-to-face interaction.
3.2.10 Desk research/database research I want to understand the details and be able to talk to the experts about the topic but first I need information quickly. Intention (Why and when do I use it?) Desk research is the ideal solution for getting information quickly, depending on your specific requirements and your available resources (e.g. time, money, urgency, skill level). Desk research gives you the freedom and decision-making
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power to start, amend and stop your information collection whenever you decide to. Desk research is ideal when you need information quickly about things that have been researched before and the knowledge is available and stored somewhere. Purpose (What does it do?) Desk research is the solitary and unstructured approach for gathering information, mainly through accessing information and knowledge sources (databases, libraries, books, archives, internet, forums, electronic databases, etc.). Instruction (How do I do it?) • Consult the guidelines for information gathering activities (section 3.2) for procedure and enquiry areas to ensure you understand the research topic and boundaries. • Identify relevant key search terms as these will determine the quality and volume of response from your search. • Contact the relevant data sources, scan for relevance and extract crucial data. When using internet search engines, make sure you use inverted commas and Boolean Operators like +/– with your search words; look up the FAQ and advanced search options section on the search engine website to improve the effectiveness of your search and exclude irrelevant results. Tips and suggestions • To improve your internet browser usage when doing search with a search engine, open each ‘results’ link (URL) in a separate new tab instead of ‘clicking’ directly on the link and therefore opening the link in the same window. This will allow you to discharge irrelevant links without having to go backwards and forwards all the time and prevents you losing the overview over the topic. Save the links and findings together on your hard drive and remember to keep the link as a source or reference. Note down the URL and date. • In order to save time and maintain an overview of your results, establish a structure for your findings on your hard drive that is similar to the logical structure of the topic itself.
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3.2.11 5 Whys I don’t think we have identified the roots of the problem. I wish I knew a quick tool to get to the root cause of a relatively simple problem. Intention (Why and when do I use it?) 5 Whys is an effective technique when you want a systematic way to lead a group to understand the ‘real’ reasons why a problem is/has occurred. 5 Whys could also be an essential tool in all your information gathering activities that require a deeper understanding. Purpose (What does it do?) 5 Whys helps getting to the source of a problem in minimum time. Instruction (How do I do it?) • Simply ask the question ‘Why?’ (or even better ‘What could be reasons for this happening?’) about the specific problem. • Continue to ask ‘Why?’ five times or until you have reached a satisfactory answer – you have either concluded with something trivial/banal or you have come to the core reason of the problem. Tips, suggestions, and alternatives Use in connection with the fishbone tool (chapter 3.1.9). Be aware of the fact that the question ‘Why?’ typically evokes a defensive response or justification in people, hence try to show support and compassion and avoid inquisition.
3.2.12 Climate assessment (structured) I wish I knew how the employees of the organization really feel. Intention (Why and when do I use it?) A climate assessment allows you to gain an impression of people’s (e.g., employees’) attitudes, feelings, emotional involvement in the job, as well their perception of the actual work situation’s various characteristics. Consequently, this allows you to choose responses and corrective, supportive actions. The climate assessment tool is not intended to measure individual performances. Tools like the 360º feedback or performance evaluation forms are better suited for this purpose. Purpose (What does it do?) A climate assessment examines the essential elements of a satisfactory work place and basically tries to identify: who is engaged, with what, for how long, and for what reason? Another commonly used term for this is the ‘level of engagement’, 125
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which can represent employee satisfaction, trust, motivation, willingness to work, passion at the workplace, organisational citizenship behaviour (OCB), commitment, identification, compatibility, team orientation, inclination to go the extra mile, etc. The assumption is that the greater a person’s engagement, the greater his readiness to go the extra mile and display a higher level of commitment and effort for the benefit of the organization. It is further assumed that high engagement levels correlate to better retention rates and higher levels of productivity, reduced number of sick-leave days and on-the-job accident rates. (Source: Ramsey) Instruction (How do I do it?) • Identify the focus of your climate assessment. What is it that you want to prove and verify? Ideally, involve a subject matter expert in the development of the questionnaires as well as in the analysis and interpretation of the data. • The list below provides you with an array of engagement categories and relevant questions for each category. Select the categories you would like to assess and investigate, and choose your questions. Create a questionnaire based on your selection of questions in conjunction with the Questionnaire tool (chapter 3.2.6). Use a Likert scale (from 1 to 5) or just yes/no answers as options. – Engagement (e.g., belonging, sense of purpose, commitment, ownership, recognition, desire to contribute, confidence, etc.): I feel a sense of belonging to company X | I feel emotionally attached to the strategy and mission of my company | Hard work is appreciated and recognised | I am proud to work for company X | I feel comfortable, valued and included in my department | I am learning and developing myself further in my job | I like the kind of work I do | When I leave work, I often feel a sense of accomplishment and satisfaction | My job and role give me the opportunity to do what I was recruited for | My supervisor has acknowledged me or recently congratulated me on something I did well | I feel appreciated for the work I do | I am encouraged to provide suggestions | I feel I have a voice regarding things that affect me. – Identification (e.g., growth, goals, role, career plan, strategy, vision, etc.): I understand how my role is related to the company’s overall goal, objectives and mission | Employees have a shared sense of mission | The company and/or my supervisor have told me what they require from me and my role | My workload is realistic | I am positive about the future of the company | I can see a future for myself at company X | My company treats me fairly | I think that my values and the company’s are very similar | Open and ethical communication is practiced | Sometimes people make inappropriate comments about people who are different | I feel free to express my views at work | I feel comfortable with the company’s ethical, moral, harassment and ethnic policies and procedures | I am comfortable with how the 126
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company applies those policies and procedures | My suggestions are used to improve the company | I have a career and development plan | A company representative recently discussed my performance and career/development plan with me | Employees are empowered to resolve problems | Company X has a good process for recruiting/performance evaluation/developing employees/etc. – Basic Needs (e.g., resources, equipment, support, etc. – mostly extrinsic aspects): Company X provides a welcoming and responsive environment for all its employees | The company provides all the resource and equipment I need or request to work well | Employees are rewarded for outstanding job performance | I have received training in the last 6/12 months | I have the necessary tools to do high quality work efficiently. – Inner Drive (e.g., performance, motivation, enthusiasm, performance, etc.) My company inspires me to do my best | I often see other people willing to provide efforts beyond what is required in order to help us become more successful | I am inspired to provide extra effort to help us succeed | I do more than what is actually required | I am inspired to do my best work | The pace and pressure in my department don’t have a negative influence on my personal or family life | If I make a mistake at work, I accept responsibility for it. – Fit (e.g., loyalty, commitment, job design, retention, compatibility, etc.): I would recommend company X as a great place to work | If offered a similar position and remuneration somewhere else, I would still stay | I have considered leaving my job in the past year | I can see myself working here in 1/3/5/10/20 years | The company generally has a good reputation | In order to contribute to the company’s objective, I volunteer to do things outside my job description | I am proud to tell others where I work | In this job, my skills are used to the fullest extent | There is a good match between my skills and the job requirements. – Connection (e.g., support, interaction, cooperation, involvement, empathy, etc.): I try to help others in company X whenever I can | People from different departments often work cooperatively to achieve a common goal | Coworkers are supportive of personal and/or family responsibilities | I stand behind my colleagues' good work | My supervisor looks after me as a person and employee | I have somebody at work to whom I can talk about sensitive issues | I am treated with respect by my co-workers | I receive the necessary training to do high quality work | I feel comfortable, valued and included in my department | There is a spirit of teamwork and cooperation | Upper level management is accessible to me | My immediate supervisor keeps me up to date on work place issues | I take a personal interest in my colleagues and their work.
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• Give everyone the climate assessment questionnaire and set a deadline for their replies. • Once you have analysed the data, discuss it with the team and employees and agree on action steps. The suggestion is to not only to focus on the ‘bad’ scores. Tips and suggestions • The three key criteria in a survey or questionnaire are validity, reliability and usability. • Less is more. Focus on a few questions and ensure that the employees are not left wondering what action should be taken. • Ensure anonymity; do not track names. Offer individuals the opportunity to leave their names if they choose to do so. If you are not sure about the interpretation of the data, seek external advice from a psychometric expert. • Be aware of the possibility that the aspects you want to assess are similar to those we all seek and find in a family environment: care, trust, affirmation, recognition, security and creation. • Here are some examples in case you want to ask open-ended questions: “What would you like more of in the organization? What would you like to see less of in the organization? What would you like to see change?” • Obviously, there are many means and tools with which to assess the feedback received and to work with it. One of the possible outcomes of the climate assessment and ways to display the results is categorisation into the following: – Engaged employees – work with passion and feel a deep connection to their company. They are committed and promote the organization and their work. – Not-engaged employees – have resigned emotionally and are not mentally present. They sleepwalk at work. They spend time at their work, but not enough energy or passion. – Actively disengaged employees are more than just unhappy at work; they actively display their unhappiness, even to the degree that they ‘morally sabotage’ and undermine what their engaged colleagues accomplish. (Source: Thackray) Cross-reference to related tools in this book Questionnaire (chapter 3.2.6). Source: BSI Consulting, www.employeeengagement.ning.com, Ramsay, Thackray
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3.3 Creativity We all copy patterns of behaviour and absorb ideas from our environment while we grow up. We then hold beliefs about facts and thought processes, forming assumptions until we get challenged. It becomes difficult to unlearn and by-pass our ingrained thought process, which can lead to bias, tenacity and prejudice. The creativity tools in this chapter can help to ‘think-out-of-the-box’. Creative thinking is also the result of right-brain activity – intuition, insight, inspiration – something, which is not always encouraged in our education system. Everybody has imagination, which is the fuel for creative thinking. Intuitive creativity techniques do at least one of the following: • Creatively spark spontaneous ideas and mental reactions – e.g., Brainstorming (chapter 3.3.1), 6-3-5 tool (chapter 3.3.3) • Transform or morph the topic (problem) into a new dimension or perspective with new ways of looking at the topic – e.g., Reverse the problem tool (chapter 3.1.3) • Compare the existing context with analogies – e.g., Bionic tool (chapter 3.3.5) or Morphological matrix (chapter 3.3.7) • Use the sub-conscious mind to trigger things and ideas – e.g., Irritating words (chapter 3.3.10), Mental provocation (chapter 3.3.11) • Transfer and transform the logic and structure to free the mind – e.g., Merlin technique/Osborn checklist (chapter 3.3.8) or Logical and functional system modelling (chapter 5.2.8) Please note that the tools in this chapter – as the symbol indicates – could (should) be used during both the diagnosis and analysis phase to stimulate Table 13
Select creativity tools
Category
Tool or technique name
Page
Ease of use
Effectiveness
Creativity
Brainstorming Cardstorming tool 6-3-5 tool Nyaka (defect analysis) Bionic Attribute listing Morphological matrix Merlin technique/Osborn checklist Lotus blossom Irritating words Mental provocation Introduction to alternative creativity tools
130 132 134 135 136 137 138 139 143 144 146 147
–
–
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divergent thinking, discover new ideas, and use the information in a structured way. So, this chapter is about expanding your horizon. The most obvious applications of creativity tools are in the ‘classic’ product development, design and marketing departments, but they should be employed in other fields as well, e.g. creating synergies between departments and people, developing systems (logic and creativity will work together), developing employees (multi-skilling and lateral job moves), managing the direction of the business (vision, strategies, diversification, or business process improvements). Ground rules for creativity activities: • All ideas and information have to be accepted – without comments or remarks. • No criticism or analysis of ideas or information is permitted. • Build on the ideas of others. • All ideas and information are listed. • Note down your ideas immediately. • Criticise later, if at all. • Motivate yourself to give your best. • Keep asking yourself ‘why’. • Keep your work space tidy, it’ll leave you stress free. • Keep a distance to the problems. • Be cautious of obvious, immediate solutions. • Take regular breaks and time to renew yourself. • Positive set-up and atmosphere to stimulate creativity Source: Osborn and Linneweh
3.3.1
Brainstorming
I need to find ideas in a short time and a large group of people is involved. At this stage, quantity is more important than quality! Intention (Why and when do I use it?) Brainstorming is a common tool for a team to creatively and efficiently generate ideas on any topic by creating a process that is free of criticism and judgement ahead of problem solving, planning or decision making. Originally developed by Alex Osborn in the thirties as a technique to stimulate creative thinking, brainstorming is based on intuition and helps to bring ideas from the unconscious mind to the surface. 130
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This type of cooperative interaction is becoming more and more important as the increasing complexity of problems in organisations forces decisions to be made in groups rather than by individuals; hence using brainstorming as a creativity and communication tool. Purpose (What does it do?) • The main purpose of brainstorming is the ‘production’ of large quantities of ideas, regardless of the quality. The findings are documented during the brainstorming process. • It encourages open thinking when a team is stuck in ‘same old way’ thinking and gets all team members involved, so that ideally a few people do not dominate the group. • Brainstorming allows team members to build on each other’s creativity while staying focused on their joint mission. • The ideas collected in a brainstorming will be further developed into solutions. This happens in a separate process. Instruction (How do I do it?) • Select your brainstorming group members. A mixed group of up to 10 people will give different approaches, knowledge and perspectives. Ensure an uninterrupted environment and arrange seats in a circle to help interaction. • State the central brainstorming question, agree on the issue to be considered and write it down for everybody to see. Ask people to rephrase it in their own words in order to check that everybody really understands it. • Provide means for recording, e.g. flipchart, cards, post-it® notes, white boards. • Each team member, in turn, offers an idea. No idea is criticised, ever! • Capture ideas on a flipchart or other means in big letters. • Ideas are generated in turns until each individual passes, indicating that the ideas (or members) are exhausted, or until a maximum duration of about 40 minutes. • Explore and shift ideas. Review written lists and discard any duplicates. Ask the group, whether they need clarification or further information on what was meant by each item. • After a short break, classify and cluster ideas in groups or relevant structure using grouping tools such as affinity (chapter 3.3.12) or clustering. If required, use decision making tools such as the utility analysis tool (chapter 6.10).
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Tips, suggestions, alternatives and cross-references to related tools • The use of an external facilitator is often helpful to avoid domination by those with vested interests in particular outcomes. Facilitation ensures everyone contributes and is valued. • If the topic is not of a sensitive or critical nature or if the group is comfortable with the process or all members, then try an unstructured, disorderly and unrestrained approach where ideas are given by everybody at any time, but ensure that all participate. • The Gordon alternative is a didactic variation of the written brainstorming tool with the difference that only the facilitator knows of the problem issue and can therefore steer the idea creation process. The benefits of this technique are that the individuals are not restricted by the predefined issue. It further prevents an egocentric influencing of the result through individuals. • Use two facilitators to record ideas and keep up with the fast flow of ideas. • You might find a quiet period in ideas before a round of new and even more creative ones. Don’t worry about a few minutes of silence. If the group is stuck, take a break or read out loudly all the ideas you have collected so far, or encourage the group to find analogies or word associations or comparisons using the Merlin technique/Osborn checklist tool (chapter 3.3.8). • A useful application to the classic brainstorming technique is to brainstorm an exhaustive list of all assumptions people have with regard to the current problem. For example: ‘Petroleum is needed to run cars. Cars must travel on roads.’ Then brainstorm ways to overturn these assumptions. Source: Osborn, Nagel, Harris, Ohmae 3.3.2
Cardstorming tool
Sharing of ideas is essential, but not everybody likes talking in front of a group or they talk too much or judge ideas prematurely, but I still like the brainstorming approach. What alternatives do I have? Intention (Why and when do I use it?) The cards tool is a less interactive way to create ideas and is a variation to the brainstorming technique that is ideal when you don’t have much time and/or rather quiet participants. A similar technique to this one is the metaplan® technique originally developed by Schnelle or the KJ tool by the anthropologist Jiro Kawakita. Purpose (What does it do?) • Each participant writes down his ideas on cards, individually and silently, then the group as a whole categorises all cards (ideas), often developing further ideas and actions as they do so. 132
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• Cardstorming avoids the pitfalls of the traditional brainstorming technique when dominant, judgmental or undisciplined participants are involved. • Team members build on each other’s creativity while having had time to think about their own ideas beforehand. • The visualisation through displaying the written ideas on cards is a key element of this tool and helps to speed up the process. Instruction (How do I do it?) • Prepare equipment, cards, flipcharts, markers, whiteboards, semi-sticky spray glue, etc. • Explain the process and state the problem or issue for which ideas are needed. • Ask everyone to brainstorm silently and individually and to write down their ideas within 10 minutes (one idea per card in big letters in not more than three lines in short phrases). • As the facilitator try to develop a high level structure and various headings for the topic in advance. Draw lines and ovals on the flipchart to indicate what goes where and label the ovals with headings. • When finished with the silent brainstorming, the first participant starts by sticking his cards on the wall. Then he groups similar cards together. He can suggest headings for each group, if the facilitator has not provided a relevant grouping/label. • The remaining participants stick their cards under the relevant headings. Alternatively, the facilitator reads the cards out loud and the group decides where to place them. • Regrouping cards and/or groups and defining new groups and headings or deleting existing ones is part of the process. • Additional cards (ideas) may be added during the group discussion. • Alternatively, instead of providing a grouping structure in advance, cluster similar cards together and let the group find a heading for this group. Tips and suggestions • Instead of the participants sticking up their cards, the alternative is for the facilitator to collect the cards, shuffle them and then read them out loudly and let the group find a place for each. • Invite additional comments and ideas on cards during the collection and grouping process; the facilitator must not comment but only guide the process.
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• Use grouping tools or a Venn diagram for the group discussions. • Take pictures of the A0 flip chart to show and document the creative process. Source: Butler, Nagel, Harris, Haberfellner et al.
3.3.3
6-3-5 tool
Intention (Why and when do I use it?) The 6-3-5 tool is a great tool to complement and build on ideas that were created by others. It is a silent variation of the brainstorming technique (chapter 3.3.1) and includes the documentation of the findings in a fast and simple way. Purpose (What does it do?) The 6-3-5 process forces team members to build on each other’s perspectives and input consciously without the louder and dominant people imposing their ideas. The stimulating effect of the classic brainstorming is not present, although the affect of building on each other’s ideas and the written documentation is definitively an advantage compared to the classic brainstorming. An advantage is the fact that a facilitator is not required; the limitation is the fact that one is tempted to remain within the bandwidth of the ideas of the predecessor. Instruction (How do I do it?) • 6 people – 3 ideas/cards – 5 minutes/rotations • Based on a single brainstorming issue, each individual of the team (usually six people) has five minutes to write down three ideas (one card per idea) • After five minutes, each of the six individuals then passes his papers to the next individual, who has five more minutes to add three ideas that build on the first three. • Repeat this rotation five times until each of the six individuals has commented on all cards. • Ensure that the participants are not feeling stressed or pressurised. Tips and suggestions Instead of 6-3-5, other combinations are also possible; e.g. 7-4-6 (7 participants, 4 ideas, 6 minutes) or 5-2-8, depending on the number of persons who may have good ideas and the complexity of ideas to be developed, however refrain from too much variation, as it may detrimentally impact the process, the experience of the participants or the result. 134
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Cross-reference to related tools in this book Discuss the ideas and use idea grouping tools or fishbone (chapter 3.1.9) to show dependencies if applicable. Source: Originally developed by Helmut Schlicksupp and B.Rohrbach; further sources: Haberfellner, Nagel
3.3.4
Nyaka (defect analysis)
Intention (Why and when do I use it?) The Nyaka tool is a pragmatic and structured technique to identify defects and to creatively find remedies while working in a group. The term comes from the French ‘il n’y a qu’à’ = ‘all you have to do’. Purpose (What does it do?) The Nyaka tool produces creative ideas and builds on a group’s natural critical ability to improve. The Nyaka tool helps to focus on defects or problem areas and creatively finds pragmatic solutions for each individual defect. Instruction (How do I do it?) • Select a group leader and describe the problem. Draw a vertical line in the middle of a flip chart. Label the left side ‘what is wrong (defects)’ and the right side ‘remedy (Nyaka)’ • Ask the group to list as many things as possible that are ‘wrong’ with the product or service or situation. Note each defect in a brief sentence in the left defect column. • Then invite the group to brainstorm a remedy (pragmatic solution) for each of the listed defects with the intention of eradicating as many defects as possible and improving the overall product/service or situation. • Mark each remedy against the relevant defect and then agree on a new, improved complete product/service solution, process, etc. • The example in table 14 lists ‘what’s wrongs’ and ‘remedies’ for a manual paper hole-punch. Notice that the way to the solution may still be far, even if you have found a remedy for each defect. Cross-reference to related tools in this book Use the Fishbone or cause-effect tool chapter 3.1.9 to check that the suggested remedies (Nyakas) are not just dealing with symptoms. Source: Townsend 135
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Table 14
Nyaka table for a paper hole-punch challenge
Problem: How can we improve the efficiency of the manual paper hole-punch (for binders)?
What’s wrong? (Defects)
Remedy? (Nyaka)
Can’t make holes in many pages at a time.
Make opening adjustable to number of pages.
Often leaves oily marks on paper.
Make with materials which don’t need lubrication.
Can only use it for punching holes.
Add more functions/uses.
Needs a lot of physical effort to obtain results.
Adapt the spring (operating system) to facilitate use.
Takes up too much space on the desk.
Gain space by combining with another device.
You can never find it when you need it.
Attach it to the binder.
Solution: Make binders with a ring-mechanism which doubles as a simple hole-punch. Source: Townsend
3.3.5
Bionic
Intention (Why and when do I use it?) Bionic comes from biology and technic and is the use and application of nature and its principles with adjustments to the special requirements to mankind. Bionic is a creativity technique that uses similarities in nature in order to find a creative solution for a (technical) problem. Evolution in the plant and animal world had a similar purpose to today’s business world: optimal energy utilisation, quality improvements, improved efficiency and productivity, hence many of nature‘s optimisation strategies or bio-cybernetic principles are applicable to organisational or technical problems. When faced with a rather technical problem and looking for a creative solution, try this approach and look to Mother Nature. Purpose (What does it do?) In the quest to find a solution, bionic searches for analogies in nature that are transferable and applicable to the problem situation, e.g. the protective design of a mushroom is used in an umbrella, the shape of a bat is mirrored in a kite, the propulsion of a jelly fish is used in rocket science.
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Instruction (How do I do it?) • Identify the structure and nature of the problem, e.g. protection, tension and structure, flotation, etc. • Screen the ‘world’ for similar structures, functions, effects and mechanisms. Look for creative sources, e.g. zoo, museum, animal or nature books or a walk in the park. Alternatively use the internet, if it works better for you. • Don’t apply the findings from Mother Nature blindly; rather use the concept as a template to stimulate new ideas and applications. Source: Nagel
3.3.6
Attribute listing
Intention (Why and when do I use it?) Attribute listing is most effectively used when a product or object exists and needs to be enhanced and ameliorated. The tool uses the given situation to creatively build and improve. Purpose (What does it do?) Attribute listing is an analytical-systematic creativity technique to find ideas to improve the properties, functions or attributes of a current system or object based on an existing one and is similar to a morphologic approach (also see Morphological matrix chapter 3.3.7). An attribute listing provides a creative and step-by-step way of developing and enhancing the understanding of the subject matter by comparing all aspects of the current and the desired future object and its attributes and properties. Instruction (How do I do it?) • List all relevant attributes or characteristics of the current object/system. • Describe the current features and design aspects, in particular the ones you need to improve. • Specify the desired design aspects or features for each attribute. • Develop possible solutions that would meet the feature or design requirements. Tips and suggestions • Take time to understand and define the current features and understand the desired future features and why there is a need to change them – the questioning often helps to find possible solutions. 137
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Table 15
Attribute listing
Attribute listing for a ‘power plug’ Attribute characteristics
Current feature/ design
Desired feature/ design
Possible solution
Objectives of object
Easy to manufacture
Easy to install and use
Simple cover over the connectors area, clip-in pins
Components
2 frames, 2 contacts, 7 screws
Fewer pieces
Replace screws with self-clamping design
Material
Frame: plastic Screws: steel
Unbreakable, recyclable, easy to colour
Thermoplast
• As the example in table 15 shows, a quick finding of a possible solution cannot be guaranteed. Nevertheless, even a solution for some of the attributes may result in an improvement. Source: Haberfellner
3.3.7
Morphological matrix
Intention (Why and when do I use it?) The Swiss astrophysicist Fritz Zwicky developed a tool that involves a systematic approach to the development of ideas, working with the help of a matrix. It is particularly appropriate for people who are used to thinking in technical and analytic terms. Similar to the attribute listing tool, the matrix is best suited for rather technical or engineering problems or where it is about an extension of the technical horizon of the existing products, systems, etc. Purpose (What does it do?) The morphological tool seeks to find solutions for each individual problem of the given situation or context and to document them in a matrix. In a second step, the best overall solution result is found through exploring the most suitable combination of the single solutions so to achieve the final combined one. Instruction (How do I do it?) • Define the problem: What are the required functionalities and what are the expected qualities and characteristics of the solution? • Define functionalities, capabilities, features, and qualities that are required.
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• Now the creative part of the process starts. Capture and document – in a structured way – all possible options. Using the example below, three forms of fuel theoretically exist: liquid, solid, gas. • Create the matrix with all relevant categories and types of parameters. Specify the features for each parameter type in a column, each of which then represents an option. Number each option. • Each cell in the matrix represents an option. • Through the combination of options for each parameter type, you create various possible solutions. Choose the appropriate solution to your problem. Example of a morphological matrix for means of transportation Table 16
Morphological matrix
Morphological Matrix Parameter type
Carriage and propulsion arrangement A Steering B Fuel C
Specification and features of the parameters Option I
Option II
Option III
Propulsion and carriage in the same unit or entity. 1
Propulsion and carriage together, plus additional trailers. 2
Propulsion and carriage separately. Carriage in separate trailer. 3
Manual steering 1 Liquid 1
Drive propulsion system D
Steam 1
Railway steering 2 Solid 2
Internal combustion engine 2
Gas 3 Electric 3
Nuclear 4
Cross-reference to related tools in this book Attribute listing (chapter 3.3.6). Source: Fritz Zwicky, Mehrmann
3.3.8
Merlin technique/Osborn checklist
Intention (Why and when do I use it?) Osborn, the founder of the brainstorming technique, has also developed a checklist in order to provide more structure and guidance for the creativity process. This Merlin technique (or Osborn checklist) is based on the principle of analogy – to alienate familiar things, search for opposites. You can use this tool in a group or individually.
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Purpose (What does it do?) Find responses to idea-spurring questions. This tool will help you to see problems and potential solutions from another viewpoint and thereby develop creative solutions. You will become the wizard Merlin and find new solutions – coming from any direction, going in any direction. Instruction (How do I do it?) Brainstorm for 10 minutes and find answers to the idea-spurring questions below. Document your answers, regardless of how mad they might seem: Change the use • Are there other possible ways in which it could be used? • Can you make use of the idea in a different context? • What other purposes could you think of? Adapt • What speaks against it? – What speaks for it? • Which idea is similar? – What else looks like this idea? • Are there parallels? • Are there analogies in nature? (see Bionic chapter 3.3.5) • How could you group and structure the idea (differently)? (use chapter 3.3.12) Change it • What can you change? • Can you change the sequence? • Can you change the significance, colour, movement, size, form, smell, sound, etc. in any way? Enlarge it • How can you make it bigger, add to it, increase the frequency, the height, length, value or distance? • Can it be multiplied, exaggerated, or coarsened? • What can be added? More time, greater frequency, stronger, higher, larger, longer, thicker, heavier, extra value, more ingredients? Shrink it • Can you make it smaller or subtract something from it?
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• Can you make it lower, or shorter, thinner, lighter, brighter, finer, narrower, omit, streamline, split up, understate, less frequent? • Can you split it up, or use it as a miniature? Replace it • Can you find substitutes for any aspects of the idea? Can the process be designed differently? • Are other positions, or other pitches possible? Can you use elements from other countries or epochs? • Who else instead? What else instead? Other ingredients? Other materials? Other processes? Other powers? Other places? Other approaches? Other tones of voice? Other times? Rearrange it • Which parts or sections could be swapped around? • Can the sequence be changed, or transpose cause and effect? • Are there other patterns, or other layouts, change places, change schedules? Reverse it • How could you reverse positive and negative? • Can you form the opposite of the idea? What does the mirror image of the idea look like? • Can you swap roles? Can the idea be turned 180° or alienated? • Can you turn tables, change places, turn it upside down? Combine it • What could you combine with each other? • How could you combine or link ideas? Could you incorporate a larger totality? • Can it be broken down into modular components? • Do you know of solutions from other domains or areas? Transform • How about a blend, an alloy, an assortment, an ensemble? • Could you combine units? • Can you bore holes in it, bunch it together, extend it? Harden it, liquefy it, or make it transparent?
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Tips and suggestions Use this tool while working with other creativity tools to increase the number of options, ideas and variations. Princeton Creative Research has developed a checklist to evaluate ideas. Use the following questions: • Have you considered all the advantages or benefits of the idea? Is there a real need for it? • Have you pinpointed the exact problems or difficulties your idea is expected to solve? • Is your idea an original, new concept, or is it a new combination or adaptation? • What immediate or short-range gains or results can be anticipated? Are the projected returns adequate? Are the risk factors acceptable? • What long-range benefits can be anticipated? • Have you checked the idea for faults or limitations? • Are there any problems the idea might create? What are the changes involved? • How simple or complex will the idea’s execution or implementation be? • Could you work out several variations of the idea? Could you offer alternative ideas? • Does your idea have a natural sales appeal? Is the market ready for it? Can customers afford it? Will they buy it? Is there a timing factor? • What, if anything, is your competition doing in this area? Can your company be competitive? • Have you considered the possibility of user resistance or difficulties? • Does your idea fill a real need, or does the need have to be created through promotional and advertising efforts? • How soon could the idea be put into operation and how? Source: Osborn, Townsend, Princeton Creative Research
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3.3.9
Lotus blossom
I already have a core topic on which I want to build and expand, but brainstorming is too chaotic and unstructured. Intention (Why and when do I use it?) The Lotus blossom tool is applicable if you already have a core idea or topic that you want to further expand and develop to ‘construct’ ideas and perspectives. Purpose (What does it do?) • The tool uses a lotus blossom metaphor. The inside of the blossom represents the core topic. The ideas around the inner blossom are represented by the petals that slowly open. • The ideas surround the core like the petals of a flower; the core and the ideas build on each other. Instruction (How do I do it?) • Use the template below (figure 51) to describe the concept to the participants. Use Post-it® notes or index cards, because movable items are better suited than a written comment on a white board or flip chart. • Write down the core topic at the centre of a 3x3 matrix, e.g., the high level of sick leave days in the production department.
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Figure 51
Lotus blossom concept
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• Ask the participants for further ideas and suggestions relating to the core topic. Use other creativity tools, e.g. Brainstorming (chapter 3.3.1), or the Merlin technique/Osborn checklist (chapter 3.3.8) if required. Select 8 relevant ideas and write each idea on a card. Place these cards in the 8 available cells of the 3×3 matrix. This is the first level. The resulting ideas for the sick leave day topic could be, e.g., adjust remuneration, improve the work and hygiene conditions, vitamin supplies and inoculations, stricter medical assessments, better ergonomic equipment, enforce legal consequences and ‘threats’, motivational workshops, and disclose all the employees’ sick leave statistics and records. • Then copy the 8 answers and place each of them in the middle of a new, empty 3×3 matrix. You will then have a central 3x3 matrix and each of the 8 ideas will appear at the centre of the surrounding 8 3x3 matrixes. • Repeat the same process and again create 8 ideas for each 3x3 matrix, based on the idea at the centre of the 3×3 matrix. • Try to complete as many fields as possible. If you are stuck for too long, continue with the next 3×3 matrix. • Try to relate the ideas from the second round to the original core topic. In theory, you have created 72 ideas. Cross-reference to related tools in this book Brainstorming (chapter 3.3.1), Merlin technique/Osborn checklist (chapter 3.3.8). Source: Michalko, Fabrega, Nölke. The Lotus blossom technique was developed by Yasuo Matsumura from the Clover Management Research Institute in Chiba City, Japan.
3.3.10 Irritating words Everybody claims to be right and knows better. This does not help to obtain a new perspective on matters. Intention (Why and when do I use it?) Use the tool when people are stuck in their frame of reference or when the idea generation process is stagnant and you want to create ideas from a new perspective. Purpose (What does it do?) The confrontation with provocative and irritating words and statements that don’t have anything ‘obvious’ to do with the original topic, is intended to ‘upset’
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the participants. This will spark new ideas and spontaneous reactions, which enable unusual associations and seeing new connections between things. Instruction (How do I do it?) • Define the tasks, problem or core topic. • Ask the participants to come up with ‘inappropriate and wild’ statements (= irritating words) that have nothing in common with the stated topic. You could also just use a dictionary or thesaurus, newspaper or product catalogue and randomly choose a word, or blindly point to a word with your finger. Don’t ignore a word just because it seems too abstruse and irrelevant. • Write down five to ten words – each on a separate index card. • Discuss each word and clarify it – without relating it to the topic. Reflect on the aspects and criteria relating to each word and write them down. • Now apply the first irritating word to the original core topic. Discuss how and where you could create a connection between the irritating word and the original core topic. Compare the statements regarding your original topic and the irritating words. What is similar, what is different? Don’t approach the task too analytically. Allow any crazy idea. • Now repeat the process with the each of the remaining irritating words. • For example, create a connection between the following irritating words and the topic: theft at the workplace. The words are: steel rope, picture frame, palm tree, landlord, oil tanker and engagement ring. Tips and suggestions • Combine your approach with the Walt Disney technique, which focuses on three specific perspectives to examine a topic and the resulting ideas. The perspectives are: the dreamer, the realist, the critic. Look at your results from those three perspectives. This technique is similar to de Bono’s logic of the Six thinking hats (chapter 7.17). • Be aware that the irritating words technique might create eccentric ideas that might be difficult to implement. Cross-reference to related tools in this book Six thinking hats (chapter 7.17). Source: Woodrow, Wikipedia.org, mycoted.com, Nölke
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3.3.11 Mental provocation Intention (Why and when do I use it?) The Mental provocation tool is best suited if you want to look at things from a different perspective. The tool is similar to the Irritating words tool. It can help with creative ideas generation as well as with new product or marketing ideas by pushing you in a direction that is contrary to your natural instinct or common sense. Purpose (What does it do?) The Mental provocation tool purposely tries to change the situation and circumstances in order to provoke absurd, escapist and unusual consequences, which should lead you to discover new perspectives and realisations. It is also intended to train your mental flexibility. Use a mundane (trivial) object or event and create a mental provocation to trigger a new thought process. The mental provocation statements are marked ‘MP’. Instruction (How do I do it?) • Define the task, problem or core topic – e.g., improve employee motivation. • Before you start, clearly communicate that mental provocations (MPs) are never intended to be (seen as) true or false statements. They merely trigger a domino effect for a discussion and idea generation. Clearly mark each mental provocation statement with an MP prefix. Each MP should trigger the question: ‘So, what if …?’ • Start to generate provocative statements. Use the options and guidelines below: – Ignore certain assumptions that you have regarding the task or topic. In the above ‘employee motivation topic’, this could, for example, be: (MP) The company does not have employees. – Ideal case – What would the situation look like in an ideal case? For example: (MP) All employees are always 120 % motivated, never tired and never sick. – Inversion – Turn a situation upside down, e.g.: (MP) The employees send the boss home or fire him if he gets on their nerves. – Exaggeration – Change a quantitative attribute, e.g.: (MP) Every employee only has to work one hour per day/week. – Coincident – Select a random word or term and use it in the core topic. This works like the Irritating words tool, for example, for the employee motivation (MP) bookcase.
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– Alteration – Change a qualitative characteristic of the topic or problem statement, e.g.: (MP) The employees never make mistakes. • Examples for mental provocation from everyday life could, for example, be – (MP) The pool table undulates. – (MP) The more you eat, the cheaper the restaurant bill becomes. – (MP) The employees delegate the work, the boss does the work. – (MP) The clock face/dial of the clock moves, the clock hands remain still. – (MP) The sea is filled with wine. – (MP) It is known who is bluffing in a poker game. – (MP) My date of birth changes regularly. • Once you have created your mental provocation statements, the participants and you can explore possible ideas. Cross-reference to related tools in this book Six thinking hats (chapter 7.17), Irritating words (chapter 3.3.10). Source: De Bono
3.3.12 Introduction to alternative creativity tools Before turning to tools whose effort is more directed to the grouping and structuring of information and data, browse through the tools listed in short form below in order to gain a more complete picture of additional creativity tool and technique alternatives: • Gunnar Heinsohn developed the tool ‘Rätselvermehrung = proliferation of the conundrum’. Through the combination of several different problems, which are unrelated to each other, a new consciousness and awareness is created. This stimulation helps to find an indirect way to a solution. • The tool ‘problem analysis tree’ is a combination of a family tree and a mind mapping diagram. It disassembles a problem into its parts; starting from a superior problem element and dissecting it into its sub-components of the problem, continue until you have created a family tree structure of the problem. • The De Bono thinking hats tool will be explained in detail in section 7.17 as a feedback tool. De Bono is particularly well known for his creativity tools and the thinking hats can also be used as such. In contrast to creativity tools, which are mostly applied in an interactive, non-sequential way, this tool follows a sequential process: – White hat: Collect information. – Red hat: State emotions relating to the problem. 147
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– Black hat: Express objections and concerns. – Yellow hat: State the positive aspects due to the improvements. – Green hat: Search for new ideas and alternatives. – Blue hat: Link, associate and combine the idea. The six different perspectives stimulate new ideas. • Scenario technique (also called scenario planning or scenario thinking) is a technique to make flexible long-term plans to simulate and predict the future. Scenarios are used to forecast various constellations of conditions and circumstances in the future. Three scenarios are typically used: an optimistic, a pessimistic and a neutral one in which conditions would continue as they are currently. The use typically revolves around forecasting techniques that bring together groups of experts in order to reduce the future risk and potential crises involved. The key steps are: Identify the assumptions and levers for future changes, create a concept of how all influences are connected, generate 5 to 10 draft scenarios that result from this conceptual framework and condense into 2 to 3 (positive, negative and neutral), and then identify and discuss the potential issues and risks that arise from each scenario. Other creativity tools might be useful in this process. • Bisociation is about combining things that don’t naturally belong together. It is a creativity technique that uses the association and combination of pictures and terms from unrelated contexts and various frames of references in order to create something new. Arthur Koestler created this technique to break open mental habits, patterns and preconceived ideas and mental associations. The process is a follows: Clearly define the topic or problem. The group of people then watches e.g. a series of paintings or pictures and tries to associate the topic/problem with those images and notes the resulting ideas and concepts for later discussion and compilation.
3.4 Information consolidation This category (and section) is primarily concerned with the processing, consolidation and display of information. The tools in this category are typically used after information gathering or creativity activities.
3.4.1
Consolidation of qualitative and quantitative information
In order to consolidate qualitative data and turn these into useful information, you should assess the data from a temporal, locational as well as an objectively and
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factually logical point of view. Further refinements of the objectively logical perspective are: • Properties and attributes – includes all elements, aspects and characteristics that describe a person or object. • Behaviour – includes reactions, mimics, gestures, language, actions, and status changes. • Relation/context – at least one aspect or attribute that at least two objects (or data sets) have in common (such as the same language). • Effects – the results of a root cause based on a causal connection. Note that most of the tools in this category deal with the consolidation of qualitative information. Quantitative information is normally analysed and consolidated with statistical techniques and displayed in charts and graphs in spreadsheet (e.g., MS Excel) or in statistical applications. Typical techniques are: • One list or multidimensional lists of frequency of occurrence or of sums (e.g., histograms, arithmetic/geometric averages, etc.) • Tally sheets • ABC analysis (see ABC tool (chapter 3.4.3)) • Correlation or regression analysis • Parameters, indices and scoring • Sensitivity analysis • Statistical distribution (discrete and continuous statistical distribution such as normal distribution) • Probability models Stochastics focuses on calculating and estimating the probability of occurrences, in other words the likelihood of a future event or value. Classic statistics focuses on analysing historic data and numbers. (Source: Haberfellner) Consolidation and display of qualitative information While quantitative information is mostly displayed in charts and graphs, qualitative information is displayed using one of the three concepts below: • Lists – the simplest form of displaying information is in a bulleted or numbered list. Typical tools display information in a sorted list. Use the Polarities tool (chapter 6.5), Swap sorting tool (chapter 6.6) or the Pair ranking tool (chapter 6.7) to group and sort information into a sorted, ranked list. Note that these tools are listed in the decision-making category.
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• Tree hierarchies – a tree-structure logic to display information that has a hierarchical relation between its information elements. Similar information is grouped together into chunks. Groups of chunks can again be grouped together into a consolidated group or category. This way, a hierarchy develops that is similar to a family tree, organigram or a book’s chapter structure. The parent-child relationship between the hierarchy levels is typical of the tree hierarchy. To prepare and build the hierarchy and to use the correct labels for the chunks and hierarchy levels, use tools such as Card sorting (chapter 3.4.5) or the Affinity diagram tool (chapter 3.4.6). Typical tools for display are the Problem tree (chapter 3.1.2), Hypothesis tree (chapter 3.1.5) and the Decision tree (chapter 6.2). Note that the MECE principle applies here – see the Problem tree instructions for details (chapter 3.1.2). • Relational maps – used in more complex situations where the information is unstructured and multidimensional and where classic tree hierarchies are overstrained. Relational maps work like the human thought process. A wellknown example of a relational map is a Mind map (chapter 3.1.21). Other tools that illustrate complex, linked information are the Context diagram tool (chapter 3.1.18), the Venn diagram (chapter 3.4.7) and, to a certain degree, even the Affinity diagram tool (chapter 3.4.6). (Source: Straker)
Table 17
Select information consolidation tools
Category
Tool or technique name
Page
Ease of use
Effectiveness
Information consolidation
Pareto (80:20) ABC tool Information matrix Card sorting Affinity diagram tool Venn diagram Force field
150 153 155 157 158 160 162
3.4.2
Pareto (80:20)
What are the key activities and issues that have the most significant impact on the end result? Intention (Why and when do I use it?) The Pareto principle can be a very effective problem solving technique as it helps identify the key elements/activities that have, e.g. the biggest impact or are the biggest ‘time wasters’. It can also be useful when selecting projects and alterna-
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tives and when identifying root causes of a problem or when you face the dilemma of how to allocate time and resources appropriately. Purpose (What does it do?) The Pareto principal was developed by the Italian economist Vilfredo Pareto (1848-1923) and is commonly known as the ‘80:20 rule’. The rule states that 80 % of the results come from only 20 % of effort, while the remaining 20 % of results are achieved by 80 % of effort. Or alternatively: 20 % of the sources cause 80 % of the problems. One can find many examples in the business world, e.g.: • 20 % of clients generate 80 % of the revenue of a company. • (The top) 20 % of suppliers furnish 80 % of the value of parts and supplies to a company. • 20 % of employees account for 80 % of sick leave days. • 20 % of products generate 80 % of the production costs. • 20 % of quality defects, errors or causes of breakdowns lead to 80 % of the rejects, failures or delays. • 20 % of the products generate 80 % of the profits. • 80 % of your customer responses come from 20 % of your advertising measures. Instruction (How do I do it?) • Once you have decided which problem or area you want to know more about, use your business experience and common sense and the examples stated above to develop hypotheses regarding the areas you are investigating. • The main source of information for this kind of exercise will come from quantitative information gathering or brainstorming. • Choose the most meaningful unit of measurement, such as frequency or cost. Then choose the time period for the study. • Gather the necessary data on each problem category (real time using, e.g. Direct observation (DILO = day in the life of) from chapter 3.2.8 or by reviewing historic data). Don’t forget to note the data source, location, time period covered. • Compare the relative frequency or costs of each problem category. (In the example detailed below, the categories could have been: sick leave days, study leave days, unpaid leave days, holiday leave days, compensation for overtime leave days, other leave days.)
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• Once you have the sum total for each category and the overall totals, sort by ranking your data in ascending or descending order, and compare the bottom and top end categories. Calculate the cumulative percentage starting with the highest problem category. • Interpret the results and possibly use variations such as ‘before – after scenarios’ (paired Pareto chart) or change the source of data or the measurement scale for the same category. Typically costs and frequency alternate. Example of an ‘80:20’ diagram The example displayed in figure 52 represents the results of an investigation into employee sick leave days of a company. There are a total of 80 employees; the ranked list of employees indicates that there are 4 that are ‘often sick’, followed
Total 80 employees
Total 300 sick leave days 33% 100 sick leave days
80%
67% 200 sick leave days 20% 16 people
Figure 52 80:20 Pareto diagram
by 12 ‘quite often sick’. These first two groups represent 200 of the 300 total sick leave days. The remaining 64 employees account for 100 sick leave days. So, 16/80 = 20 % of the employees account for 200/300 = 67 % of the sick leave days. Cross-reference to related tools in this book Fishbone or cause-effect (chapter 3.1.9), Mind map (chapter 3.1.21), most quantitative information gathering activities, Hypothesis and prioritisation tools. Source: Bassard and Ritter, Nagel
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3.4.3
ABC tool
Intention (Why and when do I use it?) The ABC tool is a variation of the Pareto or ‘80:20’ tool in section 3.4.2 and is often used in supply chain, logistics and other engineering related investigations, e.g. materials resource management, inventory management, plant maintenance, and cost accounting or pricing. ABC analysis is the technique of classifying items involved in a decision situation based on their relative importance. Its classification may be based on monetary value, availability of resources, variations in lead-time, part criticality to the running of a facility, new customer parts unique to that product, etc. In simple terms, the ABC tool is a priorities analysis that assigns items to three different groups depending on their importance or value. As a result, different strategies are used to manage and control the three different categories. In management literature, ABC sometimes stand for Activity-based Costing, which is a special costing approach for assigning fixed and variable costs to a product or service. This is a different technique to the ABC analysis tool described in this book. Purpose (What does it do?) The ‘ABC analysis’ tool determines the importance of an object or item – it can be a stock item, material, a supplier, a plant, an employee, or any quantitative unit – in relation to specific criteria or performance measures. Each item is typically assigned to one of the following three indicators or categories: • A: important/high value (10 to 15 % of the volume, but 65 to 75 % of the value) • B: less important (additional 20 % of the volume accounting for a further 20 % of the value) • C: relatively unimportant (the bulk of 65 % of the volume account for only 5 % of the value) This insight into the different categories of value and importance allows one to develop tailored approaches and strategies to manage the different categories of stock items, suppliers, customers, key products, raw materials, etc. accordingly. The A category normally gets the most attention and tighter control, B category items are important and part of the bigger picture and the C category items require efficient and cost effective streamlined management due to the large volume and time consuming task involved. Instruction (How do I do it?) • At its simplest, the ABC tool could start with a bar chart in which the bars are sorted into size order, with the tallest bar on the left. 153
3 Diagnosis
• Where there are many items with small values, they may be lumped together into an 'other' category and put on the right. The ideal chart is 'spiky', with a tall left bar. Note that the height of the bars implies priority. They may be weighted, e.g. by cost, to improve the prioritization effect. • Once you have the bar chart and its categories sorted into size order, calculate the cumulative sums and values, starting with the tallest bar or category. While you add up the absolute amounts (X), also calculate the relative percentage values (Y) and calculate the corresponding cumulative relative monetary value (Z) – the top X number of items (= Y% of the total number of items) account for the monetary value (of Z). Example of a typical ABC diagram
Cumulative monetary value
Figure 53 displays an ABC diagram of a stock items list, the first 15 % of items in the list account for approximately 65 % of cumulative value. For a company with a stock list of 1,000 different items this means that paying more attention to the top 150 items (with a sophisticated stock control system) will give close control of about 65 % of total stock investment.
A
B
C
Number or volume
Figure 53 ABC analysis diagram
The next, say, 20 % of items, will, typically, account for a further 15 to 20 % of cumulative monetary value. These can be subject to less precise control methods. The last 15 % of (low value or low usage) items then account for a mere 5 % and could be controlled with a simple system. Another example is the control of travel costs: again, typically 20 % of journeys will account for 80 % of total travel costs and should be closely monitored and controlled. Cross-reference to related tools in this book Pareto (80:20) (chapter 3.4.2). 154
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3.4.4
Information matrix
We have a lot of numbers, but we do not know which numbers force us to act. Intention (Why and when do I use it?) Use the information matrix if you want to prepare your quantitative analysis before displaying the information on charts. The information matrix is most useful if you can easily cluster the data into groups and categories and when you want to compare groups of information. The human brain sometimes struggles to process and comprehend problems if they are in a verbal or written form; hence, the simple use of a matrix or table illustrates how this can be facilitated. Purpose (What does it do?) The information matrix is a tool that displays quantitative data in a table format for better analysis and insights. Instruction (How do I do it?) • Identify and group the data and its elements – e.g., all companies that participated in a survey. • Identify the results for each data element – e.g., the number of companies that met certain criteria or provided positive feedback regarding a specific product in the survey. • List all (data) elements in the first column of the table and the results in the first row. • Populate each table cell with the existing data. • You could add numbers as absolute or relative numbers (%)? Consider both! Tips and suggestions • The information matrix gives you a lot of ways to present numbers. It needs a thorough consideration which of them to present and how to do it. Example of the IT Service Desk fault analysis in a company – information matrix Table 18 displays a typical matrix for an IT service desk fault analysis. Note that the clear arrangement of the contents and the grey fields make the matrix clear and its content easier to remember. From the table, one could conclude that region B with its 400 faults and region A with its 370 have the most problems. Table 19 displays the same numbers as the matrix above, but as relative percentages. Indeed this matrix gives less information, because it does not show how 155
3 Diagnosis
many faults are represented by the 100 % values. For full information, you would need an additional row ‘Total number’. Table 18
Information matrix – values in numbers
Region (element)
Fault reasons per month – number of occurrences Internet access problem
Printer problem
Software problem
Login access problem
Sub total
Region A
200
20
30
120
370
Region B
250
30
40
80
400
Region C
50
10
50
60
170
Region D
100
30
20
70
220
Total
600
90
140
330
1160
Table 19
Information matrix – values in percent
Region (element)
Fault reasons per month – relative percentages Internet access problem
Printer problem
Software problem
Login access problem
Total average
Region A
33 %
22 %
21 %
36 %
32 %
Region B
42 %
33 %
29 %
24 %
34 %
Region C
8%
11 %
36 %
18 %
15 %
Region D
17 %
34 %
14 %
22 %
19 %
100 %
100 %
100 %
100 %
100 %
Total
If you include the number of users per region (A-8000, B-5000, C-1500, D-900, total 15,400) in the equation, another picture emerges (table 20). Table 20
Information matrix – faults per hundred users
Region (element)
Fault reasons per month – faults per 100 users Internet access problem
Printer problem
Software problem
Login access problem
Total
Region A
2.5
0.3
0.4
1.5
4.6
Region B
5.0
0.6
0.8
1,6
8.0
Region C
3.3
0.7
3.3
4,0
11.3
Region D
11.1
3.3
2.2
7,8
24.4
3.9
0.6
0.9
2.1
7.5
Total
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You can see that regions C and D have a significantly higher number of problem incidents per 100 users than the other two regions. You could potentially learn from region A and B about what they do to keep their incident numbers so low instead of condemning them as a problem region. Source: Woodrow
3.4.5
Card sorting
I want to have all things to be properly boxed and labelled with the intuitively corrrect heading, but everybody has a different interpretation and opinion. How to solve this? Intention (Why and when do I use it?) The card-sorting tool helps you overcome the information chaos in terms of labels, categories, naming and taxonomy. Card sorting is, for example, used for website development to define a logic and user-friendly navigation and menu structure. Card sorting is helpful wherever you want to group (qualitative) information in such a way that a user can make sense of it and use it intuitively. For example, think of a second-hand or auction website’s structure. You want to sell an item and therefore have to classify and assign it to a category. The cardsorting tool helps the website developer to create a logic and structure. This is sometimes called taxonomy and belongs to the information architecture domain. Purpose (What does it do?) • Card sorting defines the logic, pattern and structure of information as a user would expect to find and intuitively use it. • Card sorting captures what and how people see and interpret information. • Qualitative information is sorted, grouped and structured with the end-user in mind and with a focus on user-friendliness through teamwork and interaction. Such information could be website navigation or menus, product portfolios, product catalogues, etc. The facilitator does not influence or dictate this process and the nomenclature, which is called taxonomy in this context. Instruction (How do I do it?) • Identify relevant team members as test subjects (approx. 7 to 15). • Prepare index cards and write down all the information on the cards. Use one card per information item. • The facilitator can allow three degrees of freedom in terms of influencing the taxonomy. – Open card sorting – no defaults or guidelines in terms of the number of category headings, nor generic terms for the category headings. The test sub157
3 Diagnosis
jects must define and agree on the number of category headings and the actual terms. – Half open card sorting – a predefined number of top-level category headings and freedom to choose the terms. – Closed card sorting – the number and the terms are predefined. The test subjects only assign the information items to predefined categories. • The test subject’s task is to identify the most logical match and then assign the index cards to the top-level category heading. • Tag each index card with a number to facilitate referencing. Expect to work with between 30 and 100 index cards to create a sufficiently granular result. • You can assign the task as individual work or as collaborative group work. • You can do this once-off or several times with different groups. Tips and suggestions When using and creating an Affinity diagram tool (chapter 3.4.6), a similar logic and approach as the Card sorting tool is used, however, the Affinity diagram focuses more on the hierarchical grouping within a tree logic. Cross-reference to related tools in this book Information matrix (chapter 3.4.4), Affinity diagram tool (chapter 3.4.6). Source: Kahlbach
3.4.6
Affinity diagram tool
Intention (Why and when do I use it?) The affinity diagram helps to group ideas or information that have been generated in other exercises and to summarise them into groupings according to certain logic, e.g. summary of services, products, reports or other large amounts of mixed data. Purpose (What does it do?) • An affinity diagram organises and gives structure to a list of elements or factors and is the display tool ideally used for chunking (= grouping and clustering into chunks of information). • It also encourages creativity during the process of identifying related data and defining a grouping logic, therefore affinity diagrams provide a new perspective and clarity.
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Instruction (How do I do it?) • Phrase the issue under discussion in a full sentence. • Brainstorm at least 20 ideas or issues on the topic or gather the information through research or interviews. • Record each idea or information on a card or Post-it® notes. • Sort information simultaneously into three to a maximum of ten related groups. Simply move any note that you think belongs into another group and be prepared to do this again later. • For each grouping, create a summary, description or heading card by group consensus. • Divide larger groupings into subgroups as needed and create appropriate subheaders. • Create an affinity diagram. Lay out all of the ideas and affinity cards on a single piece of paper or a blackboard. Draw outlines of the groups with the affinity cards at the top of each group. The resulting hierarchical structure will give you valuable insight into the situation. Tips and suggestions • It is acceptable for some notes to stand alone. These ‘loners’ can be as important as those that fit into groupings naturally. • It is possible that a note within a grouping could become a header card. However, don’t choose the ‘closest one’ because it’s convenient. The hard work involved in creating new header cards often leads to breakthrough ideas. • The grouping work often leads to a new understanding of what should belong together. Check, if this is realistic. Use ‘pin boarding’ (or Post-it notes) on a board to display, move, group, and replace ideas flexibly and quickly. • The example affinity diagram displayed in figure 54 is based on about 60 ideas generated during a brainstorming. The ideas belonging to ‘mixed’ could also be named ‘marketing tools’, or be grouped into ‘print’ and ‘online’. • Watch out for small clusters. Don’t they belong to another bigger group? • Watch out for really big clusters and chunks. Aren’t they too big and shouldn’t they rather be divided into more MECE-compliant smaller groups? • It is sometimes useful to mix the cards or to swap cards in pairs before starting with the work. This helps with a too narrow common way of thinking and breaks pattern. • In a workshop context, it can help to have a separate table or ‘parking space’ to temporarily park index cards and then assign them if and when appropriate. 159
3 Diagnosis
Types of messages and communication output
XYZ Corp. international • Exco monthly report • XYZ web site
Customer info • • • • • • • • • • • • •
Experience leaflets Bank card auth. form Business card Info sheet/letter Invitations Monthly record Booklet Platinum letter Flyer VAT brochure Web site policy Welcome letter/card ...
Sales force kit • Activity plus flyer • Application registration order form • Business manual • Customer order form/postcard • Customer price list • Order form • Replacement form • Resignation form • Retail price list • Rules of conduct • VIP client flyer • ...
Product info • • • • • •
ABC brochure ABC sampler ABC tester Gift voucher ABC video ...
Mixed • Intranet sites • Environmental brochure • Image brochure • Image video • Mailings • ...
Figure 54 Affinity diagram displaying the structure of the multiple communication means of a company
• If you can’t decide which of the two categories a card should belong to, make a duplicate and mark both cards with a ‘D’. • As a rule of thumb, don’t collect more than seven to ten cards per cluster/group. If the group is big, check whether there isn’t an appropriate and suitable way to split it. Cross-reference to related tools in this book Venn diagram (chapter 3.4.7), Cardstorming tool (chapter 3.3.2) and Mind mapping (chapter 3.1.21). Source: Nagel, Bassard, Ritter, Straker, Kahlbach. The affinity diagram is also called the KJ method; this is a reference to its creator Kawakita Jiro.
3.4.7
Venn diagram
Intention (Why and when do I use it?) The Venn diagram, developed by John Venn, is an information grouping tool to display categories of similar, overlapping and sub-dependent elements in a graphic format. As the proverb says, ‘A picture is worth thousand words’, a Venn diagram is an ideal way to categorise and present large amounts of information to a group in a simplified, abstracted and condensed way. Sometimes the situation and collected information are too complex for a hierarchical tree structure, but the use of a relational map – e.g., a Mind map (chapter 3.1.21) or a Context diagram tool (chapter 3.1.18) – is also not too suitable, as the context and information do not allow concrete relationships to be specified or allow arrows to be drawn to indicate the dependency directions. In this case, a Venn diagram might be an appropriate tool for grouping similar information. 160
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Purpose (What does it do?) Venn diagrams use circular shapes to represent different sets or elements of a situation or idea under investigation. Where elements of a group overlap, the shapes overlap to display the interrelationship between these different elements. Instruction (How do I do it?) • Scan through the information and ideas and identify elements that are similar in nature. Mark elements that belong to more than one group. • Group elements of a similar nature together in a box and start drawing a diagrammatic overview. Alternatives Similar tools, in addition to the affinity diagram, are called chunking or 3M (meta – large chunk, macro – medium chunk, and micro – small chunk) analysis or clustering. Chunking is a NLP term originally used in the information technology sector. The graphic approach to chunking involves taking the issue or ideas and representing them in a box in the centre of a flip chart page. Another box is drawn above the first one to note whatever the initial first issues are part of – what is broader than the issues, what is the bigger picture. Sub-aspects of the issues are drawn in boxes below the original one. And finally any similar, comparable or parallel issues (of the same hierarchy) are placed in boxes along the side of the original one. Chunking is an excellent way to show a hierarchic view of issues as well as the broader context. Example of a Venn diagram You can imagine that if the Venn diagram in figure 55 is being filled with information, a Venn diagram may become rather complex – in terms of content and structure.
Figure 55 Venn diagram
Source: Harris, Nagel, Haberfellner, Bassard, Ritter, Straker 161
3 Diagnosis
3.4.8
Force field
A number of competing groups are driving different initiatives. None of them understands and considers the opposition and the pressures operating for or against the desired change. I want to identify and display those influences. Intention (Why and when do I use it?) Developed by Kurt Lewin in the 1950s, force field analysis is helpful in identifying, analysing and proactively addressing opposing forces that exist for desired changes. Other useful applications are: • testing or evaluating the pros and cons of ideas and initiatives before taking those further, e.g. presenting to upper management, or • identifying reasons or factors that support or hinder the solution of an issue or problem, or • when an idea is likely to face opposition. Purpose (What does it do?) Force field analysis illustrates the relationship and significance of factors that may influence the problem/goal/initiative/desired change/project. In any situation there are likely to be forces operating which are assisting a particular situation or process and other forces operating against the situation or process. The driving forces for change will support movement towards a desired state, while restraining forces (against change) will try to maintain the status quo; hence the present state is a balance between forces for and against change. The force field tools can also display the pros and cons of a situation, so as to more easily compare them. Instruction (How do I do it?) • After explaining the purpose of the force field tool to the workshop group, draw a letter ‘T’ on a flip chart. Write down the issue or problem that you plan to analyse or find out more about above the horizontal ‘T’ line. • Explain the problem, then describe the ideal situation you would like to achieve to the audience. • Identify the forces that are driving towards the ideal situation. These forces may be internal or external. List them on the left side of the ‘T’. • Consider all forces, which can exist in: – the environment (social, political, economic, technological, ecological, etc.) – the organisation (mission, objectives, strategy, culture, values, beliefs, etc.) and groups within organisations (departments, business units, informal groups, etc.) 162
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– interactions (roles, styles, functions, alliances, conflicts, etc.) – individuals (goals, expectations, needs, desires, behavioural styles, etc.) • Identify the forces that are restraining movement towards the ideal state. List them on the right side. • Prioritise the driving forces. You can use the 100 points rating (chapter 6.9) or the nominal group tool (chapter 6.8) if you can’t achieve consensus. If you choose to display the situation in a diagram like in figure 56, then the length of each arrow indicates the significance or weight of the force. Sometimes it might be difficult to decide on the length of the arrows. • Check where the balance of weight is and work to reduce the opposing forces and increase the supportive forces and make the desired state more attractive. Decide on the most effective actions to strengthen the forces for and diminish the forces against. • List the action steps and incorporate these into your implementation plan or presentation to management. Tips and suggestions • It is often more helpful to remove the barriers than to focus too much on the positive forces, as enhancing the driving forces may increase the resistance to change. • If it is unclear whether a force is for or against the proposal, write it down on a separate page for later discussion. • Leave enough space between the forces to write in strategies or next steps and use different coloured pens to differentiate between the two. Examples Table 21 and figure 56 present two examples, a force field table on the topic of ‘stop smoking’ and a force field diagram with pros and contras of a car purchase. Cross-reference to related tools in this book The force field is not only a useful creative tool to understand the current forces, but it can also play a vital role during the analysis or decision making phase. It can also help to create criterion to evaluate the effectiveness of improvements. Source: Butler, Gundy
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3 Diagnosis
Table 21
Force field table
Force field The ideal situation would be to ‘STOP SMOKING’. Forces for (+) or driving forces
Forces against (–) or restraining forces
Force A: Poor health Action step 1
Force C: Habit Action step 3
Force B: Burned clothing Action step 2
Force D: Addiction Action step 4
Poor example Action step
Taste
Cost
Advertisements
Impact on others
Stubbornness
Figure 56 Force field diagram
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Reliability Not spacious
Good alternative cars available
Few extras
Resale value
Service quality High price
Hygiene factors not met Hindrance
Temptation to speed traps
Brand
Product quality
Driving forces Motivators
4 Goals and objectives setting
Category
Tool or technique name
Page
Ease of use
Effectiveness
Goal setting
Objectives tree Goal hierarchy Charter Goal catalogue SMART goals Goal grid Well-defined outcomes 3 P statements SNAP
167 169 172 174 176 178 179 181 182
Goal and objective setting starts with asking questions such as: ‘What do you want to achieve or avoid?’ The answers you get such as ‘improve profitability’ or ‘reduce emission’ are the goals or objectives. This section provides tools to identify, elaborate, understand, define and test those answers (goals). Goals are statements that guide the solution finding process and define what a solution is going to achieve as a result for the desired state.
Goal setting from various perspectives Figure 57 contains quotes that sum up the essence of goal setting. Whilst many alternative terms exist for the word goal, e.g. objectives, target, purpose, aspiration, goal, aim, intention, or outcome – they have all a very similar notion: aiming for a desired state that is better than the current status quo. Unsatisfactory definition of goals and objectives is a common cause of conflict and misunderstanding; therefore a proper definition and understanding is vital. The following tools will help in exploring all angles to ensure ‘high quality goals’. Tools from a wide array of disciplines – coaching, project management, educational science, counselling, work-life self-help literature, humanistic sciences, NLP, etc. – were incorporated to assist with the different situations and special requirements – and to make the exercise more fun and entertaining. One might expect a paragraph on ‘balanced score card’ in this goal section. The balanced score card is a science in itself and requires more attention than this
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4 Goals and objectives setting
, goals their Twain) f o t igh ark lost s s.“ (M y had eir effort e h t n th “Whe doubled re they
„We do this n’t kno w with cert what w aint y.“ ( e want , unk now but n)
et out ever s you n own) l, a to go, don’t be o ut a g unkn where you want „Witho et there.“ ( you don’t know .“ (unknown) „If re the e riv ar never to g surprised if you
Figure 57 The essence of goal setting
book can provide in a paragraph. The suggestion section in each tool will have – when appropriate – a reference and suggestion for integration with an existing balanced scorecard infrastructure.
4.1 Goal-setting criteria Objectives and goal setting play an important part in the problem solving process, in particular for: • the diagnosis and definition of the situation, as it helps focus on a solution-orientated approach and thereby helps prevent you getting ‘stuck in the problem mud’. • the solution-finding process as it drives the communication and consensus amongst the stakeholders towards a common goal. • the evaluation and decision making, as the goal(s) function(s) as a reference against which each potential solution will be compared and tested. Goals are not obvious. They need to be understood, compiled and properly defined to meet and guide the problem situation. Requirements for goal setting Typical characteristics and attributes for a good goal statement are therefore: • Target areas/target object – The goals are bound and linked to what? • Attributes and objectives of the goal – What are the intentions, what should be achieved?
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4.2
Objectives tree
– What are the desired results? – What are the undesired results? (see the Goal grid tool (chapter 4.7)) • Magnitude of the goal(s) – How much needs to be achieved? (see Goal catalogue tool (chapter 4.5)) • Timeframe – By when should the goal be achieved? • Location – Where should the goal come into effect? • Neutrality and consistency of the solution (the requirement to be Mutually Exclusive, Collectively Exhaustive (MECE). Also see the SMART goals tool (chapter 4.6). An example of a well-phrased goal statement would be: ‘We, the city of X, want to reduce the number of inner-city traffic accidents by at least 40 % over the next 3 years.’
4.2 Objectives tree The problem tree was helpful to dissect the problem. Now I want to define my goal(s) in an equally structured way! Intention (Why and when do I use it?) After you have drafted the problem – using the Problem definition tool (chapter 3.1.1) – and have further dissected the problem – using the Problem tree – you can now use the Objectives tree to link the problem to the intended goals and objectives. Note that you might have used the Hypothesis tree (chapter 3.1.5) and Issue tree tool (chapter 3.1.7) in the meanwhile as well. The goals and objectives defined in the Objectives tree should also be used to confirm and further refine the project/programme objectives. Purpose (What does it do?) The objectives tree often follows the problem tree activity. The problems are converted through simple rewording into specific objectives, and the chart then shows a ‘means-ends’ relationship. For example, ‘lack of sufficient water’ becomes ‘improve water provision’. These objectives then provide a basis for the project and programme goals. Instruction (How do I do it?) • As shown in figure 58, start with the core problem and rephrase all elements (boxes) in the problem tree as positive, desirable outcomes – as if the problem 167
4 Goals and objectives setting
Resulting outcome and objective
Resulting outcome and objective
Resulting outcome and objective
Resulting outcome and objective
End Resulting outcome and objective
Main goal and objective
Resulting outcome and objective
Main goal and objective
Goal
Goal
Goal
Means Sub goal
Sub goal
Sub goal
Sub goal
Sub goal
Figure 58 Objectives tree
had already been solved. In this way, root causes and consequences are turned into root solutions, and the key project or influencing entry points are quickly established. These objectives may well be worded as objectives for change. These can then, for example, be used in the Force Field tool (chapter 3.4.8) as a next step. • Review the resulting means-ends relationships to ensure the validity and completeness of the objective tree. Revise the statements and delete objectives that appear unrealistic or unnecessary, and add new objectives where required. • Draw lines between the means-ends relationships’ elements to indicate the existing connections. Tips and suggestions • Check that meeting objectives at one level will be sufficient to achieve the objectives at the next level. • Distinguish the different logics. Problem tree: 'If cause is A, then the effect is B'. Objectives tree: 'The means is X in order to achieve Y'. Note: Not every cause-effect relationship becomes a means-ends relationship. This depends on the rewording. While working from the bottom upwards, try to convert cause-effect relationships into means-end relationships. Example Figure 59 shows an objectives tree for the water case, which is built on the problem tree (water case) 168
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4.3 Goal hierarchy
Productivity level remain high
Epidemics and diseases are under control
Sufficient supply of water to people
No water related morbidity
No more people dying due to water
Flourishing industry
Sufficient supply of water to industry
Sufficiently available potable water
People can afford water
Clean potable water
People have access rights to water
People have access to water
Sufficient water for everyone
Water prices are just and fair
Water is treated and clean
Water is common property
Water pipes provide water over long distances
Supply meets demands
Income is sufficient
Waste water treatment plants are sufficient
There are no monopolies
Water reserves are full
New reserves and means are discovered
Water treatment is cost effective
Water pipes supply clean water
No private or company property regulated water
New reserves are being explored
Excessive demand is regulated
Figure 59
Objectives tree with the main objective in the centre of the diagram
Cross-reference to related tools in this book Problem definition (chapter 3.1.1), Problem tree (chapter 3.1.2), Hypothesis tree (chapter 3.1.5), Goal hierarchy (chapter 4.3), Charter (chapter 4.4).
Source: www.dfid.gov.uk, www.pm.portal.ph
4.3 Goal hierarchy We struggle to see the relationships between the different goals – which ones are conflicting, which ones are creating synergies and how initiatives and goals affect each other. Intention (Why and when do I use it?) Broad organisational goals are often set on a corporate level and are then translated into more operational goals as they cascade down through the organisation. These goals communicate what the priorities at each level are supposed to be. • The goal hierarchy helps with the understanding of the dependencies between the top-level goals and operational goals and (project) objectives, and hence with checking whether an initiative (or project) is focusing on the
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‘right’ things – i.e. influencing and affecting levers. For example, is the project goal ‘implement a call-centre’ going to increase the revenue (and if yes, how)? • When preparing a business case, this exercise highlights the related economic and financial drivers and factors. For a business case, those drivers need to be quantified in order to develop a sound and realistic network of correlated figures and numbers. Purpose (What does it do?) A goal hierarchy works like an old-fashioned clock. Depending which gear wheel you turn, several others will turn as a consequence, but you may find it difficult to predict the direction they will turn. If you understand the relationships and dependencies, you will learn in which direction you need to turn your wheel. A goal hierarchy breaks down the goals into its sublevels and hierarchical structure to identify the drivers and factors that affect high-level goals. So each goal is a value driver and lever that influences the goal above it, while it is a goal for the value drivers and levers on the level below it. Instruction (How do I do it?) • Use the top-down or bottom-up direction to break down the objectives and goals and check: – Do the stated objectives and links between them make sense? – Are they consistent? – Are the project objectives and company goals aligned (see example in figure 60)? – Are they measurable and are they actually being measured? • List the dependencies and goals and draw a hierarchy model. • Review and validate with the key stakeholders and owner. Tips and suggestions • Ensure that follow-up action steps are planned in order to achieve the goals. This is part of the development of a project contract or agreement for which you could use the charter tool (chapter 4.4). • Make sure that all initiatives that influence the same goal are aware of each other and are aligned and well coordinated. • It is important to understand and verify whether and how all sub goals add up to the corresponding goal of the next level.
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Example of a top-level business goals hierarchy Figure 60 shows drivers and impacting factors of a business goals 'tree'. For such an example, a corporate goal might be: ‘Increase revenue’ – The SMART goal might state: ‘Increase our current revenue of 200 € million by 10 % by the end of the next financial year, 31st December 2006.’ As a result of this corporate goal, a service department might embark on a revenue increasing initiative – e.g. increasing sales support and marketing activities. The SMART goal might then state: ‘Increase marketing and sales support ROI by 5 %.’ As a result of this departmental goal, the specific area within this department that does direct mailing will state their resulting SMART goal as: ‘Increase return rate of direct mail shots from currently 2 % to 3.5 % with the same budget of 1 € million by the end of the financial year.’ And so on… profit = revenue - costs
volume x price
• • • • • • • • • • • •
sales marketing advertising production output supply chain volume/ bottlenecks market barriers supply and demand level competitors seasonality demand forecasts ... ...
Figure 60
• • • • • • • • •
cost structure gross margin brand reputation price elasticity positioning product features product type ... ...
fixed costs + (volume x variable costs)
• cost structure • fixed costs levels in production • investments • labour costs • procurement costs • overhead costs • long term contracts • infrastructure costs • ... • ...
• • • • • • • • • • • •
sales marketing advertising production output supply chain volume/ bottlenecks market barriers supply and demand level competitors seasonality demand forecasts ... ...
• • • • • •
cost structure raw material costs exchange rate technology innovations cost allocation methods • ... • ...
Drivers and impacting factors of a business goals 'tree'
Another example of a goal hierarchy – which project and core business supports what goal? Figure 61 shows another example of a goal hierarchy, which can be used to find out whether goals are consistent across the board-check for interdependencies and contradictions between the goals. Value and cost drivers as an alternative on a lower level A variation of the goal hierarchy is to use cost and value drivers for the same scenario or project, e.g. the implementation of a call-centre. A value driver is any factor, both within and outside the business which is likely to generate cash flow or another added-value, either now or in future, either directly or indirectly. This value could be for the company as well as for the customer. A cost driver is the equivalent for costs (i.e. opposite). Obviously there are sub-drivers and sub-sub 171
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Image, brand and reputation
Corporate toplevel goals
Goals and value drivers
Company business standing
Core business A
Financial goals, i.e. profitability
Good corporate citizen
Core business B
Customer experience
Investment C
? Goals and value drivers
Goals and value drivers
Project A
Project B
Initiative I
Initiative IV Initiative II
Project C
Project D
? Initiative V Initiative III
Figure 61 What are the goals and their dependencies, measurements and controls? Are they consistent?
drivers. A similar logic to the goal hierarchy is used to illustrate a hierarchy of dependant drivers, factors and levers. The structure of value and cost drivers varies according to the specific situation. Value and cost drivers can be effective tools to manage resources for a competitive advantage and strategic understanding (besides the use in cost management). Cross-reference to related tools in this book Goal catalogue (chapter 4.5), Charter (chapter 4.4). Source: Haberfellner, Grundy, Grant
4.4 Charter Project objectives, activities, scopes, goals, resources, etc. – all this fills too many pages. Isn’t there a tool that provides a summary of the essential? Intention (Why and when do I use it?) A (project) charter is a handy documentation and communication tool for project starts and for later review of previously agreed elements. The structure and logic of a charter also functions as an excellent guideline and consistency control while exploring and defining objectives. Purpose (What does it do?) A charter provides a condensed overview of the key elements on a single page. It is also an excellent testing tool to ensure that what we want to achieve is based 172
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on deliverables, which are then based on activities. (See in the instruction how the testing works.) The charter is ideally used throughout the lifespan of the initiative or project as it helps to plan and set up the work, allows for review and assessment along the way and is vital for the final review and evaluation. Instruction (How do I do it?) • The identification and development of the content is best done together with some of the other goal-setting tools, e.g. Goal Catalogue (chapter 4.5) and Goal Hierarchy (chapter 4.3). • The basic logic of the charter is that each column is based on the input from the column on the right of it (see table 22). To achieve the intended objectives, you need to have the deliverables detailed in the middle column as those provide the input and foundation. The deliverables are going to be dependant on the key activities on the right. The results of the activities will become tangible deliverables. The deliverables will enable and help to reach the objectives. • You need to really understand the differences between the three columns – they are not obvious and you need to explain it to the people you work with. • The objectives column contains the goals, intentions, final achievements, outcomes, and everything this project is intended to accomplish. • The deliverables column contains all tangible things your key activities are going to produce, create, and demonstrate, e.g. analysis results of a questionnaire, a new prototype, a specification catalogue. Deliverables are not the task or activities; deliverables are what you obtain through the key activities. • Key activities are the building blocks that start on the right hand side. Each key activity must lead or contribute to at least one deliverable. Each deliverable supports at least one objective. If this is not the case, then why do them? Use this logic to check from right to left and left to right.
Table 22
Template for a charter
Charter Objectives
Deliverables
Key activities
•
•
•
•
• •
Out of scope
Time/Resources/Cost
Critical Success Factors
•
•
•
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• The bottom half of the tool – the second row – contains the headings ‘out of scope’, ‘time/resources/cost’ and ‘critical success factors’. This second row helps to capture additional conditions and factors. For example, the ‘out of scope’ column is used to explicitly state the areas, which are not to be considered. Use the ‘time/resource/cost’ and ‘critical success factors’ columns if applicable and appropriate in the context. • Add additional columns for, for example, financial and non-financial benefits or to document existing risks that need to be included in the charter. You could also add contractual responsibilities or client duties. Cross-reference to related tools in this book Project management tools, Goal catalogue (chapter 4.5), Goal hierarchy (chapter 4.3).
4.5 Goal catalogue Intention (Why and when do I use it?) A goal catalogue provides a framework to assess and define goals and objectives correctly and completely at any stage of the goal setting (or project) process. Ideally the goals should be reviewed during the project/process and reused as a reference during the decision making and evaluation stages. Purpose (What does it do?) The goal setting activity ensures that the goal is clearly defined and understood and, thanks to the catalogue, it is documented and communicated so that all relevant parties can understand it. Instruction (How do I do it?) • Define the object (e.g. procurement system, paint production unit, reduction of harmful emissions in cities neighbouring the chemical plant, etc.) that you want to change or improve. In the early stage, this is sometimes fuzzy and needs reviewing later. • State the goal and its desired and undesired qualities, properties and attributes. • Enquire about the expected outcome and what the individual wants to achieve with his goal(s). (‘Is a reduction on emissions really the end goal or is the topic rather to undo the decreasing property value or the stinking air that prevents barbeque evenings or the reputational damage of the city/company?’) Ask the question ‘What does the realisation of this goal bring you?’
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several times until you get to the underlying motivation. This question technique is similar to the 5 Whys tool in section 3.2.11. • Goals are intended to fulfil different requirements simultaneously which often leads to conflicting objectives, e.g. a company might have a goal to reduce emissions, whilst the realisation of the emission goal must not have a detrimental commercial effect on the other profit goals of the company (e.g. increase in production costs, etc.). It is quite common that goals are not well aligned and might sometimes even be contradictory. • Quantify the dimensions of the goals (in terms of time, quantity, percent quality, location) and describe how you would measure these (see SMART goals – chapter 4.6). • Review the identified goals and develop categories (and sub-categories) for goals and sub-goals using the logic of the tool goal hierarchy in section 4.3. • Decide on the importance, urgency and priority of each goal. Assign an indicator (M, S, N) according to M = must have, S = should have, N = nice to have. • Document your work using the goal catalogue and review with the stakeholders and goal owners. This review links naturally to the stakeholder analysis –
Table 23
Example of a goal catalogue
Goal catalogue
Goal category
Goal definition
Conditions, restrictions
Priority (Must, Should, Nice to have)
Financial goals Profitability
High cost saving
Min 5 %
Should
Liquidity
Minimal additional investment required
Max € 500,000
Must
Functions and process goals Security – Reliability
No downtime longer than 15 minutes
Max 3 events per year
Must
Performance
...
...
...
People goals Skills – Qualifications
...
...
...
Retention
Prevent employees from leaving the company early. – less than 10 % of the employees leave before 24 months of service
Retention % below 10 % p.a.
Should
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expectation management review tool in section 3.1.14. You would more ore less automatically review the goal catalogue while checking the stakeholders’ expectations with regard to those goals. Tips and suggestions • Test the goal and objectives with ‘Why, how, when, how much, where, who?’ • Remember that the project owner/leader determines the goals and objectives. Ensure that you and others understand these and that they achieve the desired overall objective. First write them down, then clarify and test them with the sponsor/owner, as he might not yet know what is actually required and how to define it – before you challenge and stress-test them. • Do not confuse goal and solution. Do not state the solution while defining the goal. A solution cannot be a goal, it is purely a means. Goals are the ‘WHAT’; a solution states the ‘HOW’. • The categories of the goal catalogue should be aligned with an existing corporate structure, reporting system or an existing balanced scorecard system. • A goal catalogue (table 23) follows conceptually a similar logic to a requirements catalogue (chapter 5.2.7), just on a more strategic level. Cross-reference to related tools in this book SMART goals (chapter 4.6), Charter (chapter 4.4), Requirements catalogue (chapter 5.2.7), Stakeholder analysis – Expectation management (chapter 3.1.14). Source: Haberfellner
4.6 SMART goals Intention (Why and when do I use it?) Setting goals is a skill itself that needs to be learnt and practised. The SMART goals tool is particularly useful when facilitating workshops where you may be distracted and in need of a simple guideline to steer the process and ensure quality and completeness of the identified goals. The tool helps with improving the quality of the identified goal, but not with the identification (and quantity) of goals. Purpose (What does it do?) The SMART goals tool is a guideline to implement the quality requirements for goals and to warrant robustness, completeness and congruency.
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Instruction (How do I do it?) Test each identified goal against the five S-M-A-R-T goal criteria. Each letter represents a quality criterion explained below. Smarten each goal by creating a short sentence – see example). • S – specific (state in detail what you want, e.g. ‘increase ROI of the property development investments in East Germany’) • M – measurable (state numbers ‘increase ROI by 2 % from the current 6 % as per annual report 2005’) • A – agreed upon (who agreed – a signature is a powerful sign of commitment!) • R – realistic (opposite to idealistic!) • T – time bound (indicate the measurement milestone ‘by December 2006’ or ‘within the next 6 months’) Tips and suggestions • If you can’t measure it, create a measure and make it measurable. If you can’t make it measurable, don’t bother defining the goal. This advice by the author still holds true in many situations. If you struggle to define qualitative goals – often for service or quality aspects –, ensure that you introduce a performance indicator or index which functions as a gauge for increasing or decreasing performance. Ask: ‘How would you recognize that the performance is poor? What would stop working?’ This gives you an indication where a performance measure could be established. As an example, the goal could be ‘to improve the corporate climate and culture’. The performance indicator could be the employee retention rate, sick leave days, number of disciplinary hearings, unaccounted loss of stock, etc. • To get the best from SMART goals, monitor the progress and results of each SMART goal proactively. Sometimes the monitoring itself increases the performance of the area under ‘scrutiny’. • An alternative interpretation for the SMART acronym is Specific, Measurable, Achievable, Relevant and Timed. The various, ambiguous abbreviations can make the use of this tool fuzzy at times. An example of a SMART project goal To design a 4-wheel motorbike within 12 months of the project start together with the development and production department, without external help, with a budget of € 2 million. The deliverable is: at least three design studies that could go straight into production. Source: Haberfellner, Butler
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4.7 Goal grid I want to explore goals and what we want on a higher level, without going into the ‘tangible/measurable and by when’ conversation. Is there a way of talking about goals constructively but at high level? Intention (Why and when do I use it?) Intervening in complex organisations requires careful thoughts about the potential effects of any of our actions. Therefore, our goals and objectives are typically multi-dimensional: we seek to eliminate some conditions, and to achieve others. There also are conditions we seek to preserve or avoid. This tool helps to categorise your goals into those four conditions. Purpose (What does it do?) If you don’t want something that already exists, your goal is typically one of eliminating it. If you want something that does not exist, your goal is ordinarily one of achieving it. Four categories of goals and objectives can be derived from the interplay of our perceptions and preferences: Achieve, Preserve, Avoid, and Eliminate. A way of examining the multi-dimensionality of our goals and objectives is to compare and identify any disparities between our perceptions (what we have) and our preferences (what we want). This comparison is shown with the goal grid. Instruction (How do I do it?) Ask the following questions as a way of clarifying all your goals and objectives: • Do we have it? • Do we want it? • What are we trying to achieve? • What are we trying to preserve? • What are we trying to avoid? • What are we trying to eliminate? Template for the goal grid ‘Do we have it? Do we want it?’ – According to these questions, conditions or situations may be classified into the goal grid (figure 62). Source: Arnold, Nickols (1992)
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4.8 Well-defined outcomes
Do we have it ?
Figure 62 No
I
II
Achieve
Avoid
III
IV
Preserve
Eliminate
Yes
No
Goal grid
Yes
Do we want it ?
4.8 Well-defined outcomes Intention (Why and when do I use it?) The SMART tool is common in the business context to precisely define goals, while the five SMART aspects are sometimes used too vaguely. The Well-defined outcomes tool helps you explore and describe your goal more comprehensively. Purpose (What does it do?) This NLP-based technique uses six questioning steps to further explore, comprehend and refine your intended goal from various unusual angles. Instruction (How do I do it?) The six-step process ensures you focus on what you DO want, rather than on what you DO NOT want. The emphasis is on how you want to achieve your goal rather than on problems, excuses, alibis, and explanations. Work through the following ‘I-statement’ questions: 1. Positive – What do I want (to achieve)? Phrase your objective in a positive light and be specific. “I want to change my career and want to work in the tourism industry” instead of “If I am dismissed, I want to find a job where I can work with people.” 2. Sensory specific, measurable and tangible – How will I realise that I have reached my goal? What are the intermediary milestones and how will I know I have achieved them? What will be different? How can you measure your achievement? Include the hard statistical, financial and performance-based indicators as well as the softer measures, such as how individuals feel, react, and behave. How can you measure a goal such as your personal work-life balance? No weekend work, playing with your kids at least one hour every day, etc.
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3. Contextualised – Where and when do you want to have this, and where and when do you NOT want to have this? Does this (goal) make sense? The third process step tests your goal setting’s prevailing circumstances in relation to the following criteria: – Own skills and capabilities – Do I have the skills and capabilities to reach my goal? – Relevance – The goal might seem interesting, but is it really relevant for me? – Own preference – Have I chosen and specified the goal in such a way that it is aligned with my personal preferences, or is it just more convenient this way? Is it right or is it just right for me? – Practical – Is the goal practical and workable? – Realistic – Can the goal be realistically achieved? What are the reasons for this? What are the arguments against this? This has to be asked particularly in a business context, where you might be dependent on others. Is the goal ‘to increase the response rate of our direct mailing campaign by 2 %’ realistic and can you really influence this? This corresponds also to the next point as well as to question 4. – Controllable – Which aspects of the goal realisation can I influence and which ones can’t I? Are there many uncontrollable variables that pose a high risk? Which ones are controllable – focus on those. 4. Self-achievable – with the resources to accomplish the goal. ‘What resources do you require in order to achieve this? What action steps do you need to take to achieve this? Is this something you can achieve on your own, or does it require other people to behave in a certain way?’ The term ‘resources’ includes time, money, support, information, skills, energy, equipment, logistics, manpower, etc. Check what you need and what is lacking. It is very important that the outcome is within your own realm of influence, so that you control the accomplishment and delivery of the outcome. 5. Ecological and weighing up the pros and cons of achieving or not achieving. ‘What are the advantages and disadvantages of creating this change? What will you lose by achieving this?’ There are always disadvantages when causing a change – be aware of this and consider the ethical, social, and political implications and consequences of your goal. 6. Worthwhile and in line with your self-concept and values/ethics – ‘What's important to you about achieving this goal? What does this outcome give you?’ Also remember that the goal needs to be in line with the kind of person you are (or at least you think you are) and your moral and ethical boundaries and values. 180
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Tips and suggestions • Specifically use this goal-setting tool for working with individuals and their personal goals – try it on yourself! • The following items are quite interchangeable: goals, means, and results. Every goal can be considered a means to reach a goal on the next level. For example, to what extent is your job a goal and a means? – Is your career the goal that serves for your self-actualisation and/or is it to finance your lifestyle? Use the Goal hierarchy tool (chapter 4.3) to explore the various means-end relationships when you work with goals. • The LogFrame (chapter 7.3) tool also uses the logic of a means-end relationship, but focuses on a project context. Cross-reference to related tools in this book SMART goals (chapter 4.6), Goal hierarchy (chapter 4.3), LogFrame (chapter 7.3). Source: Harris
4.9 3 P statements Whenever we start an initiative, I struggle to communicate the specific function and value of the things we are doing. Is there a technique to explain what will happen, how it will happen and why? Intention (Why and when do I use it?) Formal kick-off meetings, presentations or meeting starts as well as project initiation meetings and workshops are an ideal situation to use the 3P statement tool, which helps to guide during the preparation phase and communicate during an event. Purpose (What does it do?) The 3P acronym stands for Purpose, Process and Payoff. The 3P statement is a technique that requires answers to three vital questions: ‘What will we do? How will we do it? Why is it important?’ The 3P statement can be used to plan your meetings, agendas, open a conversation, introduce new agenda items during a meeting, or make a formal presentation or suggestion.
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Instruction (How do I do it?) Apply the tool and ask yourself the questions pertinent to the three statements. • Purpose justifies what you intend to accomplish. Stating the intention and purpose answers the fundamental question and provides direction and motivation. ‘Why are we here? What is the goal? How will the gathered information be used?’ • Process explains how the goal or initiative will be addressed. ‘How will we proceed? What techniques will be used? What steps will we take? How long will this last? What is expected of me? What is expected of the group?’ • Payoff informs about the benefits and what the people will get from the initiative/project/meeting/workshop. Tips and suggestions • Use the 3P statement as a test: If you can’t define the purpose, process and payoff for any given topic, do not proceed, as you are likely to fail. • Use the tool to help you phrase your statements, and modify wherever required: ‘In order to … (purpose), we will … (process), so that … (payoff).’ Example In order to decide how to best meet our customers’ requirements, we will conduct market research, so that we understand where to change our product design and retain market share. (One would need to check the links and assumptions between product design, customer satisfaction, customer buying decision triggers and market shares though.) Source: Butler
4.10 SNAP Intention (Why and when do I use it?) The SNAP technique – developed by John Townsend – allows one to combine neutrality of facts with personal feelings while working through an uncomfortable or tricky situation where objectives and action steps must be defined to change a situation. Disciplinary and conflict situations are charged with emotions, making goal-setting very difficult. This section provides two guidelines on how to approach and facilitate a dispute and still set goals.
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Purpose (What does it do?) The tool separates facts from emotion and helps to articulate the desired goals, which could be a behavioural change or specific outcome or action step, without letting emotions get in the way in an unconstructive manner. Instruction (How do I do it?) In a conversation, use the acronym SNAP as a guideline to cover all aspects detailed below. • Specify the behaviour or situation you wish to change. Focus on facts and specify the gap between the present behaviour and the desired one. Do not suggest or judge; state facts and clarify with the other person if he understands and agrees on the facts. • Name it – Describe how you and others feel about the behaviour/situation. Discuss the other person’s feelings and emotions. Show empathy and concern when appropriate and keep the terminology personal (I, you, we – not ‘management’). Do not move to the next step until there is consensus on feelings. • Ask for a feasible and specific change, and affirm the rules. Be specific; use a friendly but assertive tone of voice that still demonstrates empathy. Do not pause between asking and proposing, as you may get into an argument on the change you want. What you ask for is not negotiable, although you might negotiate the pay-off or punishment if change occurs. • Propose a prize for change of behaviour and/or a consequence or penalty for no change Discuss the consequences if the person demonstrates the desired behaviour and offer a reward as a sign of recognition. Explain benefits for yourself, the other person, the relationship, and the organisation if change takes place. Clarify the consequences of unchanged behaviour and make sure the other person understands the consequences – not just the penalty. Be honest, specific and clear. Tips and suggestions An alternative technique is the ‘assertive I’ statement, where the conversation or statement is split into four statements. • ‘I feel ….’ – Clean, non-judgmental, non-accusative, clear and honest message of how you feel. • ‘When you ….’ – Again state facts only, not what you heard or were told. Describe the action or situation that is causing the problem. It is helpful to focus on what the problem is from a personal point of view, e.g. ‘When I do not know that you invited dinners guests, then ….’
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• ‘Because ….’ – If we blame others for our feelings, the other person may react defensively and reject our message. Therefore phrase the statement from a shared and joint problem point of view. ‘We all ….’ • ‘What I’d like/What would make it better ….’ – When we raise an issue with another person by specifying the outcome we prefer, it provides direction for further discussions and does not demand. Example Instead of saying ‘You always arrive late for work and I am sick of it.’ you could say: ‘I feel frustrated when you arrive late for work, because we have lots of work to do and we need to fill you in on what we discussed and therefore lose time when you come late. What I’d like you to do in future is to arrive at least five minutes before the meetings start, so we can all start on time.’ Source: Townsend, Conflict resolution network
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5 Analysis
Many management or consulting interventions are part of strategic interventions in order to prepare for the future and its challenges. It is worth looking at the past and potential future challenges and views. What has changed and what might be different? Figure 63 lists several view points.
Economic challenges of the past
Challenges of the economy in the 21st Century
• Focus on assets
• Knowledge/network based
• Focus on competitors/competitive advantage
• Focus on delivering new value to customers
• Segment the markets
• Achieve low costs while differentiating the offering
• Expand markets/focus on mass
• Choose between low costs or differentiation strategy
• Use technology as an enabler to create value
• Develop entrepreneurial innovation • Assumption that organisation will do as instructed
• Ensure management consistency to support innovation
• Carefully planned to the last detail, all eventualities thought through
• Understanding of the difficulties in changing the way an organisation behaves
• Primarily aimed at increasing shareholder wealth
• Assumption that the organisation wants to learn and improve
• Organisation is seen as a series of business units
• Clear direction; the people will fill in the details • Goals that are meaningful to employees
Figure 63
Past and potential future challenges
It is important to bear in mind that the work and achievements of the past and the present are often a prerequisite for the organisation to be able to move ahead successfully into the future. Hence most of the ‘classic’ interventions, e.g. value chain analysis, are still important despite the fact that they are not the exclusive and preferred choice of tools anymore. However, they can still provide the insight to compete for the future even in the 21st century. In the highly competitive business field today, it is vital to have a clear understanding of the target or scope of the analysis efforts you undertake. As mentioned at the beginning of this book (see chapter 2.2 ‘Categories of tools’), there are many fundamentally different fields, both functionally and technically, in
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which analysis is applied. As depicted in figure 15 on page 42, the author decided to divide the multiple analysis tools into separate functional analysis categories: • Organisational analysis (chapter 5.1) • Technical analysis (system, process, data, technology (chapter 5.2) • Strategic analysis (chapter 5.3) The following sections illustrate and explain essential analysis tools and techniques for these three categories. To get a complete overview note that the following analysis categories below are not covered in this book: • Operations management, including production and manufacturing • Supply chain and logistics • Technology, R&D and innovation • Merger & Acquisition and post-merger-integration • Start-up, restructuring and turn-around • Information and communication • Succession planning • Finance and auditing For more details on the above analysis categories (and the related consulting products and processes) consult the bibliography. As always, the application of the different tools is not as clear-cut in reality as in the book; therefore you are invited to follow the cross-reference links provided in each tool section to combine related tools from ‘neighbouring analysis’ categories. For example, certain organisational tools (e.g. ‘Org structure versus process’) link closely to process analysis tools from the systems analysis category. As another example, it is also useful to combine the process analysis tool with certain strategic tools such as the Value chain analysis. 7 S model The ‘7S’ by McKinsey (figure 63), originally developed by R. Pascale and highlighted by Peters and Watermann in their book ‘In Search of Excellence’ is a good illustration of the fact that most of the above (analysis) categories are co-dependent and inter-related, and so, should not be treated, investigated, analysed or changed in isolation. Although the different chapters will focus on the (hard ‘S’) functions in isolation (systems, process, organisation, working with people/change management, etc.), this is mainly for purposes of simplicity and clarity. The ‘cross-reference’ section in each tool section is intended to provide you
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Soft “S”
Hard “S”
Structure Strategy
System
Skills
Style
Shared values
Staff
Figure 64 7 S model
with the link to related tools and the bigger picture. Keep this in mind when using the book, as you will need to close the gap. Synthesis and analysis Although the chapter heading is called ‘analysis and synthesis’, the author uses only the term ‘analysis’ without ‘synthesis’ for simplicity reasons throughout the book. He is aware that this might in certain cases not be the technically correct terminology. Therefore, a simple definition of the two different terms: Analysis: the process of breaking a complex topic into smaller parts to study the parts and their relations in order to gain a better understanding of it, hence a reasoning from the general to the particular. Synthesis: the process of combining of various components, different ideas and influences into a new unified whole. (Source:wordweb.com and MSN Encarta)
Pitfalls of analysis Without going into detail on the typical pitfalls of analysis, the key to remember is that this book provides tools and techniques and is not a manual on how to do analysis or gather information. Using an analogy of a soccer game, this book provides the soccer equipment, e.g. good soccer shoes to the players, but does not automatically guarantee that the players score many goals. It will hopefully make the game easier, but the game itself will still need to be learned and practiced. Competencies for successful analysis A suggestion of ‘competencies’ that an analyst should be able to demonstrate to perform a successful analysis: • Ability to recognise the interaction and dependency between the collection and analysis stage. • Ability to use creativity.
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• Ability to employ both deductive and inductive investigation logic and reasoning. • Ability to use alternative thinking. • Ability to understand the basic analytical models – and of course the tools in this book . • Be able to make analysis exciting rather than a dry, research approach so that the audience absorbs the work. • As mentioned before, ability to recognise the inevitable existence of gaps and blind spots. • Ability to know when to stop analysing so as to avoid ‘analysis paralysis’.
5.1 Organisational analysis As there is no overall best organisation, all relevant components and aspects of an organisation need to be analysed, understood and designed for the company’s current situation and its future demands and needs. Organisational analysis examines two different aspects of an organisation: the formal and the informal organisation. The formal organisation deals with the grouping of individuals and how those groups and individuals are connected with one another. The informal organisation is about the behaviour of individuals and how to influence and develop this behaviour. I use the two terms ‘Org. Design’ and ‘Org. Development’ to distinguish between the formal and informal organisation. Be aware that other practitioners may use these terms differently. Org. design addresses the formal organization through the 'What': • What are the tasks? • Who is doing what? • What is the structural arrangement of and within the organization? Org. development addresses the informal organization through the 'How': • How are the tasks done? • How do individuals interact with one another? • How does the organization treat these individuals? This chapter on ‘organisational analysis’ mostly looks at the formal organisation. Note that not all tools that you can use for an analysis of the formal organisation are grouped in this chapter. Use the cross-references and the list below. 188
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The following aspects and elements are required to define the formal organisation: • To answer the question: How should we arrange and group the individuals? – High-level overview of all business processes to answer ‘what are the tasks?’ – Use tools such as the Value chain analysis (chapter 5.3.1), Architectural decomposition view (chapter 5.2.1), and Functional decomposition (chapter 5.2.3). – Hierarchical distribution of resources and individuals – Use tools such as the Diamond grading tool (chapter 5.1.2) and Organisational structure (chapter 5.1.1). – Allocation and assignment of resources for tasks – Use tools such as the Org structure versus process tool (chapter 5.1.3). – Core activities and who is doing what? – Use tools such as the Functional decomposition (chapter 5.2.3) or Process analysis (chapter 5.2.4). • To answer the question: How should we connect the groups with one another? – What is the organisational structure – use the Organisational structure tool (chapter 5.1.1). – What is the reporting structure – use the Span of control tool (chapter 5.1.4). • To answer the question: What is the current and required behaviour of the individuals and to describe the informal organisation – use tools such Organisational assessment (chapter 5.1.5) and Powergram (chapter 5.1.6). The typical questions an organisational analysis effort tries to find answers for include: • How well is the organisation supporting the corporate strategy, the enabling business processes, infrastructure and workforce? (Issue of segmentation and differentiation) • How well does the organisation enable the coordination of the above aspects? (Issue of coordination and integration) • What is the organisational structure used for, apart from definition of responsibilities and authority? • What structure and organisational linkages will best support the employees, so they can build the contacts and networks to help them with their work – and how can management stop the organisation getting in people’s way? (Issue of hard structure follows soft people)
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Table 24
Select organisational analysis tools
Category
Tool or technique name
Page
Ease of use
Effectiveness
Organisational analysis
Organisational structure Diamond grading tool Org structure versus process Span of control Organisational assessment Powergram
190 195 196 198 200 201
5.1.1
Organisational structure
We don’t know how to maintain a clear workable structure, while moving more to a style of working which is customer focused and operates with cross-functional teams. Intention (Why and when do I use it?) Charts of organisational structure are important because they are commonly used to communicate information, establish reporting relationships, summarize salary costs, and draw inferences about organisational behaviour. The first step in any organisational analysis is to look at the organisational structure in order to: • understand the company structure, the roles and positions and management hierarchy • understand who is in charge of which department and delegating to whom • understand potential political tensions and power games Purpose (What does it do?) An organisational structure diagram – often called organigram or organgram or org chart – depicts the formal business structure, reporting lines, roles and function of different positions within an organisation and is the basis for further comparisons. By understanding the gap and differences between the official organigram and the business reality in terms of power groups, stakeholder involvement, reporting lines and authorisation procedures, you will get the bigger picture and a sense of the areas of dissonance or where organisation, process and strategy may not be aligned. Instruction (How do I do it?) • Organisation charts show position structures and hierarchies. Prepare a map of the entire organisation first. Show the positions on the top management level and of each subordinate unit’s head for each hierarchical level. 190
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• Conduct interviews and ask line managers for a description of their position and titles, and for their reporting structures. Gather information such as the official names of organisational units, the types and numbers of positions in each unit, and supervisory designations. • Then draw a hierarchical organisational diagram (organigram), stating name, official name of the position and (project) role. • Prepare a map of each organisational level. List the positions that lead the organisation. Then list the subordinate positions that lead the next lower level. • Repeat previous steps as many times as necessary until you arrive at the lowest working level where individual positions are listed. • For the final map, show the position structure, the number of positions at each grade level, and position description numbers. Ensure that non-supervisory positions are ranked in descending order under their team leaders or supervisors. • Count the total number of positions in each unit. If necessary, calculate the supervisor-employee ratio. Then roll up these figures for the successively larger organisational levels. • Use table 25 to compare the different aspects of each organisational structure. Tips and suggestions • Ask the HR department or the secretary of the line manager for an org chart, but do not assume it is correct. • Many organisations are so complex they require more than one chart. The first chart shows the map of the entire organisation. Succeeding charts depict each component of the first chart (such as, e.g. branches, sections, or units within a larger office, division, directorate or bureau). • Typically organisation charts show positions, not employees. Each position should clearly indicate whether it is a part- or fulltime role. This makes it easier to calculate the actual number of individuals required to fill all positions. • An organisation chart is a living document. Every time the organisation grows or changes, the chart should be updated. Always annotate the chart when positions are added, abolished, or reclassified. • Modern automated HR systems can integrate employee names, positions, job numbers, personnel action requests, and other key information. • Organisation charts show in broad terms the level of authority of various positions, their numbers, and their reporting relationships. Organisation charts do not show how work is done. That occurs in the white space on your diagram.
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• Simple companies, typically in an early phase of their life cycles. • Only practical up to a certain company size.
• Allows the owner direct and tight control over the business.
• The only management member often becomes a bottleneck and hinders growths and delays decision making. • Sometimes this person also lacks competences for all the required functions.
Applicable situation and context
Advantage
Limitations
Functional
• Succession issues, as the functional experts don’t develop management competencies. • The structure can restrain growth and expansion and allow silo empires to develop. • Tendency towards short-term focus instead of strategic.
• Relatively low overhead admin costs. Simple control and reporting lines. • Stimulates efficiencies and expert knowledge development.
• Relative stable company and industry context. • SME (small or medium enterprise), company with a few branches, manageable product/service portfolio.
• Centralised and structured around certain core functional areas and silos.
(Source: Thompson, consolidated by Cameron/Green and complemented by the author)
• Grouped around and focused on a central person or function. • No or little splitting of responsibilities. • Patriarchical management style.
Entrepreneur
Type of organisational structure
• Power struggle for resources between divisions. The satellite divisions fight for independence. • Duplication of internal support functions such as finance, HR, IT, etc. • Imbalance regarding size, revenue, etc. between divisions can lead to problems (comparability).
• Assigns clear revenue and profit responsibilities. • Encourages the equal development of specialists and management. • Management can focus on strategic activities. • Divisions can develop an entrepreneurial flair and run the business independently.
• Increasingly bigger and more complex companies, often with an existing logical split through various product groups. • Such companies often grow through acquisitions, which lead to new divisions.
• The divisions are typically profit centres or strategic business units (SBU). • Decentralised structure, independent management and decision-making authority.
Divisional (regional or by product)
Advantages and drawbacks of each type of organisational structure
Characteristic
Table 25
Matrix
• Implementation is difficult as the dual, overlapping responsibilities often lead to conflicts and power struggles between the two lines.
• Good possibility to use resources and competencies. • Supports company growth.
• Big, multinational companies with a wide product range and portfolio, as well as smaller, very competent niche players.
• Duplicate profit centre logic in a matrix structure, which leads to a duplicate control of the areas. • Typically one line (horizontal or vertical) dominates the other line in the matrix. • Overlapping of authorities, responsibilities and decision making leads to systemic conflicts.
Network
• High demand for communication. Limited applicability for big, established structures with hierarchical thinking. • Traditional HR with traditional career and personnel development measures will be difficult.
• Agile, flexible and adaptive. High transparency when properly implemented. • Political power plays surface quickly.
• Companies with a project-based organisation or a strong projectdelivery focus. • More common with start-ups and service organisations.
• No clear allocation and division of functions through structures or hierarchies. • Communication and communication technologies are vital.
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5.1 Organisational analysis
Growth
2 Internal project teams
3 Marketfocused teams
4 Strategic alliances
Figure 65 Typical development phases in terms of orgstructure for companies (Source: Glass)
1 Functional Time
Networks High
Teams Rate of change Hierarchy
Low Low
High
Degree of behavioural change required
Figure 66 Organisational structures linked to an organisation's external and internal situation (Glass)
• Be aware of the sensitive and confidential nature of the information you gather during organisational structure work and ask for permission to communicate. • When reviewing an organisation chart, consider whether the pattern of departmentation is consistent with the mission, technology, or management style of the organisation. • As the markets and environment change and develop, companies also develop and change their organisational structure in the hope of finding the structure that best suits their business. Examine (using figure 65) in which of the organisational development phases the company is in currently and probe whether the next phase is more appropriate: • Teams have an important role to play, as do networks and bureaucratic hierarchies. The key is to understand and establish which is most appropriate to a particular situation. Use the chart depicted in figure 66 to deepen your understanding for your organisational analysis and the use of the tools in this section. It shows which organisational ‘arrangement’ is most appropriate by showing the use in relation to the rate of change in an organisation’s operat193
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ing environment and the existing organisational capability to learn and respond (source: Glass). For stable, repetitive and controllable activities, a traditional hierarchy is probably the most efficient structure; rapid change and adaptation might require an interactive team or network set-up instead. Figure 67 displays examples of organisational structures.
Divisional structure grouped by customer, product, region or distribution
Functional structure MD
Production
Marketing
MD
Sales
Finance
HR
White appliances
High voltage technology
Power stations
Communications
Business Services
Finance
Finance
Finance/ Sales
Finance
Prod.
Prod.
Engineer.
Prod.
Sales
R&D
R&D
R&D
Services
Marketing
Sales
Sales
Sales Marketing
IT
Marketing
Network structure
Team or project based or matrix structure
MD Country, Project or Product A
Country, Project or Product B
Country, Project or Product C
Sales
Western Europe Sales
Eastern Europe Sales
Product
IT Executive committee Marketing
Marketing R&D
Finance ...
Finance HR
Special projects
Figure 67 Typical organisational structures
Cross-reference to related tools in this book Span of control (chapter 5.1.4), Life cycle (chapter 5.3.4), Project communication plan (chapter 7.11) – the maturity level of the organisation influences what might be the ideal organisational structure. Source: Thompson, Pugh
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5.1.2
Diamond grading tool
Intention (Why and when do I use it?) The diamond grading tool is best used once you have completed defining the core processes, the roles, responsibilities and the organisational structure. This tool helps you estimate the number of employees and how they are ‘distributed’ across the organisation’s hierarchy levels. Purpose (What does it do?) The diagram in a pyramid or diamond shape (figure 68) represents how the workforce and employees are distributed across the organisational structure and the core areas. The salary grades are the horizontal lines in the diagram. The diagram can also illustrate where the company is potentially over- or understaffed. A salary grade consists of a group of roughly similar difficulty levels or required competences in terms of knowledge, expertise, experience and management responsibilities within a salary bandwidth. Instruction (How do I do it?) • Use the HR department or alternative sources to determine the upper and lower salary levels of each salary grade as well as of each known job profile/role. • The Process analysis (chapter 5.2.4) should provide you with a useful and rough role description. Use the role/job description to derive the job types/ roles/profiles. Note that one job can consist of several roles. • Group similar applicable jobs into the same salary grade. Bigger companies tend to have between 15 and 21 salary grades. • Determine a relevant average salary for each grade. • Use the process model to inform you where and how to distribute the employees and assign them to the relevant salary grades based on their job types/profiles. If required, you can vary the salary within the upper and lower levels of each salary grade group. • Use the diamond grading tool concept according to figure 68 to allocate the employees to the salary grades. The horizontal lines separate the salary grades. The width of the diamond represents the number of people. From the top of the diamond, the number of employees increases per salary grade up, or rather down, to a certain level. Below that level, the number of employees per salary grade decreases. • Use a table and spreadsheet calculation software to calculate the resulting salary costs per grade and the total potential salary bill.
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Number of salary grades
Number of employees
Figure 68 Conceptual display of the diamond grading tool
• To further fine-tune the model, you could use the Span of control tool (chapter 5.1.4) to adjust superiors and subordinates’ reporting ratios within and across the salary grades. This might have an influence on the number of employees in each grade. Cross-reference to related tools in this book Span of control (chapter 5.1.4), Process analysis (chapter 5.2.4).
5.1.3
Org structure versus process
Is there a way to identify the misaligned and disjointed processes across the different departments? Intention (Why and when do I use it?) The intention of this tool is to identify and display how the key business processes ‘work their way through’ the organisational structure. A typical example might be a purchase order that starts with customer interaction with the frontoffice at the customer ‘touch points’ (e.g. branch, field agent), and then moves through the communication and interaction channels (e.g. call-centre) to the back-office administration for the resolution of queries, orders or transactions. Purpose (What does it do?) • It combines a process view with an organisational/departmental view and how both are interlinked. Note that the purpose of the tool is not to display the process flow in detail. • It identifies and uncovers ‘hand-over’ and coordination points whenever a process crosses a departmental border. These ‘joints’ are potential areas for delays, bad coordination or communication, and additional costs and interruptions. The tool helps to identify these weak points and make structural and/or procedural changes. 196
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Instruction (How do I do it?) • Identify the key business processes and major process steps. • Map the process steps on an existing organigram, such as in figure 69, or map the process, such as in figure 70.
MD
11
Customer Production
1
Marketing
12
Sales
Finance
Sales force
HR
10
2 3
5
Procurement
Storage
Rejects
Planning
Production
Packaging
Distribution
7
4
8
9
6 Preproduction A
Preproduction B
Team Z
Production B
Figure 69 Follow the numbering that represents the process flow displayed across an organigram
Department A
Department B
Department C
Department D
Figure 70 Process mapping across departmental borders: Why are there separate departments if they all ‘belong’ to the same process?
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Tips and suggestions Build on your previous work, e.g. the Silo view tool (chapter 3.1.19), to get an understanding of the various divisions within an organisation and its key processes. After that, it might be worthwhile to integrate the findings with a value chain analysis tool (chapter 5.3.1). The details of the processes – which are not required here – could be further investigated through a detailed process analysis (chapter 5.2.4). Cross-reference to related tools in this book Silo view tool (chapter 3.1.19), Process analysis (chapter 5.2.4), Value chain analysis (chapter 5.3.1). Source: Ulfers
5.1.4
Span of control
Intention (Why and when do I use it?) The ability of a manager to ‘look after’ his staff is influenced by the structure of the organisation as well as by the pure number of employees reporting to him. The ‘span of control’ tool provides an indicator for this and is often used in conjunction with the organigram tool (chapter 5.1.1). Purpose (What does it do?) An organisation’s span of control ratio is calculated by dividing the total number of non-supervisory employees by the total number of supervisory employees. This ratio is calculated for many organisational levels. The span of control represents the ratio of control and supervision and is an indicator for how hierarchical or flat the organisational structure is as well as the levels of interaction by the manager or supervisor. A ratio of 1:10 and higher suggests that a manager might have less time to interact than in a structure with a ratio of 1:5. Management literature suggests that a structure with a ratio above 1:7 becomes difficult to steer, control and manage, but this obviously also depends on the management style and type of environment. For example, a simple production environment with a more ‘dominant-just-follow-instructions’ management style can handle higher ratios than an environment that is highly dependant on interaction and coordination on many levels, e.g. a marketing department.
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Instruction (How do I do it?) • Use an organigram (or organisational structure chart, chapter 5.1.1) and check the reporting lines and organisation levels that have directive or delegation power. Identify the number of employees per level and position. • Calculate the ratio for all levels – as displayed in table 26 and figure 71
Table 26
Span of control ratio guidelines
Hierarchy level
Span of control ratio Min.
Average
Max.
Board
2
4
7
Directors and chief officers
3
4
8
Group leaders
4
9
11
Team leaders
6
10
20
MD
Span of control 1:5 Production
Marketing
Sales
Finance
Planning
Production
HR
Span of control 1:7 Procurement
Storage
Rejects
Packaging
Span of control 1:4 Span of control 1:13 1:25
Preproduction A
Preproduction B
Team Z
Team
Team
20
25
13
Span of control 1:20 Team
Production B
Production A Team
Distribution
20
Team X
Figure 71
Team y
The span of control should be below 1:8 – in general
Tips and suggestions • Most organisations need a variety of types of position to accomplish the assigned goal. Skills vary by type (specialty) and level (grade). When you review an organigram, compare the types and levels of positions established with the types and levels of skills required to perform the mission or to use available technologies. • When you review an organisation, calculate the ratio and determine if it is consistent with stated management goals.
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Example of an organigram with a ‘span of control’ indicator For example: If one supervisor directs 5 employees, the ratio is 1:5 for the unit (figure 71). If a division includes 5 supervisors and 65 non-supervisory positions, the ratio is 5:65 or 1:13. Use table 26 as a guideline of recommended spans of control ratios, depending on the hierarchical level. Cross-reference to related tools in this book Organisational structure (chapter 5.1.1).
5.1.5
Organisational assessment
Intention (Why and when do I use it?) An organisational assessment is a combination of various tools of differing scope and purpose to obtain a more complete understanding of different angles of the organisation, and usually comprises of: • a climate or attitude survey • an operational audit • a company culture audit • an organisational scan Purpose (What does it do?) • The climate or attitude assessment surveys what employees feel about one or many specific issues, topics, initiatives, and actions. • The operational audit investigates the level of compliance with prescribed and documented policies, procedures, and guidelines. • The company culture audit determines the values, belief systems, and behavioural practices in place throughout the organisation that govern the way people behave towards each other and how they get their work accomplished. • The organisational scan determines the issues in the organisation and establishes strengths, weaknesses, values and practices that operate in the organisation and the level of both horizontal and vertical alignment in the organisation on these issues. Instruction (How do I do it?) • For the climate or attitude survey, use e.g. the climate assessment tool (chapter 3.2.12) or a similar survey to collect data related to ‘what it feels like to work in this organisation’.
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• For the operational scan, gather data on both the actual processes and procedures that are being followed and those that are specified and prescribed in manuals, handbooks, rules and regulations. Assess the level of variance to ascertain the level of compliance. • For the culture audit, identify all behavioural aspects of how and why the organisation operates as it does to achieve its results. Target either a specific department or the whole organisation. • The organisational scan is a very broad gathering of data to identify further processes and procedures, but also issues around individuals or groups in order to check the level of alignment of all elements in the organisational system. Cross-reference to related tools in this book Climate assessment (structured) (chapter 3.2.12). Source: Silberman
5.1.6
Powergram
Intention (Why and when do I use it?) Powergrams are a graphical representation of the power dynamics and power positions within an organisation and show the power structure, which might be different to the current organisational structure; this might provide useful insights about the organisation. Power is part of each organisation and refers to various methods available to leaders to achieve alignment. An organisational structure provides the framework for this alignment of power, authority and responsibility, and the powergram tools makes the informal framework clear. Note that the stakeholder-related tools in the category ‘Definition of a situation/problem’ (chapter 3.1) and the ‘Project environment analysis’ (chapter 7.8) are typically used in a project context, whilst the powergram is more likely to be used in a ‘static’ organisational context. Feel free to use whatever tool fits your purpose and context. Why not use the powergram in a project context? Purpose (What does it do?) Whenever people work together, they form groups, whether formal or informal. Relationships amongst members of the group may be positive or negative ones. There will be channels of influence, communication, power, and patterns that regulate the group’s interaction. Powergrams display exactly those relationships amongst members. Powergrams represent the levels of power by circles (the larger
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the circle, the more the power a person possesses). The lengths and breadths of lines between the circles represent how close or strong the relationship between the two members (circles) is. Instruction (How do I do it?) • Orientate yourself on an organisational structure chart (organigram) and identify the formal lines of reporting and authority. • Identify the members or stakeholders you like to include in your investigation (use the stakeholder map tool chapter 3.1.13). You can either stick to the given organigram and add the powergram symbols to it, or develop a separate powergram that allows for more clarity. • Use the symbols from figure 72 to draw the powergram. In the example of a powergram in figure 73 the power and relations between six persons are shown: AB = close, positive and strong, AF = negative distant with major power imbalance similar to CD, ABC appear to have formed an alliance similar to FED with E forming a central facilitator role with more power than F or D, but not as much as A or C. E might be a crucial and important person for A and C to be in good relationship with despite the animosity towards E’s close friends F and D. Note that the term ‘power’ does not have a negative notion.
A circle denotes a person
The larger the circle, the more power the person possesses
A line denotes a positive relationship The heavier the line, the stronger the relationship A strike through a line means a negative relationship A heavy line with a strike through it means a highly charged negative relationship with two strongly opposing individulas
The shorter the line, the closer the relationship, often denoting frequent contact
The longer the line, the more distant the relationship
This illustrates a strong positive relationship with one member much more powerful than the other (i.e. boss and secretary)
Figure 72 Typical symbols used in powergrams 202
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A
B F E C
D
Figure 73
Powergram
Figure 74 shows a simpler version of a powergram, depicting influences persons have on each other. This kind of diagram may be well suited to display the interrelations in a project.
Superior manager
+-
Steering committee
+
Project manager
+-
-
+
-
+-
Project team members
Sponsor
+Users
+-
Figure 74 In a project context: ‘What kind of influence do you as a project manager possess on different stakeholders?’
Tips and suggestions A simple, manual variation of this tool, which you could use in a workshop situation to sketch the political power struggle, is the following: Connect two stakeholders on a flip chart with a single line. Use a double line for positive relationships and cross the single line for negative relationships. This allows you to display relatively sensitive political constellations in a harmless manner in public. Cross-reference to related tools in this book All stakeholder tools in the category ‘Definition of a situation/problem’ (chapter 3.1), ‘Project environment analysis’ (chapter 7.8). Source: Bill/Worth 203
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5.2 Technical analysis (system, process, data, technology) The technical or systems analysis focuses on systems, (business) processes, data relationships and/or technology. As opposed to the strategic analysis in chapter 5.3, this type of analysis is more concrete and tangible. The tools deal mainly with aspects of the present or near future and do often require a high level of technical skill or experience. Table 27
Select technical analysis tools
Category
Tool or technique name
Page
Ease of use
Effectiveness
Technical analysis
Architectural decomposition view Logical data relationship Functional decomposition Process analysis Entity relationship diagram Technology and systems landscape Requirements catalogue Logical and functional system modelling
204 206 208 209 213 215 217 219
5.2.1
Architectural decomposition view
Intention (Why and when do I use it?) This tool is best used when you want to display an organisation and its multiple process/product/system/etc. layers and areas. It allows a view of the bigger picture as well as the areas of scope in which to zoom in as part of defining a project scope. Purpose (What does it do?) It splits up the organisation across multiple layers (process, structure, product, technology, organisation, etc.) Instruction (How do I do it?) • Collect relevant information on the major systems, processes, organisational areas, products and services – whatever is relevant and significant should be displayed on the diagram. Speak to the strategy or system architecture people of the organisation. • Decide how many and which levels you want to display. Not all levels are always required on the diagram.
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5.2 Technical analysis (system, process, data, technology)
Corporate layer
Communication Medium Product/Service layer
Interaction or Distribution Channel
Face to face Web Phone
Branch network Web Call centre
Type of services/Product Product A Product B Service C
Area C
Business process/ system layer
Area B Area A
Back office
“Silo”
Firewall Technology layer
Figure 75
IVR
Server
PABX
Client Server Mainframe Imaging CRM Customer DB Tracking system
Architectural decomposition with four layers
• Using the template, stack related elements on top of each other, e.g.: Which department (corporate level) offers what product/service and therefore handles what process? What is the key system used to support this? • Focus on the key relevant components of each level to populate the different layers of the diagram (see figure 75). Tips and suggestions • It is a complex tool with the potential of including too much information on the same view/page, thereby confusing the viewer. • Stick to the main aspects. There are other diagrams and views to represent the detail – Follow ‘KISS’ – ‘Keep It Simple, Stupid’. • The typical target for this kind of diagram is at top-management level – so pitch your language at that level. • An alternative systems or IT-orientated sub-division of the enterprise architecture is by business (process, functions and activities), data, applications and technology. Many IT departments have created a special discipline for the technical architecture as well as for other areas. This discipline is called enterprise architecture (EA). Known models and frameworks for this discipline are Zachmann, TOGAF, NIST, etc. Cross-reference to related tools in this book Context diagram tool (chapter 3.1.18). Source: Conceptual development by author 205
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5.2.2
Logical data relationship
Intention (Why and when do I use it?) • To show the information and the relationships between the information stored in a system. • To identify these relationships is important because the ability to function and the system’s flexibility to cater for change is dependent on them. • In order to be able to report and provide relevant information to management, which can be extracted from the system (in terms of reports) – this capability is dependent on the design of the data structure, hence this diagram. Purpose (What does it do?) A data model describes the various entities for which information can be stored in the system, and the relationships between them. Instruction (How do I do it?) • Identify all entities for which data or information is stored. (It is important to note that these entities are not necessarily those identified in the process or context or ERD models, e.g. as these are either external parties or system related parts that interact with but are not part of the system.) The entities we are talking about here are groupings of data that are inherent in the system. For example, ‘Customer, Account, Product, Bank, Policy, etc.’ are all entities that have a relationship with each other via these or other entities. • The next step is to identify all attributes for each entity. Attributes are the fields that describe an entity. For example, ‘customer’ could have the attributes ‘name, address, postal code, credit limit, etc.’ • Assess the three types of relationship. A relationship between two entities can be one-to-many (e.g., a bank can have many branches, but a given branch belongs to only one bank), many-to-many (e.g., a query can have many related documents, and a specific document can be related to more than one query) or one-to-one (e.g., each customer can have only one unique login, and each login can relate to only one customer). In a diagram, the entity with ‘many’ – as the relationship indicator – has an arrow shape connector line connected to it. See the example in figure 76. • Assign a primary key – a technical term – to every entity plus at least one other attribute. A primary key is a unique identifier of a set of data only used for this entity, e.g. customer number, ID number, article number, etc. • For example, in figure 76 the entities are ‘account’ and ‘customer’. It is a ‘one (customer) to many (accounts)’ relationship. The attributes are not displayed in the diagram, but have to be listed and described in an attached table (data dictionary) together with the diagram. So, one customer has one or many ac206
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is related to
Product group
Product type has is related to
Customer
Product
are owned by
has
has
has
Account is related to
Bank
relates to
has
Service request
Figure 76 Logical data model
counts, many accounts are related to one product, or one account is related to many service requests. Tips and suggestions • Get the database-modelling experts to help you. This tool requires technical and systems skills and training. Try it and define the basic structure and data groups. This is a logical rather than a technical exercise. • Compile a data dictionary, which consists of a listing of the entities and the definition for each, to accompany the data model. The dictionary describes each entity with its attributes, or the information held about that entity. It contains at least the attribute name, a description, and the type of field, be it numeric, text, date, etc. • Logical data models are often used to discuss business rules (Who is allowed to do what?) and access control aspects (Who is allowed to see and use what data?). The ‘CRUD’ logic is often used to distinguish between the four different rights – create, read, update, delete, represented by the four letters CRUD. – C = Create – sometimes called ‘add’ – the right to create new data entries. This right includes the R and U rights. – R = Read – sometimes also called ‘view’ – the right to see data but no other right. Read-only. – U = Update – sometimes called ‘edit’ – the right to change existing data entries but no right to delete (D) or create new entries (C). – D = Delete – the right to delete data. This right includes the C right. The rights hierarchy is as follows: D>C>U>R. Source: Swanepoel 207
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5.2.3
Functional decomposition
Intention (Why and when do I use it?) This tool is useful when you want to define the high level processes and/or functionality in order to summarise the functions of an organisation (basic high level output and processes) as well as a potential project scope. It helps to represent the current and desired future system functionality (requirements, features, capabilities). Purpose (What does it do?) • The tool displays the components within different functions and purposes of entities/areas. It determines the entities that interact with the system following certain processes. • It could also be used to focus on the user perspective to ensure that the ‘right’ problem is solved. Instruction (How do I do it?) • Identify actors, which are entities. Entities can be individuals, departments, organisations, other systems, etc. that perform a role in respect of the system under investigation. • Define ‘use cases’. A ‘use case’ represents a set of capabilities or functionalities that the system can or has to perform. The system is seen as a black box, with only the visible functionality described. • The term ‘uses’ stands for a relationship between use cases, where one use case (from which the arrow stems) utilises functionality from another use case (into which the arrowhead goes). • Communication is a relationship where there is both input and output of data, typically between an actor and a use case. • One-way communication is a relationship where an actor either only provides input or only receives output. Tips and suggestions • Only decompose as far as is useful in achieving the aims of use case modelling: capturing the high-level user functional requirements for the purpose of, e.g. scoping a project. • Use case models require specific skills and knowledge in the ‘unified modelling language’ (UML), – it is a technical system analysis tool. • In order to provide sufficient information about the process and function defined in the use case without overloading the diagram, provide a table with each use case model containing the following headings: title of use case, pro208
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cess goal, summary, trigger, actor(s), assumptions, constraints, courses of action, interfaces, areas of improvement, questions, owner of business process. In the example in figure 77 a simple use case diagram – for a car rental business – is shown. Note that, in this case, one arrow is bidirectional. One of the actors (sales person) uses the three use cases (manage, maintain and sell), while the other actor (customer) only uses one.
Car rental business
Sell rental car Maintain car
Sales person
Customer Manage rental contract
Figure 77
Use case diagram
Cross-reference to related tools in this book Process analysis (Chapter 5.2.4).
5.2.4
Process analysis
Intention (Why and when do I use it?) • When you want to understand what the organisation is doing and what the sequence of activities is. • To identify and document business/systems processes for business analysis, business improvement, training or system development purposes. Purpose (What does it do?) • Process analysis uses workflow diagrams to document the current (As-Is) or intended future (To-Be) sequence of activities (process steps). • Process analysis is often a key analysis activity as it facilitates understanding of a business on an operational level and is the starting point for business improvements.
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• The level of detail of the process analysis documentation can vary: high-level business process for an overview, sub-level for more detail, task/procedural level for details/exceptions, instructions etc. Instruction (How do I do it?) • Use information gathering tools from chapter 3.2 and, e.g. conduct an interview or a process workshop to gather information and document the process flow. • Process modelling is conducted both diagrammatically and by detailed process descriptions using a table to document information for each workflow/process. • Use a big flip-chart paper and a pencil to capture every piece of information you come across in a first draft. Outline the high level process steps and drill down into the detail when you get more information. Record the findings and facts in a table. Use the headings mentioned below in the section ‘template for table headings for process documentation’. • Map all process steps and indicate separate ‘swimlanes’ for the business area in which the activity takes place or indicate which systems are used to process the information. Each column (‘swimlane’) represents a different department, system or entity, in which an activity takes place. • Document the process steps in boxes and connect the boxes sequentially (-> flow charts) with arrows indicating the flow of activities. Use diamond shapes for decisions steps and indicate the options (yes, no) on the arrows. Phrase the decision statement as a closed question such as the answer can only be ‘yes’ or ‘no’, e.g.: ‘Successfully passed quality test?’ Tips and suggestions • Use the table headings as a checklist during workshops or interviews. • Keep the generic components for process modelling in mind – see figure 78. • Set up templates in your preferred software application (e.g. MS Visio) to standardise the drawing symbols. • There are many ways of drawing process flows; the key is that it is easy to follow and all relevant aspects are covered. 10 commandments of process work 1. Work top-down and bottom-up with regard to level of detail, stakeholder support and process improvements. 2. Be customer focused – the customer is the end user, who is supposed to use and benefit from this process. A customer could well be another division in the same company that is on the receiving end of the process flow. 210
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3. Focus on needs of all user groups and the purpose of the process. 4. Top management must support and drive the analysis in order to overcome inevitable obstacles. 5. Process analysis cannot compensate for poor strategy or products. 6. Work within and across functional and departmental barriers. Use the Silo view tool (chapter 3.1.19) to display the departmental empires during your process analysis. 7. Take the current reward and recognition system into account and change it where necessary. The process and reward systems must be aligned, otherwise they sabotage each other. 8. Communicate and share honestly and openly on all levels in order to prevent rumours about your findings. 9. Use a multi-disciplinary team to cover many perspectives and ensure a universal solution. 10. Aim for the ideal solution, then work back to what is possible. Source: Glass Generic components of process modelling Figure 78 depicts the basic components of every process step and its associated information. Each process step has, e.g. an input resource (e.g. data), a trigger that initiates the process, a goal or purpose, business rules to govern the process, etc. During process modelling, each aspect needs to be investigated, questioned and documented for each and every process step.
Business Rules
Control Quantitative goal
Input
Activity
Trigger Mechanism, supply, resources
Output
Figure 78 Ensure you cover all components displayed in the diagram when doing process modelling
Figure 79 shows an example of a simple swimlane process diagram, displaying the high-level process flow for the rental of a car.
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Example of a simple swimlane process diagram
Customer
Request for rental car
Sales person
Booking system
Car park manager
Enquire about required type of car
No
Check availability System check Available ?
Yes
Book car
Pay invoice
Reserve and invoice car
Collect car
Inform car park manager
Prepare car
Figure 79 Example of a high-level process flow
Template for table headings for process documentation It is recommended that a table accompanies each process model containing additional information that should not be included in the diagram. Use the following headings: Title, traceability, process goal, inputs, outputs, controls (of the process to stop or flow), stakeholders and actor(s), summary, triggers, availability (up time), communication medium, notes, alternative course of action, business rules applied, service level agreements, metrics/numbers performance indicators, lead times, response times, process performance tracking, quality measurements, assumptions, constraints, documents used, glossary terms, current systems involved, security,
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interfaces, areas for improvement, questions, business owner, author/analyst, last updated. Cross-reference to related tools in this book Entity relationship diagram (Chapter 5.2.5).
5.2.5
Entity relationship diagram
Intention (Why and when do I use it?) • The Entity relationship diagram (ERD) is a key tool for any detailed technical or system analysis – although it can also be used to describe the ‘bigger picture’ or context of a project or system scope, as it helps to assess a situation and its dependencies in a similar way to a mind map, but on a more technical system level. • An ERD provides much more detail than a context diagram. Purpose (What does it do?) • An ERD displays the context and identifies relevant entities within the defined boundaries or context, namely other systems, departments and business units. It depicts the data flow between entities and the relationship between the two entities. • The depicted data flow leads to an understanding of the underlying process, therefore an ERD can provide input for a process analysis. Instruction (How do I do it?) • List all entities (and systems) that are part of the defined scope or problem area. • Assess the data and information flow between all entities (and systems). Ask questions like: ‘With what does the system interact/integrate, or ‘What information is passed in the interaction between which entities?’. • Identify ‘source’ and ‘data’ for incoming data, ‘destination’ and ‘data’ for outgoing data. • Link all the entities and systems with their data flows. • Review with relevant stakeholders. Tips and suggestions • If you have done a stakeholder map or black-box diagram beforehand, use these to double check whether you have included all business areas and de-
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partments. Use the black-box diagram to ensure that you are focusing on the correct scope and have not included or excluded entities or systems. These diagrams should already exist as part of a project definition to define the scope of the problem (or project). • It might help the reader and user with the review of the diagram if the entities are numbered in the logical order in which they should be read. Here, the underlying process flow logic becomes relevant again.
Assessor Customer
Request Information/ Documentation
Assessment Result Call Center
Letter of Grant/Decline
Details of Property
Supporting Document Confirmation of Bond
Letter of Grant/Decline
Rating
Core system
Clerks Letter of Grant Letter to finalise bond Loan Supervisor Property Agent
Outstanding Documentation
Grant/Approve Loan
Letter of Grant
Letter of Grant/Decline
Credit Result
Letter of Grant/Decline
Credit Division
Signed Guarantees
Client Files Attorney
Figure 80 ERD
The example in figure 80 displays an ERD for a home loan department. Cross-reference to related tools in this book Black box (chapter 3.1.10), Context diagram tool (chapter 3.1.18), Stakeholder map (chapter 3.1.13). Source: Bassard and Ritter, Swanepoel
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5.2.6
Technology and systems landscape
Intention (Why and when do I use it?) To show a technology and systems ‘landscape’ that combines software, hardware and infrastructure. The technology landscape provides an overview of the technology that e.g. exists currently in a company. Technology landscapes can e.g. depict engineering or machine plant layouts, IT or network structures, communication or security infrastructure – and the relevant essential software for development or implementation and roll-out plans. Purpose (What does it do?) A technology landscape models the technologies and systems used within the context of a project (see figure 81). This will typically include the new or upgraded system and the other current systems with which the new one will need to integrate. This diagram should ideally have different levels of abstraction depending on the level of technical understanding of the audience.
Communication
Front End
Software applications (client )
Call Centre/ Lotus CRM Notes/ Outlook email
Web server
HR application
Active directory
MS Office applications
Accounting server
...
Archive
Project mgt
Graphic Change management advertising applications
Archive
Data warehouse
Lotus Notes servers Lotus Notes DB
AS 400 ‘Mainframe’
External service providers
Credit rating bureau
Figure 81
Knowledge / content management
Office applications
Finance application
Microsoft application servers
...
Intranet MySQL
Inventory application
Support syst ems
Back End
Operating systems and server
Intranet
Core applications
SMS gateway
Fax gateway
Distribution /logistics
Web server
MySQL
Technology and systems landscape
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Instruction (How do I do it?) • Use the context, data and ERD models to get an understanding and knowledge of current systems. • ‘System’ does not necessarily mean computer system; it stands for any kind and type of ‘machinery’ and structure. • For an technology landscape, distinguish between incoming channels, front end/back end applications, support systems and related systems (business intelligence, data mining, intranet, VPN, etc.). Tips and suggestions • Set up templates to standardise the drawing symbols and icons. • A technology landscape may be sufficient to indicate interfaces. If not, then complete an interface definition exercise during which you identify and define the interface requirements, i.e. what kind and type of data gets exchanged between which systems. Add a systems catalogue to the model and a list of all the systems depicted in the landscape together with a brief description of each component. Interface definition (add-on tool) The interface definition is an add-on to a technology landscape and is used in conjunction with the technology landscape in order to fully understand how the proposed system will interact with the existing infrastructure. The tool is broken down into six aspects per interface. • Information required to be passed from one system to another. • The level of detail at which the information is needed. • The data format of the output, or of information passed from one system to another. • The type of connection and performance required, e.g. due to the need for real-time interactions. • The frequency of data exchanges passed from one system to another. • The capabilities and functionalities required by each system in terms of its interface with other systems. Cross-reference to related tools in this book Entity relationship diagram (chapter 5.2.5).
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5.2.7
Requirements catalogue
Intention (Why and when do I use it?) A requirements catalogue is a compilation of (business) requirements for the later specification, design, development and production of a system, machine, application, etc. It provides a complete picture of what the system must be able to do, and how quickly and efficiently it needs to do this in order to provide business value. The requirements catalogue is also used as a reference list against which user acceptance or product specifications can be tested against. It is therefore the key input for the development of test packs and the key output of an analysis phase. Purpose (What does it do?) The requirements catalogue lists all the functional requirements of the system from a business perspective. Each requirement should be able to be referenced back to a section or diagram of the relevant document, so that it may be further explained and understood in the context of the analysis. Instruction (How do I do it?) • Key sources for input into a requirements catalogue are most of the abovementioned analysis tools, e.g. ERD diagram, process flow, and data model, although other sources can also provide valuable input. • List the system functionality implicit in the data model. If an entity exists in the data model, it is implicit that an instance of that entity, with all its attributes, needs to be created. There may also be the need to modify or update an instance of an entity, or to delete it, depending on the type of information stored. If a relationship exists within the data model, an implicit piece of systems functionality would be the ability to create that relationship and update the necessary information as defined by that relationship. The model may also imply the splitting of a logical piece of information that needs to be stored in a separate entity in order to maximise data integrity and avoid redundancy. • List the system functionality as depicted by the process models and interface definitions. Process models highlight the logical processing steps required by the system. For example, the process model may highlight the need for a function that checks whether a customer qualifies for a product or not. Also use procedural documentation or training material to extract functionalities that are required. • The key sentence for a requirements catalogue is that the product/machine/system/etc. possesses ‘the ability to perform, do, move, execute, display...’.
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Table 28
Template of a requirements catalogue
(Business) Requirements catalogue Categories No.
Brief description
Importance L/M/H
Core business or product function 1
Ability to do, perform, execute, display, move etc. …
2
Ability to …
Security Ability to … Financial audit Ability to … System audit Ability to … System control Ability to … System backup and recovery Ability to … Reports, measures Ability to … Performance, SLA (reliability, availability, correctness, completeness) Ability to … Access Ability to … Data protection Ability to … Business architecture (conformity) Ability to … Archiving Ability to …
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Frequency of use
5.2 Technical analysis (system, process, data, technology)
• Group the requirements and functionalities that belong to the same topic into categories. Feel free to create new headings for those categories (see table 28). Talk to end-users, developers, system designers and engineers, and check the applicability of the categorisation logic you use for your table headings. A requirements catalogue usually distinguishes between the core functional and non-functional as well as the technical requirements. The latter are, for example, data protection, security, reporting, performance, etc. Note that the documentation might sometimes be divided into two separate documents for functional and non-functional requirements. • Each requirement can potentially be categorised according to its priority level (high = must have, medium = should have, low = nice to have) for the system to function effectively. Look-and-feel requirements may, for example, be of lower priority than those for checking the integrity of data input into the system. Tips and suggestions Decide on categories to group similar requirements into logical components. Check with the systems people for category logic you have used to ensure that they understand and can use the requirements catalogue. Cross-reference to related tools in this book Typically, you would use the input from the following tools to create and populate the requirements catalogue. Context tool (chapter 3.1.18), Functional decomposition (chapter 5.2.2), Process analysis (chapter 5.2.4), Entity relationship diagram (chapter 5.2.5), Logical data relationship (chapter 5.2.2), Technology landscape (chapter 5.2.6). The logical functions of the Logical and functional modelling tool (chapter 5.2.8) would also be captured in a requirements catalogue.
5.2.8
Logical and functional system modelling
Intention (Why and when do I use it?) The logical and functional system modelling tool is ideal for designing the future functionalities of a system. For simplicity reasons, the author uses the term ‘system’ synonymous as a for any kind of setup or application or infrastructure or machine in this context. Purpose (What does it do?) The tool uses a four-step approach to lead from the current to the future system; it is also a framework for the use of different systems analysis tools. This tool or approach provides an effective and simple guide to ‘how to improve anything’.
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Instruction (How do I do it?) The concept of the tool is that it abstracts the current reality, then – without any restriction from the physical reality – improves and develops the future structure on a logical, conceptual level – before this structure is then taken back ‘down’ into reality. The diagram in figure 82 depicts the four step approach: 1. Start with the current physical system, 2. abstract towards the current logical functions, 3. innovate and define the future functions, and 4. define the future systems physically.
Abstract logical
Abstract logical
s
d
What
What How
How
a
f
Physical
Physical Present
Future
Figure 82 Concept diagram of the logical and functional system modelling tool
Ask the following questions during the four process steps: 1. How (physically) does the current system work? Use tools from chapter 3.2 ‘Information gathering’ or the chapter 5.2.4 ‘Process analysis’ or chapter 5.2.5 ‘Entity relationship diagram’ on a high level to get an understanding of how the system works currently – from a physical point of view. 2. What (logically) are the functions that are performed in the current system? Tools like chapter 5.2.2 ‘Logical data relationship’ or the chapter 5.2.7 ‘Requirements catalogue’ might be useful to explore and define the current and future logical functionalities. – Keep it high-level. 3. What (logically) are the functions that need to be performed by the new system? 4. How (physically) is the new system going to work? During this phase, the logical specification will be translated into the potential physical future – the design of the future. Source: Swanepoel 220
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5.3 Strategic analysis
Category
Tool or technique name
Page
Ease of use
Effectiveness
Strategic analysis
Value chain analysis Critical success factor (CSF) SWOT and TOWS Life cycle 5 Forces Competitor analysis Environmental analysis (PEST) Strategic market group Customer segmentation
222 226 230 237 242 246 250 252 256
Strategic development
Business matrix Product/market mix Strategic development options Strategy matrix
260 264 268 273
Strategic analysis can be divided into an investigation of internal or external aspects and perspectives, followed by the strategic development. The purpose of strategic development is to take the findings from the strategic analysis into account, draw conclusions and develop an approach for an elaborate and systematic action plan. This chapter will start with the strategic analysis tools for the internal and external aspects (although there is obviously not such a clear separation) and continue with the tools and techniques to develop strategies (see figure 83).
Strategic analysis
Focus area of strategic analysis
Strategic development
Capabilities Internal perspective Financials and profit drivers External perspective
Strategic development Industry and competitors
Customer
Figure 83
Strategy work involves strategic analysis and strategic development
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Table 29
Focus areas of strategic analysis tools Focus areas of the strategic analysis tools Customer
Name of the strategic analysis tool
×
Internal perspective
Value chain (chapter 5.3.1)
External perspective
CompetiFinanCapabilitor/Indus- cials/Profit ties try drivers
Critical success factors (chapter 5.3.2) ×
SWOT and TOWS (chapter 5.3.3) Life cycle (chapter 5.3.4)
×
5 Forces (chapter 5.3.5)
×
Environmental analysis (chapter 5.3.7)
×
Customer segmentation (chapter 5.3.9)
×
Business matrix (chapter 5.3.11) Product/market mix (chapter 5.3.12)
×
× ×
×
× ×
×
×
×
Competitor analysis (chapter 5.3.6)
Strategic market group (chapter 5.3.8)
×
Strategic development
×
×
×
×
×
×
×
Strategic development options (chapter 5.3.13)
×
Strategy matrix (chapter 5.3.14)
×
Each strategic analysis tool or technique listed in table 29 addresses at least one of the four focus areas from figure 83: • customers and their needs • competitors and the industry • the profit drivers and financial aspects • current capabilities of the company Strategic development is – as a resulting ‘next step’ to most of the analytical tools – building on the insight from the analysis to develop for the future. Obviously, this framework for strategic analysis is not the only one, but the tools and techniques explained here are generally shared by many other strategic analysis frameworks.
5.3.1
Value chain analysis
Intention (Why and when do I use it?) The value chain analysis provides an understanding of how different stages and activities of a company or an industry interlink, build on each other and where 222
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and how value is created. Each link, e.g. of the production chain, is supposed to add some value to the product or service, hence the name value chain. The tool is useful when trying to understand and identify how a business or industry works and what the vital activities for success and effectiveness are. Value chain analysis is also useful for systematically appraising all the activities a company is currently undertaking and finding out where the costs are and where the profits are being made – and then looking for ways to reduce the costs (potentially outsourcing the task if it is not strategic) and enhance the revenues/profits. Linked to this is the ability to display and control the costs associated with each value-adding step as well as to use the tool for differentiation of the product/service offerings. Other secondary applications or subsets of value chain analysis used in pursuit of competitive strategy analysis are: • Competitor analysis – Analysing a competitor’s cost structure and source of differentiation provides insight for developing strategies. • Customer value analysis – Provides guidance on determining the drivers for customer value and for the concept of life-cycle costing based on the value chain analysis concept. • Company scope – Helps to answer strategic questions on ‘What business are we in?’ and ‘What are we focusing on, what are the value-creating activities?’. The perspective of the scope could be developed into four categories: segment, vertical (upstream/downstream), geographical and industry. • Supply chain management – Better understanding of the company’s bargaining power and other buyers and suppliers’ positions in the same industry open opportunities for potentially mutually beneficial cooperation. • Integration – Value chain analysis helps to understand any investment/divestments into horizontal or vertical integration strategies, e.g. should a printing company buy a pulp and paper business to secure supply instead of a newspaper business. • Strategic cost management – The key word is ‘outsourcing’. Which activities can be managed by an outside service provider more cost effectively? Purpose (What does it do?) Value chain analysis looks at all the stages, from conception of a product through to completion – e.g. development, manufacture, marketing, distribution, and sales. • The value chain analysis separates the vital activities of the industry/company under investigation into the functionally distinct areas (links) and highlights the interfaces and dependencies between them.
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• The tool identifies the activities that are core to the business as well as the support functions, e.g. marketing in a manufacturing environment. Instruction (How do I do it?) • Identify individual value activities – the appropriate degree of disaggregating depends on the economics of the activities and the purposes for which the value chain is being analysed. • Assign the value activities to the categories (or functions) that best represent their contribution to the company. • Identify all primary activities of the company or industry and classify them into the different support and core activity categories, broadly following the process flow, as below: – Inbound logistics (materials purchase, handling, and warehousing) – Operations (machining, manufacturing, production, assembling, testing) – Outbound logistics (warehousing and distribution of finished product) – Marketing and sales (advertising, promotion, pricing, product, placement merchandising, channel selection) – Service (after sales service, rejects, complaints, installations, repair, parts) • Determine the links between activities, then align and group the activities according to their dependencies and chronology. • Once the activities are detailed in the value chain, map costs, returns and players across the value chain, where applicable (cf. figure 85). • Display the results in a diagram similar to that of figure 84. Tips and suggestions • The line between support and core activities is not clear-cut and mainly dependant on the industry and each company. If an activity represents core elements that distinguish the company from others or is vitally important to the business, then it is more likely to be considered a core activity. For example, R&D is a crucial activity for a typical pharmaceutical company, while the IT area is a support function. Looking at a big fashion sport shoe and apparel manufacturer, one would assume that the production and manufacturing is core to their business of producing shoes, although this is questionable, as most of the production is outsourced to Asia. Most of the sport shoe and apparel companies are virtual shells based on R&D, product design and marketing. • The most valuable business improvement opportunities do not result from improving individual functions and departments, but from better linkages between the activities running across the departments and ‘chain links’. By
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focusing attention on the activities that deliver most value to the customer, value chain analysis provides the basis for ensuring that the key linkages are functioning effectively. In order words, too much focus on improving and measuring all the individual parts of the value chain and process steps can result in too much local optimisation with the consequence of poor performance of the overall process, e.g. reducing stock can reduce financial costs but will affect delivery, reliability, etc. • Record the costs of each activity and the value it provides to the customer in order to see whether there is an imbalance and whether the costs of that activity can be justified. The same applies to the control of the support activity costs. Both are frequent areas targeted for improvement initiatives in companies. Keep in mind that, beyond a certain level, cost reduction has a detrimental impact on the value. • Improvements need not to come only from within the organisation. You can achieve considerable influence by linking value chains to suppliers, buyers or customers. Therefore, the value chain analysis does not stop at the company borders. A variation of this view is the industry value chain that can cross one or many industries, e.g. forestry, pulp and paper, printing, publishing, etc. • Use the value chain analysis to develop differentiation opportunities. Do not restrict your search to looking to differentiate the final product, but choose other parts of the value chain as a source of differentiation, e.g. car manufacturers that offer car-financing services as part of their product/service portfolio. • Ask yourself the following questions: What are the key shifts within the industry (backwards or forwards along the value chain)? Why are competitors targeting the specific sections of the value chain? Is the industry value chain changing? Example of a conceptual value chain Pre-acquisition
Core activities
Support activities
Acquisition
Purchasing and inbound logistics
Execution
Operations
Post-execution
Outbound logistics
Marketing and sales
Services
Infrastructure (General management, accounting, finance, strategic planning) Margin Human Resource management (recruiting, development, training, retention)
Technology (R&D, product and process improvement, IT and communication systems)
Procurement (purchasing of raw materials, supplies and services)
Figure 84 A classic (conceptual) value chain that displays the typical support and core functions 225
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Example of a manufacturing value chain Purchasing (22%)
Logistics and storage (3%)
Manufacturing (25%)
Assembly (15%)
Quality control (2%)
Marketing (3%)
Sales (10%)
Distribution (5%)
IT (5%) HR (4%) Finance (6%)
Figure 85 The percentages in each value chain block could represent cost or value contributed to the final product
Cross-reference to related tools in this book Critical success factor (CSF) (chapter 5.3.2), Org structure versus process (chapter 5.1.3), Competitor analysis (chapter 5.3.6), Process analysis (chapter 5.2.4). Source: Michael E. Porter (the originator of the value chain approach, Competitive Advantage 1985), Fleischer, Hax, Wheelen
5.3.2
Critical success factor (CSF)
Intention (Why and when do I use it?) This tool, based on Michael Porter, is the underpinning for many other models and tools in the strategy field. It provides the basic understanding of a company and its performance. The tool provides direction for comprehensive analysis by highlighting key strengths and capabilities. It provides a template for the comparison of business units, companies, and even industries, and helps to identify the relative strengths of a company itself. The knowledge of the CSF is crucial in most studies of competitive strategies – the skill lies in identifying the appropriate CSFs. Distinguish between success factors that are internal (= controllable) and external (= mainly not controllable by the company). The CSF tool mainly looks at internal, hence controllable factors. Tools like the 5 Forces, and Environmental analysis (PEST) investigate external success factors amongst other things. The Business matrix (chapter 5.3.11) compares the internal success factors with the external industry success factors. Purpose (What does it do?) This tool identifies and compares the basic and essential competencies (success factors) a company must be able to perform, manage and control in order to survive in its industry. For example, an insurance company must be able to under226
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write risk and perform actuarial activities, although this does not guarantee its survival. In order to distinguish itself, a company must be able to perform relevant success factors relatively ‘better’ (e.g. cheaper, faster, more reliably, more enjoyably, with better reputation, etc.) than other companies in the industry. This ensures the ‘edge’ – the distinct advantage a company has to out-compete others and therefore to survive. The CSF tool uses a matrix to display, score and rank the relative performance for the business or segment against each critical success factor (CSF). Other terms for ‘critical success factors’ are competitive variables, company competencies, company profile categories, distinctive competency, key business drivers, key success factors, core competencies, core capabilities. Instruction (How do I do it?) • Determining CSFs requires a thorough understanding of a business or industry, and therefore draws on many analytical insights and sources for input. • Identify the critical success factors (CSF): ‘What do we need to do well to win the business?’ Use the information gathering tools in section 3.2. • Relevant issues: How do customers buy, and what’s important to them in the decision making process? Who’s successful in the business or analytic segment, and why? What are the trends within the business or segment and why? • Ensure that you have a clear understanding of the market segment(s) and customer segment(s) as the CSF might vary depending on the segments, and the CSF analysis will be too bland and generic if your focus is too wide. • Take a broad view of the relative competencies and ‘analyse’ from a customer perspective. It is therefore important to take into account both, facts and perceptions of CSF/competencies. Typical categories of critical success factors – which need to be detailed further in each case – are: – Marketing (branding and image, corporate identity, market research capability, etc.) – Management (managerial talent, style, leadership, motivation, competency, etc.) – Technology (access to technology, speed of technological change, R&D expertise, innovation ability, etc.) – Human Resources (attract new employees, develop employees and their skills, retain employees, general attractiveness as an employer, etc.) – Product/services (scale of depths of product/service range, after-sales-service, quality, market share, sales force, etc.)
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– Operations (quality, reliability, time to market, speed of delivery, cost effectiveness, distribution network, etc.) – Finance Establish which CSFs are performed within the industry average and which are ‘very strong’ and so potentially represent a competitive advantage. These are the pillars of success for the company. Tips and suggestions • The important insights come from understanding what is key to success in the company, industry or segment – the matrix is simply a mechanism to display the output. • If rigorously applied, the CSF clarifies which capabilities or skills companies need to compete successfully; hence it provides a structured, concise technique for comparing competitors. • You could rank and score the CSF relative to others, therefore you would need to give each CSF a weighting reflecting its relative importance (this is a nontrivial task), then score each competitor against each critical success factor (document the rationale for each score) and add up the total scores for each competitor. Convert the total for each competitor into a percentage of the perfect (maximum achievable) score. The results indicate the relative performance of each competitor. The above steps are detailed in the Utility analysis tool (chapter 6.10) and serve to quantify the comparison.
Table 30
Example of a comparison of Critical success factors (CSFs) in table format Companies A
Critical success factors
–
+
B ++
–
+
C ++
–
Image
Access to finances
Regional networks
Cost competitiveness
Level of technology
Service and maintenance
Systems integration Country-specific features
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–
+
++
++
Knowledge transfer
+
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5.3 Strategic analysis
Hotel company „XXX“
Average two star hotel’s value curve
Figure 86
Price
Silence
Hygiene
Bed comfort
Furniture and amenities
24h Reception
Room size
Lounges
Architecture
Restaurant
Average one star hotel’s value curve
The comparison of CSFs may result in highly valuable information
• Focus on drawing up the correct key success factors – if you decide to score it, choose a simple scale for weighting criteria, e.g. very strong, strong, industry average, weak, very weak. • Recognise that the work largely involves quantifying judgements. • Where possible, try to obtain quantitative data on each competitor’s performance against each key success factor. Example of a comparison of CSFs and the distinct competitive advantage of a company Table 30 displays a comparison of CSFs. The hotel company ‘XYZ’ outperforms its competitors in certain success factors, hence has a ‘competitive advantage’ in these areas. Cross-reference to related tools in this book The CSFs should be the logical outcome of Environmental analysis (PEST) (chapter 5.3.7), and 5 Forces (chapter 5.3.5). Use the Polarities tool (chapter 6.5) to display the results. The CSF provides input for the SWOT and TOWS (chapter 5.3.3) and Competitor analysis (chapter 5.3.6). Source: Hax, Fleischer, Wheeler, Elkin
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5.3.3
SWOT and TOWS
Intention (Why and when do I use it?) SWOT (or TOWS) is an acronym for strengths, weaknesses, opportunities, and threats. A SWOT analysis is used to assess the fit between an organisation’s strategy, its current internal capabilities (strengths and weaknesses), and the future external possibilities (opportunities and threats). SWOT is one of the earliest strategy models and is, together with the BSG matrix, the most commonly known strategic analysis tool. It is still a simple and effective tool for quickly laying out the main features of a situation, whether personal or corporate situation. Beyond the analytical value (basic directions for structuring strategic analysis), the facilitation and communication aspects of this tool may be even more beneficial than the strategic insight it provides. This is the classic application of SWOT. TOWS is the extension of SWOT and provides a structured process to develop strategic development options. SWOT therefore focuses on the analysis, while TOWS focuses on developing strategic options for the four different scenarios of the SWOT matrix. TOWS can be used to develop strategies for the four different scenarios of the SWOT chart. See the section TOWS below for details. Purpose (What does it do?) • It forces you to look at all dimensions: present versus future, internal versus external, the good versus the bad (figure 88). This helps to broaden your horizon. Strengths are those factors that make an organisation more competitive, they are resources or capabilities that the organisation holds and that can be used effectively to achieve its performance objectives. Weaknesses are limitations, faults, or defects of the organisation that will keep it from achieving its goals. It is what an organisation does poorly or where it has inferior capabilities or resources in comparison to its competitors. Opportunities include any favourable current or prospective situation in the organisation’s environment, such as a trend, change, or overlooked need that supports the demand for a product or service. Threats include any unfavourable situation, trend or impending change in an organisation’s environment that is currently or potentially damaging or threatening to its ability to compete. • A SWOT analysis provides a good summary and clear consolidated illustration of the analytical findings and issues identified through other forms of analysis (see cross-references). • It derives insight into a company’s competitive position, but it must be compared to how industries create value, e.g. what the industry CSFs are. 230
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• SWOT does not provide you with answers; it organises information as the basis for developing strategies. • TOWS illustrates how the external opportunities and threats can be matched with the company’s internal strengths and weaknesses to result in four sets of possible strategic alternatives. Instruction (How do I do it?) The complete process consists of 4 steps. You can either ‘only’ do the classic SWOT step or then continue with the following TOWS steps. See figure 87. 1. Classic SWOT analysis. 2. TOWS analysis – verify if the criteria and results of the SWOT analysis warrant further strategic development efforts. 3. Use the TOWS matrix to combine the four strategic perspectives – combine strengths with opportunities, strengths with weaknesses, etc. 4. In the fourth and final step, you review the results of the conceptual four combinations and then create feasible and applicable strategic development options, using the previous step as a discussion base.
1
2
3
4 Presence
Strengths
Weaknesses
H
H Target zone
Ability to exploit
Strength
Target zone
Ability to address and restore
External factors
Weakness
L
Presence
Actual value to the business
L
H
Actual impact (risk) to the business
S
W
O
T
Threats
Opportunities
List external opportunities
Threats
H
H Future
Target zone
Ability to potentially develop and exploit
L
H Potential value to the business
Figure 87
L
List internal weaknesses
SO strategies use strengths to take advantage of opportunities
WO strategies take advantage of opportunities by overcoming weaknesses
ST strategies use strengths to avoid threats
WT strategies minimise weaknesses and avoid threats
Threats
List external threats
Target zone
Ability to potentially develop and exploit
Weaknesses
List internal strengths
Opportunities
H
Future Opportunities
Internal factors
Strengths
?!
H
Potential risk to the business
SWOT and TOWS – the 4 process steps
• Start with the first step and define what information should be collected and who should be asked to do this. Identify competent stakeholders to gather information from, which is mostly face-to-face or using questionnaires, but also rely on findings from related analytical tools and the information gathering section 3.2. • The SWOT matrix consists of four quadrants: current internal strengths and weaknesses and future external threats and opportunities (see figure 88). • When investigating ‘opportunities/threats’ in the industry, focus particularly on competitors’ moves (past/current/forecasted).
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Strengths
Weaknesses
Internal focus and assessment
Current status
Opportunities
Threats
External focus and assessment
Future
Figure 88 SWOT matrix – each quadrant has a different focus
Strengths • • • •
What are you good at? What new skills does the org. have? What can you do that others can’t? How can you repeat a recent success? • What makes you unique? • Why do your customers come to you?
Weaknesses • • • •
What are you not good at? What skills does the org. lack? What can others do better than you? What recent failures have you had? Why? • Which customer groups are you not fully satisfying? • What customers have you lost recently? Why?
Opportunities • Have there been any changes in the market in your favour? • What new products/services could you offer? • Which new customer groups could you reach? • How could you make yourself unique? • How could your organisation look in 4 to 6 years?
Threats • Have there been any changes in the market which disadvantage you? • What are your competitors doing? • Are your customers’ needs changing in relation to your interests? • Are there any political or economic changes which can harm you? • Is there anything that threatens the existence of the org.?
Figure 89 Typical questions in a SWOT analysis
• Prioritise each element, after validation with industry experts, into greatest strengths and opportunities, most important weaknesses and threats (see figure 90 as an example). • Find the right questions to ask when developing a SWOT – typical questions are listed in figure 89. More questions are given in the Checklist below.
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Strengths
Weaknesses
• Strong brand name • Global R&D capabilities • Long tradition and history
• High production costs • Weak overall market position • Poor internal organisation
Opportunities
Threats
• Growing Asian markets • Diversification into service • Several patents pending approval
Figure 90
• Competition in Asia • Local stagnation
Example of a completed SWOT chart
Strengths
Weaknesses
H
H Target zone
Ability to exploit
L Actual value to the business
Target zone
Ability to address and restore
L
H
Actual impact (risk) to the business
S
W
O
T
Opportunities
Threats
H
H Target zone
Ability to potentially develop and exploit
L
Target zone
Ability to potentially develop and exploit
H Potential value to the business
Figure 91
H
L
H
Potential risk to the business
The TOWS structure for the testing of your SWOT results
• The above-mentioned TOWS process step starts at this point. Use figure 91 and test each result from your SWOT analysis against the criteria depicted in the diagram. For example, test the strengths aspects against the two criteria ‘ability to exploit’ and ‘value for the business’. Each one that rates as ‘high’, is then worth considering as a key element for the next process step. • In the following third step, use the results and arguments that have surpassed the TOWS evaluation criteria and use them to create strategic development options. Use the TOWS concept in figure 92 and combine the company inter-
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nal strengths and weaknesses with the external threats and opportunities to create four different strategic directions. For example, by moving the company away from threats, or matching the company’s strengths with opportunities, or using divestment or bolstering to protect it against weaknesses. At this stage, focus on almost mechanically combining and creating the four strategic directions. Don’t evaluate the combinations yet; this is reserved for the fourth and final process step.
Presence
External factors
Internal factors
Strengths
Weaknesses
List internal strengths
List internal weaknesses
SO strategies Use strengths to take advantage of opportunities
WO strategies Take advantage of opportunities by overcoming weaknesses
ST strategies Use strengths to avoid threats
WT strategies Minimise weaknesses and avoid threats
Opportunities
List external opportunities
Future
Threats
List external threats
Figure 92
The TOWS chart displays the four strategic options
– SO – Internal strengths matched with external opportunities This is the ideal match as it represents the best fit between the available resources and the opportunities. The strategy would be to protect the internal strengths by finding a unique combination of resources to achieve a competitive advantage or to reinforce these resources by linking to an established competitive advantage. This strategy might include the use of the strengths which link up with the external opportunities. – WO – Internal weakness relative to external opportunities The general strategy would be to take advantage of opportunities by overcoming weaknesses through the best trade-off between investment that turns a weakness into the strengths required to exploit the opportunity, or to abandon the opportunity to rivals. – ST – Internal strengths matched by external threats One strategic option might be to transform the external threats into opportunities by developing the competitive advantages to match the threat. Alternatively, the company might choose to avoid the threats and focus instead on more promising opportunities in other quadrants. 234
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– WT – Internal weaknesses relative to external threats This is the worst possible position and therefore the one to avoid. WT strategies are mostly defensive and primarily intended to minimise weaknesses and avoid impacts of threats in the future. If the survival of the company is at stake, a proactive strategy might be the only option. Divestment might be another option to focus instead on more promising quadrants, although possibilities should not be dismissed too early. • In the fourth and final step, review the resulting combinations. Ask yourself if the resulting options make sense. Which ones could you develop and refine even further to create a more feasible and realistic option for strategic development? Checklist: More questions you might want to ask Financial (Strengths and weaknesses) What is the cash/profit performance of the business? How sensitive is the business to a change in the level of demand? What are the levels of fixed and variable costs? At what level of activity does the business fail to break-even (cover its costs)? How well informed is the management team about the financial position of the business? How relevant and accurate is the financial information that is produced? Are the financial systems and controls in operation adequate? How well prepared/accurate are the business plans/budget and forecasts? Management and staff (Strengths and weaknesses) What is the general level of managers’ skills, their levels of expertise, drive and energy? What is the leader/owner’s philosophy – why are they in the business? What is the business strategy and plan? What is the cash/profit performance of the business? How well are people motivated and rewarded? How good are team relationships? Infrastructure, equipment, facilities (Strengths and weaknesses) What is the current state of the plant, workshop equipment, handling equipment? What is the replacement policy – and is the policy actively implemented? How well used are the facilities? What is the level of output quality achieved? What is the condition of the premises and how suitable are they for the present/future needs? Infrastructure, equipment, facilities (Strengths and weaknesses) What levels of stocks are held – what is the stockholding and replenishment policy? What are the stock turn performances? What are the levels of work-in-progress?
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What portion of the capital is tied-up in stock and work-in-progress and is that level appropriate? Are there redundant/obsolete stocks? What influence does the company have over suppliers’ prices? What is the mix of the business? Marketing, sales (Strengths and weaknesses) What is the trend of customer satisfaction performance? How secure is the customer base? What is the penetration of the market? What are the distinctive areas to differentiate from the competition? What is the customer profile? What is the state of the market? What is the level of customer loyalty? What influences do customers have on prices? Competitiveness (opportunities and threats) How intense is the competition? Are new competitors likely to enter the market? How secure is the position of the business in the market? Technology (opportunities and threats) How will changing technology affect the business, products and processes? Social/political/tax/economic/legislative change (opportunities and threats) What effect will changing lifestyle have on the business and product mix? How will these affect employees/managers/customers? What will the impact of changes in government policy or changes at the wider European level be? Is the business likely to be vulnerable to changing taxes, inflation, recession or interest rates?
Tips and suggestions • SWOTs should ideally be built by groups, not by individuals – this raises awareness. • Also develop SWOT charts for your main competitors and customers – this might broaden your horizon on many new opportunities. Cross-reference to related tools in this book Critical success factor (CSF) (chapter 5.3.2), Environmental analysis (PEST) (chapter 5.3.7), Business matrix (chapter 5.3.11). Source: K. Andrews, who is generally regarded as the pioneer of the SWOT analysis (The concept of corporate strategy 1971), but almost every strategy book touches on SWOT.
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5.3.4
Life cycle
Intention (Why and when do I use it?) The life cycle tool is a versatile and simple concept that finds its application in the marketing, R&D, financing, product development, and strategic fields as not just products, but also industries or organisations go through (a) life cycle(s). The life cycle tool allows for the prediction of sales growth and associated customer and competitor behaviours, the prescription of appropriate R&D and marketing strategies for products in different development stages, and the assessment of strengths/weaknesses of a product portfolio. From an internal viewpoint, the life cycle tool provides an internal measurement of the business position (meaning the maturity position of an organisation and its products). From an external viewpoint, the life cycle tool illustrates the maturity level of an industry. From an organisational point of view, the life cycle tool is extremely helpful to illustrate the changing requirements of an organisation over time depending on its development or maturity level. Therefore, the life cycle tool can also be used as part of an organisational analysis and certain change management initiatives. Purpose (What does it do?) Life cycle analysis uses a biological analogy to describe the evolution of sales as a function of time – like all living organisms, products, organisation and industries pass through four stages during their lifetimes. Based on the age of a product/organisation/industry category, the life cycle tool predicts how e.g. product sales will develop, how requirements and needs of an organisation change depending on the maturity level, or how an industry changes and requires different strategies. The tool distinguishes between four stages of development/maturity (figure 93):
Introductory stage
Growth stage
Maturity stage
Decline stage
Total revenue +
Investment recovery Profit
0
Time
-
Figure 93 Classic life cycle diagram that illustrates revenue, profit and investment recovery over time – the costs increase during maturity, hence the decline in profit
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• Introduction – the start-up phase, including launch, establishment and inauguration • Growth – the phase of expansion, extension, growth and development • Maturity – the phase where the growth curve becomes less progressive, or even declines over time. Typically overhead costs, effort, and input-output ratios become less and less favourable; marginal costs exceed marginal revenue. It is the point from where it is going ‘down’. • Decline – constant decline of profit, revenue, input-output ratio; while there is still demand, it is decreasing. Instruction (How do I do it?) • Estimate potential or real demand. Use either actual past/current sales or forecast figures. Determine the possible price/margin range as well as the sales volume in order to estimate the revenue (price x volume = revenue) and forecast the revenue for a range of prices. • Use statistical/graphical analysis and plot past category revenue data in a spreadsheet in such a way that a long term pattern becomes apparent. • Use your judgment, experience and the theoretical curve to determine where – in the diagram – each category starts and the crossover to the next phase and its category begins. • Ideally, you want to forecast key turning points in order to be able to modify and tailor-make a strategy for each stage in order to shorten, extend or change the phase and existence of the company). • Use table 31 for insights and a better understanding of the typical characteristics of each category during each of the four developmental stages. Tips and suggestions • The length of time in each stage varies tremendously; some products have very short cycles, others take decades or even centuries to go through the cycle. One classic example for overlapping and successing life cycles are: LP, DAT, Mini-Disc, CD, DVD, MP3-player, blue-ray, etc. Even certain industries, having reached maturity or even decline, get a thrust of revitalisation – mostly due to technological innovations – and restart in a growth stage. Think of the coal industry during energy crisis years, or the bicycle industry (BMX, MTB, trekking bikes) or wristwatches (Swatch). • Keep in mind that growth is still possible in mature categories, but typically requires greater investment or creativity than in less mature categories in order to ‘ramp’ up again. Any prediction is problematic. Companies can affect the shape of the growth curve through product innovation, product extension, repositioning, etc. 238
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• When creating the curve, beware of seasonal, non-recurring sources of fluctuation. It may be necessary to adjust to compensate for these influences in order to draw the correct conclusions from the graph. • Ensure you understand whether the life cycle of a product has been extended by a product line extension/modification, as this would change the shape of the graph, and hence affect the implied strategies. • The consultancy A.D. Little has developed an advanced life cycle portfolio matrix as a strategic development technique. Based on the life cycle stages and relative competitive position of the company, different strategies are recommended. • Another concept that might fall under the ‘life cycle’ perspective is the sales and marketing orientated ‘customer lifetime value’. Not only companies, products and service have life cycles, so too can a customer’s relationship with a company through all its products and services. This relationship to customers focuses on the value of the relationship and needs to be established, nurtured, developed, harvested and terminated, hence going through the same maturity phases as the classic life cycle model.
Table 31 Typical insight provided by the life cycle analysis for each development stage Development stages ()
Category Introduction
Growth
Maturity
Decline
Buyers and buyer behaviour
High-income purchaser, buyer inertia, buyers must be convinced to try the product
Widening buyer groups, uneven quality, aggressive buyers
Mass market, saturation, repeat buying, choosing among brands is the rule, suppliers known, buying patterns exist
Customers are sophisticated buyers of the product
Products and product change
Poor quality, product design and development key, many different product variations, no standards, frequent design changes, basic product designs
Products have technical and performance differentiation, reliability key for complex products, competitive product improvements, good quality
Superior quality, less product differentiation, standardisation, less rapid product changes – more minor annual model changes, tradeins become significant
Little product differentiation, spotty product quality
Marketing
Very high advertising/sales (a/s) costs, creaming prices strategy, high marketing costs
High advertising costs, but lower percent of sales costs than during introductory
Market segmentation, efforts to extend life cycle, broaden line, service and deals more prevalent, packaging important, advertising
Lower spendings
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Table 31 Typical insight provided by the life cycle analysis for each development stage (continued) Development stages ()
Category Introduction
Growth
Maturity
Decline
Manufacturing and distribution
Overcapacity, short production runs, high skilled-labour content, high production costs, specialised channels
Undercapacity, shift toward mass production, scramble for distribution, mass channels
Optimum capacity, increasing stability of manufacturing process, lower labour skills, long production runs with stable techniques, distribution channels pare down their lines to improve their margins, high physical distribution costs due to broad lines, mass channels
Substantial overcapacity, mass production, speciality channels
R&D
Changing production
Time to invest in some further R&D for the next generation
R&D for the next generation
–
Market growth rate
Accelerating, meaningful rate, but small base
Faster than industry or GDP, but constant or decelerating
Equal or slower than GDP, cyclical
Declines over long time
Industry potential
Usually difficult to determine
Substantially exceeds industry volume
Well known, market approaches saturation of industry volume
Saturation is reached
Breadth of product line
Basic product line established
Rapid increase as product lines are extended
Product turnover, but no/little change in breadth
Shrinking
No. of competitors
Increase rapidly
Increase to peak, followed by shake-out
Further consolidation, becoming stable
Declines
Market share stability
Volatile
A few firms have major shares, few smaller ones
Firms with major shares are entrenched
Share concentration increases or dispersed among small companies
Price
Skimming or penetration
Meet competition, price dealing
Price dealing, price cutting
Meet competition, price cutting
Pricing
High to offset launch cost or low to induce adopters
High – skimming, low – penetration
Market bearing price, low enough to avoid price war or entry of private labels competition
Low to reduce risk of unsold inventory
Ease of entry
Usually easy, opportunity may not be apparent
Usually easy, presence of competitors is offset by strong growth
Difficult, competitors are entrenched and growth slows down
Difficult, little incentive
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Table 31 Typical insight provided by the life cycle analysis for each development stage (continued) Development stages ()
Category Introduction
Growth
Maturity
Decline
Technology
Concept and product development
Product line refinement and extension
Process and materials refinement – cost/quality
Technology role is minimal
Overall strategy
Best period to increase market share, R&D and engineering are key functions
Change price or quality image, marketing the key function
Bad time to increase market share particularly if low-share company, having competitive costs becomes key, bad time to change price image or quality image, marketing effectiveness is key to success
Cost control key, revitalise or divest in time
Competition
Few companies
Entry of competitors, lots of mergers and casualties
Price competition, shakeout, increase in private brands
Exits and fewer competitions
Risk
High risk
Risks can be taken here because growth covers them
Cyclicality sets in
Management style
Entrepreneurial, generalist and multi-functional, get priorities right
Maintain control of business, delegation and functional specialist
Introduce process, procedure, control admin overhead and install effectiveness and efficiency
Turn-around manager, tough style
Margin, costs, profits
High prices and margins, low profits, low price elasticity to individual seller, controlling costs, strict management of cash flow
High profits, fairly high prices, lower prices than introductory phase, recession resistant
Falling prices, lower profits/margins, increased stability of market shares and price structure, investment recovery starts despite slowly declining profits
Low prices and margins, falling prices, prices might rise in late decline
Business priorities
Getting through start-up, ensure enough cash is available
Choose between profit and profitability, manage rapid growth
Consolidation and control of financial gains, size and volumes
Reinvest or divest
Cross-reference to related tools in this book Organisational structure (chapter 5.1.1) for the maturity perspective of the organisation. Source: Porter, Rowe, Fleischer, Hax, Glass, Hofmann
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5.3.5
5 Forces
Intention (Why and when do I use it?) Porter’s Five Forces represents a tool for analysing a company’s environment or industry structure and was first published in 1980 in the book ‘Competitive Strategy’ by Michael E. Porter. This tool is one of the classic and standard strategy tools. Despite its age and though it is often critized, it can provide a great deal of insight and learning, hence it is still valuable if used correctly. The Five Forces (5F) tool is best used: • to assess the attractiveness on the basis of competition in an industry, • to identify areas in which industry trends may pose opportunities or threats, • to analyse where the company stands in comparison to the external competitive forces, • to understand/diagnose levels of return, • to provide a starting point to understand key drivers and trends. The model can be applied to particular companies, market segments, industries or regions and is best applied to mass production companies or industries that focus on products rather than services. The value of Porter’s model is that it enables individuals to think about the current situation (and their industry) in an easy and structured way and is a good starting point for further analysis. Purpose (What does it do?) Porter’s model is based on the insight that a corporate strategy should address the opportunities and threats in the organisation’s external environment. Porter assumes that competition – in an industry and for the specific company – depends on five basic forces: • Potential new entrants – the barriers to market entry influence the feasibility of new entrants into the existing market. • Bargaining power of buyers and customers – this is affected by supply and demand, customer behaviour, and price elasticity. • Bargaining power of suppliers – this is influenced by supply and demand, cost and production capability, price elasticity. • Threat of substitutes – the substitution effects drive the replacement of products or services. • Competition amongst existing companies – rivalry amongst the existing companies is influenced by market structures, number of players, market size and growth rates.
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The combined strength and impact of these forces determines the ultimate profit potential and position in the industry. Instruction (How do I do it?) Different economic, business and technical characteristics of an industry are critical to the strengths of each of the five competitive forces. • In a first step, determine the scope of the market to be analysed. • Identify and analyse all relevant factors associated with each force for this market. It is not necessary to analyse all elements of all competitive forces to the same depth. Note that factors are – in this context – considered a sub-set of a force. • Use figure 94 to gain a better understanding of all possible factors. Then evaluate the influence of these factors on the industry or company as positive (+), neutral (0) or negative (–). Which of the forces are changing, and what will this mean for the industry and company? • Evaluate the impact of the forces that are most dominant and are likely to exert the most pressure on influence. Use H/M/L (High/Medium/Low) to indicate how critical these are to the future success. • Document the consequences for the industry or company together with the strategic option to reduce the forces. For this step and the steps described above, you may use the template shown in table 32. • With the knowledge of the intensity and power of the prevalent 5 forces, you can develop means of influencing them in a way that improves your competitive position. The result could be a new strategic direction, e.g. a new positioning, differentiation for competitive products or strategic partnerships. • The next step is to identify means and factors of reducing the power of the 5 Forces. This could be done through the outlined examples below, but bear in mind that the options open to an organisation are not only determined by external forces, but also by its internal resources and competencies. Some examples of ways to reduce the power of the 5 forces are: – Reduce the threat of new entrants: use patents, protection of intellectual property, increase minimum scales of efficient operations, create an alliance with suppliers and distributors, develop retaliation tactics, create a strong marketing or brand image (loyalty as a barrier), create an alliance with related products or services. – Reduce the bargaining power of buyers and customers: Start partnering with buyers, use supply chain management to strengthen your position, increase loyalty and separate purchase decision from price, by-pass powerful intermediaries or wholesalers and go directly to the customer, increase incentives and the value added in order to strengthen your position. 243
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Table 32
Template for Five Forces analysis
Forces and its factors
Influence +/0/-
Impact H/M/L
Consequences
Potential new entrants Bargaining power of buyers Bargaining power of suppliers Threat of substitutes Competition/rivalry
– Reduce the bargaining power of suppliers: Start partnering with suppliers, use supply chain management, supply chain training, increase dependency of the supplier of your company as the buyer, build knowledge on supplier costs and methods, upstream vertical integration (take over a supplier). – Reduce the threat of substitutes: Consider legal action to protect your products or services (trademarks), form alliances or work within the substitute market and ‘dance with the wolves’, increase switching costs or accentuate the product or service differences (real or perceived), do surveys to learn about customer preferences so you can anticipate the needs. – Reduce the competitive rivalry between existing players: Avoid price competition or acquire the competition, differentiate your product, try to reduce industry over-capacity through cartels or alliances or communication with competitors, re-focus on different segments. Tips, suggestions and limitations • Porter’s theory is based on the economic situation of the eighties. This period was characterised by strong competition, cyclical developments and relatively stable market structures. Porter’s models focus on the analysis of the actual situation (customers, suppliers, competitors, etc.) and on predictable developments (new entrants, substitutes, etc.). Competitive advantages develop from strengthening one’s own position within the 5F model. The model cannot explain or analyze today’s dynamic changes that have the power to transform entire industries, as Porter’s model is based on microeconomics. • The 5F tool assumes a classic perfect market. The more an industry is regulated, the less meaningful insights the model can deliver. • As mentioned previously, the tool is most applicable when analysing simple market structures. A detailed analysis of all five forces might become very difficult in complex industries with multiple interrelations, product groups, byproducts and segments. Focusing too narrowly on particular segments of such industries holds the risk of missing important aspects. 244
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• The tool assumes relatively static market structures, which are hardly the case in today’s dynamic markets. Technological breakthroughs and dynamic market entrants change business models, entry barriers and relationships along the supply chain. • The tool is based on the premises of competition. It assumes that companies try to achieve a competitive advantage over other companies or suppliers or customers. Therefore, strategies like strategic alliances, electronic linking of information systems of all companies along a value chain, virtual companynetworks, etc. are often excluded. Overview of the five driving (macro-economic) forces Figure 94 states a number of factors that are part of the five forces. Note that the factors listed in the figure may as well drive or hinder the corresponding force – they work in very different directions.
Threat of new entrants • Low economies of scale (i.e. volume/size do not significantly change the cost) • High initial investments and fixed costs • Cost advantages of existing players due to experience curve effects of operation with fully depreciated assets • Customer loyalty • Protected intellectual property like patents, licenses, etc. • Limited resources, e.g. qualified expert staff • Access to raw materials is controlled by existing players • Distribution channels are controlled by existing players • Existing players have close customer relations, e.g. from long-term service contracts • High switching costs for customers • Legislation and government action Bargaining power of suppliers • The market is dominated by a few large suppliers rather than a fragmented source of supply • Supplier’s product is valuably differentiated • High switching costs to an alternative supplier • There are no substitutes for the particular input • The suppliers’ customers are fragmented, so their bargaining power is low • There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. • This threat is especially high when: – The buying industry has a higher profitability than the supplying industry – Forward integration provides economies of scale for the supplier – The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products) – The buying industry has low barriers to entry
Bargaining power of customers
Competitive rivalry between existing players • There are many players of about the same size • Diversity of rivals – players have similar strategies • There is not much differentiation between players and their products, hence there is much price competition • Low industry or market growth rates (growth of a particular company is possible only at the expense of a competitor) • Costs and prices are impacted by varying competitor capacities • Barriers to exit are high (e.g. expensive and highly specialized equipment)
• They buy large volumes; there is a concentration of buyers • The supplying industry comprises a large number of small operators • The supplying industry operates with high fixed costs • The product is undifferentiated and can be replaced with substitutes • Switching to an alternative product is relatively simple and is not related to high costs • Customers have low margins and are price-sensitive • Customers could produce the product themselves • The product is not of strategic importance to the customer • The customer knows about the production costs of the product • There is the possibility of the customer integrating backwards
Threat of substitutes • Brand loyalty of customers is low – buyer acceptability of substitutes is high • Close customer relationships • No penalties or low switching costs for customers • Relative price of performance of substitutes • Current trends
Figure 94 Overview of factors that influence the 5 Forces (from www.themanager.org and others, amended by author)
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Cross-reference to related tools in this book Environmental analysis (PEST) (chapter 5.3.7), SWOT and TOWS (chapter 5.3.3), Critical success factor (CSF) (chapter 5.3.2). Source: Recklies, Elkin, Wheeler, Glass
5.3.6
Competitor analysis
Intention (Why and when do I use it?) After a series of strategic analysis tools in the preceding chapters that focus more on the internal perspective, this competitor analysis tool concentrates on external aspects and compares competitors. A thorough competitor analysis is an essential component of strategy and should not be based on informal impressions, intuition or gut feel about the competitors, as this might lead to dangerous competitive blindspots! The competitor analysis tool is best used when you want to: • identify a competitor’s future strategies and plans • predict a competitor’s likely reactions to your own initiatives and business • determine whether the capabilities of a competitor matches his strategic plans • identify a competitor’s weaknesses A competitor analysis helps you to answer the following strategic questions: • What are the (economic) boundaries of the business the company is in? How are they changing? • How is the company positioned to create value relative to its competitors? How is it changing? • What are the boundaries of the competition? Are there successful niche players or are there broad-focus players, and where do they make money? • How big is the market? How fast is it growing? Are some parts growing faster than others? • What are the average returns in the industry? How have they changed over time? How do they vary between players? • Have there been any new entrants, and why? Are they profitable? • Has anyone left the industry and why? • What and why is the overall performance of your company relative to competitors (e.g. market share, profitability)?
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Purpose (What does it do?) The Competitor analysis tool: • is a formal and systematic process to provide a basic understanding of competitors’ and the company’s own performances. • identifies numbers, names, focus areas and other key information about competitors and helps to understand their moves. • helps to understand strategic positions (product/service offering, channel usage). • directs further analysis by highlighting key strengths, weaknesses and capabilities of a company and its key competitors in the industry. Instruction (How do I do it?) • Acquire a basic understanding of the companies/competitors and industry: – Determine who your competitors are and who potential competitors might be. – Obtain general information about the companies/competitors and industry e.g. through internet research, analysts’ reports, etc. – Establish where it fits in the value chain (Value chain analysis, chapter 5.3.1) • Gather and analyse data: – Use table 33, which provides some categories and types of information for a competitor analysis. – Conduct the strategic analysis of the gathered information using the various tools mentioned in the cross-reference of this chapter, but only analyse data where appropriate. – Determine the future goals, the current strategy, the current capabilities, and don’t forget to state clearly the assumptions you made during the investigation. • Evaluate the competitor in order to anticipate its strategic response: – Ensure that your analysis relates to or answers the questions you are trying to answer. Depending on what you need to know, use the SWOT and TOWS tool (chapter 5.3.3). – Present the information in an accessible format. For example, use comparison grids (Polarities tool, chapter 6.5) or radar charts like in figure 136. You could also score (e.g. out of 10) each factor from table 33 against each competitor. Plot the scores on a diagram and create a profile of each competitor. A picture says more than a thousand words. 247
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Table 33
Typical categories and types of information for a competitor analysis
Background information
Product and services
Management profile
• Name, location
• Products and services
• Short description and history
• Diversity or breadth of lines
• History, style and management talent
• Executive team
• Quality, embedded customer values
• Vision statement
• Motivation and aspirations • Background, executive team
• Market shares by product Organisation structure
Financials
Marketing
• Size of work force
• Current, historical, and projected financial values
• Product, price, promotion, place
• Cross functionality
• Financial performance ratios and ROI
• Key customers and customer segmentation
• Ownership and shareholding
• Cost structure
• Cultural alignment
• Cash flow analysis
• Product and market segmentation
• Leadership style
• Liquidity
• See Organisational analysis tools in chapter 5.1
• Credit rating
Human resources
Operations
Technology
• Turnover and retention rates
• Manufacturing capacity
• Labour costs
• TQM and ISO 9000 certifications
• R&D and innovation capability
• Type of organisation and hierarchy
• Union relations • Skill level of employees
• Branding, image and corporate identity • Advertising
• Lean production, CAM production capability • Costing and margin structure, overhead cost structure, ABC costing
• Patents, copyrights and intellectual property • Information and communication infrastructure • Knowledge management, alliances, joint ventures • Process technology
Socio-political
Strategy
Customer value
• Government contracts, public affairs experience
• Vision, mission, strategic horizon, goals, scorecard
• Quality attributes
• Stakeholder reputation • Investor climate, credit ratings
• Shareholding portfolio, diversification
• Taxation, exchange controls
• Alliances, synergies
• Also see Environmental analysis (PEST) (chapter 5.3.7)
• Core competencies – competitive advantage, strengths and weaknesses
• After-sales service and guarantees • Service levels • Customer goals and motivations
– Use figure 95 when exploring the most likely strategic responses of your competitor(s). – Compare your own company or strategic position against the same ‘factors of competition’. The comparison of your company with the competitors’ profiles can help you to determine the required profile in order to compete successfully. Use the Roadmap tool (chapter 7.4) to draw up a strategic plan to close the gap. 248
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Tips and suggestions • Avoid becoming overwhelmed by the volume of information, and ensure that you summarise the key messages. Focus on the future and not only the present. • Bear in mind the reasons for the analysis, and structure and collect data accordingly. • Be clear about what information is necessary and keep the Pareto (80:20) tool in mind (chapter 3.4.2). Use creativity in data gathering, if information is not readily available. • Focus on major players if the market is highly fragmented and remember that the competitors’ definitions of segments can differ. • Bear in mind that it is admittedly difficult to determine the strategic shifts of competitors. • The real value comes from ongoing monitoring and identifying shifts and changes over time. Elements of a competitor analysis are displayed in figure 95.
Current strategy
Capabilities
Where and how is the competitor’s current business performing?
Strengths and weaknesses
Assumptions
Beliefs and assumptions about competitor and industry
Future goals
What are the aims of the competitor?
Figure 95
Competitor response synopsis • Is the competitor satisfied with its current position and capabilities? • What strategic direction is the competitor likely going to take? • What are the blindspots and weak spots of the competitor? • What is the worst case reprisal by the competitor? What could trigger this action? • What assumptions might the competitor hold about our position?
The four elements that have an effect on the competitor’s response
Cross-reference to related tools in this book Value chain analysis (chapter 5.3.1), Critical success factor (CSF) (chapter 5.3.2), SWOT and TOWS (chapter 5.3.3), 5 Forces (chapter 5.3.5), Strategic market (chapter 5.3.8), Environmental analysis (PEST) (chapter 5.3.7), Polarities tool (chapter 6.5). Source: Fleischer, Hax, Wheeler, Simon, Schuster 249
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5.3.7
Environmental analysis (PEST)
Intention (Why and when do I use it?) A company needs to be in equilibrium with its external environment. ‘There must be strategic fit between what the environment wants and what the company has to offer, as well as between what the company needs and what the environment can provide’ (Thomas Wheelen). The starting point of any strategic analysis is some form of examination of the external environment to identify possible opportunities and threats. Therefore, this tool is used typically to avoid strategic surprises and to ensure that the long-term strategic plans are not hampered by external uncertainties and environmental threats. Purpose (What does it do?) The context of a strategic action is often dictated to a major degree by conditions that are external to the company in its environment. The PEST tool helps to analyse relevant trends and provide decision makers with ‘accurate’ and objective forecasts in order to achieve competiveness. It provides the insight needed for the company to adapt or react to the environment in advantageous ways. The tool’s abbreviation, PEST, stands for the key environmental forces Political, Economic, Socio-cultural and Technological. STEEP is a variation that includes Ecological as an additional fifth environmental force (figure 96). Table 34 gives an overview of which kinds of environmental factors belong to the five categories.
Technological
Political-legal
Company
Economic
Socio-cultural
Ecological
Figure 96 The key environmental forces of the PEST/STEEP analysis
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Table 34
Types of environmental forces
Political-legal
Economic
Socio-cultural
Technological
Ecological
• Policies of political parties
• GDP trends
• Growth rate of population
• Patent and IP protection
• Birth rate and life expectancy
• R&D spending by industry and government
• Environmental regulations and legislation
• Antitrust regulations • Tax laws • Foreign trade regulations • Attitude towards foreign countries and companies • Labour law • Stability of government • Voting rates and trends • Presence of property protection laws
• Interest and inflation rate • Money supply • Unemployment level • Wage-price controls • Income distribution • Energy availability and costs • Disposable and discretionary income • Investment climate
• Nature and ability to influence political decision making
• Value system of social classes • Percentage of population in economic and social segment • Income gaps between social segments • Lifestyle changes • Career and consumer behaviour changes • Regional shifts in population
• Pace of technological change, process or product improvements • Technology learning curve stage • New products • Focus on technological efforts
• Pollution levels • Negative external effects • Waste management and recycling capacity • Air and water quality • Sources of power • Substitutionability of materials
• University or technology clusters
Instruction (How do I do it?) • Understand the type of environmental force that is being analysed: – What are the current key events and trends within the specific type of environmental force? – What is the evidence that supports the predicted trends? – How have the trends evolved historically? – What kind of impact do the trends have on the organisation? • Understand the inter-relationships between trends: – What are the inter-relationships and co-dependencies between the trends? – What are the conflicts between trends? Are they pushing in opposing directions? • Relate trends to issues – identify those trends that are relevant and likely to have the highest impact on the company. Those then become issues if they are not yet addressed. • Forecast the future direction – differentiate between root causes (trends) and resulting symptoms (issues) and evaluate how the issues might develop. Make 251
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alternative projections of the issues to avoid the limitations of a single forecast. Consider the Fishbone or cause-effect tool (chapter 3.1.9). • Formulate insightful conclusions – the analysis needs to make a contribution. Focus on the effect on the company and its strategic plan as well as how a competitor might be affected. This assessment should provide the input into determining the right strategy for the future. Tips and suggestions • Other key environmental forces could be: new competition, deregulations, globalisation, changing end user or customer needs. Try to identify the relevant forces and trends for your specific industry and company context. • It is difficult to effectively predict environmental events and trends. This exercise is a balancing act between short-term activities and the conclusion for the long-term horizon. Beware of an overly short-term orientation; some effects take many years to evolve before an impact can be seen. • You cannot accurately predict the future by looking at the past and present, but you can learn from it. Cross-reference to related tools in this book 5 Forces (chapter 5.3.5), Strategic market (chapter 5.3.8), Life cycle (chapter 5.3.4). Source: Wheelen, Fleischer
5.3.8
Strategic market group
Intention (Why and when do I use it?) A strategic market group is a group of companies with a common strategic orientation and similar structures, cultures, processes, and success factors consistent with that strategy. In other words, a group of companies that are relatively homogenous in the way they operate. The examination and understanding of competitive aspects of those companies can form part of an industry, competitor and PEST analysis in order to provide a different industry and market perspective. Use this tool when you want to explore the following questions: • How do companies create value in each of their businesses and how is this changing? • How is your company positioned relative to the competition to create value and how is this changing? • What are the economic boundaries, similarities and differences of the market your company is in – how is this changing?
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Purpose (What does it do?) The strategic market group tool helps to examine and understand a specific relevant portion of a market by looking at the various different criteria of a sub-set of a market within an industry. Instruction (How do I do it?) Companies can be analysed and understood based on numerous sets of industry and market perspectives. • Use figure 97 and ‘peel the onion’ from the outside in order to get to the relevant strategic market group. Try to group all companies with comparable characteristics and following a similar competitive strategy. For example, McDonalds and Mövenpick are both in the restaurant industry, but have different strategies, objectives, target groups, service offerings, etc. and thus belong to different strategic market groups. Start with the top-level industry and then work down towards the different markets and subsequently to strategic market groups. • Use the categories and dimensions listed below to define the industry and market: – emerging industries (e.g. biotechnology) – raw material-based (e.g. pulp and paper) – fragmented industries (e.g. furniture) – core technology (e.g. automotive) – distribution-orientated (e.g. retail) – brand-based (e.g. financial services) – intermediary industries (e.g. construction)
Environment Industry Market
B C A D
E
Figure 97 A strategic market group as part of the ‘onion layers’
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– network industries (e.g. credit cards, TelCo) – etc. • Use the categories and dimensions listed below to slice each layer and define the numerous strategic market groups: – Specialisation – technological leadership – product leadership – channel selection – brand identification – relationship with parent company – product quality – vertical integration – channel selection – price – maturity level – breadth of product range – market share – geographic scope • Select the appropriate two dimensions and plot the relevant companies on a 2×2 matrix, like it is done in figure 98. • Monitor the current strategic orientations and model scenarios of future developments for the strategic market group.
Breadth of product line
Consumer electronics ’80s
Broad
Matsushita Sanyo Philips Sony
Grundig (Germany) Thomson (France)
Narrow
Samsung Sharp
RCA (USA) Zenith (USA)
Global
Strategic market group
National
Geographic scope
Figure 98 The consumer electronics market in the ’80s split by breadth of product line and geographical scope highlights the strategic market groups occupied by various companies. 254
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Tips and suggestions • When choosing the two dimensions (axes of the matrix), ensure that they do not correlate, otherwise the companies simply lie along the diagonal and provide very little insight. • Review the various industry categorisation standards, such as SIC, to get a sense of common classification logics. The matrix in figure 99 illustrates an unusual view of a strategic market group using different maturity levels (grouped settlers, migrators and pioneers) for products, services and the delivery aspects of a company or industry. The larger the ellipses are, the bigger is the power position or revenue of the product, service or delivery by the company. This is a somewhat similar logic to that used in the classic BCG matrix, which displays the attractiveness and internal strengths (relative market share) of a service/product/delivery group, by defining categories of strategic direction such as the cash cow = skim the market, poor dog = leave segment, etc. The matrix in figure 99 represents maturity levels through the categories settlers (maturity, cash cow), migrators (transition, growth, risks) and pioneers (potentially stars or ‘?’). As an example, imagine the following scenario of a company, which has the following setup: A = cars, C = hydrogen cars, B = car finance/leasing, D = car-swapping service depending on season or special needs.
Focus of offering Product
Service
Delivery
A
Strategic market group
Maturity
Settlers
B
Migrators
D Pioneers
C
Figure 99 With its portfolio A to D, a company may be involved in several strategic market groups.
Cross-reference to related tools in this book Life cycle (chapter 5.3.4), Customer segmentation (chapter 5.3.9), 5 Forces (chapter 5.3.5), Competitor analysis (chapter 5.3.6). Source: Wheelen, Fleischer, Elkin, Hax
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5.3.9
Customer segmentation
Intention (Why and when do I use it?) Customer segmentation analysis is an evolutionary modern response to the traditional economic-focused strategy tools which were predominantly used in the era of mass production and cost-cutting. Customer segmentation is often used as a first step in environmental analysis and enables an understanding of how different ‘parts’ (customer segments) of the market operate. It is particularly viable where customer value is premised more on taste and preferences than on price, costs or mass market trends, and where different groups of customers exist in the market. Purpose (What does it do?) Customer segmentation helps to frame the scope of the company’s strategy in terms of product and service market focus. Why scope and focus? It is impossible to serve all customers; and even if it were possible, would it be profitable? Therefore the scope and focus should be on the ‘right’ segment. A segment consists of a group of customers presenting similar features (e.g. needs, buying criteria, etc.). Customer segmentation allows you to interpret any market as the sum of several segments, with each segment representing a specific profile. As a result, customer segmentation can be used to challenge a company to acknowledge and respond to differences in customer needs, tastes, and preferences and to become more market orientated. The underlying assumption is that these customers are likely to exhibit similar purchase behaviours. Customer segmentation aims to answer the following questions: • What are the characteristics of my customers? • How can they be differentiated (segmented)? • How well are competitors serving each segment? • Which segment should I target and how? (Identify appropriate products, services, and marketing for different segments.) Instruction (How do I do it?) • Segmentation – the purpose of customer segmentation is to identify customer groups that are both similar (within the segment) as well as different (between segments). There are a number of ways to segment customers with similar characteristics: The key classification questions are either: who, what, how or why
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• Customer characteristics – a user-based approach that asks ‘Who purchases what?’ and can be classified by the following categories: – Demographics – age, family size, gender, marital status – Geographics – worldwide, national, state, climate, rural vs urban – Company – size, technologies used, industry position, industry type/category – Socio-economic – income, classes, education, religion, ethnicity, culture • Product characteristics – an approach that asks ‘What do they purchase?’ and can be classified by the following categories: – User types – regular, patron, first time, potential, non-user, etc. – Brand loyalty, price sensitivity, cost-quality – Size of purchase, purchasing policies – Application • Channel characteristics – a systemic approach that asks ‘How do they purchase?’ and can be classified into the following categories: – Payment type – COD, cash, credit card, debit order, etc. – Purchase channel – mail order, point of sale, call-centre, home-shopping, internet, etc. – Distribution channel – wholesale, retail, multi-level-marketing, bricksand-mortar, etc. – Channel powers – accumulation or concentration of buying or selling power within the channel on either the sales or buyers’ side, e.g. OPEC crude oil cartel, raw material portals, etc. • Motivational characteristics – This needs-based approach asks ‘Why do they purchase?’ and is particularly relevant for an understanding of customer needs, and can be classified into the following categories: – The customer-needs criteria can cut across several types of category, e.g. perceived benefits, required needs: customer service requirements, delivery reliability, product availability, delivery lead time, content accuracy, order taking efficiency, etc. – Consumption patterns – e.g. impulse vs routine purchase, habits, addictions (e.g. alcohol or cigarettes) – Lifestyle – attitudes, interests, fashion, preferences, perceptions – Media exposure
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• Targeting – After identifying some broader promising segments, target specific segments and test them against the following questions: – Targetability: Can you ‘reach’ your customers easily through a feasible communication strategy? Be specific about how you are going to reach and serve each segment. – Measurability: Can you quantify the segment by size and product usage? Can you rank the buying factors that are meaningful to your customers? – Accessibility: How efficient are the channels at serving each segment? – Sustainability: How many segments are reasonable? Are the segments large enough to warrant the resources and effort necessary for a targeted marketing effort? Is segment membership stable? – Responsiveness: Is the segment responsive to the marketing, communication strategy and product/service offering? – Profitability: Is the segment potentially profitable enough to make the effort worthwhile? – Compatibility with competition: How interested in the segment are your major competitors? Are they actively pursuing it, or are they showing only mild interest? – Effectiveness: Does your sales force have the skills and resources needed to serve the segment effectively over the long term? Does the segment offer actionable opportunities? – Defendability: Can your company defend this segment against attacks by major competitors? • Strategic positioning – the positioning of the product/service in relation to the competitive offerings for the targeted customer segment. This results in the application of the classic 4 Ps of the marketing mix – product, price, promotion, place – as well as people, process and physical evidence. The vital step before this is the customer value analysis – what is the estimated cost of customer acquisition for the selected segment, in the case of a sale? Tips and suggestions • When using the customer-needs approach, consider needs along the whole value chain (check Value chain analysis, chapter 5.3.1). Consider conducting a preliminary survey – it may be useful to identify a full set of customer needs. Spend sufficient time hypothesising needs (Hypothesis – chapter 3.1.4). • If you don’t have the time or resources for the complex data gathering process, consider using a market research agency to carry out the survey, tabulate results, and perform segmentation analysis.
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• Make sure you validate your segmentation criteria and test it with people who will use it. Use tools like the Affinity diagram tool (chapter 3.4.6), Venn diagram (chapter 3.4.7) or ABC tool (chapter 3.4.3) to group and display your segments. Cross-reference to related tools in this book Value chain analysis (chapter 5.3.1), Hypothesis (chapter 3.1.4), Strategic market group (chapter 5.3.8), Affinity diagram tool (chapter 3.4.6), Venn diagram (chapter 3.4.7), ABC tool (chapter 3.4.3). Source: Fleischer
5.3.10 Strategic development When developing strategic options, bear in mind that the solution is not in the analysis alone – take time to think about the findings, because solutions come through insight. Many strategies seem to be based on finding the right fit between the company’s capabilities and the market conditions, rather than reaching out to new opportunities. The challenge for many companies in the past has been to assess: ‘What markets are we in, what is our market position and how can we best compete?’ The subsequent tools in this chapter can help you to answer those questions and analyse, understand, communicate, and react to complex situations. Table 35
Opposing views of strategy development and implementation (Source: Glass)
Traditional view
Modern approach
Keeping up with the competition. Following them when they cut costs, improve quality, advertise more, etc.
Find new ways to compete – new alliances, technologies, product offerings.
Based on the strategic fit and the current capability of the company.
Assumes the company wants to learn and improve.
Primarily aimed at increasing shareholder wealth.
Also contains goals that are meaningful to employees.
Carefully planned to the last detail.
Direction is clear, the people will fill in the detail.
Assumes the company will follow and do as instructed.
Understands the difficulties in changing the way an organisation behaves.
Sees the company as a series of business units.
Views the company as a whole, where one part can help another.
Built on the assumption that only top management has an understanding of the complete business and is therefore entitled to make strategic decisions.
Knows that top management must define the goals, but also acknowledges that the employees close to the customer, development, production, etc. can provide insight and valuable input in how best to achieve the goals.
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At the same time, it is important to acknowledge that the issue for companies is less about how do we compete today, and more about what must be changed in order to keep ahead of the changes in the environment. Many standard analysis techniques provide only limited assistance. New tools are beginning to emerge to help organisations develop strategies for constant and rapid change. The purpose of table 35 is to illustrate where strategic thinking was 20 to 30 years ago and how it has developed since. This is not to say that the traditional view and some of the default tools are wrong or outdated. It could be interpreted as the way we see strategy: It has to evolve simultaneously with the way the organisation’s environment evolves.
5.3.11 Business matrix Intention (Why and when do I use it?) Two of the classic strategic development tools are business matrices – the market growth/market share and strength/attractiveness matrices – also known as the BCG (figure 100) and GE matrices. They were originated during a time when microeconomic thinking was at the forefront. Both share the same weakness of being mechanistic, generating too few strategic options, and both are potentially used as a substitute for, instead of an aid to, creative imaginative strategic thinking. Despite these drawbacks, the matrices are excellent ways of quickly classifying many variables to present a much quicker and simpler picture than words could describe.
Market growth
Relative market share High
Low
Star
Question mark
Cash cow
Dog
High
Low
Figure 100 The classic 2×2 market share/market growth BCG matrix
Purpose (What does it do?) The business matrices, sometimes called portfolio matrices, graphically display the overall competitive standing of a portfolio of businesses. Each matrix positions the company and its business units according to two dimensions (axes).
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Table 36
Internal and external factors for the business matrices
Internal Factors
External factors
• • • • • • • • • • • • • • •
• • • • • • • • • • • •
Market share Size of business unit Positioning Comparative advantage Image, reputation, brand strength R&D Breadth of product line Quality level Vertical integration Management competence Technological strength Marketing After sales service Production and distribution capacity Financial resourcing
Market growth rate Market potential and diversity Competitive structure Financial Barriers of entry/exit Socio-political factors Environmental Inflation Legal and governmental situation Absolute market size Overall market profitability Technology
One is an external dimension that is not controllable. It is a subjective assessment based on external factors, and is intended to reflect the industry and competitive structure in which the business operates. The other is an internal dimension that is largely under the control of the company and relates to the critical success factors of the company to represent its strength. See table 36 for more details on the internal and external factors. The underlying concept of the market growth/market share matrix is closely related to the experience curve and product life cycle (see Life cycle – chapter 5.3.4), while the strength/attractiveness matrix is based on the competitive advantage theory (see Critical success factor (CSF) – chapter 5.3.2). Use the relevant tools for each matrix type. Both matrices are based on the idea of managing a portfolio of business units by allocating surplus money from successful business units to promising business units that will hopefully become future successes. Depending on the position of the business unit on the matrix, different generic strategic recommendations apply. Instruction (How do I do it?) • For the 3×3 strength/attractiveness matrix, establish the current strategic position. Based on the insight and understanding of the internal and external factors from your preliminary analysis work (e.g. Life cycle – chapter 5.3.4, Critical success factor (CSF) – chapter 5.3.2, etc.), plot the business units on the 3×3 strength/attractiveness matrix.
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• For the 2×2 market growth/market share matrix, you need to calculate the following two numbers in order to plot the business units on the matrix: – Calculate the external factor: total market sales year y – total market sales year (y –1) market growth rate (%) = ------------------------------------------------------------------------------------------------------------------------------------------------total market sales year (y – 1)
Use the average market growth rate as the horizontal line of demarcation. Alternatively use 10 % as an average. Simply plot the percentage from the calculation on the vertical axis. – Calculate the internal factor: business unit sales relative market share = -------------------------------------------------------------------leading competitor’s sales
Use a semi-logarithmic scale for the horizontal axis. The vertical demarcation line in the middle of the matrix is set as ‘1’. Any market share figure to the left of this line indicates a significant strength in terms of market share. • You can plot ‘bubbles’ around the points to indicate the relative market size of each business unit (= business unit sales/total company sales). • The next step is to determine a feasible strategic option depending on the current strategic position. Two different logics can be followed: – A reactive strategy – determine the appropriate strategies to achieve competitive advantage by matching internal resources and capabilities to the challenges imposed by the external market place.
Table 37 Conceivable generic strategic options for each position in the 2×2 market growth/market share 2×2 matrix quadrant (BCG) Cash cow Star
Question mark
Poor dog
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Market share trust
Business profitability
Investment required
Net cash flow
Hold/increase
High
High
Positive
Hold
High
Low
Highly positive
Increase or
Low or negative
Very high or divest
Highly negative or slightly positive
Low or negative
Divest
Zero or slightly negative
divest Harvest/divest
5.3 Strategic analysis
Low
High
Grow, consolidate position Seek dominance Maximise investment
Identify growth segments Invest strongly Maintain position
Maintain overall position Seek cash flow Invest at maintenance level
Medium
High
Industry attractiveness
Medium
Evaluate potential for leadership via segmentation Identify weaknesses Build strength
Identify growth segments Specialise Invest selectively
Reduce product/ service lines Minimise investment position to divest
Low
Business strength
Specialise Seek niche or specialisation Consider acquisitions
Preserve to harvest Specialise Seek niche Consider opportunistic sale
Time to exit and divest Determine timing to maximise present value
Figure 101 Conceivable generic strategic options for the 3×3 strength/attractiveness matrix
– A proactive strategy – matching internal resources and capabilities to impact and influence the industry structure for the benefit of the business unit. – For the 2×2 market growth/market share matrix, use table 37. – For the 3×3 strength/attractiveness matrix, use figure 101. Tips and suggestions Remember the fact that for the 2 × 2 market share/market growth matrix, three (divest, hold, harvest) of the four strategies are passive – withdrawing or surrendering, biding for time. Only one is aggressively seeking growth. The possibility of invigorating the market through innovation, technology, etc. is not considered in the strategic options suggested. Therefore, use table 38 to challenge your and others’ strategic thinking: • Note that the portfolio matrices, as a strategic tool, were replaced by a new paradigm of strategies, such as business process reengineering, TQM, reversion to core competencies, alliances, etc. This is not to say that they have lost their value, but they have nevertheless lost their uniqueness. A naive application of the tool could lead to inappropriate and misleading strategic recommendations. As always, use the tools to gain insight and think creatively. • Don’t focus on optimising business units in isolation, as the success is often based on shared resources, networks, skills that span across the organisation. If one underperforming unit is removed, the ripple effect might affect the en263
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tire organisation. The managerial focus is moving from defining strategy ‘what we must become’ to building the skills to achieve ‘more than the organisation believes it is capable of’ (Glass). Table 38 Refreshing opposing strategic directions for the classic BCG 2×2 market growth/market share matrix (Source: Glass) 2×2 matrix quadrant (BCG)
Traditional strategic direction
Alternative perspective
Cash cow
As markets are static or only growing slowly, there is no need for investment. Therefore drain off excess cash and invest into your stars.
You have a strong position in a static market, due to strong knowledge, distribution, production facilities. This gives you a good basis on which to build. Try to revitalise your business, which you know so well, instead of risking your future on the cash-hungry stars.
Star
You have a strong position in a fast growing market. Invest here, as it will be the future of the firm, even if there is no profit in the short term.
Due to the fact that the market is fast-growing, it attracts many competitors, resulting in overcapacity and lower market share for everybody. Keep a low profile, learn from the mistakes of the fast-movers. Buy up cheaply when someone abandons the market.
Question mark
Weak position in a growing market. Generates little cash return. Can be turned into a star with sufficient investment.
A weak position in a growing market, which is soon to be filled with many new entrants. Exit the market while you can get some money from a dazzled buyer. The market will soon be oversaturated.
Poor dog
Weak position in a static market. Market share can only be gained from other competitors, as the market is not growing. Disinvest.
Static market doesn’t mean there is no potential. The competitors might have underinvested for some time, might even want to disinvest. Identify the opportunity, attack aggressively.
Cross-reference to related tools in this book Critical success factor (CSF) (chapter 5.3.2), SWOT and TOWS (chapter 5.3.3), Life cycle (chapter 5.3.4), Competitor analysis (chapter 5.3.6). Source: Hax, Fleischer, Glass
5.3.12 Product/market mix Intention (Why and when do I use it?) The product/market mix was originated by Igor Ansoff several decades ago and is often called ‘Growth vector analysis’ because it describes possible strategic directions for growth. The product/market mix matrix is best used when you want to explore the possible strategic options of a company. It is a relatively simple tool, and it facilitates the full consideration of all possible variations for a particular 264
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market and product before deciding on a strategic action. It can also be used to determine a competitor’s options or to generate numerous strategic alternatives. Purpose (What does it do?) The product/market mix tool displays the different product alternatives available to a company in relation to its market position. The tool helps to evaluate market and competitive conditions systematically in order to identify market and product growth opportunities in four different ways, as displayed in figure 102: 1. Market penetration – Remain in the current market and sell more of the existing products to existing markets, i.e. increase market share and market penetration. 2. Market development – Use the existing product to enter a new market. 3. Product development – Grow through existing market segments by offering new products to them. 4. Diversification – Enter a new market with a new product. This is the most risky growth strategy because, as the matrix shows so clearly, it means leaving the safety zone of both existing customers and existing products for a region of two unknowns. Diversification can be expressed for vertical or horizontal integration. Vertical is the movement along the value chain either towards the source of material inputs (backwards or upstream integration) versus a movement toward the end product or final market (forward or downstream integration). For example, if a company moves from its current core business of pulp and paper into the printing business and starts offering a printing service in that industry, it would be called downstream integration. If the same company would enter forestry, it would be called upstream or backward integration. The term horizontal refers to a geographic expansion with the same product focus. In the example above, the company could expand its pulp and paper business into other countries.
Market development
Market
New
4
2 Current
Diversification
Market penetration 1
Product development
3 Existing
New
Product
Figure 102 The four arrows of the product/ market mix matrix indicate the four possible strategic directions
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New market
Market development
Product/ service extension and market development
Diversification
Expanded/ neighbouring market
Market extension
Market segmentation/ product differentiation
Product development/ market extension
Current market
Market
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Market penetration
Product extensions (e.g.variations, imitations)
Product development (e.g. line extensions)
Existing product
Improved product
New product
Product
Figure 103 Improved product/market mix matrix
An improved variation of the simple product/market mix matrix is displayed in figure 103 – the improved 3×3 product/market mix matrix that includes an intermediary stage between ‘current’ and ‘new’. This intermediary stage allows for a smoother and more defined shift between strategic positions. Study the 9 different strategic options in the 3×3 matrix. The example in figure 104 uses the scenario of a ski-boot manufacturer that ventured from its current ski equipment market into the neighbouring market (= intermediary stage) of alpine and mountaineering equipment. Instruction (How do I do it?) • Determine the existing product(s) and current market(s) in which the company operates those products and services. • Plot the company’s products and markets on the 2×2 (figure 102) or 3×3 (figure 103) product/market matrix. Ask which of your products or services you can move and into which markets. Each cell in the matrix suggests a specific strategic option, which requires some strategic thinking about the most appropriate action. For example, the combination ‘improved product/current market’ suggests the strategic option ‘product extension’, which means to broaden the product attributes or features, e.g. introduce product variants or differentiate through quality consistency, or acquire new technology or licenses that allow you to differentiate the product from others. • The difficulty is in finding the most appropriate action for the suggested strategic growth vector. Use creativity tools from chapter 3.3. Also review the examples in figure 104 and figure 105 for illustration purposes.
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Market
S*** – Sports equipment manufacturer
New market – Outdoor and adventure racing
Outdoor shoes
Cross-training and adventure racing shoes
Outdoor and adventure racing equipment
Neighbouring market – Alpine equipment
Mountaineering shoes
Hiking shoes
Functional sports and outdoor clothing
Current market – Alpine ski equipment
Ski boots
Skis and carving skis
Ski bindings
Existing product – shoes
Improved product – shoe related
New product
Product
Figure 104 This sports equipment manufacturer started as a manufacturer of ski boots and has grown along both axes.
New market
Mountain bikes
...
...
Neighbouring market
Motorbikes
...
...
Current market
Market
Car manufacturer
Engines
Cars
Car finance
Existing product
Improved product
New product
Product
Figure 105
Can you find strategies for this example of a car manufacturer?
Tips and suggestions Although the matrices presented here only mention products, the same logic applies for services. Sometimes a service might be an extension or add-on feature of
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a product. Note that it is sometimes difficult to distinguish between a product or a service. Cross-reference to related tools in this book Strategic market group (chapter 5.3.8), Value chain analysis (chapter 5.3.1). Source: Ansoff, Fleischer
5.3.13 Strategic development options Intention (Why and when do I use it?) This tool is best used after you have completed your strategic analysis and are about to develop strategic options. The intention is not to reduce strategic development to a mechanical exercise or to limit the range of possible strategic options to those emerging from the business matrices. Rather, the intention is to provide a range of feasible, comprehensive and practical options for strategic development. Purpose (What does it do?) • The tool provides an overview of different strategic options and the numerous underlying concepts. One could also convert the diagram into a matrix/table, as it is basically about a combination of columns and rows and finding a combination that makes strategic sense. Strategic sense means achieving common growth and improvement objectives. See figure 106. • On the horizontal, figure 106 shows a division into two fundamentally different kind of strategies: – Competitive strategies – are about ‘winning’. There needs to be a loser so that there can be a winner. – Cooperative strategies – are about collaboration and working together, based on the principle of co-existence and mutual support to reach a common goal. Figure 107 shows an overview. There are more details further down. • On the diagram’s (figure 106) left vertical side, you see different types of strategies, for example, marketing and logistic strategies. There are six different types of strategies: – Sales and marketing strategies – Integration strategies (this refers to horizontal or vertical integration) – Foreign trade expansion strategies (key words are joint ventures, M&A, etc.)
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Competitive strategies
Diversification
Focus/ fragmentation
Specialisation
Collusion
Alliances
Combination of collusion + logistical strategies/ measures
Expansion
Logistical
Efficiency
Skimming
Cost strategy
Sales & Marketing
Integration
Strategic measures
Strategic kinds of measures and means (by topic)
Type of strategies
Cooperative strategies
Figure 106
Combination of specialisation + sales & marketing strategies/measures
Overview of the strategic options from which to choose
– Logistical strategies (key words are supply chain or operations management, distribution channels, etc.) – Efficiency strategies (focus on input–output ratio improvements) – Skimming strategies (key words are investment strategies, etc.). – For more details, see below. • The strategic development options tool as displayed in figure 106 provides a selection of strategic combinations through the use of vertical and horizontal combinations. Figure 106 shows two exemplary combinations (see grey arrows): – A combination of a cooperative (collusion) strategy on the horizontal level with a logistical measure. A concrete example would be an unofficial transport/logistic agreement between the crude oil exporting cartel (OPEC) members. – The second example is a combination of a competitive strategy (e.g., specialisation focus) supported by strategic sales and marketing measures. Instruction (How do I do it?) • Study the tool and the various types of strategies. • Review your current findings and conclusions from your preliminary strategic analysis. 269
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• Choose between a competitive and a cooperative kind of strategy. As mentioned above, cooperative strategies focus on gaining an advantage through collaboration with others. The different cooperative strategies mostly vary through the degree of dependencies and ‘closeness’ between the partners. The examples below illustrate the possible cooperative strategy options as displayed in figure 107:
Cooperative strategies
Competitive strategies
Cost strategy
Diversification
Focus/ fragmentation
Collusion
Alliances
Mutual service consortia
Joint ventures/ licensing
Value chain partnerships
Figure 107 Overview of competitive and cooperative strategies
– Collusion (= secret agreement) – is the active cooperation of companies within an industry to reduce output and raise prices in order to get around the economic law of supply and demand. It does not necessarily imply illegal agreements between the entities. The underlying agreement is not common knowledge to the public and therefore provides an advantage. A cartel is a more transparent and open version of an agreement. It is a consortium of independent partners formed to limit competition by controlling the production and distribution of a product or service. – Mutual service consortium – the weakest and most distant form of an alliance – is a partnership of similar companies in similar industries to pool their resources in order to gain a benefit that is too expensive to develop alone, such as access to advanced technology, e.g. combined computer chip development by Siemens, IBM and Toshiba some years ago. The mutual service consortium is fairly weak and distant; there is very little interaction and communication between the alliance partners. – Joint ventures (JV) and licensing agreements are ventures through a partnership or conglomerate designed to share risk or expertise and are often used as market entry strategies into restricted markets or countries. A typical example of a (license) agreement would be that of a global company sharing its license or expertise to market or produce and/or sell a product in exchange for the right to enter a market or country. Often, a joint venture (JV) company is founded with near equal shareholding between the local partner (or government) and the global company. This form of cooperation often has a limited longevity, as the two sides have differing 270
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goals. The other risk is that the licensee or local JV partner might develop its competence to the point that it becomes a competitor to the licensing company. Therefore, a company should never license its distinctive competence. – Value chain partnership – the strongest and closest form of the alliance – consists of agreements or collaboration between companies that work together along the value chain. The agreement is typically between two companies that have a buying/selling dependency on each other, e.g. a tyre manufacturer and a car manufacturer might form a value chain partnership. This is an integration strategy and further detailed in the Product/market mix tool in chapter 5.3.12.
Competitive advantage
• The examples in figure 108 illustrate the four hints of competitive strategy options:
High
Focused differentiation through specialisation
Differentiation through diversification
Low
Cost focus and fragmentation
Cost leadership in mass market
Narrow
Broad
Competitive scope
Figure 108 The four different strategic directions based on a competitive strategy
– Cost focus and fragmentation – a narrow target market and scope with little competitive advantage could lead to a narrow focus on a specific product or service based on a ‘good price’ in a fragmented market. For example, your local bakery does not have a competitive edge over the other bakeries in town, but they try to offer a good product for a good price in the fragmented market (neighbourhood). – If the bakery were to grow, become a major producer of bread and delivery to customers beyond the narrow target market, then it would enter into cost leadership in a mass market. The key aspect would be cost or price and the market focus would widen significantly. The competition could be at regional or national level. – The bakery could grow and become a ‘specialist’ of a specific unique type of bread for a narrow target market, e.g. a Pretzel bakery in a non-German capital city. The fact that the bakery has a competitive advantage allows it to follow a focused differentiation strategy. 271
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– Differentiation through diversification is a strategic option that combines the offering of a product or service that is perceived throughout the broad mass market as unique. The uniqueness ‘protects’ it and allows the product or service to be positioned high above the ‘war over costs’. Luxury products are typical examples. What do you think, would it also work with pretzels or other bakery products? • Next select an appropriate and reasonable strategic measure – from the possible six strategy types.
Strategic measures
Sales & Marketing
Figure 109
Integration
Expansion
Logistical
Efficiency
Skimming
Six categories of strategy
Note that some options might already have been mentioned as part of other strategic tools: – Sales and marketing strategies • Market development • Export of existing products/services – Integration strategies • Vertical integration (upstream and downstream integration along the value chain) • Horizontal integration (see Product/market mix – chapter 5.3.12 for more details) – Foreign trade expansion strategies • Creation of a branch in a foreign country • Production sites in a foreign country • Licensing to a foreign country – Logistical strategies • Capacity extension • Rationalisation of the market • Rationalisation of the production • Rationalisation of the product line • Rationalisation of the distribution channel
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– Efficiency strategies (focus on input-output ratio) • Efficiency on methods and functions • Conventional cost-cutting efficiencies • Technological efficiencies – Skimming strategies • Breaking up and closing of business units • Maintain • Nourish and invest • Skim and harvest Cross-reference to related tools in this book Strategic market group (chapter 5.3.8), Business matrix (chapter 5.3.11), Product/market mix (chapter 5.3.12), Strategy matrix (chapter 5.3.14). Source: Elgin, Wheeler, Hax, Fleischer
5.3.14 Strategy matrix Intention (Why and when do I use it?) This tool combines three different strategic tools to analyse the company and market and to evaluate and prioritise the resulting strategic options. It guides the strategic analysis activities and draws them together in a consolidated result. The tool can be applied to strategic business units, segments, profit/ costs centres and other homogenous units. Purpose (What does it do?) It consolidates the results of the strategic analysis activities (competitive strength, profitability and segment attractiveness) into a simple table to facilitate the selection and decision making for the best strategic option (figure 110).
Competitive strength
Evaluation
Profitability analysis
Strategic option
Segment attractiveness
Figure 110
The three analysis areas of the strategy matrix tool 273
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Instruction (How do I do it?) Assess all three areas independently using the following tools: • Use tools like Critical success factor (CSF) (chapter 5.3.2), SWOT and TOWS (chapter 5.3.3) to assess the competitive strengths of the company and its competitors. Weigh your findings and assign a major weight factor to the findings of the current market share and market trends. Other criteria to weight are the brand strength, barriers to entry, level of competition, number of competitors, substitution threat and the current life cycle position. Check the Life cycle tool (chapter 5.3.4) for more details. • Use simple financial analysis to ascertain trends, ratios or cost structures. Assess the evolution of revenues, profits, costs, capital base (debt, equity), asset base (tangible, intangible), and cashflow. Determine ratios and indicators such as return on investment, cash flow, operational profit of core business, etc. to determine the level of financial health and profitability of the company. • To determine the segment attractiveness, use tools like the Business matrix (chapter 5.3.11), 5 Forces (chapter 5.3.5), Strategic market group (chapter 5.3.8), and the Customer segmentation (chapter 5.3.9). Include criteria like growth rate of segment, barriers to entry/exit, substitution threats, etc. Weigh your findings and assign the biggest weight factor to the predicted growth rate of the segment.
Table 39
Eight resulting options from the strategic analysis Strategic analysis results Strategic option
Competitive strength
Profitability
Segment attractiveness
1
Invest in segment and grow market share.
2
Improve profitability (lower costs, increase price, potentially increase volume).
3
Hold position and grow if possible.
4
Invest and grow market share, consider cooperative strategies like alliances, JV (see chapter 5.3.13).
5
Increase profitability and skim.
6
Investigate new technology and/or capabilities to gain market share.
7
Hold position for as long as possible.
8
Skim if possible or exit or avoid.
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• Use tools like Polarities tool (chapter 6.5) or Utility analysis (chapter 6.10) from the Decision making chapter for the overall evaluation. As you can see from table 39, the results of your evaluation don’t have to be quantified, you just need to be able to decide if the results from your analysis gets a or . So don’t invest too much time in it. • Use table 39 to identify the ‘winning’ strategic option that matches the findings of your strategic analysis. • Use the Strategic development options tool in chapter 5.3.13 to define the strategic options in more detail. Cross-reference to related tools in this book Critical success factor (CSF) (chapter 5.3.2), SWOT and TOWS (chapter 5.3.3), Business matrix (chapter 5.3.11), 5 Forces (chapter 5.3.5), Strategic market group (chapter 5.3.8), Customer segmentation (chapter 5.3.9), Strategic development options (chapter 5.3.13).
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Once you have completed the creative work, identified options and possible solutions and you know where you want to go, you might be overwhelmed by the magnitude of options and alternatives. This is when you have reached the last of the four problem-solving process steps, the decision making step. You might face questions like: • Which option to choose and why? • What are the pros and cons? • How can I compare the different alternatives? • In what order and sequence should things happen and why? • What is the ‘best’ choice? There are many decision making tools, but not all are appropriate to every situation and not every situation has an appropriate tool. Another question to ask yourself is, whether the degree of previous analysis or current decision making complexity warrants the effort and time which you might plan to invest (see figure 111). This chapter deals with all aspects of evaluation, ranking, rating, prioritisation, comparison, and decision making. Most tools amalgamate the evaluation, rating,
High
Analysis paralysis
Balanced
A
C
Experiential – just do it
Inadequate analysis
B
D
Degree of analysis
Low
High
Complexity of decision
Figure 111 Analysis vs complexity of decision 276
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comparison, mapping of alternatives, visual display of analysis results, etc. – hence there is no distinction and separation in different sub-categories. Table 40
Select decision making tools
Category
Tool or technique name
Page
Ease of use
Effectiveness
Decision making
Decision tree Perspectives3 Argument balance Polarities tool Swap sorting tool Pair ranking Nominal group tool 100 Points Utility analysis Cartesian coordinates Cross of beliefs Vroom Yetton Risk analysis Prioritisation matrices
281 283 284 286 287 288 290 291 292 294 296 297 299 305
To select the most appropriate decision making tool for your situation, use table 41 on page 280.
6.1 Introduction to decision making The Latin root of the word decision stands for ‘cut away’ – this is what a decision is really all about: cutting away the unnecessary and seeing the core and essence of what is important and set out as the goal. The decision making is the action that leads the way to the goal. The objective of decision making is to reduce the likelihood of making the wrong decision: • under conditions that are uncertain, • which exposes you to a risk, • and leads to an action towards an intent despite the uncertainty and exposure to risk.
Decision making is about: • conscious selection of an option over other alternatives • in order to reach a specific goal, objective or outcome.
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There must be a choice; it must be taken proactively, selectively, and consciously, otherwise it is simply a coincidence or occurrence. (Russell-Jones) Decision making is an emotional process! Research by Kremer (2001) indicates that the majority of decision making activities happen in the right side of our brain – the creative, lingual, instinctive, and emotional intelligence side – and not in the ‘rational’ right side, where we would expect it to happen. The hypothesis of this book’s author is that people make their decisions unconsciously and maybe even instinctively. Afterwards, they try to find rational reasons and finetune their evaluation and arguments to ‘consciously’ come to the conclusion and the final decision which they have already made unconsciously. Consider this as a possibility and test whether it resonates with you. For many individuals, decision making is uncomfortable and therefore often avoided at all costs. Once we realise and acknowledge that the purpose of all ‘preparation’ activities is to provide us with more information for the decision making, we should feel more comfortable and the decision making distress will vanish. Other positive outcomes of an effective decision making process are that it is: • inclusive – All relevant and affected parties are included and have been considered• defensible – The evaluation and scoring have taken into account all relevant data and information. • optimal – It provides the best possible outcome for the given problem, based on the circumstances. • sensible – The outcome is comprehensible for the concerned stakeholders. • implementable – Results are realistic and rational. • value adding – The organisation or the individuals are better off than before. (Source: Russell-Jones 2000) Risk is another vital part of decision making. Risk is the term used to describe the likelihood of an event happening combined with the expected consequence or impact. When talking about decision making, we actually talk about managing the risk and consequences of our decision in case they don’t materialise and manifest as anticipated. An evaluation is used to assess the cognitive and rational aspects and reduce the risks by understanding and weighing up the available options for the decision making process. Prioritisation is assigning a rank or rating to different options according to a predetermined logic, e.g. urgency, time, consequences, or monetary values.
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The outcome of an evaluation and prioritisation can be qualitative – no numeric, measurable or quantifiable result – or quantitative – a clear measurable or numeric result –, e.g. ‘option C has the highest score with 66 out of 100 points’. Quantitative = clear numbers, ranks, measurable outcome Qualitative = softer indicators, intangible, not measurable, descriptive
6.1.1
Decision making process steps
The overall high-level decision making process steps are the ones on which this book is based on: diagnosis, goal setting, analysis and finally making the decision. The decision making process could be sub-divided into the following steps: • Explore all alternatives and define possible options. • Decide on criteria in order to assess and compare each option. • Assess the options in the light of previous similar scenarios – are there lessons to be learned? • Evaluate the potential consequences and regrets. • Assess influences and effects on the project and implementation. • Investigate reception and acceptance of the decision by key stakeholders. • Assess the impact on the project, reputation, brand, company, environment, people, etc. • Decide whether to make the decision making alone or jointly. • Assess enforceability and feasibility. • Strike a balance between the risk of the decision and the amount of information you have. • Agree and commit to action with integrity. What is required for the implementation of the decision? • … and then act accordingly, after having gone through all these steps! 6.1.2
Selection table for decision making tools
The purpose of table 41 is to provide you with a selection tool to choose the most appropriate of the different decision making tools. Review your situation and identify the scenario that applies to it using the provided matrix: • Do you have many or few alternative options from which to choose? If you are, for example, buying a flat and you need to decide between six different options (= flats), the situation appears too complex to compare, as you have many options, and you are therefore in the left column. If you end up with 279
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more than 8 to 10 options from which to choose, then your analysis was most likely not accurate enough or your goal setting was too vague. • Do you have many or few qualifying criteria to consider for each option? If you are, for example, comparing two companies or holiday destinations (Caribbean, Tuscany or Tunisia) you are likely to have many criteria to consider, such as price, climate, travel time, etc.
Table 41 Find and select the right decision making tools – depending on your number of options and criteria Many options (ca. 4 to 10)
Few options (ca. 2 to 5)
Many criteria
Utility analysis (chapter 6.10) – quantitative
Polarities tool (chapter 6.5)– qualitative
Few criteria
Swap sorting tool (chapter 6.6) – quantitative
Argument balance (chapter 6.3) – qualitative
Pair ranking (chapter 6.7) – quantitative
Decision tree (chapter 6.2) – qualitative
Nominal group (chapter 6.8) – quantitative
Cross of beliefs (chapter 6.12) – qualitative
100 points (chapter 6.9) – quantitative
Cartesian coordinates (chapter 6.11) – qualitative Prioritisation matrixes (chapter 6.15) – qualitative
Examples of situations and combinations of options and criteria are illustrated in table 42. An example of a combination of many options with few criteria is the buying of a suit. The few criteria could be, e.g. correct size, dark colour (black, grey) with or without stripes and price range $ or € 500 to 700. The many options are all the clothing stores and the many available brands. The table suggests the nominal group tool for this combination. An example of a combination of many options with many criteria is the buying of a house. Table 41 suggests the utility analysis tool as an appropriate choice for this combination.
Table 42
Examples of situations for the decision making selection matrix Many options (ca. 4 to 10)
Few options (ca. 2 to 5)
Many criteria
• Buying a house
• Company acquisition
• Planning a holiday
• Buying a car
Few criteria
• Buying a suit/dress
• Dinner/entertainment plans
• Book to read
• Job offers
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6.2 Decision tree
6.2 Decision tree Intention (Why and when do I use it?) The decision tree is a powerful tool to make the available options and the different levels and dependencies of options more apparent. The decision tree can also function as a creative tool to explore and discover more options that are only applicable depending on other options and decisions on a higher level, answering the question. Which options are actually possible and relevant in what situations and circumstances? Purpose (What does it do?) It identifies all decision points and displays the subsequent options and decision points in a diagrammatic way like the branches of a tree. The decision tree’s trunk represents the basic options, a fork represents a decision point with other options. Each branch represents a different option. In other words, a decision tree maps the chain of decisions. Instruction (How do I do it?) • Clarify what the issue or objective is. • Identify all first level mutually exclusive options (branches). Identify the big, fundamental options first, before you go down to the next level of detail. • Identify the decision points and the criteria that apply (even likelihoods). • Use a table to list the conditions and the consequent actions or options. Tips and suggestions • Options – on the same level in a decision tree – have to be mutually exclusive – meaning if two events are mutually exclusive they cannot occur at the same time. So they have no outcomes in common and there are no circular loops connecting the options on the different decision levels. A good tool to identify and illustrate the inclusive or exclusive options is the Venn tool (chapter 3.4.7). • Each option must be linear, the branches must be mutually exclusive and all options must be represented in the tree. • To increase the value of this exercise, try to assess the different options in terms of time, cost, effort, and likelihood/probability. • The decision tree logic is similar to the ‘if, then, else’ logic used in the development of software applications. • The decision tree tool can also be used to display different scenarios or impacts of risk (combine different options with likelihood of risks). 281
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• If you bring the ‘risk’ into the equation and quantify and calculate it, then the decision tree becomes a risk analysis tree. • Another application is the fault tree analysis (FTA), which traces causes and effects of faults. A variation is the failure mode and effects analysis (FMEA). These safety and reliability models quantify risks, likelihoods and effects by calculating the probable value of each decision point. Multiply the likelihood x attribute = probable value of failure. For example. Option A has a likelihood of 60 % and an impact value (attribute) of 30 → 0.60×30 = 18. Option B has a likelihood of 40 % and an impact value (attribute) of 50 → 0.4×50 = 20. Example of a decision tree The example in figure 112 displays a decision tree for the topic: ‘We need to get a new system’
Decision level 1
Decision level 2 Build yourself
Own it + use it
Get for ‚free’ (e.g. open source software, freeware, etc) Re-use existing with modifications
“Get” a new system
Buy (with/without tender) Don’t own it + use it
Lease Rent Subscribe
Mixed ownership and use
Borrow
Alliance, JV, cooperation
Don’t own it + don’t use it
Partnership (sharing of cost and ownership) Outsource
Figure 112 Decision tree – What to do and what are the options?
Source: Russell-Jones, Haberfellner, Bassard and Ritter
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6.3 Perspectives3 Intention (Why and when do I use it?) Rarely does a single person make a decision in isolation. Usually several people are involved. These members of a group will have group objectives as well as their own personal individual agendas. It is important to understand the psychology of decision making and the numerous perspectives of the stakeholders. This tool helps one to understand the different positions and perspectives. To obtain a decision from a group, you must understand each of its members and the rational, emotional and political perspectives that will convince them. Purpose (What does it do?) • It explains the three dimensions of thinking and feeling of a human being (to make a decision). • The Perspectives3 tool helps to understand and address the individual’s personal goals. • It illustrates how complex a decision making process can be. Instruction (How do I do it?) • Review the diagram in figure 113 and understand the three dimensions for ongoing awareness when interacting with people. – Emotional – What will this change mean for me personally? How will my life change? Will my position in other people’s eyes be different? Will I be able to cope with the changes to my role and position?
What are the resources required? Will it work and how long will it take? What does it cost and what is the benefit?
How does this benefit me? How does this impact me? Rational dimension (logic, systematic, structure, data)
Emotional dimension (experience, feelings)
Spiritual or political (intuition, suspicion, networks, politics, power, perception, image, reputation Will I look good in the organisation if I support this? Will it advance my career?
Figure 113
The Perspectives3 view – three dimensions of an individual’s perspective
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– Political – Will I lose control over resources/people/decisions? Will I still be part of some powerful committees? Will I still be able to influence the decisions that affect my area and me personally? – Rational – Is this change right for the organisation? Is this the best solution for the problem? Is this the best time and strategy? • Check which ‘dimension’ is predominantly driving the current view of the counter parts (i.e. the current view of the ‘opponent’). • Don’t forget that there is also an organisational view and context that needs to be understood. Tips and suggestions • There is a thinking framework to be respected in any interaction involving people. • If you understand the other person and his motivation, you are in a better position to come up with the appropriate responses, i.e. don’t respond to an ‘emotional’ statement with a ‘rational’ statement. Rather understand the feelings and fears that drove the individual to his statement in order to find a win-win solution. • Often a manager tries to get the acceptance for change from his employees by appealing to the employees’ logic, while they consistently interpret any change through the filter of their emotional and political anxieties. The manager might say ‘We have got this great opportunity ahead of us to implement this system and become the country’s leading service provider’ and what people hear through their filters is ‘I have to relocate; what will my family say? After all the effort I made to get my position, they are going to rationalise the department and take it away. I am sure they are going to merge us with the other department, etc.’.
6.4 Argument balance Intention (Why and when do I use it?) The argument balance is one of the simplest decision making tools available and ideal when comparing a few simple options with little complexity or a limited number of criteria. Purpose (What does it do?) It helps to compare a limited number of options and presents a record of the arguments for or against each of the different options in tabular form.
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Argument balance
Instruction (How do I do it?) • Identify all applicable options. • Assign a label or heading to each option. • Identify and write down the positives and concerns or consequences of each option. Tips and suggestions • Compare the same categories of arguments, attributes or aspects in order to make the arguments and statements comparable with each other (compare apples with apples). • Critically review the negative arguments and contra points. Have you repeated the concerns in various statements and forms? Consolidate them and try to compare ‘apples with apples’. • Have you documented negative arguments for which you already know or could easily think of a mitigating solution? Reflect on what you could do to prevent the negative argument from occurring. How could you transform a negative argument into a positive one? Which ideas are practicable? Now rewrite your argument balance list.
Table 43
Example of an argument balance
Argument balance Options
Pro (benefits)
Contra (consequences)
A (Sell item)
• Liquidity
• Significant decrease in productivity
• Open for new items
• Emotional loss B (Re-invest and upgrade item)
• Increased productivity
C (Keep and leave unchanged)
• No surprises
• No surprises
• No investments/cash problem
• Questionable value for money – old one still works
• Substitute technology with more people and time
Source: Haberfellner, Russell-Jones
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6.5 Polarities tool Intention (Why and when do I use it?) The polarities tool is the ideal tool to illustrate graphically a comparison between a smaller number of alternatives for a larger set of criteria, e.g. comparison of two companies using all their financial, operational, marketing and production criteria. Don’t use this tool if you need a tangible, quantitative result and clear ‘winner by numbers’. In such a case, rather use the Utility analysis tool in chapter 6.10. Purpose (What does it do?) This tool compares the range of criteria of a few options by assessing each criterion, rating it and displaying the result in a graphic way (table 44). A simple scale is used for comparison. Instruction (How do I do it?) • Identify all factors (e.g. success factors) that are relevant and applicable to all options. Make sure that you have enough information to rate the relevant criteria for each option. • Define a simple scale, e.g. ++ = very good, + = good, 0 = average, – = insufficient, –– = poor. • Evaluate the value or performance of each option (e.g. product or company A) for each criteria (e.g. price, quality, etc.). • Assign a value on your scale (from ++ to ––) for each criteria for every option based on your evaluation. You might ask yourself how best to evaluate and assign a value or mark – this is not a quantitative tool, don’t invest too much time in your evaluation exercise, just compare the available options and express your opinion and evaluation with a value from ++ to ––. Tips and suggestions • Criteria could be any aspect, attribute, factor or value you can assess, evaluate and compare. • Do your evaluation row by row – assign your value (+ or –) by comparing options A and B for the same criteria, e.g. price ‘which option offers a better price’. • Remember that this tool is the non-mathematical and simpler version of the utility tool (chapter 6.10). • When this tool is used to compare companies as part of the competitor analysis, the criteria are then called success factors, as they represent the critical factors and criteria that determine the success of the company. 286
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6.6 Swap sorting tool
Table 44
Example for a comparison of two options, e.g. products or companies
Polarities for product comparison Criteria or success factors
++
+
0
–
––
Price After-sales service Compatibility Life cycle of product and service Guarantee and liabilities Payment terms Core functions of product (requirements spec.) etc. Option/Company/Product A
Option/Company/Product B
Cross-reference to related tools in this book Competitor analysis (chapter 5.3.6). Source: Haberfellner
6.6 Swap sorting tool Intention (Why and when do I use it?) Use this tool when you have a list of options, ideas or other types of information with no more than eight quantitative list items and not many tangible criteria and you want to rank them in order of priority. Purpose (What does it do?) The Swap sorting tool compares two list items with the one preceding the other in the list and then sorts them in the right order. The pairwise comparison and reordering will sort the list items in the correct order. Instruction (How do I do it?) • Decide on the criteria against which you want to compare each item. What aspect drives the comparison between two items on your list? • Then compare two neighbouring items on your list pairwise. Compare and swap items until each item has reached its correct rank on the list. Test it. Is
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there an item above another on the list that should actually be below this item? • Be aware that the number of pairwise comparisons and swaps can increase significantly. If you have 10 items in your list, this can potentially lead to (10 9)/2 = 45 swaps. Cross-reference to related tools in this book Pair ranking (chapter 6.7). Source: Straker
6.7 Pair ranking I have done my pre-selection and I am now left with a few possible options, but which one is the one? What does the team think? Intention (Why and when do I use it?) The Pair ranking tool – sometimes also called pairwise ranking – helps when you have only few criteria and intangible options that are difficult to compare. Contrary to the Swap sorting tool (chapter 6.6), this tool can handle the comparison of more than eight options/items and still provide a clear ranking. Purpose (What does it do?) The Pair ranking is – as the name implies – a ranking tool to find the best option from a list of items by comparing only two items at a time and deciding on the winner. This keeps the decision process simple and manageable. To determine the winner, you calculate which item/option has won the most pairwise comparisons. Instruction (How do I do it?) • Use a table and list all the items – in no specific order – in the first column as well as in the first row. • Note that in the table, all cells above and including the diagonal line are duplicate combinations, and are not applicable. Cross them out (see table 45). • Ideally, determine the criteria with which to compare the items. • Systematically look at every combination between a column and a row, e.g., the combination of item A and B. Which one of the two wins? Write the win-
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ning item in that cell. In the example below, it is option A. Then continue by comparing A and C, etc., until you have completed the comparisons. • Then count how often each item/option appears in the table. The item/option with the highest count is the winner. A consistent comparison will lead to a different number of counts, whilst subjective evaluations are also possible and acceptable. If two items appear equally often, use the original direct comparison to determine the winner. Example Table 45 presents a simple example of a pair ranking. Table 45
Pair ranking table A
B
C
D
E
F
A
-
-
-
-
-
-
B
A
-
-
-
-
-
C
A
C
-
-
-
-
D
D
D
C
-
-
-
E
A
B
C
E
-
-
F
F
F
C
F
F
-
The result is: A = 3, B = 1, C = 4, D = 2, E = 1, F = 4. C wins against F in a direct comparison. This generates the following ranking: 1. C 2. F 3. A 4. D 5. B 6. E Cross-reference to related tools in this book Swap sorting tool (chapter 6.6), Nominal group tool (chapter 6.8). Source: Woodrow
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6.8 Nominal group tool I need to collect and prioritise all possible ideas and thoughts in minimal time without the influence of dominant individuals. Intention (Why and when do I use it?) To ensure that ‘quiet’ team members have an equal opportunity to vote and influence the evaluation and prioritisation process in order to create a transparent collaborative and ranking process for consensus. Purpose (What does it do?) The nominal group tool achieves a consensus through the amalgamation of individual’s quantitative ranking results into a common pool of rankings and thereby prevents a direct influence from outsiders or dominant leaders. Instruction (How do I do it?) • Ask all participants to write down their ideas about the specific issues, problems or options under consideration. • Establish a list of issues, problems or options, which require prioritisation from all participants and write all statements on a flipchart. • Eliminate duplicates and clarify meanings of statements (about the issues, problems, options, alternatives). If required, ask the individual who made the statement to rephrase it. • Record the final list of statements. • Write a letter in front of each statement. • Each participant records the corresponding letters on a piece of paper and ranks the statement with the highest number for the top priority statement. In the example presented in table 46, Tom assigned the highest rank (number 5)
Table 46 Example of a nominal group table – statement A has received the highest vote, followed by D Statement (Options)
Tom
Jerry
Ron
Carolin
Harry
Total
A
1
5
5
5
5
21
B
2
1
1
1
3
8
C
5
2
3
2
1
13
D
4
3
4
4
4
19
E
3
4
2
3
2
14
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6.9 100 Points
to the statement C. The maximal possible number depends on the number of letters assigned, e.g. for five statements A to E, it is 5. • Calculate the rankings (numbers) of all team members in order to ascertain the highest rank. Tips and suggestions • You might want to use this tool in connection with the brainstorming tool (chapter 3.3.1). • When there are (too) many options or statements, only rank half the possible options. For example, if there are 20 statements, ask to only rank the top 10. This process could be repeated for the remaining options. Cross-reference to related tools in this book A variation on this evaluation tool is the 100 Points tool (chapter 6.9). Source: Bassard and Ritter, Butler
6.9 100 Points What should we focus on? What do you and the others think? Intention (Why and when do I use it?) To evaluate, rate and prioritise options, solutions, as well as problems and issues at the end of a problem solving initiative. This group exercise is simple and fun. Purpose (What does it do?) The 100 points tool creates a transparent, collaborative, playful and entertaining evaluation and prioritisation process with a clear quantitative outcome of ranked results. It creates a shortlist of priorities. Instruction (How do I do it?) • Generate a list of issues, problems, options, etc. which require prioritisation. • Write a consolidated list on a flipchart and index each statement with a letter. • Allot e.g. 100 points to each participant, which they can allocate to the statements according to their preferences. Ask all participants to stand up together and stick their points next to the statement of their choice. It is up to each individual how he allocates his available number of points. • Calculate the total points per letter and write the sum next to that letter. 291
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• After reviewing the results, ask the participants for their comments and thoughts. • If appropriate, create an action plan using action steps (chapter 7.18). Tips and suggestions • The ‘sticky points’ variation is more fun, active and transparent for everybody. • Hand out self-adhesive coloured dots (2 cm ø). The number of dots depends on the number of people, the space, number of available options and your judgement. Normally you don’t need to hand out 100 points to each individual – around 5 to 15 dots per individual for a group of 5 to 10 people should be sufficient. • Ask all team members to stand up together and stick their dots on the flipchart, according to their preferences. Make it a fun and collaborative activity and ensure that everybody sticks their dots without waiting or observing other people. • If there are leaders in the team, they should neither go first, nor merely observe. Cross-reference to related tools in this book Nominal Group tool (chapter 6.10). Source: Bassard and Ritter, Butler
6.10 Utility analysis Intention (Why and when do I use it?) When you need to have a clear and measurable comparison and quantitative outcome, the utility analysis is the default tool for all comparisons with multiple options and many criteria, which would otherwise have made the decision making complex and unmanageable. The utility analysis takes the principle of the polarity analysis and adds a quantitative, tangible element to it. The results of this comparison are tangible numbers, which can be compared with each other. Purpose (What does it do?) The utility analysis uses weightings and scoring of different criteria groups and facilitates the calculation of an overall weighted ranking of the available options. 292
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Instruction (How do I do it?) • Identify relevant criteria for your selection. What is important and relevant for me? • If desired, group the evaluation criteria into main categories and sub-criteria within each category, then assign a weight to each criterion. For example, for the main category ‘building’, the criteria could be: ‘architectural style’, ‘condition/quality of construction’, ‘age’, ‘furniture and fittings’. Each criterion has a different relevance. • Assign a weight to each criterion, either using percentage points or numeric values. Percentages are potentially easier to assign (a maximum of 100 % can be distributed across all criteria or categories), although numbers make the scoring easier. If you use numbers, set yourself a maximum weight, e.g. 5 is the highest number, and then assign the weight: ‘How important is this criterion to me?’
Table 47
Example of an utility analysis
Utility analysis Criteria or success factors
Option A
Option B
Option C
Weight Points
Score
Points
Score
Points
Score
Total price
5
9
45
5
25
9
45
sqm price
3
8
24
5
15
8
24
Growth potential
4
9
36
5
20
1
4
Potential for further development
1
5
5
5
5
1
1
New/old
3
4
12
6
18
3
9
Number of rooms
4
5
20
8
32
2
8
Garage
1
3
3
1
1
4
4
Architectural style
3
1
3
5
15
3
9
Condition/quality of construction
5
7
35
4
20
4
20
Age
4
6
24
3
12
7
28
Furniture and fittings
1
7
7
4
4
1
1
Security
2
2
4
2
4
1
2
Proximity to town
2
4
8
6
24
1
2
Leisure value
4
5
20
10
40
2
8
42
75
Sum Total Score
69 246
47 235
165
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• Verify whether you have assigned the weights according to your order of importance and relevance. The criteria with the highest priority for you should have the highest weight (percentage or score). Tips and suggestions • Vary your weights to see how your priority weighting can change the total score. • Use a spreadsheet with an automatic calculation for the scores, sums and total score. Example of a utility analysis table Table 47 shows an example of a utility analysis for the purchase of a house. In this example, the total number of weight points is 42. A maximum of 10 points are allocated across the 14 criterions. The result is that option A outperforms B and C when considering the total score as well as when only considering the score of the top 2 criteria total price and condition of the building, which represent the highest weight 5. Cross-reference to related tools in this book Use the Polarities tool (chapter 6.5) for a simpler graphic representation. Source: Haberfellner, Nagel
6.11 Cartesian coordinates Intention (Why and when do I use it?) This tool is based on the ideas of the originator of the Cartesian Coordinates and Cartesian curves, René Descartes (1596–1650), who was a French philosopher, mathematician and a man of science. He had also done extensive research on meditation, reasoning and seeking truth. The concept of the Cartesian coordinates is also used in counselling, therapy and general problem-solving. The Cartesian Coordinates tool is a great tool to exploring positive and negative options and consequences. It is based on a simple conditional combination of two dependant entities, e.g. ‘if A, then B’ or ‘if not A, then B’, and so forth. Purpose (What does it do?) The tool helps to identify possible positive and negative outcomes and consequences – this is particularly relevant in decision making situations. Two entities
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6.11 Cartesian coordinates
or statements, which relate to each other in a cause-effect manner, create different outcomes, depending on the conditions and the combinations. Instruction (How do I do it?) • Identify two aspects which depend on each other, one being the root cause (‘A’), the second being the effect (‘B’). For example, the introduction of a new multimedia technology = A, consumer behaviour = B. • For each of the four possible combinations, explore possible positive and negative outcomes. I – ‘If A, then what would happen to B?’ Possible outcomes: ‘If a new multimedia technology were introduced, the result could be increased consumer spending (positive outcome) or confusion and irritation of consumers (negative outcomes).’ II – ‘If not A, then what would happen to B?’ Possible outcome: ‘If a new multimedia technology were not introduced, the result could be increased consumer interest in the current technology (positive outcome).’ III – ‘If A, then what would not happen to B?’ Possible outcomes: ‘If a new multimedia technology were introduced, consumers might abandon current technologies or stop investing (negative outcomes) or consumer frustration with current technology might be reduced (positive outcome).’ IV – ‘If not A, then what would not happen to B?’ Possible outcome: ‘If a new multimedia technology were not introduced, the result could be that consumers were not exposed to new, un-tested and unreliable technology (positive outcome).’ • Pose the questions in different manners to explore and discover different angles and many more perspectives for each combination.
Effect B (e.g. consumer behaviour)
• Add the results to the diagram (figure 114), if there is enough space.
No
III
IV
Yes
I
II
Yes
No
Cause A (e.g. new technology)
Figure 114 The four combinations in the Cartesian coordinates diagram 295
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Cross-reference to related tools in this book Argument balance (chapter 6.4), De Bono thinking hats (chapter 7.17). Source: Harris
6.12 Cross of beliefs Intention (Why and when do I use it?) This tool is ideal for non-fact-based decision making situations with limited information. It helps to identify the personal beliefs around a decision and thereby brings the underlying motivation and assumption to the surface. The relationship between the initial objective and the intended solution-bringing decision can be scrutinised again, before a final decision is taken. It is vital to understand the interdependence in order to avoid making the wrong decision. This tool combines the ‘goal setting’ with the ‘decision making’. Purpose (What does it do?) It uncovers the personal beliefs and assumptions regarding decision making situations where facts are limited and personal views are more relevant. It displays the unconscious, less-known assumed constraints and unspoken assumptions about an intended solution-bringing decision. Instruction (How do I do it?) • Write down the initial goal or objective and place the statement in a circle. (‘Buying a car’) • Identify areas that are affected or impacted on by the goal or objective (e.g., buying a car affects finances, lifestyle, mobility, self-esteem, etc.). • Draw cross-like lines around or across the circle, so that the lines provide separate sections for the identified areas (see figure 115). • Write down your assumptions, projections and beliefs about how the goal affects and impacts the identified areas (e.g.: ‘The belief is that buying a car affects finances because there will be less cash-flow available, or more business marketing possibilities (using branding on the car), or better tax amortisation, etc.’). Note those positive or negative or other unknown outcomes in the relevant section of the cross. • Test those outcomes on feasibility, integrity, peace of mind (CISAN = Can I Sleep At Night) and your other decision criteria.
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6.13 Vroom Yetton
Affected or impacted areas
Goal or objective
Less stress
Utility and comfort
More time
Li fe st yl e
M ob ty ili
Reflects wealth and prestige
More flexibility More reliable car
Buying a car
Recognition and reward Indulge
an ce Fi n
em te es lfSe
Means for marketing and branding
Debts Less cash-flow
Fewer repair costs
Exposure, vulnerability
Tax benefit and amortisation
Positives or negatives or other unknown outcomes
Dependency on bank
Figure 115
Cross of beliefs – what would your beliefs and assumptions be in this case?
Cross-reference to related tools in this book Check with tools in the goal setting sections (chapter 4). Source: Ciolli, Townsend
6.13 Vroom Yetton Intention (Why and when do I use it?) The Vroom Yetton decision making tool can be of use when you want to find out whether a specific issue or decision is worth having a meeting about and involving other individuals. Not every decision requires participation. The spectrum of decision making management styles ranges from authoritarian to consultative to group participation. A manager or group could use this tool to establish the appropriate level of involvement in the decision making process. Purpose (What does it do?) The Vroom Yetton decision making tool helps to determine the most appropriate management style for decision making; in other words, it helps to find out how much participation and involvement is needed or desired to make a specific decision. The result is an indication of a desired decision making management style.
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Instruction (How do I do it?) • Communicate the decision to be made to the group. • Outline the Vroom Yetton decision making tool and explain the decision making management styles (see box below) to the group. A = authoritarian, C = consultative, G = group participation. • Discuss with the group how best to address the decision under consideration based on the given choices of decision making management styles. A1 – Manager makes the decision alone, using only the information immediately available. A2 – Manager formally obtains information from subordinates and then makes the decision alone. Subordinates may be made aware of the purpose of the information requested, but they play no role in defining the problem or evaluating alternative options. C1 – Manager shares the problem with subordinates individually and obtains their ideas or suggestions, but without bringing them together as a group. Then the manager makes the decision alone. C2 – Manager shares the problem with subordinates in a group meeting and obtains their ideas or suggestions. Then the manager makes the decision alone. G2 – Manager holds a group meeting with subordinates to share and discuss the problem. Manager acts as chairman and facilitator, raising issues, but not running a ‘hidden agenda’. The group makes the decision and the manager accepts it. • Ask the participants to vote for what they consider to be the best choice for the given decision. You could use the Nominal group tool (chapter 6.8) or 100 Points tool (chapter 6.9), or simplify the voting to one vote per person with a prepared ballot. • Inform the group of the consensus decision and proceed accordingly. This is a good way to get agreement on the best way forward.
A similar alternative in a matrix format Figure 116 shows a categorization similar to Vroom-Yetton. The matrix displays the power and discretion to make decisions versus the degree that the goals and interests are shared between the parties. • A – Negotiation: If the power to enforce a decision is high and the goals are not well aligned, then negotiate to reach a decision, e.g. salary negotiations. • B – Arbitration: When there is little discretion and few shared interests, the situation is difficult. Whatever the outcome, both parties need to agree in ad-
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High
Negotiation
Authoritative
A
C
Arbitration
Collaboration
B
D
Discretion/ power
Low
High
Shared goals/interests
Figure 116
Power – shared goals
vance that the ruling will be binding, e.g. soccer’s golden goal rule or an arbitration court decision or auction. • C – Authoritative: If there is clear discretion to exercise power to make decisions, then an authoritarian style is acceptable and most appropriate, e.g. a traffic officer giving orders and directions or turn-around management or disaster recovery decisions. • D – Collaboration: A high degree of shared interests and low level of power or discretion requires a joint effort and collaboration from all parties; e.g. friendly merger, holiday planning. Source: Russell-Jones Cross-reference to related tools in this book Nominal group tool (chapter 6.8), 100 Points (chapter 6.9). Source: Vroom and Yetton, Butler
6.14 Risk analysis Intention (Why and when do I use it?) Risk is an important aspect to consider when evaluating the consequences of a decision. What we fear is not making a decision; we are normally concerned about the consequences and repercussions of that decision. A risk analysis may be used when evaluating the impact and probability of the occurrence for a given decision and its consequences.
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A risk analysis process typically consists of four steps: • Identify risk • Analyse risk • Respond to risk – risk prevention strategy and action steps • Monitor and control risk Once you have identified, assessed, understood, and compared the different risks, you can respond, mitigate and further control risk. This understanding enables proper risk management. Purpose (What does it do?) The risk analysis tool helps to identify, evaluate and manage risks. Risks are documented according to impact (high, medium, low) and likelihood of occurrence (high, medium, low). Depending on the combination of impact and likelihood, different risk prevention strategy and action steps are recommended.
Table 48
Template for a risk analysis table
(Project) Risk analysis Risk category
Risks
People (customers, end users, sponsors, stakeholders employees, politics values)
•
•
Process (goals, decisions, project, budget, cost, schedule, requirements, time, development, testing)
•
•
Technology (security, deployment, support, operational environment, availability)
•
•
Legal/political risk (laws and provisions, contracts, regulations, SLAs)
•
•
Social risks (sociocultural risks, strikes, project team conflicts, etc.)
•
•
Natural hazards and risks (climate disasters, earthquakes, etc.)
•
•
Economic, competitive and commercial risks
•
•
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Impact (H/M/L)
Likelihood (H/M/L)
Risk preventions steps
6.14 Risk analysis
Instruction (How do I do it?) • Identify risk and group into categories (project, HR, business, operational, etc.). Use the risk analysis template provided table 48. • Compare the risks with the comments from a stakeholder analysis (expectations, pitfalls, reservations). Is your perception and interpretation realistic? Have you overlooked other risky aspects? • Determine the possible impact of the risk, should it occur. • Define what ‘high’, ‘medium’, and ‘low’ would mean in your business context and environment. Typically, a high impact event leads to a standstill of the operation for a longer period of time, or leads to unrecoverable damage and fatal consequences. It could look like this: High: The loss of the applications, systems or data will cause sufficient damage to the business to threaten its existence. The damage is generally beyond the ability of the business to manage. Recovery time: one month or greater. Medium: The loss of the applications, system or data will disable one or more elements of the business. The damage is generally manageable, but may be irreparable. Recovery time: 72 hours to one week. Low: Loss of the applications, system or data will disturb one or more elements of the business. The damage is generally confined to inconvenience, reduced morale, and delays. Recovery time: 24 hours. • Estimate the likelihood of its occurrence. What is the probability of this happening? This again results in three categories – high, medium, or low? • Plot the risks on the risk analysis diagram (figure 117) and follow the recommended risk prevention strategy.
ta ke
o
ac t
io n
is
C
fn
B
ris
In cr
Low
Need for action No need for action, but monitor risk
ea si
A L
Risk prevention strategy
k
of r
eg
re ti
M
ng
Likelihood (or probability) of occurrence of risk
Urgent need for action, avoid at all costs
n
H
Medium
High
Impact of risk
Figure 117 The risk analysis diagram indicates the recommended risk prevention strategy and action steps
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• After having considered the recommended risk prevention strategy, define countermeasures and your action steps that prevent the risk from happening. Use the Fishbone or cause-effect tool (chapter 3.1.9) to identify the root causes of the risk, so that the preventive countermeasures can be effective in preventing the occurrence of the risk by tackling the root cause and not just a symptom. • Validate with key stakeholders and ensure that the risk prevention steps are implemented. Use the Action steps and reviews tool (chapter 7.18). Tips and suggestions ‘Disaster recovery’ and ‘contingency planning’ are key terms that form part of the wider risk analysis context. They entail the emergency procedures if disaster has struck, as well as the preventive measures. Another relevant perspective when making decisions is the balance between caution and courage. Courage is the force that pulls you towards taking a decision. Caution of the consequences is the force that pulls you towards avoiding the decision. It is important to be aware of your own tendency when making decisions. The right balance will help to avoid making wrong decisions. Figure 118 depicts the balancing act between the two opposing forces.
High
Cowardice, inertia
Difficult, but balanced um
tim
Caution
ed
op
nc
la
Ba
Simple and balanced
Careless
Low
High
Courage
Figure 118 Caution versus courage – balance is required
Excursus on project risks: Risk Inclination – how do you compare to others? Did you ever wonder how risk inclined you are – and how you compare to others? In addition to the risk categories in the table above, the list below provides
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some more individual risk-related categories. Try it and score yourself from 1 to 10 (1 being very risk averse). • Physical risks: Activities that involve some risk of injury – riding a motorcycle, river rafting, rock climbing or skydiving are some examples. • Career risks: Such as job changes, taking on new responsibilities or seeking promotions. • Financial risks: Your risk tolerance in investing, borrowing and lending money. • Social risks: Like introducing yourself to someone you don't know or putting yourself in an unfamiliar social situation even at the risk of possible embarrassment. • Intellectual risks: Things like your willingness to study a difficult topic, pursue information that challenges your convictions or read an intellectually challenging book. • Creative risks: Such as painting, drawing, taking on a writing challenge or pursuing an unconventional design. • Relationship risks: Such as a willingness to pursue a new relationship, spend time with someone despite an uncertain outcome, or make a relationship commitment. • Emotional risks: Willingness to be emotionally vulnerable. • Spiritual risks: Willingness to place your trust in concepts that may not be provable or that you do not fully understand. While it is interesting to know how your risk inclination compares to others, please do not let it influence you too much. How you compare to others is not that important, as it is your perception and you who will feel the consequences. While we can learn from observing what others do well and poorly in this realm, comparing yourself to them is just not helpful. Your natural level of risk inclination – the position of your balance point at this moment – is a result of a multitude of factors that are unique to you. The person you were at birth and all your subsequent life experiences influences it. Like you, it's unique. (Source: McCormick) 10 common project risks or pitfalls Look back at projects that worked well and those that did not; both will provide valuable clues about potential risk. Consider these 10 common risks or pitfalls that can potentially jeopardize any project.
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1. Unknown stakeholders are people who have influence over a project’s direction, outcome, resource, or schedule without the project team’s knowledge at the outset of the planning process. 2. Unexpected resistance goes beyond the normal objections to change that consultants routinely encounter. As you might guess, unknown stakeholders are often the source of unexpected resistance. 3. External events can have a profound affect on any project. A merger or acquisition, for example, can stop a project dead in its tracks. 4. Chemistry is how well a project team works together. Poor chemistry on a team can contribute to highly negative behaviour and can jeopardize project success. 5. Late delivery of anything generally wreaks havoc with project schedules and creates unplanned time pressure on project activities. 6. Fuzzy project scope results in a lack of a common understanding about what the project is intended to accomplish. Without agreement about where you and the company want to go, you probably won’t get there. 7. Lack of early, demonstrable progress can create a perception that the project is floundering, even if it is not. Project teams should not keep their accomplishments a secret. Especially on large projects, plan to achieve a milestone every 60 to 90 days, at a minimum, and make sure everyone involved knows when it’s reached. 8. Executive turnover can cause a change in project direction, or may even result in a project being cancelled. This has been known to happen even when the company stands to lose its investment in a project. 9. Project team emergencies occur with regularity, especially during large or lengthy projects. Losing a team member for an extended period can change the dynamics and productivity of a team. 10. Ineffective communication always leads to problems and will make project results unpredictable. Be sure communication travels in all directions and as far into the companies’ organisation as possible to help locate unknown stakeholders, identify areas of unexpected resistance, and prepare for the unexpected. Source: McCormick, Russell-Jones
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6.15 Prioritisation matrices Intention (Why and when do I use it?) The prioritisation matrices (2×2 matrixes) facilitate the process of finding the ‘best’ option or the ‘best priorities’. The tool is best used when having to compare and prioritise a manageable number of options in order to decide on the ‘best’ ranking and selection. 2×2 matrices are used particularly for decision making in a project or strategy context. Purpose (What does it do?) The 2×2 matrices provide a visual guidance for prioritisation and decision making. It is important to understand that these matrices provide a simplified perspective of the reality. They try to confront and compare two opposing aspects – on the x and y axes – in order to find a priority amongst the options under consideration. Instruction (How do I do it?) • Decide on the appropriate labels for the axes. It is difficult to pre-define the ‘best combination’, therefore try different combinations and see how the position of the option changes – does the priority or ranking change as well? Typical labels are: – Importance – Urgency/urgent – Risk – Profit/revenue – Feasibility – Priority – Attractiveness (Cost vs benefit) – Ease of implementation (time, risks, complexity, etc.) – Sustainability – Efficiency – Certainty – Impact ($, %, etc.) – Complexity of decision
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• Decide where the ‘high’ – ‘low’ label on each axis has to be. Be consistent with your labelling. It is good practice to label each field of the 2×2 matrix, e.g. A to D, 1 to 4. • Clarify the meaning of each of the four fields in the 2×2 matrix. Ideally provide a brief description for each field. • List all options and decide in which field each option belongs. This is the real challenge and difficulty of the tool. Therefore let the group decide where to place the options (if team members are in a position to decide). The value of this tool is in the discussion and the rationale behind the position of an option on the matrix. Tips and suggestions • Options could stand for projects, software packages, HR decisions, investments, machines, service providers – anything that requires a decision. • In order to have a sound information base, use this tool in combination with tools like risk analysis, decision tree, and argument balance sheet. • Use the Action steps and reviews tool (chapter 7.18) to follow up. Examples and templates of prioritisation matrixes • The certainty-importance matrix (figure 119), derived from Mitroff and Linstone, can be used to position assumptions (beliefs around options for a solution) against (un-)certainty and importance. Ensure that the uncertain but very important assumptions do not come back to haunt you.
High
A
C
B
D
Certainty
Low
High
Importance
Figure 119 The certainty-importance matrix
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The efficiency-sustainability matrix (figure 120) helps to find an efficient option that may endure long enough. Questions to be asked are: Efficiency – Is this the best input/outpur ratio? Sustainability – Will it last and for how long?
High
A
C
B
D
Efficiency
Low
High
Sustainability
Figure 120
The efficiency-sustainability matrix
The profit-risk matrix and the impact-ease of implementation matrix (figure 121) are great support tools for project or investment decisions. Depending on how you define, assess and interpret each of the two labels, ‘attractiveness’ and ‘ease of implementation’, you will end up with various perspectives for the attractiveness-ease of implementation matrix (figure 122). In times of capacity restrictions (like e.g. limited budget or time), not every option makes the ‘cut’. The cost-priority matrix in figure 123 helps to identify the options that qualify under the circumstances. Figure 124 shows a tool that is often used in a time management context and is sometimes referred to as the Eisenhower principle. After categorising all tasks (and options) and assigning them to the four quadrants, follow the recommendation outlined below: • A-question: What needs to be done immediately? Act immediately yourself; this is imperative. These are the ‘I must do now’-activities. • B-question: What should I preferably give my attention and tackle? Do mid-tolong range planning and make sure it happens. Focus on the ‘I can do’-activities. • C-question: What shouldn’t I be doing now or what needs to be done that I should not be doing myself? Give it the right attention, but only for a short time. The focus is on ‘Verify and re-assign, delegate, standardise, rationalise, reduce or stop doing’-activities.
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High
A
C
B
D
Profit / ROI
Low
High
Risk
High
A
C
B
D
Impact ($, %, etc.)
Low
High
Ease of implementation (time, risks, complexity, etc.)
Figure 121 Profit-risk matrix and the impact-ease of implementation matrix
High
A
C
B
D
Attractiveness (Cost vs. benefit)
Low
Ease of implementation (time, risks, complexity, etc.)
High
Figure 122 Attractiveness-ease of implementation matrix
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High
C
Accept
Accept
Consider
D B
Priority
Accept
Consider
Reject
Reject
Reject
A
Consider
Low
High
Cost
Figure 123 Cost-priority matrix: In this case, option A and D get approval, B fails, C needs to be revisited
High
C
A
D
B
Urgent (= time)
Low
High
Important (= impact, consequences)
Figure 124 The Eisenhower principle (important-urgent), a key tool for time management
• D-question: What is wasting time and is trivial, unimportant, unnecessary? Those things are the ‘I should be ignoring’-activities. Take the risk and use the waste bin. Cross-reference to related tools in this book Action steps and reviews (chapter 7.18), Risk analysis (chapter 6.14), Decision tree (chapter 6.2), Argument balance (chapter 6.4). Source: Russell-Jones, Nagel, Glass, Elkin, Grundy, Mitroff/Linstone
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Category
Tool or technique name
Page
Ease of use
Effectiveness
Project management
Project contract LogFrame Project roadmap/programme Work breakdown structure Gantt chart Project work plan Project environment analysis Project structure Project management roles and responsibilities Project communication plan Accountability matrix (CIDA) Stakeholder communication Workshop guideline Expectation review tool Booz ball evaluation Six thinking hats Action steps and reviews Project management skills radar
318 321 327 329 333 334 335 337 339 342 346 348 350 352 353 354 355 357
The project management chapter is a collection of tools to set up, steer, control and manage a project. The reason for having this project management section in this problem solving book is that currently the majority of problems are resolved in a project-based environment. Note that not every tool and technique that can be used in a project management context is exclusively found in this section. The majority of project-management-related tools appear in other sections of this book, because those tools and techniques are not solely used for project management. Building on the sentence above, I suggest that you become aware of which of your activities are part of the problem solving cycle and which ones are part of the project management cycle. This can be confusing. Sometimes, the same activity can even feed into both cycles, but for different reasons. Refresh your memory and use the diagram in ‘Macro logic project cycle – micro logic problem solving cycle’ (chapter 2.1.5). You can
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find a comparison in the Scenario: Good practice for project and problem definition (chapter 9.2). The tools and techniques in this section are some of the basic project management tools focussed on project planning. Use them as a starting point and, over time, you’ll become more proficient at using them. Project management has become a discipline in its own right and has become a success factor for project delivery and problem solving.
7.1 Project management – activities, processes and tools 7.1.1
Key project management activities and tools
There are many different versions of project management procedures, definitions, methods, associations, etc. and each representative ‘preaches’ its own version of a basically simple matter. Table 49 lists the core PM activities and the tools I suggest for supporting them. The table is sub-divided into the four micro logic project management cycle steps: • Initiation • Planning • Implementation and monitoring (incl. steering, control, communication and documentation) • Closure Also see ‘Macro logic project cycle – micro logic problem solving cycle’ (chapter 2.1.5) on page 35 for details. For a comprehensive and focused view of project planning activities and the tools to use in a project, I suggest using the overview table Project planning and definition (chapter 9.3) as well as figure 13 on page 38.
7.1.2
Brief glossary of key project management terms
For you to be able to communicate precisely and clearly, you need to be familiar with the common PM terms and jargon. • Project idea, concept or proposal: is a first initial sketch of the identified and suggested idea. It contains the project title, description of the idea, reason or of the trigger for the idea (likely to be a known problem), the suggested approach and affected areas.
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Table 49 PM activities, processes and tools (Source: Burghardt, Kostka, Projektmagazin, Haberfellner, PMI, complemented by the author) Core project management activities
Suggested tools and/or documents
Initiation 1.
Problem discovery, project motivation/idea, project contract, project assignment and project approval
Project idea/concept/proposal Business case/feasibility study Programme management Problem definition (chapter 3.1.1) Project contract (chapter 7.2) LogFrame (chapter 7.3) Charter (chapter 4.4)
2.
Project and activities definition (also see Annex A – Check questions and Annex B – Scenarios and tool lists)
Various tools from the category Definition of a situation/problem (chapter 3.1) Charter (chapter 4.4)
3.
Preliminary agreement on project structure, organisation and high-level project elements
High-level project plan
4.
Effort and cost estimation, business case
Costing model Business case
Planning 5.
Project definition and planning. Project decomposition and set up. Problem definition
Problem-related tools in the category Definition of a situation/problem (chapter 3.1)
Scope definition
Scope-related tools in the category Definition of a situation/problem (chapter 3.1)
Identification of stakeholders
Stakeholder-related tools in the category Definition of a situation/problem (chapter 3.1)
6.
Definition of ‘chunks’ of work > work breakdown structure and task structuring
Work breakdown structure (chapter 7.5) Project work plan (chapter 7.7)
7.
Definition of the sequence of work and activities resulting in a project schedule
Project schedule Project work plan (chapter 7.7) Critical path method (CPM)
8.
Define the task/time schedule
Gantt chart (chapter 7.6) Detailed project plan
9.
Analyse project environment
Project environment analysis (chapter 7.8)
10.
Define resource requirements and resulting resource plan
Resource plan
• Project contract and assignment: contain the project objectives, the intended project outcomes, sometimes also called project agreement or project charter. 312
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Table 49 (continued) PM activities, processes and tools (Source: Burghardt, Kostka, Projektmagazin, Haberfellner, PMI, complemented by the author) Core project management activities
Suggested tools and/or documents
Initiation 11.
Estimate project costs
Cost plan/estimate Cost calculation/estimation model Budget calculation Business case
12.
Define and assign project roles and responsibilities
Project management roles and responsibilities (chapter 7.10) Accountability matrix (CIDA) (chapter 7.12)
13.
Define project organisation and structure
Project structure (chapter 7.9)
14.
Identify potential project risks
Risk analysis (chapter 6.14) Risk management plan
15.
Define overall required resources, equipment, materials, facilities, etc.
Resources and materials plan
16.
Define documentation and information requirements and standards
Documentation and information policy plan
17.
Define quality assurance policy
QA policy plan
18.
Define contractual and service delivery policies, e.g., SLAs, vendor management, etc.
Service delivery policy, procurement policy, SLA framework, etc.
19.
Define a communication plan
Project communication plan (chapter 7.11)
20.
Consolidate and document into a single source file.
Project contract (chapter 7.2) LogFrame (chapter 7.3) Project handbook/manual Project Definition Report (PDR)
21.
Arrange kick-off meeting
Kick-off meeting agenda
Implementation and monitoring (incl. steering, control, communication and documentation) 22.
Manage the daily project work
Project work plan (chapter 7.7) Action steps and reviews (chapter 7.18)
23.
Monitor and report on target and actual deviations
Project status report Risk analysis (chapter 6.14)
24.
Manage risks, emergency, contingency and disaster recovery plans (DRP)
Risk analysis (chapter 6.14) DRP and contingency plans
25.
Manage and escalate issues and risks (escalation management)
Project status report Risk analysis (chapter 6.14)
26.
Manage tasks, content and project plan adjustments as well as scope creep (scope and change control)
Change request
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Table 49 (continued) PM activities, processes and tools (Source: Burghardt, Kostka, Projektmagazin, Haberfellner, PMI, complemented by the author) Core project management activities
Suggested tools and/or documents
Initiation 27.
Manage internal and external communication
Project communication plan (chapter 7.11) Stakeholder communication (chapter 7.13)
28.
Manage documentation
Documentation and information policy plan
29.
Ensure adherence to quality standards
QA policy plan
30.
Track time, cost and budget figures
31.
Track and monitor short and long-term benefits realisations and other performance indicators (benefits tracking)
Business case Benefits tracking
32.
Manage financial and controlling indicators, costs and budgets
Budget revision
Closure 33.
Prepare project handover for next phase or go-live
Project closure checklist
34.
Final inspection, acceptance and approval of hand-over
Project hand-over acceptance
35.
Review and evaluate project or project phase
Project review evaluation sheet Expectation review tool (chapter 7.15) Booz ball evaluation (chapter 7.16) Six thinking hats (chapter 7.17)
36.
Document lessons learned
Six thinking hats (chapter 7.17) Lessons learned reports
37.
Terminate project, project organisation and structure
See the Project contract tool (chapter 7.2). You could also use the Charter (chapter 4.4), which I use in the context of problem solving and goal setting and not only for a project. • Project plan: is a complete and consolidated package of all project plans and should – based on the industry standard DIN 69905 – consist of the: – Work breakdown structure (WBS) (see next bullet point) – Time table/task schedule (in the form of tables, bar charts such as a Gantt chart, network plan): defines the time dimension of the project, the work effort, the duration and time span of each activity.
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Programme/ Project steering
Stakeholders
Project sponsor Project assignment
Program
Project
Project plan Monitoring
Figure 125
How does it all fit together? A simple summary of the project life cycle
– Costing/cost estimate: predicts the resulting costs, based on the resource plan and task schedule. • Project Work breakdown structure (WBS) (chapter 7.5) defines all chunks of work and is a decomposition of all relevant work elements in a hierarchical tree structure. – Functions as the skeleton of the project. – Is a comprehensive illustration of the complete project scope and all the key elements. – Defines the project objectives and helps ensure alignment between the project deliverables and the project objectives (see also above: project contract.) – Defines all ‘work packages’ of the project. – Arranges and structures the work in a suitable sequence. – Functions as the logic framework for all project documentation. • Project structuring and structure: can be activity-based, but can also be organisation-, cost-, information- or documentation-orientated. In general, the project structure is either line, matrix or purely project-based. • Project schedule: describes the sequential and time-bound flow of tasks and work packages, based on the logic of the work breakdown structure (WBS). A network plan or critical path diagram is the graphic illustration of a project schedule. • Project network plan: is a graphic or tabular display of processes and activities and their interdependence. Different display options exist. A classic network plan only shows the sequence of tasks with predecessors. A bar chart displays 315
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all elements in their sequential flow over a time line and is often called a Gantt chart (chapter 7.6). Milestone plans typically use network plans called PERT or Critical Path Method (CPM). • Project resource plan: uses the work breakdown structure plan and assigns resources to each task. • Project resource utilisation plan: is a bar chart that displays the utilisation of resources, equipment or financial resources during the project. This is sometimes also called the capacity plan. • Project capacity plan: uses the resources plan and the task schedule to balance the workload per resource. • Project organisation: is the totality of all the involved organisational units, resources, incl. steering committees required to plan and implement a project (Project structure (chapter 7.9)). • Project environment: includes all the relevant external factors and stakeholders beyond a normal Stakeholder analysis (chapter 3.1.12). • Project communication plan: defines who should receive what information through which medium (chapter 7.11). • Project stakeholder communication: is a communication brief for a specific stakeholder (chapter 7.13). • Project handbook or manual: typically contains the project motivation and rationale, project contract, requirements definitions, work breakdown structure, network plans, task schedule, resource plan, project plan, cost estimates, milestone plans, quality and hand-over acceptance criteria, guarantees, SLAs. (Source: Dr. Georg Angermeier – www.projektmagazin.de/glossar, expanded by the author.)
7.1.3
Warning sign of project risks
The typical project signs or incidences that could have a major impact on the project and project outcomes are listed below. Watch out for these signs, try to answer the relating questions and use the provided tools to proactively manage the project risks: • Incomplete list of participants at project start/kick-off and/or unknown stakeholders who act in the background, i.e. incomplete and inaccurate stakeholder analysis. • Change management is lacking or late – staff and project team members are insufficiently prepared and refuse support. This could as well be a consequence of the existence of unknown stakeholders and their political game.
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• External influences or events such as an external acquisition or other projects could render your project redundant. Are you aware of all other relevant projects? • Project team members are not integrated – insufficient team building before and during the project. • Project team members are overworked – insufficient project and resource planning, under-staffing or inappropriate project organisation. • Project scope needs to be changed – it is inadequately defined or the project environment has changed due to, for example, new strategic directions, budget cuts, etc. • Delays and resistance within the project organisation and PM governance – due to different levels of acceptance/integration of different PM methodologies (PMI – PMBOK – Prince2). • Line management has not been sufficiently involved or too late, hence buy-in and support are lacking – inadequate stakeholder expectation management, change management, project communication, programme roadmap (programme/portfolio management) or inclusion of top management in the business case behind the project. • Suddenly a project appears on the project landscape that has similar or conflicting objectives – the project portfolio/roadmap was not prioritised properly. Which stakeholders dominate and defend their interests? • Employees/workers’ council boycott the project or the project outcome – insufficient stakeholder expectations management and change management. • Predictable risks have occurred – inadequate and late project risk analysis and risk mitigation management. • Qualifications and motivation of employees are poor – insufficient evaluation and definition of the required and existing project skills and competencies. • Employees refuse to undertake certain tasks – insufficient clarification and alignment between the roles, responsibilities and the tasks, or overlapping roles and responsibilities; consequently, performance measurement is influenced by more than one individual; ‘people behave the way they are measured’. • There is a long history of aborted projects and the vultures are already waiting – have you assessed and understood the project environment properly? Source: www.themanager.org, expanded by the author. Also see the section on project risks in the Risk analysis tool (chapter 6.14).
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7.2 Project contract Intention (Why and when do I use it?) Before the start of the project work, the Project contract tool is useful to properly clarify and define the project. The Project contract – sometimes also called the project brief – is one of the early descriptions of a project. Use the Project contract tool if you want to define a project. The Problem definition tool (chapter 3.1.1) is conceptually equivalent to defining a problem at the beginning of a problem solving cycle; hence, be aware of potential overlaps between the tools and activities. Purpose (What does it do?) A project contract documents the essential elements and aspects of a project in its early stage. It provides a guideline and definition of what needs to be done and achieved. A more detailed version is often called Project Definition Report (PDR). Instruction (How do I do it?) Ideally, you should start your work on the basis of an existing project idea/concept/proposal document. Then refine and define the following elements and aspects of the future project: • Description of the goals and objectives of the project: – What should the project achieve? What is the concrete benefit from the project? – How can the project objectives be tangibly described and defined? – What are the sub- and intermediary project goals? – What are the project’s communication objectives? – How would you describe the project? • Accountabilities and responsibilities: – Who is accountable for the project? – Who controls the budget? – Who are the members of the steering committee? (Use the Project organisation tool (chapter 7.9).) • Sponsor and owner: – Who is the accountable sponsor or owner? (= who commissioned the project?) – Who has delegation and decision-making power?
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– What are the expectations of the sponsor? (Use the Stakeholder expectation management tool (chapter 3.1.14).) – How is the sponsor involved in the project? (Potentially use the following tools: Stakeholder map (chapter 3.1.13), Project structure (chapter 7.9), Project management roles and responsibilities (chapter 7.10).) • Feasibility and ease of implementation: – Are there already existing ideas or suggestions for solutions? – What are the known required means and resources to successfully deliver the project? – What is the budget and how many team members are available? – What are the known deadlines and milestones? – What are the legal, judicial, legislative and procedural boundaries that need to be respected? – What are the known dependencies? • Vested interests and conflicts of interests: – What is the motive behind the project? What are the interests (whose?) behind the project? – What are the anticipated benefits of the project? (What will be different once the project has been delivered and implemented?) – What are the already known advantages and disadvantages of the project? – Who is the project’s target group? – What is the priority of the project? (What do you need to give up to have this project?) • Conditions and prerequisites: – What can and should be changed – and what must remain unchanged? – What are the relevant boundaries and conditions? – Do any known milestones, commitments and deadlines exist? • Success factors and indicators: – When will the project be considered successfully delivered? – What are the qualitative and quantitative indicators? How will you know that the project objective has been met? • Project admin and hygiene factors: – Project name/project reference number 319
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– Status/version number – Accountable project manager – Dates (date of last update/sign-off/creation) – Project idea suggested by – Topic/domain/division/content area – Project audience/participants/team members – Brief project summary – Important dates (start, kick-off, key milestones, phases, go-live, etc.) – Budget/costs Example of a project contract sheet Table 50 gives an example for a project contract sheet. Please note that the table does not contain all the mentioned elements and aspects. Carefully check all possible elements it might contain and customise it to your needs. Remember that, during the project lifecycle, a detailed contract can save a lot of money, e.g. by making claim management easier or even unnecessary.
Table 50
Project contract sheet Project contract
Project name/title
Project no.
Status:
Version:
Brief description
Start date
Definition of objectives
End date
Communication objectives Steering committee
Project manager
Commissioned by
Project sponsor
Project target group
Priority (A,B,C)
Feasibility
Duration (man-days)
Interests
Costs
Conditions
Approved by
Success indicators
Date
...
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Project ideas suggested by
Signed by project manager
Signed by project sponsor
...
7.3 LogFrame
Tips and suggestions • Ensure that you have properly understood the original project idea/concept/proposal and that you have translated this as intended and without interpretation. A project idea would typically consist of: – The suggested project name/title – A brief description of the idea/concept – The initial trigger for and root cause of the project idea. (This most likely refers to a problem situation, while the idea is the assumption regarding a potential solution.) – The suggested approach and way forward – The affected areas Cross-reference to related tools in this book Charter (chapter 4.4), LogFrame (chapter 7.3). Source: Haberfellner, Kostka, Projektmagazin
7.3 LogFrame Intention (Why and when do I use it?) The LogFrame tool was developed in the 1980s for the United States Agency for International Development (USAID) and is best used as a tool for goal-orientated project planning. The tool has different names such as the Logical Framework Matrix, Goal Orientated Project Planning (GOPP), and Objectives Orientated Project Planning (OOPP). The LogFrame tool is still commonly used for international development projects by NGOs, non-profit organisations and development agencies (e.g., GTZ) for the planning, steering, control and evaluation of larger projects. Purpose (What does it do?) The LogFrame tool is a 4×4 matrix (table 51) that provides a simple but still comprehensive overview of a planned or running project. The tool can be useful in all four phases of the micro project life cycle. It helps you set up the initiation and planning phases as well as with the steering and control during the implementation and evaluation after the project closure.
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Table 51
Logframe Activity description
5. Verifiable indicators
6. Sources or means of verification
7. Assumptions (Risks)
1. Goal or overall objective
The higher-level objective to which the activity will contribute. The goal statement is the context of the project intervention. Your project will contribute to the achievement of this objective.
Helps answer the question: ‘Is progress being made towards the goal? How would you demonstrate this?’ The metrics for measuring your project’s contribution to the goal statement.
How will the information be collected (when and by whom) and how will it be reported? The source of the goal statement metrics.
The risks that may have a bearing on the achievement of the goal statement.
2. Acitvity objective or purpose or objective
The more specific development outcome/s to be achieved by the activity. What can the target group (the primary beneficiary) do after the project? This statement is the guideline of your project interventions.
Helps answer the question ‘Have the activity outcomes been achieved?’ and is measured in terms of quality, quantity and time. The metrics for measuring the achievement of your purpose statement. This is the measure of the project's effectiveness.
Sources of information and how it will be reported. The source of your purpose statement metrics.
Factors outside the activity management’s control that may impact on the activity objectives to the goal link. The risks that may have a bearing on the achievement of the purpose statement. This is stated as an affirmative statement of risks.
3. Outputs or results or deliverables
The outcomes delivered by the project’s activities. This statement is the project intervention to achieve the project purpose.
Helps answer the question: ‘Have the outputs been delivered?’ and is measured in terms of quality, quantity and time. The metrics for measuring the achievement of your output statement. This is the measure of the project's efficiency.
How will the information be collected (when and by whom), and how will it be reported? The authoritative source of your output statement metrics.
Factors outside the project management’s control that may impact on the output to the activity objective link.
4. Tasks/ activities (or input)
The tasks that have to be completed to deliver the planned outputs.
Helps identify whether tasks/activities have been completed according to plan. The metrics for measuring the input statement. This is the measure of the allocation resource.
(Sometimes a summary of the costs/budget is given in this box). The authoritative source of your activities’ statement metrics.
Factors outside the activity management’s control that may impact on the tasks/activities to the output link.
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7.3 LogFrame
The 4×4 matrix LogFrame uses a top-down > bottom-up approach to cover all 7 important project aspects and to compare them for consistency. The seven elements are: 1. Goal or overall objective – What is the overall objective? What are the expected benefits? 2. Activity objective or purpose or objective – Why are we doing this? What are our intentions? 3. Outputs or results or deliverables – What are the measurable outcomes and results? What will be delivered? 4. Tasks/activities (or input) – What activities are required to achieve and deliver results? 5. Verifiable indicators – How would you measure and demonstrate that progress has been made and the goal has been achieved? 6. Sources or means of verification – How can you verify progress? What are the information sources? What needs to be done to actually verify? 7. Assumptions (positive outlook+) and risks (negative outlook) – What are the assumptions on which this project is based? What are the risks if the assumptions and objectives are not realised? Instruction (How do I do it?) • Use the provided LogFrame 4×4 matrix (table 51) as a template. • Ask yourself and the audience the questions regarding the seven project elements and capture them in your LogFrame matrix. • Use the direction shown in figure 126. Follow the arrows top-down in the 1st column, then bottom-up in the 4th column, and then horizontal from the 2nd to the 3rd column. • In the first step, start working through the instructions in the 1st column topdown from no. 1 to no. 4. Also use tools like the Objectives tree (chapter 4.2). • In a second step, reverse the direction (4 > 1) and verify if the defined activities are really sufficient to deliver the results, etc. This is an important quality assurance step. The Charter (chapter 4.4) uses a similar logic to ensure consistency and a robust quality definition. • The 1st column represents your goal hierarchy. You have verified that your activities will create the deliverables and results, which will in turn help achieve the overall objectives. All elements of the framework must fit together and – in their totality – represent the project. The next steps are to ensure consistency across and within the LogFrame matrix. Use the ‘If … and …, then …’ logic. Figure 127 depicts the ‘If … and …, then …’ logic and sequence to further refine the project definition. Start from the bottom and ask:
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– If the activities are undertaken, will the expected results and deliverables then be delivered? – If the deliverables are delivered, will the objective or purpose of the deliverables then be met? – If the purpose of the deliverables is met, will the goal or overall objective then be met? • If you have discovered inconsistencies and gaps, you need to correct them and repeat your checking from the beginning to ensure that the complete framework is robust and solid. • In the 3rd step, address your assumptions. For every statement you made in the 1st column, you have probably made an assumption. These assumptions can be wrong or right. What are the associated risks? Use the instructions in the 4th column in table 51. Verify your assumptions with the audience. Be aware that this might raise expectations amongst the participants. Use the Stakeholder expectation management tool (chapter 3.1.14) to reveal these and simultaneously start to document the identified risks, using the Risk analysis tool (chapter 6.14).
Activity description
Verifiable indicators
Sources or means of verification
Goal or overall objective
1
8
9
Activity objective or purpose or objective
2
10
11
7
Outputs or results or deliverables
3
12
13
6
Tasks/ activities (or input)
4
Assumptions (Risks)
5
Figure 126 Approach and questioning direction within the LogFrame
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7.3 LogFrame
Activity description
Verifiable indicators
Sources or means of verification
Assumptions (Risks)
Then Goal or overall objective
Then
If Activity objective or purpose or objective
Then
If
Outputs or results or deliverables
Then
Tasks/ activities (or input)
If
Figure 127
If
and
Then If Then
and
If
and
‘If …. and …., then ….’ logic of the LogFrame tool
• Now verify the consistency between the assumptions and risks in the 4th column with the goal hierarchy in the 1st column. Again use the zigzag logic from figure 127. The tests questions are: – If the activities are undertaken and the underlying assumptions are valid, will the expected results and deliverables then be delivered? – If the deliverables are delivered and the underlying assumptions are valid, will the objective or purpose of the deliverables then be met? – If the purpose of the deliverables is met and the underlying assumptions are valid, will the goal or overall objective then be met? • Make sure that the assumptions and risks are precise and detailed enough. Do you have an action plan to mitigate the risks? • When you have completed the assumptions/risks column, you can move to the 2nd and 3rd column. This 4th step contains checking the consistency and accuracy of the performance indicators and the ways to prove their validity. Again, use figure 126 to orientate yourself and apply the instructions from table 51. Use the following criteria when defining the measurable performance indicators: – Validity – the indicator must measure the result. – Reliability – the indicator must deliver the data consistently and reliably.
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– Sensitivity – the indicator must react to and display a change in the underlying data. – Simple – it must be simple to collect and display the data. – Useful – the indicators must be of value for the decision making and steering. – Financially justifiable – the indicators must be worth the money and effort taken in terms of the value added they create. • In the 5th step, define the means and sources that allow you to demonstrate and prove the indicators. What are the information sources and how are you going to collect and measure the data? Prepare a plan for this. Tips and suggestions • In larger scale projects, it might be useful to capture the activities in a separate Gantt chart (chapter 7.6). Use project references and cross-references to link all the documents. • Use the LogFrame tool as an interactive communication tool to create clarity and solve misunderstandings between the project stakeholders. Even if you have created correct content whilst working in complete isolation, the other stakeholders will probably reject this. Collaborate! • Don’t forget that the LogFrame tool uses an iterative process; meaning that prior decisions need to be changed if new evidence appears and result in an updated version. I suggest creating a project decision log of all the events and decisions that led to an update and those who were involved. • Adjust the tool to your needs, while maintaining the principle of consistent and interrelated elements. This does not imply that the purpose is a mechanical ‘paint by numbers’ – ‘fill the boxes’. Each step has to be enriched through the interactions and discussions with the relevant stakeholders. Involve them as soon as possible. • The LogFrame matrix is a living document. Use it throughout the entire project life cycle and update it regularly. • Officially there is a distinction between the method (Logical Framework Approach) and the resulting document (Logical Framework or LogFrame). I don’t maintain this distinction; I use ‘LogFrame’ for the tool name, the approach, the method and the document. Cross-reference to related tools in this book Charter (chapter 4.4), Project contract (chapter 7.2), Gantt chart (chapter 7.6). Source: Rasul, GTZ, NORAD 326
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7.4
Project roadmap/programme
7.4 Project roadmap/programme Intention (Why and when do I use it?) People of the (project) middle and top management are typically the audience of a roadmap for budget decisions, strategic alignment, coordination and resource aspects. The audience of a Gantt chart (chapter 7.6) is typically a project sponsor, project manager and people directly affected by the specific project. Purpose (What does it do?) A roadmap helps in the understanding and communication of the bigger picture of a complex programme or series of projects over an extended period of time. It shows parallel projects and initiatives on a strategic level by displaying a summarised version of projects and other initiatives that are inter-dependant and relevant. A roadmap shows the projects and the sequence of events on a strategic level. Instruction (How do I do it?) • Minimise and consolidate all project plans and Gantt charts onto the highest level in order to summarise them. • Consolidate the summarised project phases into logic groups, and display them. The logic groups could be similar to the example in figure 128: process,
Programme ABC Project XY Process
Transfer
Development Implementation
Data
Communication
Global roll out
SAP integration
Climate and culture assessment
Product XY launch
Technology
People
VoIP
Role assessment
Job re-assignment
XY intermediary training
Office refurbishment
Infrastructure Project management 2007
2008
2009
Figure 128 In this example, the roadmap is divided into the six streams: process, data, technology, people, communication and infrastructure 327
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data, technology, people, etc. It could also be according to different products or services, or different regions in which projects are taking place, or according to a project life cycle, or whatever other logic you find useful. If required, add a long-term timescale. • Add other related and relevant projects that affect or are affected by the projects to the diagram. • A roadmap is the purest form of a ‘bigger picture’ which is easiest to understand – displaying the dependencies between projects, how certain ‘out of scope’ aspects impact on the whole program, and projects in other silos or departments that potentially deal with similar aspects. Tips and suggestions • In order to align this roadmap to the IT or business strategy (strategy map), choose the grouping logic as the same as the reference strategy. For example, you could use the grouping logic of a ‘balanced score card’, which comprises of financial, customer, internal process, and learning/growth perspectives. • Don’t rush this exercise, as much thinking and planning is needed, especially when you plan for the next unknown project phase and don’t have detailed project plans as a basis.
Program Project XY
Transfer
Development Implementation
Global market introduction
SAP integration
Product XY market introduction
Survey
VoIP - TelCo
Job/role analysis
Redistribution of work
XY Training
Office renovation
2007
High importance
2008
Medium importance
2009
Low importance
Figure 129 The different shading represents the importance or relevance of each project within the project landscape
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• If you want to understand the complexity of many different projects aiming for very similar goals, but which are often not managed under a common umbrella but should be consolidated ‘on the level above projects’, you could use a programme management approach. In principal, a roadmap groups similar projects (with similar objectives) together, according to certain criteria, and forms a programme for a specific top level theme that cuts across several areas, departments, product/service areas, hence has a major impact, but is currently affected by many uncoordinated projects ‘all doing their own thing’. Example of an alternative road map grouping logic Figure 129 presents an alternative grouping logic to depict a project road map which is based on the relevance or importance of each project. Also use this in conjunction with the Prioritisation matrices (chapter 6.15). Cross-reference to related tools in this book Gantt chart (chapter 7.6).
7.5 Work breakdown structure Intention (Why and when do I use it?) A work breakdown structure (WBS) helps you define your project’s scope of activities through its grouping and structuring approach. A WBS provides a structure for the relevant project management as well as the technical and problem solving activities that need to take place during the project. It is a simple tool that helps you verify whether you have remembered and specified all the required activities. The work breakdown structure (WBS) is used during the initiation and planning micro project cycle. Predecessor tools would be a Charter (chapter 4.4), a Project contract (chapter 7.2), and the LogFrame (chapter 7.3). A WBS helps you • deconstruct the project into its sub-sections and ensure that you have covered and addressed all the ‘chunks of work’. • determine the resulting resource requirements on the basis of the outlined activities. • develop a feeling for the sequence of activities that will be documented in, for example, a Gantt chart (chapter 7.6). • build a solid understanding of the required work so that the later estimation of the time lines and costs is more accurate. 329
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Purpose (What does it do?) A work breakdown structure is typically an activities and deliverables-focused grouping of project elements. This structure organises and defines the project’s total work scope in a tree type hierarchy diagram. Each descending level is an increasingly detailed definition of a project element. These elements can be grouped by the following logics: • object orientated – disaggregating the project into individual subsets according to the topic, object, work product, or other issues that will be created. • functions orientated – structuring the project according to the functionalities and capabilities that the project will enable. • mixed – grouping the project according to a combined, mixed set of criteria such as requirements, activities, products, services, location, project life cycle, department, etc. Remember that there are three types of activity in a project plan; however, the charter, project contract or LogFrame might only mention the technical and project-objective-related activities. The three types of activities in a project plan are: • Specific technical activities that require technical skills and which define the type of project – e.g., architectural and system development require programming and IT skills. • General problem solving activities that require a broad spectrum of skills – e.g., analytical and facilitation skills. Tools and techniques for such activities are outlined in this book. • Project management activities that ensure that the project runs smoothly. These project management and project governance activities are often defined in a project management methodology to provide a framework ensuring quality and success. In a later, separate step, the WBS will have a sequential, resources and time dimension added. This will result in a task schedule, resource plan and Gantt chart (chapter 7.6). Don’t confuse this with a Project work plan (chapter 7.7). Instruction (How do I do it?) • Use another tool (Charter (chapter 4.4), Project contract (chapter 7.2) and LogFrame (chapter 7.3)) to understand the objectives, the required deliverables and the key activities that will build and deliver the project. • Structure the WBS in the most suitable way. This could be according to the project life cycle, for example, the scope, analysis, design, build, etc., or one of the above-mentioned logics (object, function, mixed, etc.). • Identify and define all the deliverables you need to produce to complete each project phase. Start with the high-level outcomes and use a top-down ap330
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7.5 Work breakdown structure
proach to further divide and detail the required deliverables. Check the Charter tool (chapter 4.4) for deliverables which might be already defined. • Decompose all the deliverables into high-level key activities. • Break down those key activities into smaller sub-activities until you reach the desired level of detail using a top-down approach. At the end of the exercise, ask yourself these three questions: – If I had all these deliverables, would I achieve the planned objectives for the project? – If I do all these activities, will I complete that deliverable? – If I do all these subactivities, will I complete that activity? If any answer is no, retrace your steps and fill in the missing elements. • Plan and display your projects using a tree-style diagram known as a WBS Chart (figure 130). The WBS does NOT show dependencies, but groups tasks beneath each other. It is not time based – there is no time scale on the diagram. Tips and suggestions • Don’t re-invent the wheel. There are templates for most types of project, which require only small adjustments to specific technical and project management activities. • Remember to define headings and group similar activities together. The logic for the grouping and categorisation is often pre-defined by the nature of the project. This is where the above-mentioned life cycle perspective becomes relevant. For example, a WBS for the construction of an airport will use the typical architectural, civil engineering and construction phases, which are different to the development of an IT system. • Name smartly – name all deliverables as noun or adjective/noun deliverables, such as ‘creative brief’ or ‘functional specification’. Name activities as active verbs, e.g. ‘write creative brief’ or ‘update functional specification’. • By adding the active verb, you communicate better not only what the outcome is (the deliverable) but also what kind of work the assigned person is going to perform (e.g. create, update, etc.). Don't use weak verbs like ‘do, execute’ or ‘perform’. They do not communicate clearly what outcome or result is expected. • How granular should you get with a WBS? There are no hard-and-fast rules on how granular a WBS should be. It all depends on the complexity of the project, the level of risk, how skilled your team is, and how much detail is required to maintain the necessary level of control. A general guideline might be that each lowest-level activity in the WBS should be assigned to a single in-
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Technology innovation project
Planning
Mining
Production
Marketing
New product development
Project planning
Substitute sourcing
Mini series
Customer feedback
R&D
Project governance
Prototypes
Infrastructure upgrade
Broker research
Testing
Equipment
Launch
Pilot
Product line project
Product 1 Book
Product 2 CD
Product 3 e-book
Product 4 DVD
1.1 Write
2.1 Write
3.1 Write
4.1 Write
1.2 Publish
2.2 Record
3.2 Develop
4.2 Record
1.3 Produce
2.3 Produce
3.3 Produce
4.3 Produce
1.4 Sell
2.4 Sell
3.4 Sell
4.4 Sell
1.4.1 Retail
2.4.1 Retail
3.4.1 Internet
4.4.1 Retail
1.4.2 Wholesale
2.4.2 Wholesale
4.4.2 Wholesale
2.4.3 Internet
4.4.3 Internet
Figure 130 Tree-style diagrams of work breakdown structures (WBS)
dividual, and that an individual should be able to complete the activity in e.g. one to ten working days. Cross-reference to related tools in this book Mind map (chapter 3.1.21), Charter (chapter 4.4), Project contract (chapter 7.2), LogFrame (chapter 7.3), Affinity diagram tool (chapter 3.4.6).
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7.6 Gantt chart
7.6 Gantt chart I need a simple and commonly understood diagram to illustrate the bigger sequential picture of project activities. Intention (Why and when do I use it?) A Gantt chart displays schedule-related information. It can provide a simplified overview of high-level activities/areas, the sequencing, time, duration, dependencies for projects and any type of activity structuring and planning you intend to share with others. Purpose (What does it do?) A typical Gantt chart summarises and displays high-level activities, the sequence and dependency of the different activities across a timeline. It lists activities or other project elements on the left side of the chart, dates are shown across the top, and activity durations are shown as date-placed horizontal bars. Instruction (How do I do it?) • Generate a list of required and outstanding activities. • Use the Work breakdown structure (WBS) tool (chapter 7.5) to establish a grouping and hierarchy for the activities. • Condense the activities and summarise on the highest level, so that you end with about 6 to 14 key activities or deliverables, which are expressed through
Week
Activities Start of the week
1
2
3
23 oct
30 oct
6 nov
4
5
6
13 nov 20 nov 27 nov
7
8
4 dec
11 dec
Task 1 – Process Process analysis and general assessment of environment, analysis of core business and support areas, process flows, areas of responsibilities Task 2 – Scorecard and performance indicators
Performance indicators for each process flow. Indicators for finance, process, HR (learn & growth), customer perspective
Task 3 – Org design
Design org level 1 and 2, define key areas, roles and responsibilities and job descriptions.
Task 4 – Test design and pre-present
Consolidation of above results and development of an implementation strategy for the design of the new department
Stakeholder review
Figure 131
Milestones
Gantt chart diagram – a screenshot from MS Project 333
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key activities. If you use a software application like MS Project, you would look at the activity level 1 or 2. • Decide on the dependencies and sequencing of the activities. What activity cannot start until another one is finished? Which activities will run concurrently? Set the estimated start and end date of the activity. • Identify milestones, which are dates when significant deliverables and major project activities are planned to be completed. • Most software applications like MS Project have a Gantt chart view (figure 131). If not, use a drawing application like MS Visio to graphically represent the diagram. Cross-reference to related tools in this book Roadmap (chapter 7.4), Work breakdown structure (WBS) (chapter 7.5).
7.7 Project work plan I don’t want to read the complete project documentation, I just want to see the relevant information in the relevant sections for my sub-stream. Intention (Why and when do I use it?) Use the Project work plan if you want to breakdown the project into smaller parts in order to make the activities and responsibilities clearer and easier to manage. Compared to the Charter (chapter 4.4), the Project work plan focuses more on the project management aspects, while the Charter focuses more on the objectives and the problem solving aspect. Purpose (What does it do?) The Project work plan translates the project contract into a task-orientated plan for a sub-section of the project. It is a kind of a mini-project contract for a specific project stream. There are many different terms for this tool. Don’t be confused by the terminology, understand when you should use it and why. Instruction (How do I do it?) • Use the Project contract as the high-level reference and input document. • Use the Work breakdown structure tool (chapter 7.5) to learn about the ‘chunks of work’. Then break them down even further into relevant tasks and steps, and define them using table 52. 334
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7.8
Project environment analysis
Example of a project work plan template Table 52
Project work plan template
Project work plan Number Phase
Description Segment
Task/step
Project name
Project manager
Sponsor
Predecessor task
Start
Effort/ Work
Successor task
End
Duration
Comment
Cross-reference to related tools in this book Project contract (chapter 7.2), LogFrame (chapter 7.3), Charter (chapter 4.4), Work breakdown structure (chapter 7.5). Source: Haberfellner, Sommerlatte (HdU)
7.8 Project environment analysis I want a simple and quick way to identify all the external elements and factors that can impact and potentially harm the project. Intention (Why and when do I use it?) The Project environment analysis has similarities with the Stakeholder analysis (chapter 3.1.12) and the Stakeholder map (chapter 3.1.13), while the Project environment analysis is useful if you want to explore and identify more than the project internal stakeholder interest groups. Consequently, the Project environment analysis examines the external factors that could impact and harm the project. This allows you to mitigate those risks. This is part of good project management practice. Purpose (What does it do?) The Project environment analysis tool investigates the project ‘surroundings’ and • identifies all of the factors influencing the project, stakeholders and other interest groups to proactively manage project risks that originate from them, • identifies potential ‘tactics’ with which to influence the project environment, and • explores options for the successful integration of the project in, for example, the organisation, company, and environment at a later stage. 335
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Instruction (How do I do it?) • Identify all of the project’s influencing factors and conditions. • Assess the relevance and associated risks of all the external factors/entities (see figure 132), which could be: – Physical – Ecological – e.g., environmental – Social incl. – e.g., ethics, different social levels, etc. – Psychological – e.g., group dynamic, change resistance, mobbing, etc. – Socio-cultural – e.g., religious, country-specific traditions and cultures, etc. – Political – e.g., dependencies on political parties or parastatal projects, etc. – Commercial-economic – e.g., macro economic situation, recessions, etc. – Financial – e.g., access to capital, lending conditions, interest rates, credit ratings, etc. – Judicial – e.g., different legal practice, jurisdiction, product liabilities, etc. – Contractual – e.g., penalty terms and conditions, enforceability of contracts in the Middle East, etc.
Consultants Coaches Manufacturers
Public
Employees
Team Suppliers
Sponsors Organisations
Project Divisions
Subsidiaries Municipalities (Legislation)
Research
Internal departments High Schools/ Education Media
Competitors Clients
Figure 132 Diagrammatic display of external factors that may be part of a Project analysis
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• Use the Stakeholder analysis (chapter 3.1.12) and assess the internal factors and stakeholders as well as their interests. Document them with the external factors. • Use the Risk analysis (chapter 6.14) to identify and document the related project risks. • Start to identify and explore the ‘shared, connecting factors’ as an entry point for an easier, later project integration. • Find out where and how you could positively influence the project environment in ‘your favour’? • Document these findings and conclusions for the project plan. Ensure that your insights are passed on to the relevant project areas and owners. • Continuously watch out for changes in the project environment and circumstances. Tips and suggestions • Use the Powergram tool (chapter 5.1.6) or other stakeholder-related tools to depict the political positions and power balance of the project stakeholders (internal and external). • Consider doing an Environmental analysis (PEST) (chapter 5.3.7) that uses a similar logic. Cross-reference to related tools in this book Powergram (chapter 5.1.6), Environmental analysis (PEST) (chapter 5.3.7), Stakeholder analysis (chapter 3.1.12), Stakeholder map (chapter 3.1.13). Source: Projektmagazin.de
7.9 Project structure Intention (Why and when do I use it?) When setting up a project, it is vital to understand how to assemble a project with the available components existing in the organisation. Purpose (What does it do?) This tool explains the various organisational project components and their specific functions for a project. Not every organisation has an ideal project environment with all the mentioned project structure components. It is then up to you to create those roles informally, even though the organisation does not formally offer the project support structure. For example, a formal project office does not always exist in organisations. 337
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Instruction (How do I do it?) Review the relevant components for your project structure and decide if, where, when and how to use those components in your project structure. Not every project merits the use of the complete team and its bureaucratic overhead. • Project steering committee – typically consists of members from the top management. • Project sponsor – typically the individual who owns the project and represents the project on the project steering committee. His organisational position is normally on director or middle management level. • Project review and QA team – an amalgamated team of multi-disciplinary subject matter experts who play a quality assurance and content review role. The individuals are typically experienced middle management leaders who advise the steering committee from a content perspective. • Project manager – the crucial ‘conductor’ of a project usually belongs to the middle management. Some organisations have established a resource pool of experienced and trained full-time project managers who only run projects. This more recent development acknowledges the need for dedicated full-time project professionals. The focus of a project manager is not necessarily to be a technical expert for the project’s issues but rather to know how to run a project. • Project office – the dedicated professional support structure usually comprises of a project office manager and project office employees, who themselves might work part-time on the project as project administrators or assistants to the project manager. • Project team members – the work-horses and core of any project. Tips and suggestions • Use this tool in combination with the Project management roles and responsibilities (chapter 7.10). It will provide the detailed responsibilities behind each role. • Also use the Accountability matrix (CIDA) (chapter 7.12) tool. It will provide you with a structure of how the different roleplayers could work together. • It is important to understand that in a project-based organisation a distinctly separate sub-structure develops. As a result, a matrix develops that is sometimes formal, sometimes invisible. Several different reporting lines develop and are often the reason for confusion and disorder. Imagine a financial subject matter expert that has been assigned to a project as a team member. There could be three reporting lines: one to the project manager, one to the financial director, one to his operational line manager! It is important to take the situation of the individual person into consideration when building a project team. 338
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7.10 Project management roles and responsibilities
Project structure versus organisational structure
CEO
Directors
Re QA view tea , m Pr ma ojec na t ge r Pr me ojec t mb te er am s
Top management
Pr sp ojec on t so r
Pr ste ojec co erin t mm g itte e
Figure 133 shows how a project structure can span across an entire organisation. Nowadays, companies have sometimes set up a separate project(-based) organisation, in order to manage many projects in parallel.
tS
Pr
oj
ec
Subject matter expert
tru
Pr o of jec fic t e
ct
ur
e
Middle management
Organisational structure
Figure 133
Organisational structure and project structure – a pyramid
Cross-reference to related tools in this book Project management roles and responsibilities (chapter 7.10), Accountability matrix (CIDA) (chapter 7.12), Organisational structure (chapter 5.1.1).
7.10 Project management roles and responsibilities Intention (Why and when do I use it?) Project management roles and responsibilities are required in every project environment. Purpose (What does it do?) The responsibilities outlined below are the default for all typical project management roles. Instruction (How do I do it?) Compare the relevant role with the default list of responsibilities and amend where required in order to compile a project job description. 339
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Responsibilities of a project sponsor/owner This is the person with the ultimate authority over a project. The sponsor provides project funding, decides on issues and scope changes, approves major deliverables and provides high-level direction and oversees the contracting. He also champions the project within the organisation. Depending on the project and the organisational level of the sponsor, he is likely to delegate day-to-day tactical management to a project manager. Other responsibilities are to: • Set project objectives and review project performance against the project objectives of the sponsor/owner. • Make sure that contracts are formulated clearly and may not be misinterpreted and that claims are managed fast and reliably. • Define the schedule and budget constraints for a project and set top-level project objectives. • Review project scorecards and reports for individual projects, selected projects, or portfolios. Responsibilities of a project manager • Oversee the implementation of the project on a daily basis (may include multiple projects) with regard to time, budget and quality. • Guide and evaluate the performance of the team and its members. • Ensure that sufficient time is allocated in the project plan to attend all recommended training. • Use project schedules and work breakdown structures to guide the team members in the implementation of the project. • Consult with a methodology subject matter expert and provide continuous feedback to the project team on the status of project regarding methodologyrelated issues. • Manage the project scope. • Select, develop and oversee an effective team, allocate team members to project tasks, and coordinate activities of sub-teams. • Report project progress to senior management. • Mediate problems encountered by team members. Responsibilities of a project office manager (PMO) • Provide scheduling tool support (resource levelling, reporting). • Measure and report progress of project teams. • Monitor and report the status of key milestones and deliverables. 340
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• Conduct regular status meetings. • Monitor issue resolution. • Manage the change control process. • Coordinate strategic initiatives through cross-project management. • Foster clear communication and synchronise activities among multiple project sites. • Maintain a project documentation archive. • Manage sign-off of key deliverables. • Facilitate quality assurance reviews. • Conduct risk reviews. Responsibilities of a project review and quality assurance (QA) team • Conduct quality assurance reviews, whilst playing a neutral although critical content review role. • The team ideally consists of multi-disciplinary, part-time team members who are assigned depending on the nature of the project. Responsibilities of a project team member • Support the project manager. • Administrate the project in terms of governance activities. • Execute all assigned tasks. • Identification and regular reporting on progress, status, issues and identified risk. • Ensure that the context and implications of change are understood by the stakeholders and the project team. • Develop an understanding of how present and future business needs will impact the solution. • Identify and document all business, technical, product and process requirements. • Documentation, support and training. • Subject matter experts are called upon request and need – those speciality skills and knowledge can be internal or external resources and tend to be added to the team on an ad-hoc basis.
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Tips and suggestions Depending on size and structure of the project, the responsibilities of the team members and the project structure may differ from the above description, e.g. there might be several hierarchies of senior and junior project managers to cater for the bigger scale projects.
7.11 Project communication plan Clear and consistent communication is essential to the success of any project. A variety of tools may be used to communicate with project stakeholders. Common tools include status reports, correspondence, meetings, and formal presentations. To communicate effectively with project stakeholders, a project manager needs to develop a good understanding of the unique needs of each stakeholder group. This is accomplished with several tools that are included in the communication plan, including the stakeholder map and the stakeholder communication matrix. These tools help to describe all project stakeholders, provide a clear understanding of the specific interests of each stakeholder group, their vested interests in the project, and their expectations. All communication tools mentioned in the project communication plan are correlated to the specific needs of each stakeholder group. Specific individuals are assigned the responsibility of executing the communication outlined in the communication plan. Intention (Why and when do I use it?) The communication plan (table 53) describes the specific communication tools that will be used to communicate with project stakeholders. Furthermore it ensures that the tools, channels and frequencies of communication are clearly defined for all project stakeholders. However note that the communication means are not explicitly mentioned in this example. Purpose (What does it do?) • The communication plan identifies and describes all project stakeholders. • It describes the communication needs of the project stakeholders. • It defines how project stakeholders will be kept informed about the project. • It identifies the communication paths within the project. • It also ensures that all information is consistent, accurate, and timely.
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Table 53
Example of a communication plan
Stakeholder
Accountabilities of stakeholder (from Accountability matrix tool, chapter 7.12)
Objectives
Expectations (from Stakeholder analysis tool, chapter 3.1.14)
Communication media (example)
Software development manager
• Communicate weekly with the IT executive steering committee (ITESC). • Ensure adherence to IT policies and procedures. • Effective utilization of resources. • Maintain focus on customer service.
• Customer expectations are met. • Project goals & objectives support division strategic plan. • Project meets agency’s goals & objectives for Web services.
• Customers are satisfied. • IT resources are effectively used. • Receipt of progress reports on a regular basis. • Adherence to project management methodology (PMM). • Timely notification of issues. • Project is completed on time and within budget.
• Verbal, direct
Project office manager
• Communicate with the project manager regarding project management tools and practices. • Ensure all deliverables are reviewed by the project office to assure quality.
• Project deliverables are of high quality. • Project office projects are successful.
• The PMM will be followed as it applies to this project. • Project manager will provide regular project status reports. • Timely notification of issues.
• Verbal, direct • Interactive – score card
Assistant project manager
• Communicate with the project manager regarding project management tools and practices
• Project office projects are successful
• Timely notification of issues.
• Verbal, direct • Interactive – intranet
Project manager
• Manage the overall project. • Ensure timely completion of deliverables. • Coordinate and direct project activities. • Effective management of project resources. • Ensure project stakeholders are kept well informed. • Maintain focus on customer service.
• The project is well managed. • All customer requirements are communicated and captured efficiently. • Information flows easily among project stakeholders. • Customer expectations are well met.
• Adequate funding is available. • Adequate project resources are available. • Customers are satisfied. • Project team members participate when needed. • Project team members contribute to the flow of project information.
• Status reports • Letter to the employees
Technical support
• Provide technical input to the statement of requirements. • Provide technical support for infrastructure. • Support the network, server, database, and PC infrastructure. • Assist with product installation. • Communicate with project manager as necessary.
• The product is properly designed, meets agency standards, and is compatible with other systems and infrastructure. • The product and infrastructure are correctly installed.
• Hardware and software will conform to corporate standards. • Product will run correctly in this computing environment.
• Verbal, direct • Protocols
Instruction (How do I do it?) • Use the Stakeholder map (chapter 3.1.13) to verify that you have identified all relevant individuals for the communication plan. • Use the Goal catalogue (chapter 4.5), the Stakeholder analysis (chapter 3.1.12) and the Accountability matrix (CIDA) (chapter 7.12) to assess and understand the position, roles, accountabilities and expectations of stakeholders in order to adjust what and how to communicate and how to best use the communication plan. 343
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• Use table 53 to decide which means of communication (= communication tools) will be used to reach a particular stakeholder group. • The project manager will be the individual responsible for updating the communication plan and disseminating it to the project team. The project manager will also review the communication plan whenever a milestone is reached or if there is a significant change in the project. • The skeleton of the communication plan is based on the questions below. You need to answer these in order to create a communication plan, irrespective of whether you use the provided template: – What – What are the message and the essence of the statement? – Why – What are the reasons, objectives and intentions behind the message? – Who and when – Who do you want to reach with the message? When and where? – How often – What is the intended frequency of the communication? – From whom – Who is the official owner of the message? Who are the distributors and the messengers? – When – What are the start and end date and period of communication? • Use table 54 and decide which communication means you want to employ to reach your target audience. You can choose between three different types of communication means: – Oral communication – face to face, that is based on the direct interaction between individuals, e.g., interviews, video conferences, etc. – Distribution of printed, displayed communication means from a central source to all recipients, e.g., status reports, brochure wares, project newspaper hand-outs, reports, etc. – Interactive, electronic communication means, e.g., electronic newsletters, web-based surveys, interactive multimedia platforms or portals, intranet, etc. – Mixed bag: Road shows, info display stands, hotlines, forum group presentations, etc. Tips and suggestions • Possible interaction and communication means for virtual project teams might be: dynamic web-based project planning and collaboration platforms, crossdepartmental scorecards and steering applications, shared document management applications, forum, chats, blogs, virtual conferences, collaborative knowledge management systems, a virtual project handbook, etc. 344
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Cross-reference to related tools in this book Goal catalogue (chapter 4.5), Stakeholder expectation management (chapter 3.1.14), Accountability matrix (CIDA) (chapter 7.12). Source: www.TechRepublic.com
Table 54
Communication tools and stakeholders, with examplary frequencies
Project manager
Project associate
A
A
A
a
a
A
A
a
a
a
a
a
a
a
a
a
a
a
a
A
a
a
a
a
a
a
a
a
A
A
A
A
A
A
A
A
A
a
A
a
a
a
A
A
A
A
BW
BW
a
a
Account management
a
Email
Executive sponsor
Daily bulletins/newsletter
Name of the Communication tool
IT steering committee
Customer support
Project office manager
a
Technical team member
Business team members
A
Technical team lead
Business team lead
a
Project support
Business owner
Stakeholder role
Communication plan
Implementation plan Specific letters and memos
a
a
a
Project summary/report
W
w
W
a
a
a
a
W
W
W
W
Meetings
A
a
A
A
A
A
Presentations
a
A
a
a
A
a
A
A
A
a
Project charter/definition
A
A
A
A
A
A
A
A
A
Project plan
M
M
BW
BW
BW
BW
BW
BW
BW
Project progress report
M
M
W
W
W
W
W
W
W
A
a
A
a
A
A
A
Risk management plan Milestones report
W
W
M
W
w
W
W
W
Test plan
a
a
A
A
A
A
A
A
A
a
Training plan
a
a
A
A
A
A
A
A
A
a
Legend Frequency Weekly Bi-weekly Monthly
W
a
Mandatory W BW M
Optional w bw m
Frequency Bi-monthly Quarterly As Needed
Mandatory BM Q A
W
Optional bm q a
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7.12 Accountability matrix (CIDA) Intention (Why and when do I use it?) The CIDA matrix is a tool used to assign high-level responsibilities to specific stakeholders for specific tasks. This helps to tie stakeholders and team members into producing deliverables, and serves as a reference point when time frames are not met for specific tasks, or specific deliverables are not produced. The tool allows one to set and define the output and responsibility at the start of a project/job, thus allowing for easier and more collaborative project management and task control. Purpose (What does it do?) The CIDA matrix has three components in a simple table. The rows contain the key activities or deliverables of the project or job. The columns list the various roles or names of the individuals/stakeholders. The activities in the rows are crossreferenced to the roles or stakeholders using four different letters (C, I, D, A). The completed matrix provides several different views: • Who is responsible for a specific activity and how is it executed (the row)? • Work overload – who is doing a lot of work? • How is a specific stakeholder involved in different activities or deliverables (the column)? • Co-ordination of problems and unclear accountability. Instruction (How do I do it?) Define key activities or deliverables and list these in the rows of a table, e.g. stock control, account payments, payroll payments, customer service, contract management, vendor relationship, etc. (table 55). The level of detail depends on the extent to which you intend to micro-manage the team. • Identify all relevant stakeholders and place each stakeholder (or role) in a separate column of the table. • Decide on the different responsibilities for each stakeholder and assign C, I, D or A to every relevant cell. – D = ‘doer’ – that’s who does the actual work. – A = ‘accountable’ – the ‘A’ makes the final decision and has ultimately the ownership and accountability. Note that this does not mean that the person holds the power from an organisation’s point of view. From an enablement point of view, the person has been given the authority to make decisions and is accountable for those decisions. It might be in the per-
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Table 55 Example of an accountability matrix for a product launch and market introduction Stakeholder role Activity
Tom
Jerry
Peter
Rod
Sales
C
D
C
A
Contract management
A
D
I
C
Budget approval
A
D
TV campaign
C
Events
C
A
Technology interface
C
A
Vendor relationship
Eve
Ervin
David
Sue
C
I
I
D
I D
D C
C
D
A
D
C
Tom
D
A C
C
C
I
I
son’s interest to ensure to get ‘thumbs up’ from the project steering committee and the ‘C’ stakeholders. – C = ‘consult’ – the person to consult before a decision or action is taken. This individual might even sometimes physically sign off approval documents, although ‘to be consulted’ does not necessarily require ‘agreement’ by ‘C’. The ‘A’ still makes the decisions, unless the project steering committee or the project sponsor use their veto rights. – I = ‘Inform’ – the person to be informed of a decision or action taken. The ‘I’ is typically affected by the outcome of the decision, but does not have a say in the decision making. • Scan horizontally along the rows of key activities or deliverables and ask the following questions: – Many Ds -> Are there too many people involved and working on the same thing? – No D -> Who does the work? Is the job being done? – No A -> Major alarm bell; no accountability. Is anybody committed to this deliverable? – More than one A -> Is there confusion, indecision, and no clear accountability? This leads to blame when things go wrong. It is worse than no ‘A’ at all. – Many Cs -> Is it necessary to consult so many people – is there a lack of trust and empowerment? – Lots of Is -> Do they all need to know?
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• Scan vertically down each stakeholder column and ask the following questions: – Many Ds -> Is this too much work for this individual? – No empty space -> Is there too much work? Too much consultation? Is this individual ‘superman’? – No Ds or As -> Could this role potentially be eliminated? – Too many As -> Is accountability at the right level? Is the organisation too hierarchical? Could those As become Cs instead, and empower a lower level with an A assignment? Tips and suggestions • Other terms you might hear for this tool are RASCI, RACI (for ‘responsibility, accountability, support, consult, inform) or RAM (responsibility assignment matrix). • It is important to note that the CIDA tool does not question the required or capable level of skill in order to be able to do a job and fulfil a certain accountability. The CIDA tool assumes that the required skills are in place. It might be worth checking this assumption and avoid setting somebody up for failure.
7.13 Stakeholder communication Intention (Why and when do I use it?) The Stakeholder communication tool is best used when you need a specific briefing and preparation for a meeting or negotiation with a particular individual and require insight information about that individual beforehand. Purpose (What does it do?) The Stakeholder communication tool is a kind of ‘personality profile’ or summary of a plan of action about a specific individual. Instruction (How do I do it?) • Use the Stakeholder analysis (chapter 3.1.12) and the Stakeholder influence matrix (chapter 3.1.15) as well as other means to gather relevant information and start drawing up a profile. • Use the template (table 56) as a guideline and adjust where required. Discuss your plan of action with experienced colleagues and keep this information locked away and confidential.
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7.13 Stakeholder communication
Example and template of a stakeholder communication brief Table 56
Stakeholder communication Stakeholder communication – Prof. Murray
Headings
Data/information
Consignee/name
Prof. Gilbert Murray
Role
Supporting external adviser
Informal relationship with other stakeholders
Good relationship with the HR and Finance Directors
Good contact with
Mrs Rudolph, Mr Meyer (production)
‘Negative vibe’ contacts
Mrs Graf (procurement)
General attitude to the topic XY(+/0/-)
Is supportive but cautious
General attitude to the project/ project manager (+/0/-)
Does not like the (other) external consultants, advisors and project managers
Preferred way/style of communication
Factual, rational and direct
Preference and attitude regarding topic/content
Averse to high risks
Preparation of own communication
Functional, professional, subject matter competence, not a political games player
Consequences of his (prior) statements
Project could be a political landmine and danger for him
His expected reaction (+/0/-)
0 – neutral for now
Desired reaction
Approval and constructive supportive criticism
Consequence of his reaction to the project objectives
His opinion is an important and respected reference at the board level
Required preparation and measures
Pre-presentation in a small group, his feedback is important as a warning signal and for the later vote/approval.
Approach and preparation of future interaction and communication
Email with a consolidated presentation. Pre-presentation with him and 2 or 3 others.
Required next steps and follow-up measures
Keep meeting minutes, invitation to the road show
Cross-reference to related tools in this book Stakeholder analysis (chapter 3.1.12), Stakeholder influence matrix (chapter 3.1.15), Powergram (chapter 5.1.6), Stakeholder map (chapter 3.1.13).
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7.14 Workshop guideline Intention (Why and when do I use it?) The workshop guideline tool helps save time when setting up meetings and workshops in order to extract and gather information more effectively from participants. Purpose (What does it do?) The Workshop guideline tool ensures a consistent approach to meetings and workshops for quality and more efficient and effective meetings. Instruction (How do I do it?) Before the event: • Decide on agenda points and objectives for the meeting: Typical agenda: 1. Introduction 2. Agenda review – walk-through of agenda 3. Purpose and objectives 4. Expectation exchange 5. Review of previous action steps (if applicable) 6. Approach 7. Agenda items – 1, 2, 3 8. Expectations review (if applicable) 9. Pros and cons 10. Action steps • Invite ahead of time. • Check logistics, venue, date, equipment. During the event: • Be at the venue at least 15 minutes early and use the time to check all equipment and to welcome people. • Workshop activities: 11. Introduce yourself and relevant stakeholders to the participants. 12. Share your approach with the audience and review the agenda items. Get agreement on ‘ground rules’ with regard to interruptions, phones off, etc. 13. Clarify the purpose and objectives (‘Why are we meeting and what are the desired results?’ ‘What are we intending to achieve as an end result?’). 350
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14. Expectation – Check the expectations of all the participants (using the Expectation review tool (chapter 7.15). Document their needs and expectations: ‘Is there anything anyone would like to say, anything that we need to know before moving on? Is there anything you need at this stage?’ 15. Review previous action steps, if applicable. See the Action steps and reviews tool (chapter 7.18). 16. Work through each agenda item and facilitate the discussion around the main points. 17. End the session and summarise areas of consensus and achievements. Review expectations (if applicable), using the Expectation review tool (chapter 7.15). 18. Discuss and document all positive and negatives aspects of the session on a flip chart. 19. Review the action steps that you captured during the session and check that everybody understands what they need to do. 20. Ask for feedback – ‘What are your thoughts on today’s session?’ – and check if their expectations were met. Use the Booz ball evaluation tool (chapter 7.16). After the event: • Distribute the list of action steps together with a summary of consensus and achievements. Tips and suggestions • Prepare a list of the topics you need to cover depending on the type of work you are doing. • Think where and how you are going to document the information you intend to obtain. This will help you to understand what else to ask for in order to be able to provide a complete picture. • Check the meeting logistics thoroughly (room booked, projector, flip chart, enough space, etc.) a few days beforehand and arrive at least 15 min early to welcome, chat and deal with emergencies. Cross-reference to related tools in this book Information gathering (chapter 3.2), Action steps and reviews (chapter 7.18), Expectation review tool (chapter 7.15), Booz ball evaluation (chapter 7.16).
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7.15 Expectation review tool Intention (Why and when do I use it?) Participants in most events often don’t know what they can expect from the event. This is a proactive way of discussing and managing potentially unrealistic wishes and workshop results. The expectation review tool makes the individuals’ expectations explicit and visible to the facilitator and all participants. Purpose (What does it do?) Documenting expectations at the beginning of an event helps to ensure that all participants understand what everybody assumes, expects and anticipates. It also helps the facilitator to understand what to focus on in order to make this a successful event. Reviewing and evaluating expectations at the end of an event makes everybody aware of the work they have accomplished together, shares achievements and is a proof point of successful facilitation. Instruction (How do I do it?) • At the beginning of any kind of event, explain the purpose of this tool, ask each individual participant for his expectations, and write them on a flipchart page for everybody to see. Ask the person to phrase the statement in his words. If you have summarised the statement for him, check if the person is content with your summary. • Provide feedback about each expectation in terms of feasibility, practicality and scope. Manage the expectation of the person if you know for sure that it is unrealistic to meet the stated expectation during the event. • At the end of any kind of event, e.g. workshop, project phase, etc., review each item that was written down and ask for an evaluation of it. ‘Have we touched on this item, have we achieved what you expected, and how would you rate this in percent?’ Tips and suggestions • Use the template (table 57) not just only to capture the expectations but also the feedback and evaluations as shown below. Use the Booz ball evaluation tool (chapter 7.16) to quantify the feedback and evaluation. • Provide a comment or feedback about how realistic the expectations are. This helps to focus on the real objectives of the event. Unresolved expectations can re-surface at the end of a meeting when you ask ‘whether any concerns or issues remain?’ These concerns should then be addressed by an action step – use the Action steps and reviews tool (chapter 7.18). 352
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7.16 Booz ball evaluation
Table 57
Template for an expectations review
Expectations review Expectations
Evaluation (= 25 %)
Cross-reference to related tools in this book Booz ball evaluation tool (chapter 7.16), Stakeholder analysis – Expectation management (chapter 3.1.14), Action steps and reviews (chapter 7.18).
7.16 Booz ball evaluation Intention (Why and when do I use it?) To evaluate and quantify ‘soft intangible’ evaluation results in a simple and picturesque way. Purpose (What does it do?) The Booz ball tool interprets qualitative and intangible feedback, e.g. ‘we like the project work and we are happy with the outcome’, and translates it into a quantitative view, e.g. 75 % project goals achieved, and makes the delivery measurable. Instruction (How do I do it?) • Ask participants to judge the result or achievement and assign either 0 %, 25 %, 50 %, 75 % or 100 % achievement rate according to their personal opinions. • Write the percentage number next to the item and later replace it with the corresponding ‘Booz ball – a circle divided into quarters (figure 134). Each quarter represents 25 % satisfaction.
0%
Figure 134
25%
50%
75%
100%
Project achievement or satisfaction level, characterized with Booz balls
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Tips and suggestions • This is a crucial activity, as you will obtain recognition for successful work by asking for the comments and evaluation by an individual or a group consensus. Give the participants time and explain which item/activity/objective is under evaluation. • Also ask for comments like: ‘What should we have done better or differently in order to achieve 100 %?’ Make sure the person feels that his view is important. Document it and use it for lessons learned sessions. • The name originates from the consultancy Booz Allen & Hamilton that invented the concept. An alternative name is Harvey balls which is the font that contains those symbols. Cross-reference to related tools in this book 100 Points (chapter 6.9), Expectation review tool (chapter 7.15). Source: Booz Allen & Hamilton Consultancy
7.17 Six thinking hats Intention (Why and when do I use it?) De Bono’s six thinking hats tool helps to explore diversity and the different perspectives of individuals when discussing, reviewing and evaluating projects. It can also be used to obtain performance information of individuals for the HR and performance appraisal procedure, or to learn from mistakes and make improvements. This (review) tool requires an open discussion group, which provides input and feedback about different aspects and viewpoints. Purpose (What does it do?) De Bono’s underlying principle for this tool is that if teams are to be effective, different conflicting perspectives need to be acknowledged by the team in order to fully understand a problem or review a project. Each perspective is called ‘hat’, because each individual can ‘put on a hat’ and play the role that is associated with this particular hat. Each hat has a distinctive colour, which represents a particular perspective. Instruction (How do I do it?) • Use the six different hats (perspectives) to explore a situation, or problem or when reviewing a project or giving feedback. Start from the top with the white hat and work your way to the blue hat. 354
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7.18
Action steps and reviews
• Explore all aspects but stay with the same colour unless you make the change explicit, e.g. ‘If I were to put the red hat on for a moment, I would say that …’. – White hat – facts, figures and neutral aspects. What is the observable data? What do we know about the situation? – Yellow hat – positive optimistic view. What went well (e.g. for the project owner, with our interaction and internally as a team)? – Black hat – logical but negative pessimistic view. What did not go well or what could go wrong? – Green hat – creative, lateral thinking, new ideas, other possibilities, ‘green fields’. What would we do differently if we could do it all again? – Red hat – instincts, feelings, emotions, intuition. – Blue hat – Control of thinking, problem-solving process, the way ahead. How are we going to address and solve the problem? What are the next steps? Tips and suggestions Only do review exercises if feedback is required or you know that the feedback is truly used for further learning. Otherwise, the ‘paper exercise’ raises people’s expectations and disappoints them if nothing happens. Cross-reference to related tools in this book Introduction to alternative creativity tools (chapter 3.3.12). Source: de Bono, Markham
7.18 Action steps and reviews Intention (Why and when do I use it?) This is a simple tool to ensure that meetings have tangible outcomes and that ‘things are happening’ and commitments are adhered to. It enforces a culture of rigour, where things are moving and activities are happening, rather than just meetings being held. Purpose (What does it do?) It makes outstanding issues apparent and provides a sense of progress and urgency on outstanding activities.
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Instruction (How do I do it?) • Capture next steps on a flip chart whenever they arise during meetings. • Phrase activities using an active language and starting with an active action and outcome orientated verb, e.g. ‘obtain project sign-off, design business cards, set up workshop’, etc. as it is demonstrated in table 58. • The ‘collection of action steps’ is an ongoing activity during meetings or workshops. Ensure that you have time to review the list of action steps at the end of the event in order to determine who will be responsible for each one and when the due dates are. • The key to the success is the group review of previous action steps at the beginning of the next event. Review and follow-up on the previously assigned tasks within the same team. The peer pressure works like magic. Table 58
Template of an action steps table
Next steps or action steps
Activities Who • Distribute meeting minutes within 24 hours of meeting
Tom
Monday
• Obtain signature for vendor contract
Jerry
30/June
Tips and suggestions You could combine this tool with a review of all the positive aspects as well as outstanding concerns and document them in two separate tables. Then check if each mentioned concern has a corresponding action step attached to address it. A useful memory hook for a way to word a feedback question is: ‘WWW’ – What went well (positive enquiry) and ‘EBI’ – Even better if (negative enquiry). Then engage the group members in finding the next steps to address the mentioned concerns. Cross-reference to related tools in this book Workshop guideline (chapter 7.14).
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7.19 Project management skills radar
7.19 Project management skills radar Intention (Why and when do I use it?) Project management (PM) is a new discipline that has developed over the last decades and has not actively been taught as a function in its own right. Therefore most individuals have learned project management ‘on the go’, with subsequent skills gaps. The project management skills radar is a tool that helps assess the current project management skills level. This is particularly helpful in identifying who requires training and in which specific project management areas. Purpose (What does it do?) The project management skills radar depicts the different skill levels for the key project management components. These components provide the structure and foundation for a successful project; the tools and techniques detailed in this book provide the ‘equipment’; you just have to apply and use them effectively. The project management skills radar helps to identify the skills gaps. Instruction (How do I do it?) • Review the provided PM components and competency areas and customise them, if necessary. Compare the key competencies and PM components with the numerous project management associations that exist, e.g. Institute of Project Management, International Project Management Association, Project Management Institute, etc. The suggested project management components and competency areas are: – Roles, responsibilities, competency maps – Timesheet and resource management – Scorecard and reporting – Project office – Programme management – Tools, documentation, templates – Methodology – Databases for project management – Risk and escalation management – Project steering and prioritisation – Social, collaboration organisation, structure – Finance, budget 357
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Mental model
Methodology
Business and project stakeholders Objectives, deliverables
Quality assurance
Tools, documentation and templates
Roles, skills, responsibilities and tasks Project planning and governance
Risk and escalation management
Quality assurance
Project structure planning Work break down (WBS)
Social, collaboration, organisation and structure
Time, material effort
Activities planning
Resourcing
Deadlines and milestones
Cost and budget
Roles, skills, responsibilities and tasks
Finance and budget
Risk Risk and escalation management Plan complete
Figure 135 PM skills and competency areas linked to the PM process
– Project planning and governance – Quality assurance – PM software Figure 136 displays an example of the different skill levels for the project management. Competency components differ – before and after a series of trainings. • Agree on a scale for the assessment, e.g. 1 to 5, and define how the displayed behaviour for each level would look, e.g. 5 = permanent, and ongoing displayed on the highest skill level, 95 % error free, trains and mentors others in this skill. • Evaluate the individuals (and/or team as a whole) before and after. Define a max required level for the project context. For example, your organisation might not require that individuals perform at the highest possible level in all PM components. • Use a radar diagram in a software application like MS Excel to display the results (see figure 136). Source: PMI handbook
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7.19 Project management skills radar
Project management components Roles, responsibilities, competency maps 3
PM/PMO software
Quality assurance
Timesheet and resource mgt
Expert 2
Advanced
Project planning and governance
1
Scorecard and reporting
Basics
Project office
Before After Max
0
Not
Finance, budget
Social, collaboration organisation, structure
Programme/ portfolio mgt
Tools, documentation, templates
Project steering and prioritisation
Methodology Risk and escalation mgt
Databases for PM
Figure 136 Skill levels of the key project management components – before and after a PM skills training
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8 Annex A – Check Questions
8.1 Check questions for a project start A1
Is the problem clear and known?
A2
Do we know which problem we are intending to resolve?
A3
Is the problem clearly defined and differentiated?
A4
Do we understand the context and connection with the environment and relevant entities?
A5
Do we clearly understand what the objectives are?
A6
Is there agreement about this, in particular with the sponsor?
A7
Do we understand the requirements and the high demands for the intended solution?
A8
Which requirements need to be met?
A9
What are the business and financial objectives and goals?
A10 What are the organisational and social objectives and goals? A11 What are the environmental and ecological objectives and goals? A12 What are the constraints and conflicting objectives and goals? A13 Do we have a sufficient overview and understanding about different alternatives and options for the solution? A14 Can we verify if the different options are suitable for the intended solution? A15 Can we objectively compare, evaluate and judge the different alternatives and options available? A16 Have we tested all our assumptions? A17 Do we understand all the risks? A18 Is the suggested concept convincing and realistic? A19 Where and how does the suggested concept fit into the ‘bigger picture’? A20 What are the implications of the concept from a functional, operational, financial, organisational, personnel, economical and strategic point of view? A21 What are the alternatives and do we understand the differences and implications? A22 What are the crucial elements and components for this solution? A23 What are the risks involved? A24 Do we have an action plan to deal with the high likelihood/impact risks?
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8.3
Check questions to define the current situation – diagnostic
A25 Are we ready to make a decision about the concept? A26 Can we justify the decision internally and externally? A27 Do we understand the priorities for the further development of this project? A28 Do we understand the different priorities for the requirements?
8.2 Check questions to review ideas and qualitative information B1 Have you considered all the advantages or benefits of the idea? Is there a real need for this? B2
Have you pinpointed the exact problems or difficulties that your idea is expected to solve?
B3
Is your idea an original, new concept, or is it a new combination or adaptation?
B4
What immediate or short-range gains or results can be anticipated? Are the projected returns adequate? Are the risk factors acceptable?
B5
What long-range benefits can be anticipated?
B6
Have you checked the idea for faults or limitations?
B7
Could the idea create problems? What are the changes involved?
B8
How simple or complex will the idea’s execution or implementation be?
B9
Could you work out variations on the idea? Could you offer alternative ideas?
B10 Does your idea have a natural sales appeal? Is the market ready for it? Can customers afford it? Will they buy it? Is there a timing factor? B11 What, if anything, is your competition doing in this area? Can your company be competitive? B12 Have you considered the possibility of user resistance or difficulties? B13 Does your idea fill a real need, or must the need be created by means of promotional and advertising efforts? B14 How soon could the idea be put into operation and how?
8.3 Check questions to define the current situation – diagnostic C1
What has gone wrong?
C2
What isn't working properly?
C3
What is working properly?
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C4
Why is it necessary to solve the problem?
C5
What should be happening but isn’t?
C6
What shouldn't be happening but is?
C7
What is the unknown?
C8
What is it you don’t yet understand?
C9
What are the specific symptoms and indicators?
C10 Where is it? Is it only there or is it elsewhere too? C11 When is it? Is it only then or is it at other times too? C12 What does it include? C13 What does it exclude? C14 What all is affected by this problem? C15 Who else is affected by it? C16 Where are the boundaries of the problem? C17 How big is it? How bad is it? C18 What is it costing? Is it worth fixing? C19 How urgent is it? Can we wait it out? C20 Will it go away of its own accord? C21 What happens if we don't do anything? C22 What happens if we do the wrong thing? C23 Should we look for causes? Were things okay before? C24 Did the problem pop up or sneak up on us? C25 Have you seen this problem before? C26 Have you seen this problem in a slightly different form? C27 Do you know a related problem? C28 When did things go wrong? What went wrong? C29 What changed right about then or slightly before? C30 Does this change account for the problem? C31 Can whatever changed be corrected? C32 If not, is there a viable workaround or ‘jury rig’? C33 What do the solutions that are being proposed tell us about the perceived ‘causes’? C34 What are the hypotheses for the root cause of the problem?
8.4 Check questions to define goals and objectives D1
What do we want to achieve and want to avoid?
D2
What are the goals (what, how, how much, by when, who)?
D3
What is the range of goal alternatives?
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8.5 Check questions during an analysis
D4
What would things look like if they were going right?
D5
What should (would) be happening that isn't?
D6
What shouldn’t (wouldn't) be happening that is?
D7
What do we want that we don't have? What are we trying to achieve?
D8
What do we have that we don't want? What are we trying to eliminate?
D9
What do we not have that we don't want? What are we trying to avoid?
D10 What do we have that we want to keep? What are we trying to preserve? D11 What results are we after? D12 What will serve as evidence of success or failure? D13 How will we know the problem has been (is) solved? D14 What is the ‘should be’? Who says so?
8.5 Check questions during an analysis E1
What are the costs?
E2
What are the risks and side effects?
E3
How do we decide and what is the timeline to decide?
E4
Do we have our egos out of this?
E5
What frame of reference is appropriate?
E6
What kind or class of problem is it?
E7
What are we calling it? How have we labelled it?
E8
What is the structure of this problem?
E9
What factors or elements make it up?
E10 How do these factors relate to one another? E11 What ‘means-end’ relationships exist? E12 Are we dealing with some kind of mathematical structure? E13 Are we dealing with some kind of production or state-change process? E14 Is the structure psychological or sociological; that is, are we dealing with people and politics? E15 Is the structure one of events occurring over time? E16 Do we have a model of this structure? E17 Should we construct one? E18 How can we show all this in a picture or diagram? E19 Where in the structure of the problem are the factors I'm trying to affect? Which factors affect or drive those? E20 Which of these factors are truly driving the problem? E21 Do we need to change peoples' behaviour, the procedures they're following, the system they're using, or all of the above? 363
8 Annex A – Check Questions
E22 What means are available for affecting the factors we've targeted? E23 Is there training for people? E24 Is there a procedural or methods modification required? E25 Is there process redesign required? E26 Is there an equipment change required? E27 Is there a systems change required? E28 Is there staffing changes required? E29 Is there resource allocation required? E30 Could we confirm the hypothesis defined earlier? E31 What could the potential concepts and solutions be? E32 What are the alternatives? E33 What are the pros and cons for all the options?
8.6 Check questions during decision making F1
Do we have a formal reference catalogue or evaluation criteria to compare the alternatives?
F2
Have the initial goals and objectives changed since they were defined?
F3
Have we ranked and prioritised the goals, objectives and requirements, so that we can compare the options against the requirements (must/should/nice to have priorities)?
F4
What are our restraints and constraints?
F5
What are all the things we must do?
F6
What are all the things we can't do?
F7
Who says so? Are they real or imagined?
F8
What are we assuming? What are we overlooking?
F9
Can we get there from here?
F10 What has to be given? Resources? Results? Time? Money? F11 Who has to give? F12 What kind of a time frame are we talking about? F13 Who does what when? F14 What could go wrong? F15 What are the risks and implications and consequences? F16 How will we know if things are going okay or have fouled up? F17 What's our backup or contingency plan? F18 Do we even need one? F19 How do we monitor progress?
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8.7 Check questions for the project initiation phase
8.7 Check questions for the project initiation phase G1
Is the problem known and understood?
G2
Are you clear on which problem you want to solve, and what aspect thereof?
G3
Is the problem clearly and comprehensively defined?
G4
Do you understand the context and all related links and influences?
G5
Are you clear on the goals and objectives of the project?
G6
Is there agreement and alignment on the objectives – in particular with the project sponsor?
G7
Do you understand the level of the requirements that needs to be achieved for the intended solution?
G8
What requirements need to be met?
G9
What are the financial and business goals?
G10 What are the organizational and social objectives? G11 What are the environmental and ecological objectives? G12 What are the boundaries and limitations? Which objectives are conflicting each other? G13 Do you have a sufficient overview and understanding regarding all possible resolution options? G14 Can you (and how) verify if the various options are suitable, feasible and appropriate to solve the problem? G15 Can you objectively compare, assess and evaluate the various options? G16 Have you verified all your assumptions and dependencies? G17 Do you know and comprehend all identified risks? G18 Is the intended concept convincing, congruent and realistic? G19 Where and how does the concept and intended solution fit into the overall picture? G20 What are the implications and consequences of the concept, finances, processes, org structure, work force, profitability and strategic direction? G21 What are the alternatives and do you understand the differences and implications of each? G22 What are the key elements and components that ensure the success of the solution? G23 What are the risks? G24 What is the mitigation plan to address the high impact, high likelihood risks? G25 Are you in a position to make a decision regarding the solution? G26 Can you justify the decision internally and externally? G27 Do you understand the priorities for the way forward of the project? G28 Do you understand the different priorities of each requirement and key component? 365
9 Annex B – Scenarios and tool lists
This annex provides you with overviews of typical and recommended activities as well as tools for various scenarios or types of ‘projects’: a feasibility study, project definition/planning, system development, organisational restructuring, a strategy workshop, business process improvements and – my personal favourite – tools.
9.1 Author’s top 10 tools My personal Top 10 list of tools, in no specific order of priority or preference: 1. IS – IS NOT (chapter 3.1.11) 2. Stakeholder expectation management (chapter 3.1.14) 3. Context diagram tool (chapter 3.1.18) 4. Problem tree (chapter 3.1.2) 5. Charter (chapter 4.4) 6. Prioritisation matrices (chapter 6.15) 7. Action steps and reviews (chapter 7.18) 8. Accountability matrix (CIDA) (chapter 7.12) 9. Expectation review tool (chapter 7.15) 10. Booz ball evaluation (chapter 7.16)
9.2 Scenario: Good practice for project and problem definition This scenario was created to show the differences and overlaps between problem solving activities and project management activities. Figure 13 on page 38 shows you a less detailed graphic version of the table below. Each activity row has an index (1st column) to distinguish between problem solving (PS) and project management activities (PM). Note that the purpose is not to show a detailed list of project planning activities. Also see the following Project planning and definition scenario (section 9.3). 366
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9.2 Scenario: Good practice for project and problem definition
Project/problem definition PM or PS?
Typical activities
Compilation of suggested tools
PM
Review of existing project idea or project brief
Charter (chapter 4.4) Project contract (chapter 7.2)
PM
Project initiation workshop
Project contract (chapter 7.2) LogFrame (chapter 7.3)
PM
Define business case
PM
Conduct feasibility study
Feasibility study (chapter 9.7)
PM
Set up and form project
Project roadmap/programme (chapter 7.4) Project contract (chapter 7.2) Charter (chapter 4.4)
PS
Define and ring-fence problem
Problem definition (chapter 3.1.1) Problem tree (chapter 3.1.2)
PS
Investigate and narrow down the problem
Problem tree (chapter 3.1.2)
PS
Explore problem and related aspects – also help establish project scope and boundaries
IS – IS NOT (chapter 3.1.11)
PS
Learn about context of problem
Black box (chapter 3.1.10)
PS
Use the Black Box and IS – IS NOT to identify the relevant stakeholders for every input, output, or scope element
Stakeholder analysis (chapter 3.1.12) Stakeholder map (chapter 3.1.13)
PM
Clarify what each client/stakeholder wants, needs and hopes for
Stakeholder expectation management (chapter 3.1.14)
PM
Identify friends and enemies
Powergram (chapter 5.1.6)
PM
Adjust potential project objective variances that have emerged
LogFrame (chapter 7.3) Charter (chapter 4.4)
PS
Illustrate context and correlations of problem aspects
Context diagram tool (chapter 3.1.18)
PS
Identify connection between the problem and potential solution options
Issue tree (chapter 3.1.7)
PS
Establish hypotheses to save time and focus your approach
Hypotheses (chapter 3.1.4) Hypothesis tree (chapter 3.1.5)
PM
Establish project ‘chunks of work’ and components
Work breakdown structure (chapter 7.5)
PM
Specify project tasks
Project (tasks) plan
PM
Decide on timing and sequence
Gantt chart (chapter 7.6)
PM
Learn about project environment
Project environment analysis (chapter 7.8)
PM
Assign project resources
Resource plan
PM
Assign project roles and responsibilities to individuals
Project management roles and responsibilities (chapter 7.10) Accountability matrix (CIDA) (chapter 7.12)
PM
Decide on project set-up, organisation, team members, governance and reporting lines
Project structure (chapter 7.9)
PM
Detect project risks
Risk analysis (chapter 6.14)
PS
Identify business risk, assumptions, dependencies and prior decisions taken
Risk analysis (chapter 6.14)
PM
Consolidate, condense and document project information
Project contract (chapter 7.2) Project Definition Report (PDR)
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9.3 Project planning and definition Also see the table on page 310. Project planning and definition Typical activities
Compilation of suggested tools
Agree on methodology and approach for project
Not available
Question project sponsor and stakeholders on project objectives and business goals
Goal catalogue (chapter 4.5) Charter (chapter 4.4) Project roadmap/programme (chapter 7.4)
Problem identification, project motivation, project brief clarification and project set-up and approval
Project idea/concept/proposal Business case Programme/portfolio management Problem definition (chapter 3.1.1) Project contract (chapter 7.2) LogFrame (chapter 7.3) Charter (chapter 4.4)
Project and activities definition (use Annex A – Check Questions (chapter 8) and Annex B – Scenarios and tool lists (chapter 9) for quality assurance
Various tools in the category Definition of a situation/problem (chapter 3.1) Charter (chapter 4.4)
Define and agree on high level project setup and organisation
Project brief Project contract (chapter 7.2) Project handbook
Costs, revenue, efforts estimation
Business case
Project initiation and planning, deconstruction and definition of project elements
Various tools in the project management category
Identification and understanding of stakeholders
Various stakeholder-related tools in the category Definition of a situation/problem (chapter 3.1)
Project components and resulting activities
Work breakdown structure (chapter 7.5) Project work plan (chapter 7.7)
Decide on sequence and timing of tasks
Task schedule
Establish project plan with work and duration for each task
Task schedule, Gantt chart (chapter 7.6)
Analyse and understand project environment
Project environment analysis (chapter 7.8)
Plan and assign resources and other resourcing needs
Resource plan
Estimate and calculate costs
Cost plan/estimate, Cost calculation/estimation model, Budget calculation, Business case
Assign project roles and responsibilities to individuals
Project management roles and responsibilities (chapter 7.10) Accountability matrix (CIDA) (chapter 7.12)
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9.4 Strategic analysis
Project planning and definition Typical activities
Compilation of suggested tools
Decide on project set-up, organisation, team members, governance, reporting lines and communication needs
Project contract (chapter 7.2) Project communication plan (chapter 7.11)
Assign project roles and responsibilities to individuals
Project management roles and responsibilities (chapter 7.10) Accountability matrix (CIDA) (chapter 7.12)
Detect project and business risks
Risk analysis (chapter 6.14), Risk management plan
Establish resource and equipment plan
Resource and equipment plan
Define documentation and information requirements and standards
Documentation and information policy plan
Define quality assurance policy
QA policy plan
Define contractual and service delivery policies, for example, SLAs, vendor management, etc.
Service delivery policy, procurement policy, SLA framework, etc.
Define a communication plan
Project communication plan (chapter 7.11)
Consolidate and document into a single source file
Project contract (chapter 7.2) LogFrame (chapter 7.3) Project handbook/manual (Project Definition Report)
9.4 Strategic analysis Strategic analysis Typical activities/questions
Compilation of suggested tools
What are the core processes that create the value and competitive position? How does the company work and function? What are the products and services? Use the results to build on the following steps.
Value chain analysis (chapter 5.3.1)
What are the ‘high-level’ functions that the company performs? Deconstructing these will drive the understanding of the critical success factors.
Functional decomposition (chapter 5.2.3)
What are the basic competencies and success factors of the company? What gives the company the competitive edge and ensures its survival? Use this understanding for the internal aspects of the SWOT analysis.
Critical success factor (CSF) (chapter 5.3.2)
Optional – In what phase of its life cycle is the company at the moment? What are the typical signs and verification points? What are the typical symptoms and issues? This provides an external perspective.
Life cycle (chapter 5.3.4)
Who are the competitors and what is the competition like?
Competitor analysis (chapter 5.3.6)
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Strategic analysis Typical activities/questions
Compilation of suggested tools
Who are the current customers and potential future target groups/segments?
Customer segmentation (chapter 5.3.9)
What are the strategic development options and directions – based on the current understanding? Start to construct and engineer options.
SWOT and TOWS (chapter 5.3.3)
What are potential options and combinations to create new options for expansions and enhancements? A constructive product/market brainstorming – which combinations make sense?
Product/market mix (chapter 5.3.12)
Which other types of strategic development options have you not yet thought of?
Strategic development options (chapter 5.3.13) Strategy matrix (chapter 5.3.14)
9.5 Org analysis and org design Organisational analysis and design Typical activities/questions
Compilation of suggested tools
Establish and define all high-level processes and functions.
Value chain analysis (chapter 5.3.1) Functional decomposition (chapter 5.2.3)
Analyse and define the resources and role needs of each process and the assignment of resources to the process and org structure.
Org structure versus process (chapter 5.1.3)
Who does what? Define the current and required future core functions and activities.
Functional decomposition (chapter 5.2.3) Process analysis (chapter 5.2.4)
Analyse the current required organisational structure and define the future structure. Remember that the org structure is a result of the strategy, process and org work flows.
Organisational structure (chapter 5.1.1) Org structure versus process (chapter 5.1.3)
Analyse the current formal and informal behaviour and climate.
Organisational assessment (chapter 5.1.5) Powergram (chapter 5.1.6)
Analyse and define the hierarchical distribution and allocation of the resources and individuals besides the processes and org structure.
Org structure versus process (chapter 5.1.3) Organisational structure (chapter 5.1.1) Diamond grading tool (chapter 5.1.2)
Who reports to whom and on what? Analyse and define the reporting and information requirements.
Span of control (chapter 5.1.4) Organisational structure (chapter 5.1.1)
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9.7 Feasibility study
9.6 Organisational restructuring Organisational restructuring Typical key activities
Compilation of typical tools
Define scope and objectives
Goal catalogue (chapter 4.5) Charter (chapter 4.4) Goal hierarchy (chapter 4.3)
Review with stakeholder and understand context
Stakeholder map (chapter 3.1.13) Stakeholder expectation management (chapter 3.1.14) Stakeholder influence matrix (chapter 3.1.15) Stakeholder swapping (chapter 3.1.17) Context diagram tool (chapter 3.1.18)
Gather information and define context
Climate assessment (structured) (chapter 3.2.12) Octagon (chapter 3.2.4) Survey/field study – dipstick (chapter 3.2.7) Force field (chapter 3.4.8) Fishbone or Cause-effect tool (chapter 3.1.9)
Organisational analysis
Organisational structure (chapter 5.1.1) Organisational assessment (chapter 5.1.5) Span of control (chapter 5.1.4) Process analysis (chapter 5.2.4) Org structure versus process (chapter 5.1.3)
9.7 Feasibility study Feasibility study Typical key activities
Compilation of typical tools
Define purpose and objective of feasibility study
Goal catalogue (chapter 4.5) Well-defined outcomes (chapter 4.8)
Define the mandate of the feasibility study
Charter (chapter 4.4)
Assess initial context
Stakeholder map (chapter 3.1.13) Mind map (chapter 3.1.21) Black box (chapter 3.1.10)
Detailed assessment
Context diagram tool (chapter 3.1.18) Environmental analysis (PEST) (chapter 5.3.7)
• Technical and physical assessment – (‘Can we do this project?’) • Social and political assessment (‘Do we want this project and can we justify it?’) • Legal and tax consideration • Environmental consideration • Economic feasibility (‘Can we afford this project?’)
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Feasibility study Typical key activities
Compilation of typical tools
Further assessment
Interview (unstructured) (chapter 3.2.2) Focus groups (unstructured) (chapter 3.2.5) Questionnaire (structured) (chapter 3.2.6)
• Capital costs • Production costs • Sales revenues estimate • Pro forma costs and earnings • Economics and employment impacts • Market assessment • Target market • Market feasibility • Consumer survey Impacts and risks
Risk analysis (chapter 6.14)
Findings Conclusions Benefits and concerns Management summary
Argument balance (chapter 6.4) Polarities tool (chapter 6.5) Cartesian coordinates (chapter 6.11) Project roadmap/programme (chapter 7.4)
9.8 System development Software or communication system development Typical key activities
Compilation of typical tools
Define scope of project
Goal catalogue (chapter 4.5) Charter (chapter 4.4) Black box (chapter 3.1.10)
Identify relevant stakeholders
Stakeholder map (chapter 3.1.13)
Information gathering
Interview (unstructured) (chapter 3.2.2) Tripod (mixed) (chapter 3.2.3) Direct observation (DILO = day in the life of) (chapter 3.2.8)
Technical analysis
Architectural decomposition view (chapter 5.2.1) Logical and functional system modelling (chapter 5.2.8) Functional decomposition (chapter 5.2.3) Entity relationship diagram (chapter 5.2.5) Process analysis (chapter 5.2.4) Logical data relationship (chapter 5.2.2) Technology and systems landscape (chapter 5.2.6) Requirements catalogue (chapter 5.2.7)
Solution design, Testing, Pilot or prototype, Training, Implementation
See expert literature/advice
Continuous improvement and maintenance
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9.9 Strategy workshop
9.9 Strategy workshop Strategy workshop Typical key activities
Compilation of typical tools
Introduction of participants and their roles in the workshop Set ground rules (working breaks, parking bay, cell phone, time keeper, action steps list) Explanation of workshop objectives Review agenda Expectations exchange
Action steps and reviews (chapter 7.18) Expectation review tool (chapter 7.15) Stakeholder expectation management (chapter 3.1.14)
Assess the situation
• Discuss ‘findings’ and group into cause -> effect
IS – IS NOT (chapter 3.1.11) Brainstorming (chapter 3.3.1) Affinity diagram tool (chapter 3.4.6) Fishbone or Cause-effect tool (chapter 3.1.9)
Strategic analysis discussion: Understand critical internal factors and drivers
Critical success factor (CSF) (chapter 5.3.2) SWOT and TOWS (chapter 5.3.3)
Understand external factors and drivers
Environmental analysis (PEST) (chapter 5.3.7) 5 Forces (chapter 5.3.5)
Discussion of the strategic options
Business matrix (chapter 5.3.11) Product/market mix (chapter 5.3.12) Strategic development options (chapter 5.3.13)
Discussion around drivers, success factors, threats and risks around strategic options
SWOT and TOWS (chapter 5.3.3) 5 Whys (chapter 3.2.11) Nyaka (defect analysis) (chapter 3.3.4) Merlin technique/Osborn checklist (chapter 3.3.8) Fishbone or Cause-effect tool (chapter 3.1.9) Risk analysis (chapter 6.14)
Compare options and alternatives
Argument balance (chapter 6.4) Polarities tool (chapter 6.5) Cartesian coordinates (chapter 6.11)
Evaluation, prioritisation and decision discussion
Prioritisation matrices (chapter 6.15) Decision tree (chapter 6.2) Perspectives3 (chapter 6.3)
Develop roadmap
Project roadmap/programme (chapter 7.4)
Workshop closure: Review next steps Expectations review Workshop evaluation
Action steps and reviews (chapter 7.18) Expectation review tool (chapter 7.15) Booz ball evaluation (chapter 7.16)
• Assess what is/is not the problem • Brainstorm (6-3-4 method) causes for problems
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9.10 Business process improvements Business process improvements Typical key activities
Compilation of typical tools
Review business case
No tool or technique available (at this stage)
Define scope and objectives
Charter (chapter 4.4)
Expectation management
Stakeholder expectation management (chapter 3.1.14) Stakeholder accordion (chapter 3.1.16) Silo view tool (chapter 3.1.19)
Information gathering
Interview (unstructured) (chapter 3.2.2) Tripod (mixed) (chapter 3.2.3) Direct observation (DILO = day in the life of) (chapter 3.2.8) Fishbone or Cause-effect tool (chapter 3.1.9)
Process analysis
Organisational structure (chapter 5.1.1) Span of control (chapter 5.1.4) Process analysis (chapter 5.2.4) Org structure versus process (chapter 5.1.3)
Process improvements
Nyaka (defect analysis) (chapter 3.3.4) Merlin technique/Osborn checklist (chapter 3.3.8) Pareto (80:20) (chapter 3.4.2)
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Grundy, Tony; Brown, Laura (2004) The ultimate book of business skills, Capestone Publishing (Wiley Group) Haberfellner, Reinhard; Daenzer, W.F. (Hrsg.) (1994) Systems Engineering – Methodik und Praxis, 8. Aufl, Verlag Industrielle Organisation, Zürich Harris, Carol (2001) Consult Yourself – The NLP Guide to being a management consultant, Crown House Publishing (www.crownhouse.co.uk) Hax, Arnoldo C.; Majluf, Nicolas S. (1991) Strategisches Management – Ein integratives Konzept aus dem MIT, Campus Verlag, Frankfurt Hax, Arnoldo C.; Majluf, Nicolas S. (1996) The strategy concept and process – a pragmatic approach, Prentice Hall, New Jersey Hofmann, Markus (2000) Customer-Lifetime-Value-Management, Gabler, Wiesbaden Ishikawa, K. (Lu. D. J. trans.) (1985) What is Total Quality Control?, Prentice-Hall Inc., Englewood Cliffs, NJ. (http://www.skymark.com/resources/leaders/ishikawa.asp) Kahlbach, James (2007) Designing Web Navigation, O’Reilly Media Kostka, C., Möch, A (2009) Change Management, 4. Auflage, Pocket Power Nr. 27, Hanser Kremer, Alfred J. (2001) Reich durch Beziehungen, Verlag Moderne Industrie, Landsberg/Lech Markham, Calvert (2000) How to be your own management consultant, Kogan Page, London McCormick, Jim (2005) Rish Inclination – How do you compose to others (based on proprietary research by Jim McCormick), www.takerisks.com Mehrmann, E. (1994) Schnell zum Ziel. Kreativitäts- und Problemlösetechniken, Düsseldorf Michalko, Michael (2006) Thinkertoys: A Handbook of Creative-Thinking Techniques (2nd Edition), Ten Speed Press Michalko, Michael (2001) Erfolgsgeheimnis Kreativität – Was wir von Michelangelo, Einstein & Co. lernen können, mvg Mitroff, I. (1983) Stakeholder of the Organisational Mind, San Francisco, Jossey-Bass Mitroff, I.; Linstone, H. (1993) The Unbounded Mind, Oxford University Press, Oxford Mizuno, Sigeru (1988) Management for Quality Improvement: The New 7 Quality Control Tools, Productivity Press Morgan, Gareth (1986) Images of organization, Sage, Thousand Oaks, California Nagel, Kurt (1991) 200 Strategien, Prinzipien und Systeme für den persönlichen und unternehmerischen Erfolg, 4.Auflage, Verlag Moderne Industrie, Landsberg/Lech Nickols, F. W. (1994) Reengineering the Problem Solving Process: Finding Better Solutions Faster. Performance Improvement Quarterly (Vol. 7, No. 4) Learning Systems Institute, Florida State University, Tallahassee Nickols, F. W. (1992) Objectives, Systems, Patterns, Politics, and Conflict Performance and Instruction, NSPI, Washington, DC
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Application areas of each tool (in alphabetic order) Name of tool or technique
Page
100 Points
291
3 P statements
181
5 Forces
242
5 Whys
125
6-3-5 tool
134
ABC tool
153
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
355
Affinity diagram tool
158
Architectural decomposition view
204
136
Black box
74
260
Card sorting
157
132
Cartesian coordinates
294
Charter
172
Climate assessment
125 66
Competitor analysis
246
Context diagram tool
95
Critical success factor (CSF)
226
Cardstorming tool
Competing hypothesis
Bionic
Business matrix
284
353
137
130
Decision Project making management
Attribute listing
Brainstorming
Strategic analysis
Argument balance
Booz ball evaluation
Technical analysis
Accountability matrix (CIDA) 346 Action steps and reviews
Org. analysis
Cross of beliefs
296
Customer segmentation
256
Decision tree
281
Delphi or expert panel
123
Desk research/database research
123
Diamond grading tool
195
Direct observation (DILO)
121
379
Application areas of each tool (in alphabetic order)
Name of tool or technique
Page
Entity relationship diagram
213
Environmental analysis (PEST)
250
Expectation review tool
352
Fishbone or Cause-effect tool
72
Focus groups
115
Force field
162
Functional decomposition
208
Gantt chart
333
Goal catalogue
174
Goal grid
178
Goal hierarchy
169
Helicoptering
101
Hypotheses
61
Hypothesis tree
63
Influence matrix
70
Define InformaSituation tion gathering
Creativity
Org. analysis
Technical analysis
Strategic analysis
Decision Project making management
110
Information matrix
155
Interview
111
Irritating words
144
IS – IS NOT
77
Issue tree
67
Life cycle
237
LogFrame
321
Logical and functional system modelling
219
Logical data relationship
206
Lotus blossom
143
Mental provocation
146
Merlin technique/Osborn checklist
139
Mind map
102
Morphological matrix
138
Nominal group tool
290
Nyaka
135
Objectives tree
167
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Goal setting
Information gathering plan
380
Information consolidation
Application areas of each tool (in alphabetic order)
Name of tool or technique
Page
Octagon
114
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
Org. analysis
Technical analysis
Org structure versus process 196
Organisational assessment
200
Organisational structure
190
Pair ranking
288
Pareto (80:20)
150
Perspectives3
283
Polarities tool
286
Powergram
201
Prioritisation matrices
305
Problem definition
50
Problem tree
56
Process analysis
209
Product/market mix
264
Strategic analysis
Decision Project making management
Project communication plan 342 Project contract
318
Project environment analysis 335
Project management roles and responsibilities
339
Project management skills radar
357
Project roadmap/ programme
327
Project structure
337
Project work plan
334
Questionnaire
117
Requirements catalogue
217
Reverse the problem
60
Risk analysis
299
Silo view tool
99
Six thinking hats
354
SMART goals
176
SNAP
182
Span of control
198
Stakeholder accordion
91
Stakeholder analysis
79
Stakeholder communication 348
381
Application areas of each tool (in alphabetic order)
Name of tool or technique
Page
Define InformaSituation tion gathering
Creativity
Information consolidation
Goal setting
Org. analysis
Technical analysis
Strategic analysis
87
Stakeholder influence matrix
89
Stakeholder map
84
Stakeholder swapping
93
Strategic development options
268
Strategic market group
252
Strategy matrix
273
Survey/field study – dipstick
119
Swap sorting tool
287
SWOT and TOWS
230
Technology and systems landscape
215
Tripod
113
Utility analysis
292
Value chain analysis
222
Venn diagram
160
Vroom Yetton
297
Stakeholder expectation management
Decision Project making management
Well-defined outcomes
179
Work breakdown structure
329
Workshop guideline
350
382
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