by Pat Bodin
Think about artificial intelligence (AI) and machine learning. Technologists have been playing around with AI for 30–40 years. But now they are causing tremendous progress. For instance, a computer has now beaten a master at Go, a complex board game that originated in ancient China.32 Beating a master at chess simply requires a lot of number crunching and following a set of simple rules. But in Go the state space is large enough that just number crunching isn’t feasible. Intelligent software is essential.
Digitalization means that because of these underlying technologies, we have the capability to connect the unconnected: sensors, users, databases, artificial intelligence, applications. Connecting the unconnected drives new business models and personalizes customer experiences. That’s ultimately what digitalization means: connecting the unconnected to generate new value for customers.
Chapter 14.
USIM: Identify and Measure
The final steps of USIM are Identify and Measure.
USIM: Identify
The third step is identify. Have you simplified the process into its essential components, removing extraneous steps? Excellent. Now you should identify a component to improve.
Identification is about continuous improvement. Do not try to change every aspect of the process at once, lest you never know what caused the improvement (or disaster). Follow these three steps:
❶ Establish a baseline
❷ Change something
❸ Measure the result
Then repeat! Keep on identifying things to improve. Adhering to this process lets you increase the speed of how many changes you make, while still understanding the impact of each individual change.
USIM: Measure
Before you improve a process, set a baseline for your current state, then, iterate. Modify one thing at a time and measure the difference. If you change more than one thing at a time, you will never know which one caused the positive (or negative) effect.
Once we automate the coffee machine connection, that should change a lot of things. Mean time to repair should decrease, since we know the instant a machine is down. Helga doesn’t even have to pick up the phone. And the machine gives us data on what is broken, so our repair accuracy should increase. We can also perform better preventative maintenance, because the machines can notify us when they are due for cleaning or a replacement part. Best of all, we can carry out predictive maintenance, monitoring the status of each machine and proactively fixing issues before they break the machine.
More fundamentally, the value proposition of the business will change. “Call us—we’ve got your coffee needs covered” is now outdated, in a very positive way. The customer doesn’t even have to call anymore! The machine does the calling and Heidi shows up ready to fix it in no time flat.
To speak Blue, we need to understand the processes we work in daily. I use the MSP example because many organizations have field services and their value streams would look similar. Now, the machines might change. The actors might change. The applications or systems might change but the underlying process would look similar.
So, that’s one example of a value stream. The acronym USIM helps us follow the value throughout the process. You need to understand the key components: understand the actors, understand the systems, understand the machines, and understand the KPIs. Simplify the systems to reduce unnecessary complexity. Identify a component to improve. Then, measure your success.
To use USIM and improve a process, do you need to be the expert at process engineering? No. You really just need to be curious. Your fellow Blue people that work in sales, production, etc know their area very well, they just need your help to figure out how to use technology in an even more impactful way. The goal should be to improve your listening, to be an enabler, and to facilitate a deeper understanding of your company’s business processes. Work together to connect the unconnected and provide better visibility for your organization.
Get in the Boat Whiteboard
Chapter 15.
Competitive Advantage
The Advantage
How does the technologist use their ability to positively impact their company’s business processes and have a direct impact on their business model? It’s not as hard as it might seem. According to Chan Kim and Renée Mauborgne in their wellknown book Blue Ocean Strategy, there is a clear path to do this. Not to be confused with the Blue and Red People in this book, Kim and Mauborgne also used colors to indicate the state of the particular market when he referred to “red oceans” and “blue oceans”. A red ocean is an ocean full of sharks; full of blood. It is incredibly competitive and difficult to navigate and to survive in. A blue ocean is clear sailing; no sharks, no competitive pressures. Another way to look at this personally is like this: let’s assume that you are very good at a specific task, for instance, being a highly skilled troubleshooter, but you are poor at marketing. What should you do? Improve your skill at marketing? Most people focus on what they are poor at and try to improve it. Taking the time to do this will reduce the time that can be spent improving strengths. The result of this is mediocrity. Your marketing may improve but you haven’t spent time honing the skills that could set you apart…and you enter shark infested waters.
What’s a better way? First off, we need to figure out if our strengths have any correlation with our weaknesses. In this particular case, it would. Your strong troubleshooting skills are needed as a technologist but if no one knows you have the skills, that’s a problem. Rather than abandoning your craft to pursue marketing, you should work with someone else who already possesses the needed marketing skills so that you can focus your time on improving your specialty. The market demand for your skills would skyrocket due to your laser focus.
A company’s value is communicated through their value proposition. Lego’s value proposition is that they teach children problem solving skills. If Legos improved their value proposition, they would be even more laser focused in their particular market and more successful. In our coffee machine MSP example, their value proposition was, “Call us, we have your coffee needs covered.” By eliminating the “Call us,” aspect, our MSP’s value proposition radically improved. However, this is not enough. You must simultaneously eliminate cost to radically improve the MSPs market position.
According to Kim and Mauborgne, you must do the following:
• Raise – Which factors should be raised well above the industry’s standard?
• Reduce – Which factors should be reduced well below the industry’s standard?
And:
• Create – Which factors should be created that the industry has never offered?
• Eliminate – Which factors that the industry has long competed on should be eliminated?
A great example that Kim and Mauborgne use is Cirque du Soleil. Cirque du Soleil is a circus, but not a traditional one. Back in the 1980s, Guy Laliberté and Gilles Ste-Croix (the co-founders) thought to themselves, “We like the circus. We like acrobats and dancing and music. Let’s ramp those up radically. And let’s eliminate all the other costs: no animals, no star performers.” They also got rid of the English language—in fact, every language. This unexpected move gave them access to a worldwide labor pool, dramatically reducing costs.
Kim and Mauborgne say, “Cirque du Soleil succeeded because it realized that to win in the future, companies must stop competing with each other. The only way to beat the competition is to stop trying to beat the competition.”
With Cirque du Soleil, Laliberté and Ste-Croix set sail in an ocean free of sharks and have been incredibly successful for over 30 years. Why? Because they carved out a model that is uncontested. And what happened to the competition? On May 21, 2017, the Ringling Bros. and Barnum & Bailey Circus closed after 146 years. The traditional circus model was no longer sustainable.
What if you could help your organization shift into uncontested waters? Say you work for the coffee machine MSP. You propose, “We should enable ourselves to carry out predictive mai
ntenance instead of repairing broken machines. We can do this by connecting the unconnected machines through sensors and networks. This will dramatically reduce costs while improving our value proposition and increasing our appeal to customers.” You call your shot and then hit the mark. How relevant would you be? More than you’ve ever been.
Remember the paradox from earlier? Technology is more relevant than it has ever been, yet technologists are still not in the boat with the business leaders. You can grow in relevance by positively impacting your organization through value streaming with blue ocean strategy. You can understand a business process, identify areas to improve, amplify your organization’s value, and shift it toward uncontested waters. That’s being Blue.
Power of Blue
Alexander Braumann, a friend of Robert’s from Austria, discusses his experience in the Blue World:
I joined Cisco in December 2000 via a trainee program and it didn’t take long until I went into the field of IP Telephony–now called the “Collaboration unit”. Let me tell you a story about one of my first experiences on the power of Blue, of translating “technology into business”.
It all started when I met the CIO of an Austrian customer about six years ago. From the beginning, we connected and I really enjoyed working with him. At that time, I was a Collaboration Systems/Sales Engineer at Cisco Austria. This CIO really understood the key to success in any end client project was user experience and since all communication impacted every user process, whether it was by video or by voice, it was critical that we got it right. The other thing that this CIO truly understood was that technology is essentially a dead weight without the user adopting it in their daily life.
The CIO had some very specific ways that he directly enabled his business. First off, he made it clear that we could not use nerd/tech language. Second, he asked us to always understand the business problem we were solving – what business processes were we directly impacting with our collaboration solution. He would tell us, “My company is a speedboat and it is my job to equip this agile boat for future waves.” He got it! He understood that not only was technology required to solve an actual business problem, but if he was ever to be allowed in the boat – he would need to have direct impact.
Many people in the IT industry find it easy to understand and communicate the value of collaboration tools while also finding it difficult to communicate the value of other IT solutions, such as networking and performance monitoring tools. There is a simple explanation. Collaboration involves people and quite often involves user applications and processes. Collaboration is blue. That is good news! The technologist is already involved in areas that directly impact the Blue and Green world.
Robert Schaffner bridges the gap between worlds in Singapore:
You can use collaboration to pivot from Red to Blue within a project. I remember a story about Singapore American School, a customer of my systems integrator company. Our project with the school was rather technical: replacing the private branch exchange (PBX) with an alternative solution. Thankfully we completed the project successfully and speedily.
As soon as the new technology was in place, we engaged with people at the school about how to fully take advantage of it. What could we do with this technology? How could we improve the students’ experience? Could we enable sick students to connect into the classroom? Suddenly, we were in Blue conversations with the school and that collaboration led to several fruitful projects.
Role Confusion
Blue operators must be able to communicate and partner with Green strategists, lest the organization fall apart. My friend Justin Brady told me he had firsthand experience with this. Here is his story of what can happen when Blue is not in the boat.
I started out my career as an engineer working with networks and voice solutions. A man named Ben was my mentor and though he was not the CEO, for all intents and purposes he ran the company.
A few years later, I started to run down the Blue path. I asked Ben how I could do things differently, how I could help out clients, and how I could do some business consulting. That eventually led to a few different positions: running our network operations center, our project engineering group, and our cloud services division.
In turn, those positions migrated into some responsibility in the Green area. Along with Ben, I was responsible for projections for the entire company: looking at company financials, and helping set the company vision.
The interesting part of this story concerns the company’s CEO and part owner, whom we will call Albert. During his last few years at our company, Albert began to step out of the day-to-day operations. Although he was the CEO, he wasn’t providing vision and he wasn’t providing direction, at least from my standpoint. He was basically leaving all the responsibility to Ben. Ben was informing Albert the CEO about vision and structure and strategy.
Albert had also continued to be loose with company expenses. We began to notice many questionable expenses. These weren’t small numbers, either. Some expenses were purchased in his name only but paid for with company money. Oftentimes he would have egregious expenses and write it off to different clients. He might have a quick meeting with a client and then spend large amounts of company money on unrelated expenses and state they occurred because of the meeting and that the client participated in them when that was not always the case.
Albert decided to launch a new division in the company and long story short, it failed after a couple of years, but not before costing the company a large amount of money. It’s my opinion that this had put the company into a cash poor state. We then began to see real signs of company trouble. The business started sliding. Clients started to notice negative changes as well. This is where the disconnect between Green and Blue really started to have a negative impact. Ben, along with myself, took the initiative to try and arrest the slide. Our company’s existing board agreed to step down, and we brought a new board into the company. This board consisted of three individuals who specialized in taking companies of our size and growing them an average of 3x-4x and beyond. Between them, they had successfully done this many times.
A few months into the new board’s tenure, Albert was removed as the CEO and Ben replaced him as the CEO. At this point, I would describe it as a battle between Green and Blue. It seemed like Green was trying to drown Blue with their boat. During this time Ben spent most of his time dealing with internal issues related to this and was really challenged to perform his job in resetting the vision of the company. The new Board worked with Ben to develop a plan to turn the company around and set it up for future success and growth.
In another few months, the board presented their plan right before Thanksgiving. This is where things took a turn for the worse. Albert has a knack for convincing one that his way is right and everyone else’s is wrong. He is really good at this. He throws promises out left and right and in my case almost never came through. He really knows how to get you behind him and support him.
The ownership (previous board) reviewed the plan as the changes proposed required majority vote and they decided they did not want to pursue that plan and dictated several things that had to be done. One of these included laying off about 40% of the staff in order to make the company immediately profitable. The board had stated that would be detrimental to the business and said they could not support any plan other than the one they had presented after almost a year of deliberation.
Nevertheless, the owners rejected the board’s plan. The board had no recourse other than to resign. The owners took over again as board members, which put the company into a state of flux for about a week. None of us outside of those owners knew what would happen next.
The week after Thanksgiving, Ben got a call from one of the owners. The board was relieving Ben of his duties and letting him go, effective immediately.
Two days later, the board members brought in a new outside individual as CEO. I can only assume they had been searching for a new CEO over the past few weeks or months to a
ct that fast. It’s my opinion that the board already knew what they were going to do before that Thanksgiving meeting.
Shortly after, the new CEO identified individuals to lay off, encompassing about 40% of the company. I made it clear that if we laid off these individuals, the employees who were left would have to work 80-hour weeks and would risk more employees leaving due to the uncertainty. I also stated that I didn’t think we could sustain the level of service needed to our clients to continue to grow. Nevertheless, the decision was out of my hands. I personally had to lay off 11 employees (the vast majority of those laid off) that day. He did take other’s feedback into consideration during this, but as I later found out, the new CEO just didn’t have the information he needed coming into the business and later resigned 3-4 months later. One of the owners took over as CEO.
A few weeks after that, I quickly realized that the damage had been done. A lot of relationships had been suffering during the last year of company chaos. Communication was basically non-existent. The result of this was that many employees were unsure of everything. As a result, client relationships also suffered and the mentality became just holding on to a job as opposed to delivering the value and culture of the company we had in years past. Clients noticed this and as a result, some clients ended their relationship with the company.
In the end, just 6 months later, the board members called an all-hands meeting. They stated that as of the end of the day, the company was closing its doors. That same day, the owner turned CEO started calling clients with the message that as of the end of the day, the company was closing its doors and it would no longer be able to provide the level of support in which they were accustomed. That threw my world into chaos as I received calls from many clients and employees seeking advice and help.
