Predicting success.

I hold a lot of respect for Seth Godin and read his excellent blog often. In the March 17 entry  Not for me  Seth talks about separating personal preferences, tastes and beliefs, and reasoning.

It’s a good point and a nice brief entry used to convey it. There is one thing I will have to mildly disagree with Seth on.

Seth says:

“You can say you don’t like a book or a movie or a political candidate, but without more data, it’s impossible to say that it won’t succeed, get great reviews or even get elected.”

In fact, it is plain impossible to reliably predict the outcome of a new venture based on ANY amount of data. If the opposite were true, there would never be flopped projects, unexpected failures and unexpected successes. There would be no such thing as 30% project success rate, no Betacam, and many and early iPhones.

Talk to any C-level person long enough and the word “innovation” will pop out. The “culture of innovation is a highly coveted, rare substance. It is so for a good reason because businesses, its shareholders and the Street demand predictable, reliable results. Innovation, the quest into uncharted territories, is bound to produce both stars and duds. Not very predictable, understandably.

Successfully balancing the rigour of analytics and the exciting uncertainty of innovation is an enviable trait of a high-class CEO. Organizations that can do both effectively have the clear competitive advantage and, by definition, are positioned to weather economic storms better.

Are the wheels coming off the IT industry?

This article was originally published by The Mark News on Mar 1, 2010

In the wake of Toyota’s massive recalls, questions remain as to the reasons for this kind of spectacular failure. And since there are questions, there is no shortage of analysis, often bordering on speculation.

Is it the traditional Japanese work culture or the emergence of the new, rebellious generation? Is it the choice of suppliers or the choice of materials? The management or the practices? The Bush administration or an unfortunate alignment of the stars?

I am not at all sure that looking for a single cause is a worthwhile undertaking. In business and in life, most unexpected and, hence, impressive failures precipitate from not one but a confluence of several factors. These are potentially harmless on their own, but together form a perfect storm of sorts. But this is not my point.

I am most intrigued by the recent assertions that the famed Toyota Production System (TPS), a philosophy focused on continuous improvement and the elimination of inconsistencies and waste, may have been behind the disaster. This is critical because the success of TPS has led to the development and wide-spread adoption of its generic derivative, lean production. Numerous organizations around the world have become fond of “lean” and have adopted it internally. How can it possibly be a suspect?

Any methodology is only a means to an end, never an end in itself. It is always secondary to the goal. Confusing the two is dangerous because it clouds the thinking. Building great cars that are reliable and safe is a fantastic goal. Doing so efficiently is the means of staying profitable so that that goal can be pursued. Not vice versa.

We routinely observe this in IT departments. The traditional self-positioning of IT as a support function provides for a particular way of thinking where the expedients and tasks trump strategic goals and results.

Methodologies du jour are routinely implemented as a matter of “best practice” without much reflection on their alignment with goals. Projects are often pursued because of the infatuation with the “coolness” of the underlying technology. People are hired based on their ability to perform tasks vis-à-vis delivering results – just read a few job postings on any job board.

Such IT departments are doomed. A recent McKinsey study showed a reduction of CIO positions reporting to CEOs. The cost cutting pressures of the après-crisis environment have accelerated outsourcing efforts and a support function is a natural candidate for outsourcing. The wheels of North American IT departments are coming off.

One doesn’t have to despair though, because things are quite different for those CIOs who have positioned their IT departments not as a commoditized support function, but as a valuable strategic asset of the organization. They do not confuse means with ends. They are as integral to their organization as marketing or finance is. They think in terms of business results, speak the language their organization actually understands, and constantly innovate.

Such IT departments are crown jewels. They will live and prosper, along with their respective organizations, for a long time to come.