The relevant user groups for targeted IT Investments (part 1)

Cut access to Facebook? Roll-out the iPhone? Deploy wikis and blogs? All are investment decisions and all should be based on cold economic analysis. They rarely are. For a simple fact: the end-users are either indiscriminately put in one single bag (”the Employees”) or they are put into the existing organizational boxes. Both approaches are wrong and usually result in misunderstanding and wrong investments.

What is needed is to slice and dice the users population according to a few simple economic principles. This allows to accurately surface the different business cases and make an informed choice when choosing to invest or to pass.

Let’s look at it in a threefold post:

• what typologies can we use to distinguish employees’ economic situation (part 1)?
• what are the relevant groups that appear (part 2)?
• what guidelines for action can be deducted (part 3)?

This goes right against Minto’s Principles but I want to split this piece in three and in that order. Should be the exception.

When faced with an IT Investment decision, execs tend to look at the possible user in 2 specific ways: 1) the average Employee (an artifact). The investment is made on this basis and suits infrastructure investments (invest in Email?). 2) the explicit organization of jobs, functions, business units, etc. Here, it’s suited for applications that will be used only by specific positions (think CRM, SAP, etc.).

But this approach is also used when deciding to invest in so-called Enterprise 2.0 applications, like blogs, wikis, etc. and will lead to wrong decisions because the economic situation sof the employees are not the same and the investment decisions should therefore be unbundled.

So what lenses do you use to see your user population in a different light ? I propose 4:

Corporate specificity

Are the main goals of an employee specific to the organization or are they generic? Generic here means that if the employee is taking the exact same job in another organization, he would generally operate in the same way. We focus on the goals here, by opposition to the skills and tools.

A worker using a in-house developed software to perform an exclusive service to a client: corporation specific goals. An employee in most of the support functions, like HR, has mostly generic goals ((s)he would do the same 90% of the time in another organization).

A business unit manager, though possessing generic management skills, still has a corporate-specific function 90% of the time. Support function managers have most of their goals internal but still generic: a consequence is that they need to learn from the outside. To be clear, think about the strategy part of the job. Take a CIO, 75% of the strategic agenda is the same in similar organizations. Take a business unit leader, very little will be (if it is, time to worry).

Transformational, Transactional, Tacit

Sources: Competitive Advantage from Better Interactions, The McKinsey Quarterly, 2006; The Next Revolution in Interactions, The McKinsey Quqrterly, 2005.

John Hagel synthesized this typology of work types as follows:

• Transformational – “extracting raw materials or converting them into finished goods” – examples cited include “mining coal, running heavy machinery, or operating production lines”
• Transactional – “interactions that unfold in a generally rule-based manner and can thus be scripted or automated” – examples of transactional jobs include cashiers, office clerks, truck drivers and accountants
• Tacit – “more complex interactions requiring a higher level of judgment, involving ambiguity, and drawing on tacit, or experiential, knowledge” – examples of tacit-intensive jobs include retail sales people, customer service representatives, registered nurses and general managers

Note we are at the activity level here: nearly every job is comprised of a mix % of the 3 types of work.

Knowledge Manipulation / Decision-Making

Concentrating on the tacit interactions category, we need to distinguish between two very different focus:

Knowledge Manipulation focused: employees need to come up with creative ways to solve complex problems. This requires them to gather vast amount of information, exchange it, share it, collaborate on it with co-workers both inside and outside of the organization, etc. R&D is the perfect example here, but strategists, analysts and so on, are as well. The main emphasis is on new knowledge creation and dissemination.

Decision Making focused: employees need to mainly digest knowledge and act on it. Little knowledge creation is involved, creation is not the main focus, action and decision is.

General example: Think a manager (decision-making focus) and her cabinet (knowledge manipulation focus).

Drucker’s executive scale

I admit the name might (will) change but it captures clearly the concept. Drucker makes a series of good points about who is an executive (The Effective Executive, 1966). One key point:

Every knowledge worker in a modern organization is an “executive” if, by virtue of his position or knowledge, he is responsible for a contribution that materially affects the capacity of the organization to perform and to obtain results.

Drucker’s definition rightly encompasses a vast array of positions. I want more granularity: I’m distinguishing between the executives based on the level at which they shape the future of an organization (level of Drucker’s effectiveness).

In the pharmaceutical industry for example, the employees in R&D, responsible for creating new products, are much higher on the executive scale, than, say, the sales force, which is nevertheless executive, albeit at a lower level. Think about it this way: the sales force can continue to do what it does, the corporation won’t be impacted severely. If R&D doesn’t come up with new products, end of the game. This is how Drucker puts it:

[...] The chemist in the research laboratory who decides to follow one line of enquiry rather than another one may make the entrepreneurial decision that determines the future of his company. He may be the research director. But he also may be - and often is - a chemist with no managerial responsibilities, if not even a fairly junior man. [...] And this holds true in all areas of today’s large organization.

Of course, both are necessary, but the scale at which a decreased performance will impact the organization are different. You can think about this as a multiplier as well.

Using those four lenses, the “users population” takes all kinds of shades (16 for those who don’t like permutations). In the next post, we’ll describe the relevant ones (not 16!) for IT investment decisions.

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