Building in Operational Control

Shortly after Enron blew up, most enterprises undertook a multi-year effort to tighten operational control, under the rubric of “compliance”.

The presumption was that, if executives were going to be legally-bound to “know” the operational state of the enterprise, then controls needed to be built into systems to enforce processes and procedures. The existence of those would mean that an executive would “know”, and could sign.

Well, it’s a theory.

Along the way, we lost two key things: innovation, and an actual understanding of whether flows are moving in the ways we expect.

Innovation (and its cousins, flexibility, adaptability, and service) require that some portion of the enterprise’s work depend on smart people quite as much as on smart systems. It requires loosening up, to allow for barely repeatable processes: a “component” approach rather than a single system with all required use cases approach.

What I want to talk about here, though, is the second of these: flows.

Suppose, for instance, that you’re one of these comprehensive “all things to all people” banks. Part of signing off on the quarterlies should include knowing whether or not you’re taking up positions of high risk. Do you have a rogue trader emerging, for instance? Is someone intermixing customer funds with the house account?

Indeed, you might want to get on top of that sooner than the next quarterly filing required by a securities commission.

Suppose your systems had had alerting conditions built into them? Suppose your “executive dashboard” wasn’t just filled with history, but could actually show you the money flows in the bank, highlighting suspect ones?

You might actually be able to get closer to handling compliance that way.

Note I didn’t say “stop the process”. A use case that says “you can’t do this” sounds good, until you realise that opportunity would also be lost that way.

An alert, on the other hands, allows for innovation within the organisation — and oversight — to proceed in tandem.

Although that was a banking example, there are many others. An airline, for instance, may want to empower gate agents and customer service agents at check-in to rebook passengers, and waive baggage or rebooking fees. At the same time, profitability is an issue: decide too few in the customer’s favour and you might lose business to a more flexible competitor, decide too many in the customer’s favour and your financial plan isn’t achieved.

No single agent can make the profitability call: only an alert looking at the accumulating flow of decisions can. (Here, a smart system might send back messages recommending a fee reduction rather than an elimination, but the agent would still have autonomy.)

Getting value from technology until recently has mostly been about automating processes, and making them rigorous. Now value will be obtained by providing the capabilities for smart people to work with smart systems and seize opportunities. This implies that monitoring the enterprise must shift as well, to modelling the flows in real-time.

Effective management will be less about defining the process in advance — and more about being alert to the need to step in.

Advertisements

About passionateobserver

I am a passionate observer of our society, the economy, and politics. Mostly I don't like much of what I see, so I write as a concerned citizen. To the fray, I bring a background in the philosophy of history, a lifetime's reading, a work history in information technology management, consulting and education.
This entry was posted in Services, Strategic positioning, Value Generation and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s