Do Not Undermine Your Most Valuable Asset: The Soft Assets

A couple of decades ago software was provided almost as a possible freebie to encourage buyers to purchase computer hardware. Today both hardware and software are available for free. With services such as Google's App, IBM's Symphony Suite, Sun's Open Office, G.ho.st and others software applications and hardware platforms are available for free. The competitive difference between two organizations is not what assets (capital, resources, technology, etc..) they have but rather how they utilize these assets. In other words their capabilities and in particular their soft capabilities.

Soft capabilities is becoming increasing important. As discussed in a past blog entry soft skills of individuals are things like a person's interpersonal skills and emotional intelligence. The question on the table is what defines an organization's soft assets? We can state that soft assets of your organization include its agility, culture, values, alignment to its mission, sustainability. The reason they are soft is because we usually can not measure them easily. This might change in the future. Today we can measure an organization's performance through monitoring its financial reports and deriving some measures that reflect its level of success in managing its capital and financial resources. However this performance measure is very narrow-sighted, it only addresses one stakeholder of the business, the investor, and does not include all aspects of a business' mission, or maybe none of it at all.

Take for example a company whose mission statement is "preserving and improving human life". To effectively measure the delivery of its mission, measuring return on investment and debt / equity ratios will not provide a true picture. Rather measurements of soft aspects of the business are needed. Examples would be return on educating customers about diseases, adoption of good practices by patients, healing rates, impact of side-effects on the health of patients, economies and other aspects of human life, and the list goes on. Our lack of solid approaches and well-defined techniques makes measuring these performance indicators difficult, and hence we call them soft.

Businesses need to focus on these soft areas, whether they are soft outcomes of the business, soft assets, or soft capabilities; simply because this is where true value lies. True value of a business is its ability to achieve its mission. I consider any business metric that can not be measured in a standardized approach across business borders to be part of the soft side of the business. For example, a business' performance is a soft attribute, simply because true performance is not simply financial return on investment (which has very standard approaches of calculating and measuring), but could include customer satisfaction, and other metrics that most people today do not have standard way of measuring across autonomous domains. The first step of understanding a business's soft-side is to include it as part of the business architecture.

The concept of soft extends beyond businesses and organizations and is also considered at country level, an example is discussed on the Foreign Policy Blog which is seen to be an emerging component in valuation of nations.

In summary, (1) the soft-side is where value is located, and its is usually hidden simply because we do not attempt to measure it, and those who do attempt to measure do not have sound approaches. (2) anything that a business has difficulty in measuring will be defined as soft.

Three Fatal Mistakes Leaders Do

Everyone makes mistakes, including leaders. We are all human and its part of how we are. However some mistakes are more fatal than others. These three killers below can diminish a leader's effectiveness.

1. Lack of Consistency
These leaders are not consistent in their performance. They are not involved on a continuous basis and their work habits are sporadic. They also demand more than they give, and are not easily accessible or available, even though they might be working very hard. Their messages are confusing and do not have a clear vision or strategy. Our Creator tells us in the Quran about these types of people in a couple of places,

وَيْلٌ لِّلْمُطَفِّفِينَ (83:1)
WOE UNTO THOSE who give short measure

الَّذِينَ إِذَا اكْتَالُواْ عَلَى النَّاسِ يَسْتَوْفُونَ83:2)
those who, when they are to receive their due from [other] people, demand that it be given in full

وَإِذَا كَالُوهُمْ أَو وَّزَنُوهُمْ يُخْسِرُونَ(83:3
but when they have to measure or weigh whatever they owe to others, give less than what is due!

"These leaders lack loyalty, vision, commitment and respect to their followers and the cause they are leading"

2. Lack of Action
These leaders love to visualize, strategize and come up with ideas, but they never deliver. They miss deadlines, they don't keep up promises, and might even always critique others without providing a solution or alternative. They set standards of behavior or quality and don't abide or ignore them. These types of leaders are also discussed in the Quran,

يَا أَيُّهَا الَّذِينَ آَمَنُوا لِمَ تَقُولُونَ مَا لَا تَفْعَلُونَ (61:2)
O YOU who have attained to faith! Why do you say one thing and do another?

كَبُرَ مَقْتًا عِندَ اللَّهِ أَن تَقُولُوا مَا لَا تَفْعَلُونَ (61:3
Most loathsome is it in the sight of God that you say what you do not do!

إِنَّ اللَّهَ يُحِبُّ الَّذِينَ يُقَاتِلُونَ فِي سَبِيلِهِ صَفًّا كَأَنَّهُم بُنيَانٌ مَّرْصُوصٌ
Verily, God loves those who fight in His cause in [solid] ranks, as though they were a building firm and compact.

"These leaders are usually not team players, are not serious about other team members' opinions, are not responsible, nor reliable, are perceived as not sincere, and provide limited value"

3. Fail to Develop Others
These leaders do not include coaching or mentoring thoughts into their directives. They do not think of providing opportunities for growth and development of their followers. Their main focus is on self-development. Opportunities for learning, development, responsibility and taking initiative are limited in their organizations. Teams are disengaged and clusters of groups exist. Succession planning is not on the radar screen, and sustainability is weak.

Allah (SWT) shares with us many stories of leaders who developed others such as Al-Khider and Musa (PBUH), Mohammad (PBUH) teaching his companions through the revelation from Allah (SWT) in the numerous statements of قُلْ throughout the Quran, Ibrahim and Ismail (PBUH) and many others.

"Leaders who fail to develop others are perceived to lack confidence, vision, loyalty, trust, courage, motivation, teaching and compassion"

Leaders need to constantly revisit where they stand and if they are approaching any of these three killers.

Strategy and its Role in Becoming Capable

Strategy is focused on the matching of an enterprise's opportunities and threats (external factors) to the enterprise's capabilities.

In some cases an organization might not have a capability in place that allows it to benefit from an opportunity. In such cases the capability will need to be realized otherwise the opportunity will be missed. The realization of such absent capability is part of the enterprise strategy, and will require enablers from across the enterprise such as technology, locations, roles, processes, intellectual property and more.

__________________________________________
Robert Grant, "Contemporary strategy analysis: concepts, techniques, applications", Blackwell Publishing, 2002.

Harvey Thompson, "The Customer-Centered Enterprise: How IBM and Other World-Class Companies Achieve Extraordinary Results", Mc Graw-Hill, 2000.

Getting Capable

Institutions vary widely in their capabilities to achieve their mission. You could find two organizations in the exact same line of business, with very similar strategies and business drivers, yet very different results due to the differences in their capabilities. Lets take an example of two airlines. Both airlines share the same mission, transporting humans across the globe safely and in an enjoyable manner. Airline A always takes off on time, lands on time and does not lose luggage. Airline B always takes off late and loses luggage.

Their business requirement is the same, yet their outcomes are very different, which is due to differences in their capabilities.

A capability is a realized requirement, it could also be said that a capability is a business requirement added to some value acquisition process. The value acquisition process should span the entire enterprise to ensure that is picked from all strengths of the enterprise and also did not bring along any unnecessary baggage.

Organizational Capabilities in Less than 100 Words

How quick can your organization respond to its constituents needs. How effective can it adapt to changing dynamics in the environment surrounding it? How efficient can it deliver its mission? The answer to these questions depends on what we call organizational capabilities.

Similar to an individual's ability, organizations have abilities to do certain things, these abilities combined with resources, assets, processes and skills form an organizational capability. A few examples of strategic capabilities are (1) The ability to innovate and be creative, (2) the ability to develop and deploy products in a compressed cycle, and (3) the ability to educate and train young people.

Are your capabilities well defined? Do you know how to improve them, and how to measure where these capabilities are enabling your stakeholders to realize the value proposition you are offering?

Know Thy Business Events

A business event is a valuable building block in an enterprise's business architecture. Business events provide insights to triggers and decision points in the business domain. Business events could be classified into three types: External events such as a customer service request, internal events such as closing a project or an employee time sheet submission, and finally temporal events which occur based on the elapse of a given time-frame such as end of month.

There are many important questions to ask oneself about events when building a business architecture or when defining events. Examples are:

1. How are these events identified?
2. Are they unique?
3. Can they be repeatable?
4. How can we structure events in the context of a business architecture?
5. How can events be modular?
6. What processes are related to events?
7. What business capabilities are impacted by events?
8. What impact does the event have on the business services, operations and other areas?
9. Who reacts (which roles) to an event and in what way?
10. How often does an event occur and what is its significance?

Step By Step Business Architecture

Developing a business architecture for an enterprise can be a daunting task. However following a systematic approach makes it a bit easier, or at the very least organized.

1. Develop a description of the existing business architecture if it exists. The description should include as much of the AS-IS architecture as needed for the development of the TO-BE architecture.

2. Identify any reference models, tools, patterns and techniques that should be used to develop the TO-BE architecture based on the context, complexity and scope of your business requirements.

3. Select viewpoints of the business architecture to be utilized to illustrate the architecture, according to the business requirements. Common business architecture view points are operational, systems, technology, governance, financial and functional viewpoints.

4. Develop an architecture model for your TO-BE business requirements. Ensure that you perform each of these,

• Create the model for the specific view point. For example create the activity model for an operational view point of the business architecture. Common models are activity models, use-case models, class models, node connectivity diagrams and information exchange matrices.
• Verify that all stakeholder requirements and concerns are included.
• Ensure you have models for business goals and objectives, business functions, business services, business processes, roles, business data,
  
• Ensure your architecture has captured the interlocking of organization and functions, and interlocking of processes and systems.
• For each business function identify when, where, where, how often and by whom will the function be performed. Identify the inputs to the function and the expected outputs.
• Identify dependencies and assumptions for each business function.
• Conduct trade-off analysis if any conflict exist among the different views.
• Validate and verify the developed model against requirements for completeness and scope

5. Select the business architecture building blocks. Reuse blocks as applicable, and develop new ones to add to the BA library.

6. Hold a formal architectural review of the developed model and building blocks with the stakeholders.

7. Review the non-functional requirements and service level agreements. Common non-functional requirements are scalability, performance, availability, costs, reliability and capacity.

8. Complete the documentation for the business architecture by ensuring that you,

• Have a completed requiements traceability report.
• Identified requirements that are driving the architecture.
• Mapped the architecture to reference architectures and models in the organization.
• Identified new vs. reused building blocks.
• Documented rationale for architectural decisions.
• Completed the business architecture report including the business footprint, detailed description of business functions, and their information needs.
• Outlined the governance footprint as related to the business needs and scope of the TO-BE
• Included a table of standards, rules, guidelines, assumptions, dependencies, and measures used.

Business and Enterprise Architectures: Differences and Commonalities

Business architecture is a unifying structure that enables the execution of business strategies through initiatives to achieve business results. The business architecture could also be viewed as the relationships and connectivity among the various value streams and the inputs that feed these value steams, the processing centers that enable the value streams and the value realized.

Business architecture is only one component of enterprise architecture. In an enterprise there are business objectives, technology and infrastructure assets, organizational units, security concerns information handling and processing and various other components, each of which can be defined as a separate architecture and part of a defined framework.

The business architecture encompasses the business flows, activity models, use cases, user models, class models, node connectivity diagrams and business information exchange matrices. Business architectures usually reflect a baseline known as the AS-IS architecture and defines a future aspiration known as the TO-BE architecture.

Enterprise architectures explain all aspects of an enterprise; its data, business processes, infrastructure, technology and business

Patterns: What Are They? Part 1

Literally patterns are defined as a combination of qualities, items, objects, behaviors, or other which form a consistent or characteristic arrangement. We observe dozens of daily patterns every day. Examples are teen behavior, the movement of the earth around the sun, the blooming of flowers and hundreds more.

"A combination of qualities, items, objects, behaviors, or other which form a consistent or characteristic arrangement"

Patterns are not new to man-kind, the Creator has informed us about patterns in the Quran and other earlier revelations. Recently system developers started to analyze the concept of patterns, pioneered by Christopher Alexander in his book, " A Timeless Way of Building", he defines a pattern as a three-part rule, expressing a relation between a certain context, a problem and a solution.

Patterns are a first step in understanding root causes of the problem within a specific context. It also allows the development of architectural and solution building blocks.

"In systems realization, patterns express a relationship between a problem and its solution within a given context"

For a software designer some pattern examples are: Message Translators, Process Managers, and Proxies to mention a few. A process manager pattern for example will comprise of a sensor to detect an incoming message which initializes the process manager. The process manager in turn executes a set of rules stored in the process manager memory implementing the processing rules, and detects the subsequent steps through a status feedback detector/analyzer.

Considering a different domain, take the example of a group that does youth trips, examples of patterns could be: Headcount Process, Critical Supplies, Meal Managers, Activity Itinerary Manager and many more. An Activity Itinerary Manager pattern will comprise of an input process to capture developmental and coaching themes/needs of the youth trip, a search process to match the theme to a group of activities that meet the objectives of the theme from a repository of activities, the selected lists of activities could then pass by the activity processor which breaks down the activity into steps, each assigned to resources, a lead, a cost structure, risk factor and plan of action. Feedback from the actual deployed activity is then finally fed back into the activity manager for updates to the activity definitions and other relevant areas, within quality expectations.

_____________To Read More _______________

(1) Hohpe and Woolfe, "Enterprise Integration Patterns: Designing, Building and Deploying Messaging Solutions", Addison Wesley signature Series, 2004.

(2) Haskins and Raveh, "Introduction to Patterns Through Writing Systems Engineering Patterns", 16th Annual International Symposium, 2006.

(3) Gross and Yu, "From Non-Functional Requirements to Design Through Patterns".

The Spark ...

Teamwork is touted as the driver behind progress. This is not necessarily true. There is no doubt that teamwork is a fact of life. As humans we have to interact with one another to satisfy our human needs and desires such as socializing, belonging to a group identity, sustaining needs of life among many others.

Effective teams need leaders to align them and give them direction and motivation. The spark that makes groups and societies move is the outcome of individuals. These sparks ignite the team and thrust its members forward, but the team members do not necessarily produce any starting sparks. As Igor Sikorsky once said,

"The work of the individual still remains the spark that moves mankind ahead, even more than teamwork"

If you find yourself on a team, organization or society, with higher levels of motivation, vision and commitment than others, don't despair, that means you are a leader. As a leader you can not work alone, sparks don't develop into fire without a catalyst, and your team is your catalyst. Nurture, coach, and develop the team, and it will be a strong catalyst.

It was once said that a small group are the ones carrying the ambitions of the nation, and a group of those are the ones who sacrifice their time and wealth to accomplish these ambitions, and a group of that smaller group are the ones who sacrifice their lives for the sake of succeeding in the accomplishment of these ambitions. A small group, from a small group, from a small group.

"A small group, from a small group, from a small group"

______________________

Picture: Courtesy of NASA: The formation of a star, A molecular cloud is a region containing cool interstellar gas and dust left over from the formation of the galaxy and mostly contains molecular hydrogen. The Spitzer data, in red, green and blue shows the molecular cloud (in the bottom part of the image) plus young stars in and around Cepheus B, and the Chandra data in violet shows the young stars in the field. http://www.nasa.gov/mission_pages/chandra/multimedia/photo09-062.html.

10 Attributes of a Learning Oganization

Communications is a key component of effective leadership. Leaders don't sit in their offices behind their desk, they are out in the field dealing with customers, suppliers, employees and other constituencies of their organization. This interaction between the leader and these other groups and individuals yields tremendous amounts of experience and knowledge. An organization which shares knowledge and learns from its members is a learning organization.

Learning organizations are characterized by the following:

1. Possess solid systems for communications among its members.
2. Knowledge and intellect is respected and appreciated.
3. Team work and collaboration is the norm.
4. Members consult one another on a continuous basis.
5. Members update others on a continuous basis.
6. Teams learn from past experiences, and mistakes are rarely repeated.
7. Information, knowledge storage and retrieval is efficient and effective.
8. Team members are accessible and known for their expertise, contributing to centers of competence.
9. Realizes continuous growth and innovation.
10. Encourages diversity and systems-based thinking.

Is your organization a learning one? How can you assess its learning capabilities?

Instilling Change: A Key Component of Leadership

Leading change is by no means a trivial job. Only the experienced leaders with astute vision can lead their teams to change. The Prophet Mohammad (peace be upon him) is a role model for not only change, but transformation.

Our Creator informs us that no group of people will change unless they take initiative to embrace change themselves. Indeed the only things that is constant is change itself, or as Muslims know it as the sunnah of Allah (ways of Allah).

Scholars of management [1] define a few steps which are key for successfully leading change. I summarize these points [2] and provide references from the Quran and teachings of the Prophet (PBUH).

1. Intention:
Quran: Indeed Allah does not change the condition of a group unless they change themselves.
Hadith: Indeed deeds are based on their intentions

2. Urgency:
Quran: So flee to Allah quickly indeed I am to you from him a clear warning
Quran: And hasten to a forgiveness from your Lord and a paradise the width of the skies and earth

3. Clear Vision:
Quran: And Indeed Allah is my Lord and your Lord, so worship him, this is the straight path (Mary 36)

4. Stick to a Good Team:
Quran: And seek patience in your soul with the ones who remember their Lord in the early morning, and the evening late at night, seeking his pleasure and acceptance (Cave 28)
Quran: Wow to me, I wish I have not taken him/her a close companion (friend) (Al-Furqan 28)

5. Self Critique Self:
Quran: Oh you who believe fear Allah, and shall a soul see what it has prepared for its tomorrow (hereafter), and fear Allah, indeed Allah is with what you have performed all knowing
Hadith: Seek forgiveness, for indeed I seek forgiveness 70 times in a day

6. Take Action and Perfect it:
Hadith: Indeed Allah loves if one of you do an action, that you perfect it

7. Be Consistent:
Hadith: The best of deeds are the continuous, even if they are little

8. Take Small Steps:
Hadith: This way of life (Islam) is deep so get in it slowly and gently

9. Don't Give Up:
Quran: Tell my servants who have transgressed upon themselves to not despair from the mercy of Allah, indeed Allah forgives all the sins.

10. Offer Value and Increase Benefit:
Good deeds wipe out bad deeds

11. Ensure You are Working on a Sound Foundation:
Fix your beliefs and values
Quran: And Satin said when the matter was over (life on earth, and the day of judgment), indeed Allah promised you the promise of truth, and I promised you and broke my promise, and I had no power over you, except that I invited you and you accepted, so do not blame me, and blam yourselves. (Ibrahim 22)

12. Set and Realize Realistic Goals
Quran: Indeed Allah does not burden a soul with more than what it can handle

13. Stay Away from Distractions
Quran: Do not even come near fornication
Quran: So flee to Allah

14. Remember Your Mission in Life:
Quran: I have only created jinn and mankind to worship me
Quran: Is it not that with the rememberance of Allah that hearts have tranquility and content

15. Remember Life-cycles End:
Hadith: Remember the destroyer of all pleasures (death)

16. Never Execute Trivial Work:
Hadith: A human's accountability on the day of judgement will not be over until he is asked about four things, from among them is his time and how he utilized it

17. Forecast Risks:
Quran: Indeed the plotting of Satin is weak
Be vigilant and forecast problems and risks




[1] Dan Cohen and John Kotter, "The Heart of Change Field Guide", Harvard Business Press, 2005.
[2] Ayman Nassar, "Implementing Change", Friday Khutbah, Hanover, PA, July 10th, 2009

The Demise of Quality - My Wife's Friend, British Airways and Air France

I was vacuuming the living room last evening, when my wife told me that her friend arrived safely in Egypt after a long flight from Washington with a connection in London. She then added that her 10 year old son is walking around in his swimsuit at home and her friend is wearing some old maternity clothes she had from a decade ago. I asked my wife "Did they lost their luggage?", she replied that no a single bag of the eight pieces her friend and her three kids had arrived.

It has been two days since my wife's friend family had arrived on board British Airways with no luggage. I mentioned to my wife that her friend should request a compensation of some sort, may $100 per passenger, so they can use this modest pocket money to go buy some clothes until their bags appear. My wife's response was "we are thankful that they arrived safely". Well, yes of course compared to Air France's latest flight that plunged in the Atlantic, the losses and inconvenience is minimal, and one should always be thankful, regardless of what one goes through". The point however is that the passenger's (customer) expectation is be transported safely along with his luggage from point A to point B. If customer's start changing their expectations, quality will automatically by definition change.

An attorney would seize the opportunity and ask the passenger to file a suit against the airline asking for some ridiculous amount of money as a compensation for damages. Maybe $1 million dollars per lost bag, or the highest that the court will allow. We have various mindsets of customers when it comes to settling disputes with a service provider. At one extreme a client will say no problem, just get me my bags if you can, when you can. On another extreme another customer will say meet me at court, and then there are infinite of perspectives in between.

What would you do? What would a good system's engineer do? Share your thoughts in the comments below.

Probability Distributions for Business Events - Binomial

System engineers and technical managers need to make decisions based on the probability of certain events occurring. For example during a risk assessment practice, the systems engineering might be calculating the risk value of an event, and based on the value of the risk level the organization will take certain steps to respond to the risk.

To accurately calculate the risk value which is calculated as the (impact level * probability of occurrence), the probability distribution selected needs to be accurate.

In some events outcomes could be binary, for example: good or bad, correct or incorrect, successful or failed, conforming or non-conforming. A suitable probability distribution would be a binomial probability distribution, using a binomial calculator the system engineer can calculate the probability of occurrence of one of the two possible events knowing the sample size (n), the rate of good versus bad, or correct versus incorrect (p) and the number of items (x) fitting a particular outcome. For example if we select a sample of six items from a batch which has a defect rate of 3%, we can find the probability that the sample has one defective item using the binomial formula

P(x) = [n! / x! (n-x)! ] p^x (1-p)^(n-x)

In the above example, n=6, p=0.03, x=1

Using the formula above or the binomial calculator available at Texas A&M, we get that P(1) = 0.1546

Stay tuned for other probability distributions that are also common in business environments.

Two Approaches to Use Statistics on Your Project

Most people don't like statistics, and most decision-makers make wild guesses when they need to take a decision. Statistics might not be the most straight-forward science during the college years, but it has tremendous value in providing insights and guidance for making rational decisions.

Using statistics one can show various properties of a set of data such as the mean, mode, median, dispersion and distribution. These parameters can be represented graphically using histograms, charts and other visual illustrations.

Another approach using statistics is to develop inferences, test hypothesis and develop forecasts through the use of sample data from a bigger population. Relationships between variables can be developed and illustrated using a scatter diagram or a regression equation.