Human capital is a critical asset to all businesses, and the problems associated with capturing it and leveraging it are well known. One of the primary problems all managers have is implementing newly gained knowledge and putting best practices into action. Whatever management information system is used for Management 2.0, it must be simple to implement, as simple as setting up a spreadsheet or checklist. This narrative describes the ideal management system for any business, the constraints that keep us from implementing it today, and some of the potential critical success factors.
Goals and Objectives of an Ideal Management System
The management information and control system of a business governs collection and flow of information and also acts to set standards of governance, control, and visibility of business data. It is meant to ensure the proper flow and use of information upward to various management levels. It is also meant to serve the purpose of being a conduit of downward-and-across goals, objectives, standards, best practices, and governance and communications.
Top executives understand that the design and execution of the management system is one of the few ways in which they can effectively direct the energy of their business. The goals and objectives of the ideal management system, and the underlying requirements for our vision of “advanced management insight,” include the following:
Provide critical information flow throughout the organization to enable visibility, control and governance
Provide true and insightful information to management by including human feedback of stakeholders
Provide properly distilled key information to all levels of management to:
- Understand what is occurring in their business, providing visibility into operations and into results
- Allow upper management to use their knowledge and judgment to evaluate operations
- Allow upper management to advise and consult with lower and peer management
Provide risk assessment and governance facts and warnings
Make available a common data platform for all management use
Provide a common language of facts and rules by which the company is managed and governed.
Drive a fact-based culture and reduce anecdotal and story-telling management practices
Build a historical repository of business operational data and facts, and a consistent audit trail
Allow for the spreading of knowledge and best practices
In summary, the management control system is the “prescribed information system used by management to ensure the clean and honest flow of information,” one that provides for efficient management interaction within the organization.
In the classic model, information flow is often a collection of individually prescribed networks created by whoever the current managers are and their view of their own needs, which often changes. It is directly related to the immediate focus of the individual management unit.
Human feedback data is seldom considered part of the information flow and is seldom formally solicited or required. Human opinion/perspective from the participating stakeholders is typically provided by word of mouth in meetings, the hallway, or at the coffee pot. It is seldom in the record, or in individual written reports. The end result is that the left hand often can’t know what the right hand is doing. At the operational level, individual islands of information and knowledge exist within a segment of the organization, and the collective knowledge of the lowest-level workers is never captured, much less leveraged.
Moreover, as personnel change, the information desired and the upward flow change. History is often lost, i.e., the meaning of the empirical data. The objectives, data flow, etc., run the risk of disruption and change with every significant change of manager, executive, or subject matter expert. Judgment and analysis within the information flow is then highly impeded by new or less capable managers. Top management seldom has a comprehensive information flow within the organization. Instead of a constantly improving information flow, they face a constant change and lack of overall design.
All organizations have a constantly changing mix of individuals of various capabilities, experience, and talent. Knowledge drain is a fact of life, particularly in the social world of Web 2.0. Not everyone can be an “A” player, but the classic model fails to maximize the knowledge of the “A” players and to lift up, monitor, and systemically improve the B, C, and D players.
Constraints of Management 1.0
Multiple constraints impede the successful execution of current management systems, including all of the following.
Information tends to often flow only vertically in a silo-like fashion.
Two forms of data exist: operational (empirical) data, and feedback data (verbal perspective, opinion, judgment, etc.). Both are important.
Classically, there is no formal record maintained of the feedback data.
There are many human data filters where individuals chose to decide which information flows upward, goes into the record, is changed, emphasized or filtered.
True management review and governance is extremely time-consuming or difficult, and in most cases is done with incomplete and filtered information.
Smooth information flow and easy reuse of data is limited or non-existent.
Information, facts, risk, etc., can be hidden, either intentionally or unintentionally.
Bad news is often filtered for too long by individuals before being communicated to management.
There can be little formal checking and quality assurance (QA) of data and information as the data flows within the organization
Formal records or repositories of information sometimes exist but they are most often islands of data that tend to serve operational objectives well and to serve management visibility, governance, etc., poorly. Determining a true history is difficult.
These systems are hard to modify. As the business grows and adapts to a changing world, the management control system itself is unable to adapt. Whatever change is possible requires computer programmers, many of whom do not understand the business. And the implementation cycle is months and sometimes years, by which time the business has moved in another direction.
As an integrated repository of human knowledge within an enterprise, AMI provides a bold new frame of reference for effective management. We see it as a means to drive knowledge across the enterprise and retool management to perform more effectively in a 2.0 world. We also foresee challenges and tremendous potential for managing a transparent "democracy of information."
Management 2.0 Model: Advanced Management Insight
As noted, the 2.0 community is a neural network. It has a repository of knowledge, is aware of its mission, and is a growing and learning entity that will broadcast “critical insights” to stakeholders and provide unfiltered access to information. Its lowest unit of self-management is what we call a cell.
All business organizations are made up of collections of management units, i.e., a group or groups of people overseen by a manager. In most businesses, this will be a department, work group, or other similar business unit. As with any organization chart, the cell can also contain underlying cells, such as a division made up of underlying departments or a department made up of underlying teams.
Cells have their own rules of engagement, focused on how to accomplish their work. The information that the cell uses to manage itself contains both hard data, such as key performance indicators (KPIs) and other numerical data; and soft data, such as opinions, perspectives, and similar human knowledge about the business and the work at hand.
The challenge for Management 2.0 is to create a common, easy-to-modify system that will synthesize rules, procedures, data, and information from the business environment and from the people impacted by it. In AMI terms, we envision a control unit that manages this flow of hard and soft information. AMI is designed to automate and institutionalize both the objective (empirical) and subjective (human) knowledge needed to manage a business. It enables a business to intermingle this hard and soft data. In point of fact, the 2.0 business must have this enhanced view of its operations in order to remain competitive.
This allows us to leverage knowledge, shown as “K” in the diagram. This allows AMI to know what data to collect, who to collect it from, and who to notify in exception conditions. This includes incorporating perceptive information from all stakeholders and reacting to it, where appropriate.
The AMI Control Room: An Early Warning System
One of the key purposes of a great management system is to promote identifying and using knowledge across the enterprise and to create a system to gather and disseminate knowledge in a business. This knowledge occurs in the form of books, best practices, rules of engagement, checklists, etc. There are endless elements of knowledge that we are constantly trying to move into the working elemental cells of the business, so as to confirm that knowledge is indeed being leveraged at the operational levels. So the ideal management system is focused on the flow of information through the business, through the management system itself. It is very focused on widening knowledge, spreading and pushing it into the business. Leveraging knowledge has consistently proven to have a great return for any business.
A key operational component for industries such as space flights, television broadcasting, and nuclear engineering is the use of a control room. A nuclear control room sits above the power plant, so to speak, constantly monitoring readings from all systems. The control room is all electronic. It’s got all the information. It’s got knowledge and algorithms about why this temperature is too high, or too low; combinations of readings and algorithms. Its first job is to be a “canary in the mine,“ to provide warnings of danger based on sensory perception. However, a nuclear control room is much more sophisticated than a canary. It’s not just a reactionary warning to current conditions, such as the presence of carbon dioxide. Because of the continual increase of knowledge, having the right intelligence embedded within the system, and the flow of information to the control room itself, nuclear control rooms have become extremely sophisticated and even predictive. They operate within a trajectory of information flows and provide early warnings of things that might happen.
One of the key discerning points for Management 2.0, and the revolutionary aspect of AMI, is the introduction of similarly intelligent “controls rooms,” i.e., the capability for greater quality assurance, within the management control system. These are intellectual control rooms, data flow controls throughout the whole management system. Imagine a pipeline of information flowing between all the management cells of a business. AMI applies the concept of having a “best manager” or “best consultant” functioning as a control unit on this pipeline, constantly examining the flow of data through it, constantly setting up dials and dashboards for warnings and analytics, constantly creating and enhancing the electronic repository of all this information. Like our nuclear control room, the AMI control room is aware of past performance, current operating conditions, and potential danger to the business. It has become a living, breathing organism, with intellect.
Control rooms thus provide a unique opportunity to apply internal and external knowledge to operational activities. They synthesize historical data with current knowledge and predict future courses of action. AMI is designed to enhance the sharing of information and provide agility in control rooms to allow rules and reasoning procedures to be adapted as needs dictate. In designing it, we enabled “double loop” learning as defined by Argyris and Schön (1978: 2, and 1996:28 ff). Their classic single-loop example is a thermostat that turns on/off based upon the temperature of the room. If we apply double-loop thinking, we realize we aren’t trying to control temperature at all; what we’re trying to control is "comfort." So we modify our model to incorporate measures and controls for humidity, air flow, and other characteristics in addition to temperature that impact our situation. This is what the AMI control room allows us to do. An individual manager can establish new perceptive qualifiers at any time, and thereby expand or transcend the current paradigm for monitoring and control. This is indeed a new paradigm, one which will enlarge the frame of management capabilities.
This in turn allows total transparency into the operational environment. It addresses these critical factors:
- Available operational data (Where are we now?)
- Desired happenings (Where do we want to go?)
- Internal or external benchmarks (What is our target? What are the danger signs?)
- Must-do items (What are my checkpoints?)
It also incorporates things like "never again” knowledge; analysis and reports; team and management communications; and early warnings and alerts.
Like an Excel Spreadsheet
The nuclear control room functions as a power center, usually at the center of the organization. The AMI control room, by contrast, is a "bottom up" model, where every single entity uses a control room - and shares its information across the organization. It is also easy to implement, similar to plugging an air filter or carbon monoxide detector into every room in your house. Democracy of information means that everyone has a control unit, a sensory monitory; it also means all control rooms are cognizant of all other control rooms, so that all can leverage the collective information of the neural network.
The concept of AMI, control rooms, and knowledge flow is wonderful, but it has to be implemented in a “traditional” computer system. Historically, we have spent decades doing analysis and architecting management information systems. Years writing, programming and testing them. And after we accomplish a certain level of success, they remain at heart computer systems: changes are difficult and time-consuming. The technology, in fact, can stifle the flexibility we need in order to remain competitive.
What managers need is an implementation method as easy to use as an Excel spreadsheet, a model that allows a manager to build a control room very, very quickly. Where he/she can very quickly define the data, the rules, and what these mean to the specific business unit. And where the manager can quickly change dashboards, events, rules, etc., as easily as he/she can modify a spreadsheet. That’s because in the 2.0 world, once you build your control room, you need the ability to change it easily. It’s not that you’d “like to,” it’s that you “NEED to” build those control rooms in a matter of days, not in months. You need to be able to build those control rooms without access to a computer engineer. The manager is the one who understands the business. The manager understands the data. He/she is the is the one who needs to be able to define it and use it to manage the cell.
Imagine that one of us can build a control room to monitor our business unit or department or other organizational entity, just like the nuclear control room. And every manager in the organization can set up one for his/her business unit. And each control room is like a LEGO piece, that we can snap together into a coherent, integrated system. The assembled structure is able to leverage the collective awareness of ALL control rooms, so that a control room at any location in the structure is instantly aware of potential problems anywhere else in the enterprise. This is true democracy of information. All pieces constantly aware, all assembled by business managers, none requiring computer engineers.
Collections of Control Rooms: Management 2.0
This is the absolute, stunningly simple value proposition, this ability to combine control rooms into higher-order, more complex management groupings. The strength of the AMI model lies in its ability to network all cells in the enterprise, and to add new cells as a business organization changes. These changes can occur in the form of mergers and acquisitions, or by extending the model to incorporate entities previously excluded from AMI. They can also occur when a management cell splits into smaller ones. The management model for the 2.0 world must allow an infinite number of control rooms. With increased complexity, the guidance available is much more than the sum of its parts. This is the concept of “a rising tide floats all boats.” AMI allows managers to leverage the human insight of the “A” players so that B, C, and D players function on the same level as “A” players. This is a true democracy of information.
With the addition of formal and informal systemized knowledge relevant to the operation of the management cell, we can achieve better outcomes with fewer resources. We do so by:
- Deploying an agile management information flow
- Integrating hard and soft data
- Eliminating human data filters of bad news – or exaggerated good news
- Providing formal checkpoints and quality assurance (QA) of information and information processing
- Ensuring formal records of information exist within a permanent repository
Providing the ability for true management review and governance without the time-consuming efforts of
needing to form a management picture of the past
- Making all this easy to modify by formalizing the cell model in a control room environment
Advanced Management Insight is a revolutionary concept for managing business performance in the Web 2.0 world. At its core is a management control unit, with five components. These are summarized in the accompanying AMI graphic, showing input in the form of operational information and the expert knowledge system; output via the analysis and presentation system, including active warnings; and a comprehensive data repository for all management information. At its heart, of course, is the AMI control room.
Each component has a specific function:
This combines quantitative data with subjective team feedback to present a constant stream of operational data to the AMI Control Room. It imports data from existing data systems and gathers “feedback” from the ground up, in the form of stakeholder responses to prompts. This is normally yes/no, e.g., “Do you have the tools you need to complete your task?” These are role-specific, so that all participants in a process are prompted with identical status checks.
This is a library of expert knowledge including best practices, KPIs, standard processes, and management expertise. It represents a systematic application of best practices and standard processes, augmented with discrete business knowledge from the specific organization. This allows the organization to meld its own knowledge with that of the external enterprise.
This takes the data from the AMI Control Room engine and provides robust visibility and insight into the status of the business. For upper management, it comprises robust, interactive dashboards that provide “at a glance” access to enterprise data with the ability to drill down into the empirical data and the subjective assessment of that data by participants. This provides management with insight into the opinions and awareness of issues that affect the business. It also serves as an early-warning system.
This is the repository of historical data, findings, and analysis. It reflects all ongoing data as well as data from prior review cycles. It is much more encompassing than traditional business intelligence data, because it incorporates subjective knowledge. It is a comprehensive diary for all reviews throughout the life of a business.
This is the core of AMI, the brains of a control room. It ensures that the organization conducts consistent, phase-by-phase QA review. It achieves this by constantly feeding operational and human data through several core systems to identify risks, any activities off track, and compliance with best practice. It has a built-in issue tracking system and a risk-assessment and scoring engine. It performs KPI scoring and reporting and schedules QA reviews and monitors QA compliance.
This is the absolute, stunningly simple value proposition, the ability to combine control rooms into higher-order, more complex entities.
The Management 2.0 information and control system will benefit all decision-makers at all levels of the organization. We believe Advanced Management Insight will function as a knowledge reservoir that is all of the following:
AMI is holistic, including economic, political, demographic, and other information. It is also global and will include information from outside the organizational boundaries of the business entity. This includes customers, suppliers, shareholders, legislators, etc.
AMI contains empirical data, such as that found in production or accounting systems, but the data will be correlated to opinions, perceptions, concerns, attitudes, needs, wants, skills, etc. It will be objective data wrapped with subjective knowledge. AMI will continuously, dynamically, and pro-actively obtain information from multiple human sources.
- Infinitely Connected
Democracy of data means that all stakeholders are enabled to access all information, thereby creating a web of unlimited connections.
AMI will monitor information by inference rules, such as an inference engines deploying artificial intelligence; it will pro-actively trigger human assessment of what it finds. All data will be situationally aware, able to self-identify deviations from nominal states and potential risks, and trigger alerts and dynamically seek data.
AMI supports the 2.0 manager by providing benefits in four areas:
- Establishes a prescribed, but easily modifiable information network that will constantly gather empirical data and feedback data (personal perspectives) from all relevant sources of information.
- Builds a complete data repository as a natural by-product of the normal work flow.
- Allows for a permanent and easily accessible common repository of the organizational information data.
- Continuously monitors the information flow and has intelligence, review, and quality assurance of the data, its use, and value.
- Easily facilitates the addition of a “growing and endless” addition of nodes of knowledge, intelligence, and control rooms at low cost, rework, or time delay.
Speed to Market
Managers can modify their view of business – and act on the knowledge they are acquiring – in a matter of hours and days, instead of the weeks and months needed to modify current management information systems. AMI is a model allowing managers to implement their own configuration without requiring computer programming.
- Incorporates 360⁰ degree feedback into actionable information for management.
- Provides “intelligent” analytics to help management understand current-state data, the emerging risks, and trend information.
- Automatically maintains a permanent diary and repository.
- Implements a self-learning and heuristic system.
- Opens role-based actionable information to all levels of management.
- Dramatically reduces or eliminates the hiding and filtering of bad news and information.
- Enables and solicits mass team feedback, advice, suggestions, and collaboration.
- Encapsulates organizational knowledge into the organizational data flow.
In short, AMI elevates the information flow from being a report of “what happened yesterday” into a dynamic new model that provides a comprehensive knowledge base and intelligently active review system that will automatically assume many of the current QA functions embedded in the management review process. AMI provides a solid knowledge base for operational analysis and improvement of people, processes, and effectiveness. It makes the management information system alert, warning sensitive, and predictive.
The first step toward revolutionizing Management 2.0 is to address these challenges, primarily in the form of management education and training. We anticipate the following steps vis-a-vis our moonshots:
- Enlarge the frame of management education
Business KPIs and subjective perceptions are a fact of life. The ability to correlate the two in a meaningful fashion, especially from across the enterprise, is a paradigm shift. We need to teach our managers how to leverage this collective wisdom, how to apply insight in what will become an open organization.
Moreover, AMI enables the electronic equivalent of "management by walking around" in a virtual enterprise, where stakeholders are physically dispersed at multiple locations. This provides an entirely new frame of reference for 2.0 managers, and they will need training in how to best use it to manage people across an "e-enterprise."
- Retool management for an open world
In a similar fashion, 2.0 managers will need to apply new management techniques to "manage" a shifting mass of people, projects, and cells -- many of whom are not "owned" by the business. In the borderless world of Web 2.0, the entities participating in a business enterprise may be internal; they may be external. AMI opens the knowledge base to an infinite number of participating cells; 2.0 managers need to learn how to then energize, mobilize and "manage" them.
Knowledge has always been an asset to businesses. What's different in Management 2.0 is that knowledge has also become an active tool in the business, both a strategic and operational tool. We will need to train our managers how to use it better -- how to partner with it, accept it, and deploy it.
- Create a democracy of information
When awareness and knowledge is spread across the enterprise, all stakeholders are in fact empowered to act. AMI allows managers to "control" employee behavior by ensuring that everyone is on the same page, so to speak. Instead of issuing edicts, 2.0 managers will need to learn how to manage by transmitting knowledge.
"Democracy of information" doesn't negate the fact that organizations are vertical and that someone above you is paying your salary. Providing total transparency enables all stakeholders to work with the same set of data, tools, and business objectives. By creating an enterprise model for collecting subjective knowledge, in fact, AMI becomes objective in removing the emotion-filled judgments or hype from the business model. At the operational level, it means the first-level employees in fact can work with totally objective business rules.
Life happens, and change is part of it. Technology architects are already dealing with designing and creating a constantly changing management system. This is one of the most technically challenging, and exciting, environments my industry has faced in the past 30 years. With AMI (http://www.amiplatform.com/default.aspx?pageid=2777) we are attempting to create an infinitely open architecture that “automates” human knowledge across an enterprise. We are in effect trying to automate knowledge across the known universe while simultaneously anticipating the unknown. From our perspective, we have created an AMI 1.0, and we are eagerly awaiting our next steps as we move toward 2.0.
John Bowen, Peter Balestrini, Bart Carpenter, Gene Clater, Peter Detweiler, Peter Lechner, Steve Heilenman, Roger Nagel, Matthew Peters, John Proctor, Tony Salvaggio, Linda Schultz, Dave Smith, Richard Wood, Joe Zielinski
Advanced Management Insight by Tony Salvaggio is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 United States License.
Patent application approved 6/21/11, No. 11/321.649