Monday, June 27, 2005

The True Key Performance Indicator for Technology

I was discussing with a couple of Key Account Managers yesterday, Dan French from Consider (collaboration software) and Ralph Heinzelmann of BEA (portal solutions). We were discussing the true value of technology and how we should measure that value.

We tend to look at traditional, single point ROI measurement that are filled with assumptions about a certain ‘call to action’ or other KPIs that indicate an economic benefit for the company. In my world of integrated channel communication, these assumptions have built in elasticity that are effectively self-prophesying. In short, they are wrong and are used for budgetary support, if you catch my drift...

These are very complex measurements and there isn't a single solution but, in essence, what are we really trying to do? What do we really want?

My proposal is that we want our organizations to think faster, be a proactive competitor and react faster to competitive behavior, truly understand our customers better, take more calculated risks that results in lower failure rates and most importantly, trust each other so that we are more open and honest with our decision making.

Isn't that the real purpose of introducing technology into an organization.

Complexity theory is an emerging field of study in science and technology. Fundamentally, a system is complex when it is linear understanding, simple cause and effect relationships, and beyond analysis by the standard methods of systems analysis. This can be seen in 'siloed' organizations.

Complex systems are ones in which patterns can be seen and understood, but interplay of individual elements cannot be reduced to the study of individual elements or measured by single point ROI tools. Web metrics are a good example. A website has no value in itself. How it integrates into your communication efforts and positively changes a readers behavior is the value. The measurement has to be done along the whole decision making pathway ... from, 'I have an ache to I have a prescription' and from offline to online to offline. It's that pathway that represents the true ROI measure, not the individual stops along the way - they only 'support' the true ROI.

Organizational intelligence and knowledge management refers to the capacity of an organization to gather information, to innovate, to generate knowledge, and to act effectively based on the knowledge that it has generated.

The human side of knowledge management is very important. The term knowledge capital is sometimes used to describe the intellectual wealth of employees and is a real demonstrable asset of organizational value. Clearly, there is a major role for information technology in managing organizational change to a knowledge organization, and in enhancing and supporting the resulting intellectual capital and knowledge capital.

For a learning organization, organizational intelligence is greater than the sum of the knowledge of each individual in that organization. Organizational intelligence includes historical knowledge inherent in the organization and generative intelligence that results from collaboration between organizational members. Organizational intelligence is a major competitive advantage of a knowledge organization.

My conclusion is that: (1) the potentially most productive use of complexity theory is in the generation of new possibilities for technological innovation, and that these possibilities require new ways of thinking and new models, and (2) that organizational knowledge and results are a strong function of the ways in which organizational processes result in action and learning.

This often run completely counter to the trend towards increasing fragmentation and specialization. They certainly does here where I work.

I hope I have stimulated interest in a broad synthesis of knowledge involving mathematics, computational sciences, physics, chemistry, biology, neuroscience, social science, economics, political science, and engineering.

This awareness will impact how and why we introduce technology into our organizations. We need to understand the interdependence of technology and human/organizational learning, including knowledge creation and management. In a broader sense, positive organizational change is directly supported by technology, information, and systems management capabilities. This is what we should be measuring, positive organizational behavior, when we measure technology. The true KPI.


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1:42 AM, August 13, 2006  

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