What should NASDAQ OMX, SEC and Congress do?

Last week, NASDAQ was closed for ~3 hours due to a software/computer glitch. Within 24 hours of this incident, the NASDAQ OMX CEO came on the news explaining what happened. Various news outlets criticized the company for not coming out sooner and informing the general public. On the surface, this incident seems like just a technical glitch and a communication breakdown but there might be deeper issues. Here are some recommendations to address this:

  1. Role of NASDAQ OMX
    • Create backup hot-sites on a different electrical grid
    • Document and test offline scenarios so that markets and exchanges continue to function even if technology infrastructure is affected
    • Have communications SOPs to timely inform the public
    • Upgrade technology infrastructure
  2. Role of SEC
    • Create policies and fines if something like this happens again
    • Create systems that provide real-time monitoring of markets and exchanges
    • Regulate the existence and maintenance of backup hot-sites
    • Regulate the technology infrastructure to check for obsoleteness
  3. Role of Congress
    • Increase the budget of the SEC to create systems that monitor markets and exchanges

5 Factors for Business Transformation

Business transformation entails assessing people, processes, and technologies of the organization in terms of the current state (where the organization is right now) and future state (where the organization wants to be). In these assessments people, processes and technologies are not standalone areas but are part of an integrated and holistic organization. If any of these areas are ignored or not given enough attention then true business transformation is just a pipe dream.

In order to have a holistic understanding of an organization and its broader role in society, there are 5 factors that need to be considered. These factors should have an inward focus and an outward focus. If the organization only has an inward focus then sooner or later it will be taken over by competitors and if the organization only has an outward focus then it will crumble under the weight of its own (mis)management. So, both are necessary. The 5 factors that will determine an organization’s success and longevity are Strategies, Politics, Innovation, Culture, and Execution or simply called The SPICE Factors. It is critical to remember that:

  1. Strategies are to be used as blueprints. They are not shelf-ware.
  2. Politics is a reality and needs to be understood.
  3. Innovation is the lifeline and not only the responsibility of the R&D department.
  4. Culture is the soul. Lip service is not culture but your actions are.
  5. Execution is evolution. Without it you become stagnant.

All of the above need to be measured constantly, managed consistently and reviewed periodically.

SPICE Factors
SPICE Factors

Below is a poll on what people think are the most important areas and factors for Business Transformation:

To the Cloud or Not to the Cloud

It seems like these days most organizations are interested in jumping onto the Cloud Computing bandwagon in one way or another. While there are many reasons why organizations want to move to the Cloud, I believe that optimization of business and technology processes should strongly be considered Pre-Cloud adoption. Additionally, organizations need to develop strong Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) to measure against the performance of a Cloud vendor and take into consideration the consequences if the KPIs and SLAs are not met. Thus, the thought of improving your organization and inspiration from William Shakespeare’s Hamlet led me to write the following:

To the Cloud or not to the Cloud, that is the question:
Whether ‘tis nobler in the mind to suffer at the hands of IT
The processes and systems of extreme complexity
Or to take the decision to outsource against a sea of issues
And by opposing end them: to completely, to partially
No more; and by partially, to say we end
The headache, and the thousand business challenges
That implementation is heir to? ‘tis a consummation
Devoutly to be wished. To completely to partially,
To partially, perchance to dream; aye, there’s the rub,
For completely what new issues may arise
When the organization has shuffled off this essential support,
Must give us pause. There’s the respect
That makes calamity of a vendor’s contract;
For who would bear the disruptions and problems of time,
Is the management wrong, the proud man’s contumely,
The pangs of despised mind, the compliance delay,
The insolence of office and the rejection
That patient merit of the unworthy takes,
When he himself might his demise make
With outdated processes? Who would governance bear,
To complain and sweat under sub-standard operations,
But that the dread of something after completely,
The undiscovered lessons learned, from whose goal
No professional return, puzzles the will,
And makes us rather bear those problems we have,
Than ask to other that we know not of.
The conscience does make ignorant of us all,
And thus the native hue of resolution
Is sicklied o’er, with the pale cast of thought,
And enterprises of great pitch and moment,
With this regard their thoughts turn awry,
And lose the name of action. Soft you now,
The fair (insert company name here), in thy orisons
Be all my decisions remembered.

Cloud Adoption
Cloud Adoption

 

References:

  1. 5 Factors for Business Transformation
  2. 5 Questions to Ask About Your Business Processes

5 Observations on Being Innovative (at an organizational level)

A typical organizational analysis entails observing the organization from the strategic, political and cultural lenses encompassing people, processes and technologies. While these lenses are useful in understanding the workings of an organization, they are not sufficient for an organization to be innovative. To be innovative, organizations need to have a constant flow of ideas that are generated, captured and then shared smoothly up/down and horizontally across the organization.  These ideas can potentially turn into products and/or services and thus propel the organization forward and keep them ahead of the competition.

In this blog post, I will focus on how to generate ideas for your organization and introduce a term I coined the Innovation Diversity Lens. The basis of this lens emerges from the fact that given the right environment, diversity of people and ideas can lead to innovation. So how does an organization generate ideas? Well, I am glad you asked.  According to my current view of the world, idea generation happens in the following 5 ways:

  1. By tapping into the innovation capabilities within the organization through internal customers. Typically people who are closest to the work can tell you what is not efficient and how it can be improved. Taking this information from multiple people and the co-dependencies of processes you can have a holistic idea of what can happen.
  2. By becoming a catalyst for innovation for external customers. Think about how new versions of the software are released typically based upon new requirements from the customers.
  3. Keeping abreast of innovation within your industry.
  4. Keeping abreast of innovation outside your industry through cross-pollination of ideas. Think about how concepts of Project Management emerged from construction and are now used in software development.
  5. Integration, customization, and combination of the above.
Idea Generation Map

Future Considerations for Kodak

Recently, I was asked to perform an organizational analysis of Eastman Kodak based on an article published in The Economist titled, “The last Kodak moment?”.  Here are my views if I was a new CEO sending a memo to the Board of Directors:

Eastman Kodak has been around for more than 132 years. In these years Kodak has seen the best of times and the worst of times. In the best of times, we were the envy of our competitors and as recently as 1996, we had revenues reaching $16 billion but now we have reported a net loss of $222 million. Some of the issues that I decipher by going over company history are the failures to adapt to new markets and not listening to our customers. While there are certain things beyond our control but there are other things that we can control. Why is that the builder of the digital camera in 1975, we are now at the bottom.

In my current analysis, I have observed that we are structured by our product line. This has worked in the past but we cannot sustain this organizational structure if we have to move forward. It is apparent that the power within the organization resides with the product owners and not the customers. Since we held a majority of the market in the past and were able to keep our competitors at bay, over time we have developed a culture of thinking that the customer will come to us and we do not have to change. Additionally, although we may have the best technology in the past and a highly lucrative intellectual property (IP) portfolio, this is not enough to make Kodak go into the black. In light of all of this I am recommending the following:

Firstly, I recommend changing the structural design of our organization by turning it into a Front/Back organization. The reason for this would be so that our marketing and sales team can directly interface with the clients, work with them to figure out what issues they would like to solve and then develop solutions around them. The customer is king and we have to respect that. Additionally, I would like to open offices in new markets so that we do not surround ourselves with “yes” men only here in Rochester, NY. The new offices would be in India and China where not only that we will have marketing and sales offices but also research and development (R&D) offices.

Secondly, as I read Larry Matteson’s report from 1979, I am surprised that we did not pay attention to the people who could help us divert the current mess that we are in. This will have to change, the feedback and reports that are being generated by our executives who are closer to the action should be held at a greater value. I am recommending an office within Kodak whose purpose solely would be to assess internal and external threats to our corporation and make recommendations. This office will report directly to me so we can erase any management or bureaucratic barriers.

Thirdly, as the strategic design changes, we will be changing the culture of the organization as well by institutionalizing Customer Satisfaction Assessment Reports (CSAR) in which we will solicit feedback from internal and external customers and ask them how they see we can improve the services that we provide. As you are well aware that most of the innovation comes from the people who are at the front lines as well as the customers. Doing this will not only give us a way to improve our current services and products but also open potential markets that we may not be aware of. The flow of this captured information is very important and thus the new office that I mentioned above would also house these suggestions and make actionable recommendations which I will review personally. In this way, I am creating an open door for anyone who has an idea to talk to this team and thus making all levels of the organization realize that we are in this together.

Lastly, I would recommend that the current IP that we have should not be merely sold off so that we can stay afloat. I ask you for how long can we stay afloat by merely selling our IP and how long can we survive. In this regard, I would recommend the beginning of a strong R&D arm which will not only continue to develop new IPs but also help us in developing new product features. This R&D arm will have several offices in several countries so that we are not limited by what we only know here in the USA but we can leverage globalization in a new way and all together for the future of the company.

We are not Fujifilm. We are better!

I look forward to working with you and thank you for your time.

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