"Theory" is how we think something should behave without external manipulation.
"Reality" is how we see something behave with external manipulation.
"Practice" is the study of controlling external manipulation.

Business Liberal

As many of my students know, I am a diehard business professional; therefore, I do not come by my more liberal opinions easily. For many of my students, my opinion of the Citizens United ruling by the United States Supreme Court in 2010 has been confusing. The ball is in my court to rectify this.


Our legal recognition of corporate entities as artificial persons, with the host of rights normally given to a natural person, dates back to 1816, and was based on the principles that management would be the decision making agent of the corporate entity. Management’s authority to make all decisions regarding the control of assets, on behalf of the corporation, is granted by the state government where the entity incorporates, not the shareholders. Shareholders consent applies to the control of equity, not assets.

For management, authority granted by the state comes with strings attached. These strings, known as RAA, can be defined as 1) responsibility as liability before the fact; 2) authority as the legal right to commit; and 3) accountability as liability after the fact. The relationship between the three is symbiotic. Effective delegation from state to management, from board to executive, from executive to front-line managers transfers the RAA as a package together. To manipulate the delegation by separating or limiting one element of this symbiotic relationship renders the others ineffective.

At the time the principles of corporate artificial personhood were developing, management had a long competent history. From the end of slavery in 1863 to the beginning of its involvement of World War II, the United States contributed most significantly to the establishment of management as a science and the breadth and depth of the current management body of knowledge.

Though there is little doubt that management is a professional practice as decisive as the practice of medicine and as complex as the practice of law. The business culture of the United States has failed to recognize and apply the same rigor demanded of medicine and law.

Our greatest management thinkers, including Drucker, Deming, Ackoff, Porter, Chandler, Senge, Argyris, etc. have presented differing perspectives of the same problem – the actions of a corporation are the actions of management – and the competency of management in general is growing dangerously thin. If we want corporations to be responsible and accountable, we must demand that our management be held to the same professional standards of rigor as our doctors and lawyers.

I had the good fortune to meet an amazing educator named Rita Mulcahy.  In her text, she published the results of a study that changed how I look at Organizational Change Management (OCM). 

She said, “When it comes to taking a professional certification exam, the most common reason individuals fail, is because they pick the answer that matches what they do it at work, not the professional standard."  

In other words, it is not mastering the tasks that are asked of you in the workplace, but mastering the generally accepted principles and practices of any given profession; and being able to apply them appropriately, that make the individual a certified professional.

At that moment, I realized that all the leading software manufacturers based the design of their applications on the same the generally accepted principles and practices.  So, more often than not, what really happens at work will be in conflict with the software.  It turned out to be true.  Over the years, as an OCM practitioner, I have learned to help clients adopt the generally accepted principles and practices of the profession, before they pick their software.

Is it me?

Or are the vast majority of managers working in the United States amazingly under qualified to fill the positions they hold.

Facilitating Change........

Looking at it purely from a legal perspective, when it comes to decisions, a manager will always be responsible (liable before the fact) and accountable (liable after the fact) for the decision.  That is the purpose of a manager; to make decisions.  Culture on the other hand could care less.  So, managers often look to a group for advice and even consensus, even though that does not dissolve either responsibility or accountability.  So building consensus with a group is an important process to master.  Real consensus is difficult because no matter how hard we try, individuals cannot support ideas they do not accept; and they cannot accept ideas they do not understand.  So an employee I know at the Boeing Company, Dr. Jennifer Sumner, developed a process known in as UAS.   I have used it and taught it for many years and have never experienced or been told of a single failure with the process.

First Seek Understanding.  After presenting an issue and a solution, test for understanding by asking all the group members to rate their understanding.  Have them place a post--it note on a scale drawn on a white board. The scale should run from 1 to 10, with 10 as complete understanding.  Notice if there are any mid-range or low numbers.  Find out what questions the person with a low number has.  Work through all the questions, providing simple answers.  Often, they are questions that will inform the whole group.  Test for understanding again until you are satisfied with the level of agreement.  If it turns out that a large group cannot move beyond mid scale, this issue is either too complex, the idea may be wrong, or the group maybe wrong.  It is important to know that individuals who cannot understand the issue or solution, should not be involved in the follow on steps.

Next Seek Acceptance. When it is time to move on and test the group’s general acceptance of the direction, repeat the ranking process with 10 indicating full acceptance of the direction.  This might mean there are bits with which the person disagrees, but that she or he is willing to accept the approach in order to move forward.

Finally Seek Support. Once you have decided to go forward with something, the questioning turns to support.  Support means full-hearted application of position, relationships, influence, resources, and time as needed, given one’s role in the solution necessary to get the job done. Too often, leadership groups agree to a solution and silently leave one person holding the effort.  Again, rate willingness to support from 1 to 10, with 10 meaning you will fully support the effort personally.

Each phase will surface concerns that if resolved properly help improve the quality of consensus and the effort to move forward.

Change agents are guardians, guides and facilitators.  They tend to see the concepts of change, transformation and transition as different terms.  Change is seen as a different state of existence – changing from day to night.  Those who manage change focus on leaving and arriving.  Progress is in the outcome.  Transformation is seen as the journey to different – living life.  Those who manage transformation focus on the plan.  Progress is in action, not result.  Transition is seen as the mental state of traveler – wisdom.  Those who manage transition focus on understanding, acceptance and support.  Progress is in the individual developing.

Organizational change management (OCM) is a framework for managing the effect of change such as new business processes, changes in organizational structure or cultural changes within an enterprise.  A systematic approach to OCM is beneficial when change requires people throughout an organization to learn new behaviors and skills. By formally setting expectations, employing tools to improve communication and proactively seeking ways to reduce misinformation, stakeholders are more likely to buy into a change initially and remain committed to the change throughout any discomfort associated with it.

While the transition effort can be reactive, post-change (after we buy the software) or proactive, pre-change (before we buy), the transition effort is necessary.  Organizations using post-change efforts tend to direct negative energy to the cause of change.  Organizations using pre-change efforts tend to avoid negative energy by developing buy-in and support in anticipation of the change.

The Service Oriented Organization

In our discussions there have been many questions regarding the concept of service oriented software.  A great deal of the confusion is rooted in our everyday notion of service.  In lay terms, services are often contrasted with products.  However, in business terms, products are things that are produced through a process, which means services are a technically a product, which is why in business, service is contrasted with goods.  The difference between the two is that goods are tangible services are intangible.  The easy way to remember the difference is a producer of goods “makes” something for you and a producer of services “does” something for you.  In either case, it is the benefit provided by goods and services that are consumed and valued.

Based on the notion that people do things for other people, you can begin to imagine that within most organizations, service relationships are all over the place.  For example, we could say that the human resource department provides staffing services to management.  This notion actually began to emerge right after World War II.  It formed a school of thought that became known as the Nordic School.  By the 1970’s the school of thought was extremely mature and the application of it was producing results.  In the late 1970’s this concept of service relationships was made globally famous by the dramatic turnaround of Scandinavian Airlines.  Quickly the idea expanded to the United Kingdom which developed the concept of managing IT as a service.  In the early 1980’s the practice of Information Technology Service Management (ITSM) was born and the associated standards were captured in the Information Technology Infrastructure Library (ITIL).  Today, ITIL is the global standard for managing IT.

It is important to remember, when the organizational service concept began as a chain of service roles, technology was not a factor, which means the first 40 years of evolution was dominated by processes and practices.  Service Oriented technology has emerged over the last 20 years.

In software engineering, a service-oriented architecture (SOA) is a set of principles and methodologies for designing and developing software in the form of interoperable services.  These services are well-defined business functionalities that are built as software components (discrete pieces of code and/or data structures) that can be reused for different purposes.  SOA design principles are used during the phases of systems development and integration.

SOA generally provides a way for consumers of services, such as web-based applications, to be aware of available SOA-based services.  For example, several disparate departments within a company may develop and deploy SOA services in different implementation languages; their respective clients will benefit from a well-defined interface to access them.  Extensible markup language (XML) is often used for interfacing with SOA services, though this is not required.  Java Script Object Notation (JSON) is also becoming increasingly common.

SOA defines how to integrate widely disparate applications for a Web-based environment and uses multiple implementation platforms.  Rather than defining an application programming interface (API), SOA defines the interface in terms of protocols and functionality.  An endpoint is the entry point for such a SOA implementation.

Service-orientation requires loose coupling of services with operating systems (OS) and other technologies that underlie applications.  SOA separates functions into distinct units, or services, which developers make accessible over a network in order to allow users to combine and reuse them in the production of applications.  These services and their corresponding consumers communicate with each other by passing data in a well-defined, shared format, or by coordinating an activity between two or more services.

SOA can be seen in a continuum, from older concepts of distributed computing and modular programming, through SOA, and on to current practices of web mash-ups, Software As A Service (SaaS), and cloud computing (which some see as the offspring of SOA).

Service oriented technology is nothing without people.  Today, service oriented organizations have the benefit of almost 70 years of evolving thought, proven processes, practices and technology.  We know that the heart of a service is a relationship, which means that people need to build and maintain them.  Which means the most important part of becoming a service oriented organizations is developing service oriented people and relationships.

During my graduate studies, I had a professor who helped me frame a new mental model of budgeting.  The basic idea – when thinking of budgeting as a management tool – is to think about a budget in the context of “predictive” accounting.  As a manager looks into their Chrystal ball of planning work, what expenses do they expect to incur and how should those expenses be recorded for accountability.  Then budget accordingly.

When budgets are used as controls, they are a management tool.  They serve as part of an agreement between two levels of management.  While all contracts are agreements, not all agreements are contracts, so you can’t take your fellow manager to a court of law.  However, what they do share is a meeting of the minds and a commitment.  Therefore, in determining the level of effective planning and budgeting, it is important to first recognize the RAA or Responsibility – before the fact; Authority – for the fact; and Accountability – after the fact.  Thus, trying to hold a first level manager accountable for a budget developed at a high level of management dissolves the symbiotic relationship of RAA and therefore entirely unproductive and intuitively unwise.

When budgets are used as constraints, and imposed by a higher level of management upon a lower level of management, the lower level manager should align expectations and plan out the work that can be accomplished within the budget.  This establishes a meeting of the minds and a commitment between managers.  Therefore, performance can be measured based on the agreement, and unplanned work items should be funded outside the budget.

You know that I intentionally work in two very different worlds.  As a consultant by day, I live in the business world, rich with the knowledge of practice and experience.  As a teacher by night, I live in the academic world, rich with the knowledge of theory and concepts.  I work in both worlds intentionally.  That is because a quick scan of opinions about theory and practice often finds these worlds in a philosophical conflict.  No doubt you have heard the old saying “Those who can – do; those who can’t – teach”.  This conflict arises because; for the most part we invest our beliefs in one world or the other.  Unfortunately, less than 30% of our population has attended at least one course from an institution of higher learning.  That means the majority of our population has not had the opportunity to explore and discover that we as individuals cannot really “understand” one without the other.

The late, great Dr. William Edwards Deming once wrote - "Rational prediction requires theory and builds knowledge through systematic revision and extension of theory based on comparison of prediction with observation.  It is an extension of application that discloses inadequacy of a theory, and need for revision, or even new theory.  Again, without theory, there is nothing to revise.  Without theory, experience has no meaning.  Without theory, one has no questions to ask.  Hence without theory, there is no learning."  In the most fundamental of truths, theory and practice are partners that form knowledge.  Without knowledge there is no learning.  Without learning there is no wisdom.  Without wisdom there is no progress.

Because of theory, we have evolving models of systems and their behavior; which includes weather systems, economic systems, and even organizational systems.  These models help us predict future behavior and therefore, outcomes.  As with the recent hurricanes, while what actually happens in a system may not happen exactly as predicted by the model or the theory, what does happen is very important.  Over time we learn to embrace the quote from Dr, Olaf Isachsen – “For whatever happens, all the conditions were present”.  That is because; a well developed theory often includes variation common within the system, but we cannot include variation from causes outside the system.  Even though there may be influence from the outside, we can analyze what happened and we can evaluate the quality of our theory and improve it.

We don’t intend to change the people – we try to change behavior.  If the behavior won’t change, then we change the people.- Unknown

First, culture comes from the word cultivate.  Culture is a group phenomenon produced by the cultivation of many personalities, which is an individual phenomenon.  The personality of an individual is comprised of many attributes such as attitudes, feelings, norms, values, ideas, beliefs, knowledge, tastes, style, etc.  A group which is comprised of two or more individuals, will come together to mix and blend attribute.  Just as personality drives the behavior of the individual, culture drives the behavior of the group.  So, group behavior is cultivation.  Not surprising, the products of the culture are the results of group behavior; these include shared attitudes, feelings, customs, norms, values, language, ideas, beliefs, knowledge, tastes, style, etc.

Second, it is important to understand that because culture guides the behavior of the group, just as personality guides the behavior of the individual, the greater force will always influence the lesser force.  Most individuals will behave one way inside the group and a very different way outside the group.  Individuals who transform themselves to comply with the behavioral norms of the group are followers.  Individuals who challenge the behavioral norms of the group are leaders.

Third, it is important to understand that every culture believes itself to be the center of the right world.  They believe other cultures are either less right or wrong.  Rationalizations help support these beliefs.  When a culture comes to believe itself to be less right, it will learn, self-direct and self-correct to be more right.  Right or wrong is a theoretical perspective commonly known as the truth.  It is important to grasp that humans do not believe in facts, they believe in truths.  Facts are used to support or challenge the truth.  Think in terms of children who believe in Santa and how much their behavior is influenced by that belief.  In the mind of the child, the truth of Santa is supported by the facts that gifts magically appear under a Christmas tree.  As a consultant, I investigate the facts in order to understand the truths that are held by the culture.

Everything has a purpose, even budgets.

The purpose of management is to act as the decision making agent of the organization as a legal entity.  This is not the same as leadership.  Management, the administration of decisions, has become a science; leadership, the administration of direction, is still an art.

Every day, managers in organizations make decisions that affect the performance of the organization.  When evaluated in hindsight, decisions can be good or bad.  However, over the last one hundred years, a science has evolved to evaluate decisions in foresight.  This science has greatly improved the effectiveness of decision making and the coordination of decisions across the enterprise.  Enter the concept of the “plan”, also known as a body of premade decisions.  A plan has two primary sections, the “action” plan and the “cost of action” plan, which is also known as the “budget”.  Budgets are usually for a specific period of time and expressed in a measure of currency.  The financial budgets should directly tie to the actions related to the work planned.

An organization that does not have a plan or budget will make far more bad decisions than good because managers lack a clear understanding of the cause and effect relationship between the goals of the organization and the work of the organization.

The science of management is not limited to planning and budgeting.  It also includes organizing to the plan and budget (resources); directing to the plan and budget (communication); coordinating to the plan and budget; and controlling to the plan and budget (monitor, evaluate, correct)

After fifteen years of experiments, it should be clear that effective organizational change management (OCM) is more than just training.  It should also be just as clear that it is not an afterthought.  A serious business transformation program will change technology, practices and processes.  These are three projects, with three different, yet interrelated outcomes.

The first effort by management is to determine the end result in terms of organizational capability.  For the last twenty five years, capability has been assessed over five progressive levels and across the three symbiotic elements of technology, practices and processes.  Effective capability is the level all three share.  So, we can ask, is the organization at level 5 maturity in its compliance with the generally accepted principles and practices of the profession?  If yes, are they at level 5 complying with the best practices of their industry?  If yes, then touch nothing.

However, if the answer is no to either question, examine the requirements of the next progressive level of capability.  Most organizations have technology that is far more robust than their practices or processes.  This means, most organizations should be looking at OCM long before they need to look at changing technology.  Unfortunately, most organizations still subscribe to the myth that new technology will force the organization to change.

How do you know if your organization is subscribing to the myth?  If the organization has had to customize state of the art software in order to support its processes and practices, then it is out of touch with the state of the art of processes and practices.