Backing into the Future Efficiently
What if you had a window into Blockbuster's quarterly business review in 2006 before Netflix introduced streaming?
What do you think was on the executive summary?
The investment asks, risks, and results readout?
Did someone get promoted because they had increased revenue that quarter? What initiatives were they excited about?
Blockbuster's CEO reported to the press in March 2006 that they were feeling confident about their choice to discontinue late fees. For reference, they had pulled in $5.86B in revenue in 2005.
Many leaders have risen through organizations by creating a demonstrable record of solving problems.
The pursuit of short-term, demonstrable results is taught in school and reinforced by current economic incentives within organizations because most leaders and managers must answer for the demonstrable, measurable results achieved by their team or organization in quarterly reviews and at the end of each fiscal year.
But, as immortalized by the late Dr. Russell Ackoff:
“The righter we do the wrong thing, the wronger we become. When we make a mistake doing the wrong thing and correct it, we become wronger. When we make a mistake doing the right thing and correct it, we become righter. Therefore, it is better to do the right thing wrong than the wrong thing right.”
Why is it that every department can report a record quarter, yet customers are leaving for a competitor?
It's a measurement problem.
When we measure the performance of each individual department—we cannot add those together to understand the performance of the whole organization.
The measurement of how well a computer is running is not a sum of how well each of its parts is performing, but a sum of the interactions between all of those parts.
Put another way, if you're measuring the performance of a choir, you don't break out each individual voice, score how well they're singing, and add their scores together - you listen to the whole choir.
I've seen hundreds of artificial intelligence initiatives fail, and one of the common factors between them is when they are focused on "doing the wrong thing righter." They make a broken process more efficient. Or they make a working process more efficient in a way that breaks down the interaction between that process and the rest of the organization.
Leaders must develop measures specific to their organization and to the interactions between their departments as well as the performance of the individual departments if they are going to harness the economic and societal potential of artificial intelligence and other advanced technologies.
So where do you start?
