Monday, July 30, 2007

Human Resource Management

Human resource management:

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(HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business.The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations.

Human resource management is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. Synonyms include personnel administration, personnel management, manpower management, and industrial management, but these traditional expressions are becoming less common for the theoretical discipline. Sometimes even industrial relations and employee relations are confusingly listed as synonyms, although these normally refer to the relationship between management and workers and the behavior of workers in companies.

The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.

HRM is seen by practitioners in the field as a more innovative view of workplace management than the traditional approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can be understood and undertaken by the workforce, and to provide the resources needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and operating practices of the enterprise overall. HRM is also seen by many to have a key role in risk reduction within organistions.

Synonyms such as personnel management are often used in a more restricted sense to describe activities that are necessary in the recruiting of a workforce, providing its members with payroll and benefits, and administrating their work-life needs.

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Workforce Planning:
Strategic Workforce Planning
involves analyzing and forecasting the talent that companies need to execute their business strategy, proactively rather than reactively, it is a critical strategic activity, enabling the organization to identify, develop and sustain the workforce skills it needs to successfully accomplish its strategic intent whilst balancing career and lifestyle goals of its employees.

Strategic Workforce Planning is a relatively new management process that is being used increasingly to help control labour costs, assess talent needs, make informed business decisions, and assess talent market risks as part of overall enterprise risk management. Strategic workforce planning is aimed at helping companies make sure they have the right people in the right place at the right time and at the right price

Through Strategic Workforce Planning organisations gain insight into what people the organisation will need, and what people will be available to meet those needs. In creating this understanding of the gaps between an organisation’s demand and the available workforce supply, organisations will be able to create and target programmes, approaches and develop strategies to close the gaps.

Steps in Workforce Planning:
Though there is no definitive ‘Start here’ activity for any of the approaches to Strategic Workforce Planning, there are five fundamentals activities that most Workforce Plan models have:
  • Environment Scan
  • Current Workforce Profile
  • Future Workforce View
  • Analysis and Targeted Future
  • Closing the gaps
Recruitment:
Recruitment
refers to the process of finding possible candidates for a job or function, usually undertaken by recruiters. It also may be undertaken by an employment agency or a member of staff at the business or organization looking for recruits. Advertising is commonly part of the recruiting process, and can occur through several means: through online, newspapers, using newspaper dedicated to job advertisement, through professional publication, using advertisements placed in windows, through a job center, through campus graduate recruitment programs, etc.

Suitability for a job is typically assessed by looking for skills, e.g. communication skills, typing skills, computer skills. Evidence for skills required for a job may be provided in the form of qualifications (educational or professional), experience in a job requiring the relevant skills or the testimony of references. Employment agencies may also give computerized tests to assess an individual's "off-hand" knowledge of software packages or typing skills. At a more basic level written tests may be given to assess numeracy and literacy. A candidate may also be assessed on the basis of an interview. Sometimes candidates will be requested to provide a résumé (also known as a CV) or to complete an application form to provide this evidence.

Training & Development:
In organizational development, the related field of training and development (T & D) deals with the design and delivery of learning to improve performance, skills, or knowledge within organizations.

In some organizations the term Learning & Development is used instead of Training and Development in order to emphasise the importance of learning for the individual and the organization. In other organizations, the term Human Resource Development is used.

Performance Appraisal:
Performance appraisal, also known as employee appraisal, is a method by which the performance of an employee is measured (generally in terms of quality, quantity, cost and Time). The roots of Performance Appraisal can be found in Frederick Winslow Taylor's time and motion study. Performance appraisal is a part of career development.

Performance appraisals are a regular review of employee performance within organizations.

Generally, the aims of a scheme are:

  • Give feedback on performance to employees.
  • Identify employee training needs.
  • Document criteria used to allocate organizational rewards.
  • Form a basis for personnel decisions-salary (merit) increases,promotions, disciplinary actions, etc.
  • Provide the opportunity for organizational diagnosis and development.
  • Facilitate communication between employee and administrator.
  • Validate selection techniques and human resource policies to meet federal Equal Employment Opportunity requirements.

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Risk management

Risk management is the human activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources.

The strategies include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.

Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death and lawsuits). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments.

Objective of risk management is to reduce different risks related to a pre-selected domain to the level accepted by society. It may refer to numerous types of threats caused by environment, technology, humans, organizations and politics. On the other hand it involves all means available for humans, or in particular, for a risk management entity (person, staff, organization).

Some Explanation:
In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order. In practice the process can be very difficult, and balancing between risks with a high probability of occurrence but lower loss versus a risk with high loss but lower probability of occurrence can often be mishandled.

Intangible risk management identifies a new type of risk - a risk that has a 100% probability of occurring but is ignored by the organization due to a lack of identification ability. For example, when deficient knowledge is applied to a situation, a knowledge risk materializes. Relationship risk appears when ineffective collaboration occurs. Process-engagement risk may be an issue when ineffective operational procedures are applied. These risks directly reduce the productivity of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality. Intangible risk management allows risk management to create immediate value from the identification and reduction of risks that reduce productivity.

Risk management also faces difficulties allocating resources. This is the idea of opportunity cost. Resources spent on risk management could have been spent on more profitable activities. Again, ideal risk management minimizes spending while maximizing the reduction of the negative effects of risks.

Steps in the Risk Management Process:
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Establishing the context:
Establishing the context involves

0. Identification of risk in a selected domain of interest

1. Planning the remainder of the process.

2. Mapping out the following: the social scope of risk management, the identity and objectives of stakeholders, and the basis upon which risks will be evaluated, constraints.

3. Defining a framework for the activity and an agenda for identification.

4. Developing an analysis of risks involved in the process.

5. Mitigation of risks using available technological, human and organizational resources

Identification:

After establishing the context, the next step in the process of managing risk is to identify potential risks. Risks are about events that, when triggered, cause problems. Hence, risk identification can start with the source of problems, or with the problem itself.

  • Source analysis Risk sources may be internal or external to the system that is the target of risk management. Examples of risk sources are: stakeholders of a project, employees of a company or the weather over an airport.
  • Problem analysis Risks are related to identified threats. For example: the threat of losing money, the threat of abuse of privacy information or the threat of accidents and casualties. The threats may exist with various entities, most important with shareholders, customers and legislative bodies such as the government.

When either source or problem is known, the events that a source may trigger or the events that can lead to a problem can be investigated. For example: stakeholders withdrawing during a project may endanger funding of the project; privacy information may be stolen by employees even within a closed network; lightning striking a Boeing 747 during takeoff may make all people onboard immediate casualties.

The chosen method of identifying risks may depend on culture, industry practice and compliance. The identification methods are formed by templates or the development of templates for identifying source, problem or event. Common risk identification methods are:

  • Objectives-based risk identification Organizations and project teams have objectives. Any event that may endanger achieving an objective partly or completely is identified as risk. Objective-based risk identification is at the basis of COSO's Enterprise Risk Management - Integrated Framework
  • Scenario-based risk identification In scenario analysis different scenarios are created. The scenarios may be the alternative ways to achieve an objective, or an analysis of the interaction of forces in, for example, a market or battle. Any event that triggers an undesired scenario alternative is identified as risk - see Futures Studies for methodology used by Futurists.
  • Taxonomy-based risk identification The taxonomy in taxonomy-based risk identification is a breakdown of possible risk sources. Based on the taxonomy and knowledge of best practices, a questionnaire is compiled. The answers to the questions reveal risks. Taxonomy-based risk identification in software industry can be found in CMU/SEI-93-TR-6.
  • Common-risk Checking In several industries lists with known risks are available. Each risk in the list can be checked for application to a particular situation. An example of known risks in the software industry is the Common Vulnerability and Exposures list found at http://cve.mitre.org.
  • Risk Charting This method combines the above approaches by listing Resources at risk, Threats to those resources Modifying Factors which may increase or reduce the risk and Consequences it is wished to avoid. Creating a matrix under these headings enables a variety of approaches. One can begin with resources and consider the threats they are exposed to and the consequences of each. Alternatively one can start with the threats and examine which resources they would affect, or one can begin with the consequences and determine which combination of threats and resources would be involved to bring them about
Assessment:
Once risks have been identified, they must then be assessed as to their potential severity of loss and to the probability of occurrence. These quantities can be either simple to measure, in the case of the value of a lost building, or impossible to know for sure in the case of the probability of an unlikely event occurring. Therefore, in the assessment process it is critical to make the best educated guesses possible in order to properly prioritize the implementation of the risk management plan.

The fundamental difficulty in risk assessment is determining the rate of occurrence since statistical information is not available on all kinds of past incidents. Furthermore, evaluating the severity of the consequences (impact) is often quite difficult for immaterial assets. Asset valuation is another question that needs to be addressed. Thus, best educated opinions and available statistics are the primary sources of information. Nevertheless, risk assessment should produce such information for the management of the organization that the primary risks are easy to understand and that the risk management decisions may be prioritized. Thus, there have been several theories and attempts to quantify risks. Numerous different risk formulae exist, but perhaps the most widely accepted formula for risk quantification is:

Rate of occurrence multiplied by the impact of the event equals risk

Later research has shown that the financial benefits of risk management are less dependent on the formula used but are more dependent on the frequency and how risk assessment is performed.

In business it is imperative to be able to present the findings of risk assessments in financial terms. Robert Courtney Jr. (IBM, 1970) proposed a formula for presenting risks in financial terms. The Courtney formula was accepted as the official risk analysis method for the US governmental agencies. The formula proposes calculation of ALE (annualized loss expectancy) and compares the expected loss value to the security control implementation costs (cost-benefit analysis).

Potential Risks Treatment:

Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of these four major categories: (Dorfman, 1997) (remember as 4 T's)

  • Tolerate (aka retention)
  • Treat (aka mitigation)
  • Terminate (aka elimination)
  • Transfer (aka buying insurance)

Ideal use of these strategies may not be possible. Some of them may involve trade-offs that are not acceptable to the organization or person making the risk management decisions.

Another source, from the US Department of Defense; Defense Acquisition University, calls this ACAT, for Accept, Control, Avoid, and Transfer. The ACAT acronym is reminiscent of the term ACAT (for Acquisition Category) used in US Defense industry procurements.

Risk avoidance:

Includes not performing an activity that could carry risk. An example would be not buying a property or business in order to not take on the liability that comes with it. Another would be not flying in order to not take the risk that the airplane were to be hijacked. Avoidance may seem the answer to all risks, but avoiding risks also means losing out on the potential gain that accepting (retaining) the risk may have allowed. Not entering a business to avoid the risk of loss also avoids the possibility of earning profits.

Risk reduction:

Involves methods that reduce the severity of the loss. Examples include sprinklers designed to put out a fire to reduce the risk of loss by fire. This method may cause a greater loss by water damage and therefore may not be suitable. Halon fire suppression systems may mitigate that risk, but the cost may be prohibitive as a strategy.

Modern software development methodologies reduce risk by developing and delivering software incrementally. Early methodologies suffered from the fact that they only delivered software in the final phase of development; any problems encountered in earlier phases meant costly rework and often jeopardized the whole project. By developing in iterations, software projects can limit effort wasted to a single iteration.

Risk retention:

Involves accepting the loss when it occurs. True self insurance falls in this category. Risk retention is a viable strategy for small risks where the cost of insuring against the risk would be greater over time than the total losses sustained. All risks that are not avoided or transferred are retained by default. This includes risks that are so large or catastrophic that they either cannot be insured against or the premiums would be infeasible. War is an example since most property and risks are not insured against war, so the loss attributed by war is retained by the insured. Also any amounts of potential loss (risk) over the amount insured is retained risk. This may also be acceptable if the chance of a very large loss is small or if the cost to insure for greater coverage amounts is so great it would hinder the goals of the organization too much.

Risk transfer
Means causing another party to accept the risk, typically by contract or by hedging. Insurance is one type of risk transfer that uses contracts. Other times it may involve contract language that transfers a risk to another party without the payment of an insurance premium. Liability among construction or other contractors is very often transferred this way. On the other hand, taking offsetting positions in derivatives is typically how firms use hedging to financially manage risk.

Some ways of managing risk fall into multiple categories. Risk retention pools are technically retaining the risk for the group, but spreading it over the whole group involves transfer among individual members of the group. This is different from traditional insurance, in that no premium is exchanged between members of the group up front, but instead losses are assessed to all members of the group.

Outsourcing is another example of Risk transfer where companies outsource IT,BPO,KPO etc. In IT, some companies will outsource only development work and product is made at offshore locations where as business requirements are handled at onshore/client site. This way, companies can concentrate more on business development rather than managing large group of IT development team.

Create a Risk Mitigation Plan:
Select appropriate controls or countermeasures to measure each risk. Risk mitigation needs to be approved by the appropriate level of management. For example, a risk concerning the image of the organization should have top management decision behind it whereas IT management would have the authority to decide on computer virus risks.

The risk management plan should propose applicable and effective security controls for managing the risks. For example, an observed high risk of computer viruses could be mitigated by acquiring and implementing anti virus software. A good risk management plan should contain a schedule for control implementation and responsible persons for those actions.

According to ISO/IEC 27001, the stage immediately after completion of the Risk Assessment phase consists of preparing a Risk Treatment Plan, which should document the decisions about how each of the identified risks should be handled. Mitigation of risks often means selection of Security Controls, which should be documented in a Statement of Applicability, which identifies which particular control objectives and controls from the standard have been selected, and why.

Implementation:
Follow all of the planned methods for mitigating the effect of the risks. Purchase insurance policies for the risks that have been decided to be transferred to an insurer, avoid all risks that can be avoided without sacrificing the entity's goals, reduce others, and retain the rest.

Review & the Evaluation of the Plan:
Initial risk management plans will never be perfect. Practice, experience, and actual loss results will necessitate changes in the plan and contribute information to allow possible different decisions to be made in dealing with the risks being faced.

Risk analysis results and management plans should be updated periodically. There are two primary reasons for this:

  1. to evaluate whether the previously selected security controls are still applicable and effective, and
  2. to evaluate the possible risk level changes in the business environment. For example, information risks are a good example of rapidly changing business environment.
Limitations:
If risks are improperly assessed and prioritized, time can be wasted in dealing with risk of losses that are not likely to occur. Spending too much time assessing and managing unlikely risks can divert resources that could be used more profitably. Unlikely events do occur but if the risk is unlikely enough to occur it may be better to simply retain the risk and deal with the result if the loss does in fact occur.

Prioritizing too highly the risk management processes could keep an organization from ever completing a project or even getting started. This is especially true if other work is suspended until the risk management process is considered complete.

It is also important to keep in mind the distinction between risk and uncertainty. Risk can be measured by impacts x probability.

Enterprise Risk Management:
In enterprise risk management, a risk is defined as a possible event or circumstance that can have negative influences on the Enterprise in question. Its impact can be on the very existence, the resources (human and capital), the products and services, or the customers of the enterprise, as well as external impacts on society, markets, or the environment. In a financial institution, enterprise risk management is normally thought of as the combination of credit risk, interest rate risk or asset liability management, market risk, and operational risk.

In the more general case, every probable risk can have a pre-formulated plan to deal with its possible consequences (to ensure contingency if the risk becomes a liability).

From the information above and the average cost per employee over time, or cost accrual ratio, a project manager can estimate

  • the cost associated with the risk if it arises, estimated by multiplying employee costs per unit time by the estimated time lost (cost impact, C where C = cost accrual ratio * S).
  • the probable increase in time associated with a risk (schedule variance due to risk, Rs where Rs = P * S):
    • Sorting on this value puts the highest risks to the schedule first. This is intended to cause the greatest risks to the project to be attempted first so that risk is minimized as quickly as possible.
    • This is slightly misleading as schedule variances with a large P and small S and vice versa are not equivalent. (The risk of the RMS Titanic sinking vs. the passengers' meals being served at slightly the wrong time).
  • the probable increase in cost associated with a risk (cost variance due to risk, Rc where Rc = P*C = P*CAR*S = P*S*CAR)
    • sorting on this value puts the highest risks to the budget first.
    • see concerns about schedule variance as this is a function of it, as illustrated in the equation above.

Risk in a project or process can be due either to Special Cause Variation or Common Cause Variation and requires appropriate treatment. That is to re-iterate the concern about extremal cases not being equivalent in the list immediately above.

Areas of Risk Management:
As applied to corporate finance, risk management is the technique for measuring, monitoring and controlling the financial or operational risk on a firm's balance sheet. See value at risk.

The Basel II framework breaks risks into market risk (price risk), credit risk and operational risk and also specifies methods for calculating capital requirements for each of these components.

Risk Management & Business Continuity:
Risk management is simply a practice of systematically selecting cost effective approaches for minimising the effect of threat realization to the organization. All risks can never be fully avoided or mitigated simply because of financial and practical limitations. Therefore all organizations have to accept some level of residual risks.

Whereas risk management tends to be pre-emptive, business continuity planning (BCP) was invented to deal with the consequences of realised residual risks. The necessity to have BCP in place arises because even very unlikely events will occur if given enough time. Risk management and BCP are often mistakenly seen as rivals or overlapping practices. In fact these processes are so tightly tied together that such separation seems artificial. For example, the risk management process creates important inputs for the BCP (assets, impact assessments, cost estimates etc). Risk management also proposes applicable controls for the observed risks. Therefore, risk management covers several areas that are vital for the BCP process. However, the BCP process goes beyond risk management's pre-emptive approach and moves on from the assumption that the disaster will realize at some point.

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Tuesday, July 24, 2007

Basic Negotating Tips

We all negotiate in our personal and professional lives. We negotiate when we go to a garage sale, or when we want to do something different at work, or when we are dealing with members of the public.
Sometimes its easy to negotiate, but other times, when we have a great deal at stake or we are upset, the task can be intimidating or difficult.
We are going to talk about some tips to effective negotiating that can help you work more effectively with your customers, co-workers, and boss. They are also applicable to other interpersonal situations.
Overview of The Negotiation Process
Negotiating is the process by which two or more parties with different needs and goals work to find a mutually acceptable solution to an issue. Because negotiating is an inter-personal process, each negotiating situation is different, and influenced by each party's skills, attitudes and style. We often look at negotiating as unpleasant, because it implies conflict, but negotiating need not be characterized by bad feelings, or angry behaviour. Understanding more about the negotiation process allows us to manage our negotiations with confidence increases the chance that the outcomes will be positive for both parties.
Barriers To Successful Negotiation
Viewing Negotiation As Confrontational
Negotiation need not be confrontational. In fact effective negotiation is characterized by the parties working together to find a solution, rather than each party trying to WIN the contest of wills. Keep in mind that the attitude that you take in negotiation (eg. hostile, cooperative) will set the tone for the interaction. If you are confrontational, you will have a fight on your hands.
Trying To Win At All Costs
If you "win" there must be a loser, and that can create more difficulty down the road. The best perspective in negotiation is to try to find a solution where both parties "win". Try not to view negotiation as a contest that must be won.
Becoming Emotional
It's normal to become emotional during negotiation that is important. However, as we get more emotional, we are less able to channel our negotiating behaviour in constructive ways. It is important to maintain control.
Not Trying To Understand The Other Person
Since we are trying to find a solution acceptable to both parties, we need to understand the other person's needs, and wants with respect to the issue. If we don't know what the person needs or wants, we will be unable to negotiate properly. Often, when we take the time to find out about the other person, we discover that there is no significant disagreement.
Focusing On Personalities, Not Issues
Particularly with people we don't like much, we have a tendency to get off track by focusing on how difficult or obnoxious the person seems. Once this happens, effective negotiation is impossible. It is important to stick to the issues, and put aside our degree of like or dislike for the individual.
Blaming The Other Person
In any conflict or negotiation, each party contributes, for better or worse. If you blame the other person for the difficulty you will create an angry situation. If you take responsibility for the problem, you will create a spirit of cooperation.
Some Negotiation Tips
Solicit The Other's Perspective
In a negotiating situation use questions to find out what the other person's concerns and needs might be. You might try:
What do you need from me on this?
What are your concerns about what I am suggesting / asking?
When you hear the other person express their needs or concerns, use listening responses to make sure you heard correctly.
For example: So, you are saying that you are worried that you will get lost in the shuffle and we will forget about you...Is that right?
If I have this right, you want to make sure that the phones are covered over lunch?
State Your Needs
The other person needs to know what you need. It is important to state not only what you need but why you need it. Often disagreement may exist regarding the method for solving an issue, but not about the overall goal.
For example:
I would like an hour on Tuesday to go to the doctor. I want to make sure I am healthy so I can contribute better to the organization.
Prepare Options Beforehand
Before entering into a negotiating session, prepare some options that you can suggest if your preferred solution is not acceptable. Anticipate why the other person may resist your suggestion, and be prepared to counter with an alternative.
Don't Argue
Negotiating is about finding solutions...Arguing is about trying to prove the other person wrong. We know that when negotiating turns into each party trying to prove the other one wrong, no progress gets made. Don't waste time arguing. If you disagree with something state your disagreement in a gentle but assertive way. Don't demean the other person or get into a power struggle.
Consider Timing
There are good times to negotiate and bad times. Bad times include those situations where there is:
. a high degree of anger on either side
. preoccupation with something else
. a high level of stress
. tiredness on one side or the other
Time negotiations to avoid these times. If they arise during negotiations a time-out/rest period is in order, or perhaps rescheduling to a better time.
Conclusion
Negotiating is a complex process but one worth mastering. If you keep in mind that you are responsible for the success or failure of negotiation, and if you follow the tips above, you will find the process easier.

Do You Know Why People Buy Your Product?

Stepping back and understanding the big picture of sales can help any salesperson increase their sales margin. Do you know why people buy anything? Gaining an understanding of the following six reasons why people buy will improve your selling ability.
1.Fear
is one motivator that is possibly driving your prospect to consider purchasing your product or service. An example of this could be an insurance policy against possible loss or tragedy. If you understand this then you can gear your approach to your prospect accordingly. You need to show this type of prospect how your product or service can effectively reduce his or her fear. Once you’ve done this, you will most likely be able to finalize the transaction.
2.A desire for gain
is another possible reason that your prospect is considering your product or service. An example of this could be some sort of investment opportunity with a hope for financial gain. The key to approaching this prospect is to show how your product or service is superior to other comparable products or services, and how you can promise more gain. Reduce the risk. If the prospect truly feels that your product or service can promise long-term gain with minimum risk, then you are more likely to close the sale.
3.Pride
is another possible reason that your prospect is seeking your product or service. Pride of ownership is a powerful motivator, and may include clothing, cosmetics or luxury automobiles. Your prospect may wish to consider purchasing your product or service because he of she is interested in impressing friends or family. Distinguishing this type of motivation is fairly simple because this type of prospect will be seeking a product or service in accordance with his or her wants or needs. Show how your product or service can inspire pride and your prospect will react warmly to your product or service.
4.Imitation.
The prospect who is interested in what may be termed as imitation is interested in purchasing a product or service that is similar to existing quality items. You must prove to this prospect that your product or service is of equal or greater value to the product or service that he or she wants to imitate. Examples of imitation items might be toys, furniture or sportswear.
5.Gratification
is another motivator that drives prospects to seek your product or service. The prospect who is seeking to gratify some need or want is fairly simple to satisfy as long as you prove to them that your product or service will fulfill this need or want. Food and beverages fall into this category. You must be careful not to forget that there is much competition, and while such items as food and drinks are never going to run out of demand, your competition can provide better prices and such than maybe you can. You need to build the value of your product or service in the mind of your prospect.
6.Empowerment
is a motivator that drives prospects to buy because they wish to feel better or stronger. Fitness programs, self-help materials and self-image books are included in this category. In these instances, you need to sell your product or service on the basis of the value built in the mind of the prospect. You need to demonstrate exactly how your product or service will be able to increase your prospect’s feeling of well being or strength. Because these particular types of prospects are typically seeking independence or self-sufficiency, you should allow them to lead the sales situation.
While the motivations behind each and every prospect’s buying drives are rarely readily apparent, the better you become at identifying the focusing on these drives, the more successful you will become in your sales career. Don’t always assume that these are the only reasons that prospects want to buy. There are other reasons. The fact remains, however, that the more intimately knowledgeable you become with these reasons, the better you will become at solving your prospects’ problems or fulfilling their wants, needs or both. The salesperson who succeeds the most is the salesperson who possesses a genuine interest in helping prospects get what they want. Try to understand the prospects’ reasons for buying, and you will most certainly increase your sales success, as well as your income.

Principles of Decision Making

Over the years of working for Rich DeVos in the Magic organization, I have seen him make many bold, risky, multimillion-dollar decision. From watching him and talking to him in those moments of decision, I have identified eight principles Rich uses whenever he has a difficult decision to make.
These eight principles have made him one of the most effective and successful decision makers of all time:
1.Pray
Prayer is two-way communication, so talk to God and ask him for wisdom – then listen for his answer.
2.Define the Decision that Must be Made
Ask yourself: What am I trying to achieve with this decision? What is the problem that must be solved? What are my options? Avoid looking at the decision in either/or terms. There are often three or more options to any decision, so think creatively and expand your options.
3.Gather Information
Get as much information as possible – but don’t wait too long to decide. Avoid getting caught in “the paralysis of analysis.” Usually a good decision can be made with considerably less than 100 percent of the available information; 50 to 75 percent is usually sufficient.
4.Make a List of Pros and Cons
This will help you to think clearly and logically about the decision you must make.
5.Listen to Your Instincts and Intuition
This does not mean, “trust your feelings.” Feelings are never a good substitute for clear-eyed analysis. But most decisions are improved by listening to your intuition as well as your logic.
6.If Still Undecided, Consider Your Worst-Case Scenario
What is the worst thing that can happen if you decide this way or that way? Considering your worst-case scenario will help you identify the uncertainty and anxiety that keep you from deciding – and it will bring clarity to your thinking.
7.Seek Counsel from Trusted Advisors
Proverbs 11:14 (KJV) tells us, “In the multitude of counsellors there is safety.” Sometimes an outside perspective can bring clarity to the situation. You don’t have to take the advice of other people, but it is wise to listen and at least consider it.
8.Make a Decision
Don’t stall, don’t procrastinate – decide. Then act on your decision and trust the guidance God gave you in answer to your prayer.

Monday, July 23, 2007

Internet Commerce

The Internet provides an opportunity to create markets, and serve customers in ways hitherto unimaginable. A couple of years ago many viewed electronic commerce as simply trading using online networks and EDI (Electronic Data Interchange). For them, the Internet was "totally irrelevant and unsuitable for electronic commerce". Their views have changed! Many large companies and retailers are now flocking to the Internet. Many have suffered set-backs through rishing into this new medium carrying over baggage from established practices, This briefing sets out the scope of Internet commerce, indicates the opportunities and challenges, and gives insights into the strategies of the entrepreneurs who are succeeding.
What is Internet Commerce?
Internet Commerce is the use of the Internet for all phases of creating and completing business transactions. Various surveys suggest that the amount of business conducted online will increase ten-fold over the next few years, from around $500 million in 1996 to over $6 billion in 2000. However, this still represents less than 10 per cent of the business conducted by mail order.

In our view too much focus of electronic commerce to date has been put on carrying out the final transactional phases - the ordering and payment. While such a perspective is all right when there are established supply chains for regular and routine purposes, this overlooks the wider perspective. It is often said, that the formal placement of an order is preceded by as many as 30 previous information exchanges. Thus, in its broadest sense we view Internet Commerce as also including:

  • The full sales and marketing cycle - for example, by analysing online feedback to ascertain customer's needs
  • Identifying new markets - through exposure to a global audience through the World Wide Web
  • Developing ongoing customer relationships - achieving loyalty through ongoing email interaction
  • Assisting potential customers with their purchasing decision - for example by guiding them through product choices in an intelligent way
  • Providing round-the-clock points of sale - making it easy for buyers to order online, irrespective of location
  • Supply Chain Management - supporting those in the supply chain, such as dealers and distributors, through online interaction
  • Ongoing Customer Support - providing extensive after-sales support to customers by online methods; thus increasing satisfaction, deepening the customer relationship and closing the selling loop through repeat and onging purchases.

This wider perspective of Internet Commerce - as an ongoing iterative relationship that uses email, discussion lists, and other Internet facilities as well as the World Wide Web - is the strategy of most successful 'Netrepreneurs'. As in other marketing, the main categories of Internet Commerce are business-to-business and business-to-consumer.


Evolution and Status Today
Over 80 per cent of large companies have their own Web sites and make use of electronic mail. Our analysis suggests that companies evolve their Internet Commerce activities through six stages:
  1. The World-Wide Web as an online product catalogue - this has the advantage (or should!) of being up-to-date and readily accessible. The best have guided interaction (e.g. http://www.xerox.com/products.html)
  2. Pre-sales support through electronic mail - providing prompt and informed repsonse to the queries of potential buyers (this means going beyond simply emailing the Webmaster, but having the active involvement of many staff)
  3. Full transaction processing for placing orders - ideally through a 'secure server'
  4. Delivery of product or product update information - some products (e.g. software, documents) can be delivered online. For others, customers can be kept informed of new developments
  5. Collecting details of prospective customers' interests - typically through forms. This stage is more fully developed when these are handled in a database and targetted offers can be sent to those registered Note: those sites that demand that users complete lengthy registration forms before you can enter them do not fulfil this criteria
  6. Provision of interactive discussion facilities for customers with shared interest - developing online 'communities' will be a key way of engendering ongoing loyalty.

Our analysis shows that certain products and markets have characteristics that lend themselves more readily to Internet commerce. These include:

  • Information-intensive products
  • Medium to high value
  • Global in applicability
  • May require sourcing or delivering at a distance
  • Often highly specialised
  • Dispersed potential customer base
  • Are attractive to Internet early adopters

Hence the markets that have actively used Internet Commerce since its inceptions have included been - computers, software, specialist cars, flowers, books, music, travel


Opportunities and Benefits
Those who trade via the Internet cite the following benefits:
  • Timeliness - Your Web site is accessible round the clock. Email queries can be handled more expeditiously and completely than is often possible by mail or phone.
  • Reduced Marketing Costs - Online catalogues are cheapre to produce and maintain that paper catalogues.
  • Better Targetting - Internet communities are self selecting. People with particular interests tend to visit particaulr places in Cyberspace. Customers find you, rather than vice versa.
  • Greater Market Reach - Distance is no object. Sending information or exchanging messages costs virtually the same as someone locally. You don't need to pay expensive courier bills.
  • Reduced communications costs - With electronic networking it cost virtually the same to send a message to 100 people as to one.
  • Improved After Sales Service - By providing online support, customers can serve themselves for many of the common post-sales information needs.

There are particular opportunities for those who have specialised markets, or wish to expand their market base without the cost of opening new offices. There are also opportunities created by the medium itself - for example for Internet intermediaries (directory and trading services), and novel ways of providing access e.g. kiosks in public areas.


Enabling Mechanisms
Several mechanisms are needed for there to be an effective electronic marketplace for a particular product or service. In particular prospective buyers must be able to find your site. Although traditional directories like Yahoo! have a role to play, trade directories (such as TradenetUK) or shopping malls may fit the bill, but many are too general or localised to be effective. There is a role and opportunity for specialised intermediaries. Or simply becoming the best known in your field (c.f. Amazon.com for books).

Additionally, an individual supplier will need:

  • World Wide Web site - with appropriate transaction and database software
  • Payment facilities - to accept credit card information or online electronic cash
  • Secure interfaces - to prevent unauthorised access to critical systems
  • Redesigned Business Processes - to accomodate online interaction via email and online transactions.

Above all they will need to develop the appropriate skills and strategies to adapt their marketing and business to the new medium.


Successful Strategies
Many commentators have focussed on ways of "making money on the Web". Their models include advertising, subscription services, site sponsorship etc. Unless your business is advertising, information services or Internet related, this should not be your strategic focus. Your focus should be
"How can the Internet enhance my existing key market process cycles?"

Key processes to consider are:

  • New product-to-market - e.g. by wider use of testers across the world; use of interactive test panels
  • Market awareness-to-buying decision - e.g. by better provision of information and access to expertise
  • Sales order-to-fulfilment - e.g. by simplifying the order process

Challenges
Those who have focussed on electronic transactions cite a number of issues. Some challenges and potential solutions are:
  • Bandwidth - There is concern that as usage of the Internet grows exponentially, that there will be insufficent bandwidth and it will grind to a halt. However, various analysts have shown that, in general, market forces will enable capacity to keep up with demand, though it may be patchy in places. Solutions: Some suppliers are talking of multi-tiered services with premium pricing guanteeing faster levels of service.

  • Authentification - When orders are placed over a network the buyer needs reassurance that it was an authorized transaction and actually comes from who it purports. Solutions: Electronic signatures, trusted third party validation .

  • Security - Both parties want assurance that their confidential transaction details have not been intercepted. Solutions: Encryption, secure servers.

  • Legislation Harmonisation - Under which jurisdiction does a transaction take place- the location of buyer, seller or server? Issues like these are the subject of policy debate.

  • Payment - How can someone set up simple, reliable and risk free mechanisms for payment, in multiple currencies and without hefty bank charges? Solutions: Electronic cash mechanisms, new Internet protocols such as SET (Secure Electronic Transactions), virtual banks.

In our own experience, even without new mechanisms such as SET it is probably no less secure sending your credit card number over the Internet than by phone or fax. In any case, solutions to most of these challenges are in sight. If one takes the wider view of Internet Comerce the main challegnes is that of attitude and skills. Conducting business and trading online has different expectations, patterns of work and needs new skills for customer dialogue and interaction. Long-term success in Internet Commerce does not come through mass merchandising techniques. It requires the nurturing and developing of customer relationships through a new interactive medium, using automatation in the bast way. Most suppliers have yet to develop these skills.

The 10Ps of Internet Marketing

Despite the problems of many dot.com companies, the Internet is here to stay. E-commerce can bring advantages to every business, and there are few large corporations today that do not have e-business initiatives. But creating a website is only the start and will not guarantee a flow of visitors, new business and satisfied customers. Indeed, our analysis shows that many large corporations have a very ineffective Internet presence and show a lack of understanding of how to market effectively via the Internet. This Insight introduces a proven ten point strategy that distils the lessons from successful Internet strategies. If you follow the principles behind these 10Ps of Internet marketing, your success in marketing via the Internet should show a distinct improvement.


Marketing Revisited
Marketing on the Internet brings many new opportunities not readily available or affordable using conventional marketing methods, including:
  • 24-hours a day / 365 days a year opening
  • global market reach
  • customer self-service e.g. product selection, problem solving
  • multimedia interaction
  • gaining instant customer feedback
  • small companies can compete on an equal footing with large ones.

However, there are certain marketing fundamentals that remain as true as ever:

  • Customers have needs and wants that need satisfying
  • The buying process involves sharing of information and knowledge - about customer's needs and priorities and how your products and services can meet them
  • The sales cycle is similar - potential customers progress through a sequence: awareness, interest, desire, action, commonly known by its acronym AIDA.

Above all, the customer - or potential customer - is the focus. Your customer knowledge and the experience you provide them with throughout the whole sales cycle and their ongoing relationship with you - is what matters.


The 3Cs and 4Ps of Marketing
Marketing textbooks talk about the 3Cs and 4Ps of marketing. The three Cs are Customer, Competitor and Company (your organization). The 4Ps - the so called marketing mix - are Product, Price, Promotion, and Place (distribution channels). These remain core considerations in Internet marketing, although their emphasis changes, viz.:
  • Customer - On the Internet they can come from a wide geographic area and diverse cultural backgrounds. You must be more international in your outlook.
  • Competitor - They are not who you first think of. Try typing a keyword for your product in a search engine and see whose names appear! On the Internet, share of mind is more important than share of market.
  • Company - The strengths that stood you in good stead in traditional marketing are not the same on the Internet. Responsiveness, flexibility, online capabilities, good website design and good follow-through service are what counts.

  • Product - You may need to be selective about what part of your portfolio you can sell online. On the other hand, the Internet creates opportunities for easy customization of digitized products such as reports, directories, multimedia etc.
  • Price - On the Internet it's always lower than you expect. Much content is free, although to be viable, providers of worthwhile content can and do make realistic charges. A new opportunity afforded by the Internet is that of dynamic pricing, where you can adjust prices according to supply and demand, time of day etc (though be careful not to upset your customers).
  • Promotion - This is where the rulebook needs rewriting. Throw away your glossy brochures and start afresh with information and promotional material that exploits the medium - but again do it appropriately (many potential customers do not want to wade through a multimedia Flash presentation before they can find some basic product information).
  • Place - The place is cyberspace. But real-world taxes and legislation are starting to make their presence felt on the Internet. So make sure you are as compliant as you can be with all the trading laws and practices in the various countries you sell to.

The 10Ps
Positioning

Positioning has three aims:

  1. Claiming a distinctive niche in the marketplace
  2. Making your website distinctive from the many millions of other websites
  3. Supporting your overall marketing and business objectives.

How can you achieve these aims in practice?

  • Be clear about your target customers or potential customers
  • Decide what you are best at doing in the overall online supply chain e.g. are you a creator, a connector, a portal or an online shop?
  • Articulate what makes you distinctive - your USP (Unique Selling Proposition)
  • Reflect your positioning in the design of your website
  • Constantly review your positioning and how your site's positioning is perceived.

Packaging

Online packages come in a wide variety of forms, from face-to-face consulting assignments to information packaged in documents or databases. Or it may be simply a promotional package that describes a physical product. The main aim of packaging is to make it easier to sell and distribute with minimal marketing costs. Three considerations are important:

  1. Determining what to offer online, and what to offer as an added service e.g. via person-to-person dialogue
  2. How to convey to the prospective buyer the value of knowledge in your product or service
  3. How to match what you have with what the customer wants, yet minimize the extra costs of customization.

Achieving these requires a degree of online development. For information and knowledge products one challenge is determining how much to codify. Greater codification means lower reproduction costs, whereas a higher personal knowledge component that can be tailored to a customer's individual needs can command higher prices. Whatever the level of codification, give due attention to the product 'wrapper'. This is where you explain clearly what'd in the package, and also, where practicable, allows the potential buyer to sample it.

Portals

Don't be bemused by the rush into portals. The concept is simple - a one-stop shop for information. The practice, however, is a little trickier. A good portal has structured and unstructured knowledge (content and communities), news and reference material, indexes, navigation tools and search facilities, personalization tools and various in-built applications. personal utilities. Only a few websites can achieve portal status - even if it is for a specialized profession or industry- specific portal. For most organizations, developing an internal enterprise portal is a a major change in itself - and it is not simply a matter of technology but the whole knowledge management infrastructure that lies on top of it. Because portal sites are generally the most highly visited websites, marketers need to consider these two important questions:

  • Are there already established portals for your target markets? If so, what sort of alliances should you develop with portal owners to ensure your visibility?
  • If no such portal exists, does it make sense to create one, either by yourself or with industry partners - some of whom you may regard as competitors?

Pathways

Visitors beat a path to your site from many directions. Your aim should be to create as many pathways as possible. Some of the techniques for doing this are:

  • Ensure you are listed in the main directories and portals used by your target audience
  • Make good use of META keyword and other tags to ensure that you come as high as possible in search engine results - visit Search Engine Watch for some tips on how to do this.
  • Negotiate mutual links with related websites
  • Consider advertising or affiliation programmes - where you pay other sites for referrals
  • Be prominent in communities and other resource sites covering your topic area.

In general, there is no need to pay high amounts for advertisements or placements. If you have helpful editorial content, any number of sites are willing to take it to boost their own credibility, and you get a free hotlink into the bargain. Finally, don't forget to publicize your URL in other publicity material - both online and offline. Having a memorable URL also helps!

Pages

This P is all about making a good impression with your visitors. Unfortunately, far too many websites put style over substance. Talk to any professional, and these are the typical things they look for in a website:

  • Compelling content - relevant to their needs, with links to additional resources
  • Quick to load - if there are important large images, small thumbnails are shown first
  • A good clean design - limited but effective use of graphics
  • Encourage interaction - perhaps through use of a drop-down list or through a short navigation or computational routine
  • Effective navigation - easy to move from on page to another
  • Guidance - steering the visitor to the most relevant pages

and perhaps a bit of intrigue, where tantalizingly one more click may uncover yet more valuable knowledge. The three basic areas that need attention are:

  • A Look 'n Feel appropriate for your target audience - it is helpful to think in terms of metaphors, such as a library, magazine, or personal assistant
  • An Information Architecture that groups information logically - this is where a good knowledge tree helps; and it must be user-centric, not according to the department or author who created the content
  • Navigation aids to help users find their way around quickly - While search engines are in vogue, a good site map - which at a glance shows what is available - is often more practical.

Personalization

Personalization comes in two flavours. First, is the ability for the user to personalize the layout of your home page, such as at MyYahoo! Second, and more widespread, is the serving of pages based on individual profiles or pattern of use of the site. This means that two different people clicking the same initial hyperlinks may be shown two different pages. While it takes expensive eCRM and other software to build fully personalized sites, your website should, as a very minimum, aim to address different classes of audience. For example, on this website, we have FAQs for managers, knowledge professionals, researchers and so on.

Like all technologies with possibilities, it is possible to get so overwhelmed with personalization, that if a visitor does not fit a given profile, then they get shown no pages at all! In fact, you can offer a level of personalization without going overboard on technology e.g.:

  • Using 'cookies' to distinguish first time and returning visitors
  • Targeting offers to particular groups
  • Giving users access to their own account information or specific password protected areas
  • Using different email lists to send messages to different market segments
  • Engaging in a personal email dialogue!

And remember, once you enter the realms of personalization, you are wading through the hazardous waters of personal privacy protection, where laws are becoming stricter all the time.

Progression

Progression is the art of guiding a user from free information through to paid-for goods and services. Unless you are providing a public service or using your website purely for promotional purposes, at some stage you want visitors to turn into paying customers. Take a look at your product portfolio. Do you have free products or samples? What can you sell for $10, $100, $ 1000 and so on? At each stage of progression give the customer value for money, convey your quality, and smooth the pathway to your premium offerings. A good progression in a knowledge-based business goes something like:

  • A free offering e.g. the 'lite' version of a software product
  • Something in return for disclosing information e.g. registering details to receive free monthly newsletter
  • A low cost item - but make sure you have an efficient and low cost online payment mechanism
  • Higher value items - here you must give the visitor confidence that they will get value for money; use samples, money-back guarantees
  • Premium items - most will require individual selling in which some one-to-one dialogue perhaps in the form a of a phone call.

Payments

Once abhorred by the big banks, payments over the Internet are now quite straightforward, thanks to the services provided by Payment Service Providers, and for small businesses, a growing number of shop hosting services. From a marketing perspective, you want to give your customer as much choice as possible, while at the same time making sure you get their funds! Here are a few practical considerations and questions to ask your service providers:

  • What is the point of sale for legal and tax purposes?
  • What currency should I transact in. How much will I lose on a foreign exchange transaction through bank charges?
  • If I send goods first, how do I know I will get paid, especially if it is a low value product and my buyer is in a foreign country?
  • How easy is it to set up my site for instant online credit card payments?
  • How secure are the transactions?
  • How long does it take for my account to be credited?
  • What is my liability for fraudulent transactions conducted at my website?

Processes

It may seem odd to put process as one of the 10Ps of the Internet marketing mix. After all, aren't business processes an integral part of the business, whereas marketing primarily involves with the customer interface? Yes, and that's the point. Marketing is concerned with the whole customer experience, and many websites let the customer down in the quality of that experience - before the sale, during the sale, and after the sale. Surveys have shown consumers abandoning shopping baskets half way through because of usability problems and of goods that are not being received when promised - if at all.

So, before you embark on a major Internet marketing effort, make sure that you can deliver what you promise. Broken promises and lost customers are much more costly to your business, than not even making the offer in the first place.

Performance

This is the bottom line! Unless your website delivers performance, you are wasting your time. This P addresses performance for the customer in terms of online experience and satisfaction; and performance for your business in terms of service delivered and revenue and profit results. As we know, far too many dot.com companies have failed on both counts.

Performance measurement systems (such as the Balanced Business Scorecard or the European Foundation for Quality Management model) are increasingly used to drive a business forward. But an online business is slightly different:

  • It has more intangibles (e.g. intellectual capital)
  • The pace of change is such that any long-term comparisons may be difficult
  • There are complex causal links between inputs and outputs
  • Different indicators need to be monitored than those with which managers may already be familiar
  • New methods of data collection are possible (e.g. online surveys and statistics)
  • Your performance is dependent on the performance levels of others e.g. ISPs, PTTs, software suppliers.

However, these are differences in detail. What remains fundamentally the same is that:

  • A good performance system can help you pinpoint problems and improve your business results
  • Improvement measures should be linked to goals, from organizational to individual
  • It is more important to collect the right information rather than that which is easiest to collect, i.e. it is better to be roughly right than precisely wrong!

Above all, the general approach is the same - clarifying objectives, developing indicators, initiating the system, data collection and analysis, initiating change.


Challenges
In this Insight we have tried to demystify some of the factors surrounding Internet marketing. Fashions change quickly. Whereas everyone was promoting banner advertisements a couple of years ago, today they are out of favour. The Internet has always been, and will remain, a dynamic communications medium, offering many possibilities. It enhances the ability of people to connect and communicate with each other on a one-to-one or one-to-many basis. Above all it is a community. Many traditional methods of marketing did not carry over well into Internet territory, because they ignored such basic facts. Over time the details of these principles will change, but their general thrust is based on established marketing practice and the special characteristics of the Internet. The 4Ps of marketing have survived for four decades, with occasional tweaking here and there. Learn and apply the 10Ps of Internet marketing and you will be building on a solid and practical foundation.

Information Resources Management

"Drowning in data, yet starved of information"
(Ruth Stanat in 'The Intelligent Organization')

One of the dilemmas facing today's manager is that on the one hand they seem to be suffering from information overload, yet on other hand, they often they complain about shortage of information needed to make vital decisions.

Symptoms of overload are a growth of incoming information, including electronic mail, an explosion in the volume of information sources (there are over 10,000 business newsletter titles and a similar number of CD-ROM titles). Symptoms of scarcity are the lack of vital information for decision making, unexpected competitor moves and the inability to find the relevant 'needle in the haystack'

There is also the crucial problem of exploiting an organisation's proprietary information as a strategic asset.

Underlying these problems is that of having "the right information, in the right place, in the right format, at the right time".


What is the Solution?
Partial solutions include Executive Information Systems (EIS), On-line and CD-ROM data-bases, alerting services. A more encompassing solution is to adopt the principles of Information Resources Management (IRM) (not to be confused with an information management or information systems). Whereas the value (often declining!) of tangible assets, such as property and office equipment, is regularly assessed and audited, similar processes are lacking for intangible assets, such as information and knowledge, whose asset value is increasing in many organisations.

Information Resources Management (IRM) is an emerging discipline that helps managers assess and exploit their information assets for business development. It draws on the techniques of information science (libraries) and information systems (IT related). It an important foundation for knowledge management, in that deals systematically with explicit knowledge. Knowledge centres often play an important part in introducing IRM into an organization.

Nick Willard of ASLIB's IRM Network (now the IRM SIG) has developed a model highlighting the five key activities for their effective IRM management:

  • Identification What information is there? How is it identified and coded?

  • Ownership Who is responsible for different information entities and co-ordination?

  • Cost and Value A basic model for making judgements on purchase and use

  • Development Increasing its value (see '10 ways to add value to your business') or stimulating demand.

  • Exploitation Proactive maximisation of value for money

Benefits of implementing an IRM Strategy
Few organizations have developed a comprehensive IRM strategy. Those that have started with some of its key processes of information audit, and information mapping cite the following benefits:
  • Identifies gaps and duplication of information
  • Clarifies roles and responsibilities of owners and users of information
  • Provide costs saving in the procurement and handling of information
  • Identifies cost/benefits of different information resources
  • Actively supports management decision processes with quality information

Some of the issues that it addresses are:

Strategic - the information needs to support the implementation of business strategies; also the way that information itself can be a key lever of strategy (in terms of new product and service opportunities)

Organizational - ownership, evaluation, fragmentation, isolation from processes, the politics of information

Structural Integrating external and internal information, its categorisation, refining it from data into classified actionable 'chunks'.

Systems User accessibility, interface to sources, multiple databases, retrieval, usability

Human Processing capability, overload, incentives to share.


How to Manage Information as a Strategic Asset
1. Understand the role of Information.
Information can add value to your products and services. Improved information flows can improve the quality of decision making and internal operations. Yet many managers do not fully understand the real impact of information - the cost of a lost opportunity, of a poor product, of a strategic mistake - all risks that can be reduced by using the appropriate information.

2. Assign Responsibility for Leading your IRM Initiative.
Developing value from information resources is often a responsibility that falls between the cracks of several departments - the user departments in different business units, and corporate planning, MIS units or librarians..

3. Develop Clear Policies on Information Resources
Policies for ascertaining information needs, acquiring and managing information throughout its life cycle. Pay particular attention to ownership, information integrity and sharing. Make the policies consistent with your organisational culture.

4. Conduct an Information Audit (Knowledge Inventory).
Identify current knowledge and information resources (or entities), their users, usage and importance. Identify sources, cost and value. Classify information and knowledge by its key attributes. Develop knowledge maps. As knowledge management gains prominence, this is sometimes called a knowledge inventory "knowing what you know".

5. Link to Management Processes.
Make sure that key decision and business process are supported with high leverage information. Assess each process for its information needs.

6. Systematic scanning.
Systematically scan your business environment. This includes the wider environment - legal and regulatory, political, social, economic and technological - as well as the inner environment of your industry, markets, customers and competitors. Provide selective and tailored dissemination of vital signs to key executives. This goes beyond the daily abstracting service provided by many suppliers.

7. Mix hard/soft, internal/external.
True patterns and insights emerge when internal and external data is juxtaposed, when hard data is evaluated against qualitative analysis. Tweak your MkIS system to do these comparisons.

7. Optimize your information purchases.
You don't have to control purchasing, but most organisations do not know how much they are really spending on external information. By treating consultancy, market research, library expenses, report and databases as separate categories, many organisations are confusing media with content.

8. Introduce mining and refining processes.
Good information management involves 'data mining', 'information refining' and 'knowledge editing'. You can use technology such as intelligent agents, to help, but ultimately subject matter experts are needed to repackage relevant material in a user friendly format. One useful technique is content analysis, whose methods have been developed by Trend Monitor International in their Information Refinery, and are used in our analysis services. The classifying, synthesising and refining of information combines the crafts of the information scientist, librarian, business analyst and market researcher/analyst. Yet many organisations do not integrate these disciplines.

9. Develop Appropriate Technological Systems
Continual advances in technology increase the opportunities available for competitive advantage through effective information management. In particular, intranets, groupware and other collaborative technologies make it possible for more widespread sharing and collaborative use of information. Advances in text retrieval, document management and a host of other trends in knowledge management technologies have all created new opportunities for providers and users alike.

10. Exploit technology convergence.
Telecommunications, office systems, publishing, documentation are converging. Exploit this convergence through open networking, using facilities such as the World Wide Web, not just for external information dissemination but for sharing information internally.

11. Encourage a Sharing Culture
Information acquires value when turned into intelligence. Market Intelligence Systems (MkIS) are human expert-centred. Raw information needs interpretation, discussing and analysing teams of experts, offering different perspectives. This know-how sharing is a hall-mark of successful organisations.

The Hybrid Manager

The BCS (British Computer Society) report 'Hybrid Managers - From Potential to Reality' (1990) called for the UK to develop 10,000 hybrid managers by 1995. The report highlighted the needs for further action in:

  • increasing management awareness
  • research into hybrid managers and their context
  • management and IT education
  • organization policies

This paper presents the results of a two stage research programme carried out by the author at the Oxford Institute of Information Management at Templeton College in 1989-91. In addition, it gives some personal reflections on hybrid managers based on the author's own experience as one an industrial marketing department.


What is a Hybrid?
The term hybrid was originally coined by Peter Keen in the mid 1980s, but received its most precise and most quoted definition by Michael Earl:
"A person with strong technical skills and adequate business knowledge or vice versa .... hybrids are people with technical skills able to work in user areas doing a line job, but adept at developing and implementing IT application ideas"

In addition, roles such as leaders and impresarios were also defined.However, these distinctions are seldom recognized by practicing managers.


Why do we need Hybrid Managers?
Every week the popular IT press cites another survey which highlights some of the prevailing issues in the world of IT. Examples over the last few years include:
  • "Only 11% of organisations are successful with IT according to any objective measure" (A.T.Kearney)
  • "30% of systems projects fail to meet user needs" (KPMG)
  • "Over 40% of systems projects are not completed within time or to budget" (Butler Cox)
  • "Only 27% of CEOs in the UK are satisfied that their IT department can deliver them the business advantage they need in the 1990s" (Amdahl)

Consistently among the top MIS issues in various surveys are:

  • Alignment of IS to business needs
  • Strategic Benefits of IT not understood by business managers
  • Need to improve IS-line relationships
  • Identification of competitive edge applications

All of these suggest the need for much closer partnerships between the business and IT. Hybrid managers are seen as able to play a leading role in this, with specific emphasis on:

  • creating awareness of IT potential in the business
  • educating IT professionals in the business
  • educating the business into what is achievable and realistic with IT

To do this effectively needs the knowledge and experience of both business and IT which as possessed by a hybrid manager.


About the Hybrid Manager

Are they a new breed?
The power of publicity in the professional press is apparent in that the number of citations of the term 'hybrid manager' increased significantly during 1990 following a series of reports and articles. When research was undertaken in Nov 1989, only 1-2 people in a typical MIS audience had heard the term. Today it is more like 80%.

However are they really new? Many people, including myself (!), who would now be recognised as hybrid managers, had never thought of calling themselves that in the past - but nevertheless they existed!

When given an open-ended question which asked senior IT managers to describe themselves less than 10% said hybrid managers. As well as conventional descriptions such as 'IS director', 'business manager' there were some quite revealing ones e.g.
- "consultant"
- "facilitator"
- "ambitious and eager"
- "a practical person who uses common sense coupled with a suspicion towards IT hype"
- "pragmatic"
- "energetic and sociable"
- "a future CEO"
- "a magician"
- "a bloody miracle"!!

Origins in Research
Research by OXIIM in the 1980s showed that IS organizations go through an evolution with the following emphases:

  • Delivery - focus on internal IS matters
  • Reorientation - focus on the business and external factors
  • Reorganisation - focus on internal linkages and relationships

It was also apparent, that as organisations evolved through these stages, the head of the IT function became more business and organisation oriented, as opposed to a technologist. Indeed, in many organisations, the people themselves were changed - technologist DP managers being replaced by line managers from the main-stream business. To be successful in these later stages calls for hybrid characteristics.

Other research looked at IT development as a process of change and innovation. With such a 'competitive edge' focus, new roles such as sponsors and champions emerge. Again research suggested that successful champions have hybrid characteristics.

Hybrid Characteristics
As well as business and technical knowledge implied by definition, it has been found that successful hybrids also need organization specific knowledge and management competences. The latter is perhaps the most important competence needed to ensure success. Although good cognitive, analytical and decision-making capabilities are required, the key management competences needed are 'soft' inter-personal skills e.g.:

  • communications
  • negotiation
  • team building
  • motivating

In addition, personality traits affect whether a person has the motivation to be a hybrid manager. Typical recruits to the IT profession have traditionally had very low social affiliation needs. Their career 'anchors' (after Schein) have often been technical. Yet hybrid managers must want to manage people and have a good degree of extroversion and social skill.

Characteristics often cited and searched for include:

  • energy and enthusiasm
  • a sense of perspective
  • a great communicator
  • ability to work with broad concepts or precise detail
  • a driving attitude ("if change isn't taking place we must make it happen")

The acid test of whether someone is a true hybrid manager is whether they can exchange jobs with their peers in other functions. For example, I know of where the company's former senior lawyer is now the CIO, and an IT project manager who became the manager of an oil refuelling depot. Career paths and development routes for hybrids must therefore typically include periods of 2-3 years in an IS function and a line function.

An Old Idea
Examination of another specialist function - finance, reveals some interesting parallels with IT. Once almost a very specialised accounting function, during the last 20 years, financial managers have come forward to play a major role in shaping high level business policy. This is the role to which many IS managers now aspire. An interesting survey in the early 1980s showed that financial managers who had successfully made that transition had developed good business knowledge and good general management skills, in addition to their financial speciality.

General management literature also gives us good pointer to what characteristics a hybrid manager needs. They are consistent with those mentioned above - they include the ability to be a team player, a motivation to manage and a loyalty to the organization (not a traditional strong point of IT professionals!).

The R&D function also provides a useful parallel in the way they now recognise the need to 'bridge' into other functions such as manufacturing and marketing. There are interesting lessons here for IT departments. Indeed, cross functional hybridization (e.g. engineering to manufacturing) is a well known theme in other disciplines - but does not attract labels other than 'hybrid' (c.f. 'concurrent engineering').


Agendas for Change

Some Prerequisites
The call for hybrid managers is a symptom of the changes that most organisations are now facing. IT is increasingly seen as a way of helping organisations gain competitive advantage. The turbulent environment is demanding that organisations create and manage appropriate changes in response. Above all, IT is seen as too important to be left to the IS department. It must be an integral part of the business and pervade its every-day thinking.

This also raises the question of whether having hybrid mangers is sufficient to ensure successful IT-business partnerships. Our research suggests not. Perhaps as important are 'hybrid teams', where people from different disciplines work together to make policy (e.g. IT steering committees) or implement change (e.g. system project teams). I would even go so far as to say that each project team should also have a social scientist as well as business analysts, users and systems developers!

Other factors which our research has revealed as important are:

  • Organizational culture and climate conducive to change
  • Effective organisation structures (e.g. ad-hoc teams, federal organisation of IS)
  • Support and leadership in IT from top management
  • Appropriate human resource focus e.g. on career planning,
  • Personal and management development, career structures,
  • Education and training, capability planning.
  • A new look at methodologies ('Softening' the edges of some of the hard structured methods)
  • Working environment (e.g.co-location, working together)

Developing Hybrids
Implicit in the hybrid ideal are a number of agendas that different organisations and groups will need to work. These include:

  • Management Agendas - setting the right culture, managing change, giving emphasis to human resource policies, creating effective structures and management processes for IT-line partnership, as exemplified in the above list.
  • Professional Body Agenda - the BCS has for example created a hybrid manager stream within their professional development scheme.
  • Education and Research - the provision of courses and other means of developing the knowledge and skills needed by hybrid managers.

This Insight is based on the work of David Skyrme and Michael Earl 1989-92. See resources below.


Retrospective (1995)
Although steady progress has been made over the last few years, still much remains to be done to create hybrid managers and allow organisations to gain the full benefits of their IT investments. On the positive side we have seen:
  • Growing recognition of the business manager who is knowledgeable about IT and acts as a champion for it.
  • Hybrid programmes in several high profile and successful organisations
  • Many courses (e.g. Business Information Technology) covering a wide range of topics
  • Closer integration of IT into everyday business functions

One aspect that subsequent field work research we conducted showed conclusively was the importance of bridging mechanisms. These are the various ways that individuals and teams cross-fertilise knowledge and skills either in formal or informal settings. Bridging mechanisms include IT steering groups, job rotation and secondment, multi-disciplinary project teams etc. We see more evidence of these mechanisms in use, but few organisations have systematically reviewed such approaches or measured their effectiveness.

Some of the other areas where more progress needs to be made include:

  • Introducing 'soft' aspects into systems development
  • Encouraging IS professionals to develop their business and general management skills
  • Recognising the hybrid in organisation career structures
  • In education - the lack of integration across disciplines to give students a coherent view of IT, strategy and organisation (too much is still taught a discrete subject areas)

Update (1999)
As IT and especially Internet Commerce continues to be critical for ongoing business success, the need for hybrids is as strong as ever. Interestingly, this year has seen more use of the term. For example, Clive Couldwell writing in Information Week (UK Edition) in a feature on hybrid managers on 24th March 1999 (pp.21-23) wrote:
"Just what is a hybrid, and is it really worth becoming one? Hybrid IT managers are as rare as prize-winning orchids - yet business need them more than ever."

He cited our work on characteristics, that as well as the appropriate IT and business skills include energy and enthusiasm, a sense of perspective,communications skills, an ability to work with broad concepts or precise detail, and a driving attitude: "if change isn't taking place, we must make it happen".

"The acid test of whether someone is a true hybrid is whether they can exchange jobs with their peers in other functions"