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#QuPlan #QuPlan discusses the current status of planning and project management, and then builds up on “unconnected” dots to derive a potential evolution of planning concepts

#QuPlan is part of the “Connecting the dots” series, short pragmatic books (generally, up to 60 pages), based on experience and aiming to inspire re-thinking your business ways #QuPlan Episodes Expanding on the #QuPlan book, this (free. online) series of booklets (“episodes”) is a walkthrough within the lifecycle of a fictional business case concerning a regulatory programme

This fourth “episode” (along with the next two) aims to convert changes in compliance requirements into opportunities- in this case, to increase retention and profitability

See the back cover for the full list of the planned 2015 episodes


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INTRODUCTION

Whatever the purpose of your project or

Organization

Team

programme, you will have three main actors whose motivation and involvement have to be balanced: the team(s) charged with its delivery, the organization that will be accountable for whatever is delivered, and the ubiquitous stakeholders.

As discussed in previous episodes, any Stakeholders

programme delivers a modicum of change, and this generates a stream of ongoing negotiations between the interests of the three main actors.

But “balancing” should not replace the purpose of your project or programme: otherwise, you turn project/programme management into just acting as a PR for your activities, while ignoring “details” such as budget and deadlines.

In this chapter, the left-hand page is shared between the three episodes discussing the “delivery” side, each episode exploring a change during the ongoing fictional activities, with a focus on what each one of the three main actors could do; you can either read the episodes sequentially, or read all the “method” chapters together, before moving onto “business case” and “thinking”.

The right-hand page contains information specific to each episode. © 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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Overheads

The longer the timespan covered by your activities, the higher the chance that, eventually, you will have to cut some corners.

The first candidates for cuts are, obviously, overheads, but the issue is: what do you call overheads, during the delivery of a project or a programme?

A step back: while I was working on the design of Decision Support System (DSS) models in the late 1980s, the main target was to build multidimensional models that allowed to control activities or manage sales, and there were obviously costs associated with specific sales activities or specific products, and others that were considered a “cost of being in business”, or “overheads”.

Some can be actually turned into a revenue stream (i.e. billed to somebody else). As with any other cost, it is better to negotiate “overheads” (e.g. allocated as the % of your budget vs. the overall budget in your corporate portfolio) before you start your activities, and resist the temptation of using them as “future padding” for your budget (i.e. expand your budget, as if overheads where a “contingency”).

Meaning: recovering some budget by negotiating your way out of overheads while the programme or project is ongoing is tempting- but you should consider also how those overheads have been “taken for granted”, or if you really have the power and support to negotiate your way out of them and reallocate the budget.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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THE RATIONALE

In most cases, compliance is based on the assumption that what you have to comply with is defined before you start your programme- rules “cast in stone”.

In this case, I followed instead the approach that way too often was followed with compliance in Italy, at least since the 1980s (when I started seeing it in businesses, small and large, local and multinational).

In some cases this might be the “new normal”, as instead of “compliance” we should get used to “convergence on compliance”: define the ground rules, define the initial framework, get feed-back by those implementing it, observe how the new regulation solves the issues that it was created to solve, and evolve the regulation.

Sounds familiar? In a way, this is what has been done for most business-related ISO standards, or rules on risk for the financial sector promoted by the BIS in Basel.

Therefore, the main issue is not with the approach- but with the “static” concept of compliance that I found often e.g. around Europe.

We have to get used to a more “agile” mindset, the way traditionally was done in Italy (maybe with less pathos)1.

1

Suggested short reading: Roumeliotis “Please stop bastardizing Agile” 21 June 2015 https://www.linkedin.com/pulse/please-stop-bastardizing-agile-george-roumeliotis

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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Change

This "episode" is focused just on a change that is introduced within the compliance framework, due to some business impacts that regulators had not considered.

Since personal computers became the norm and not the exception (roughly- the early 1990s in most Western countries), more information has been shifted closer to operational staff, usually expecting an improvement in decision-making processes as an aggregation of information collected at the end of the feeding chain, and processed all the way to the top, for various uses.

Internet? It expanded that “downstream shifting”, by adding for free in the mid1990s what before required dedicated equipment e.g. “ticker tape” machines.

But something else happened, what is now generally called “uberization” 2: it isn’t just Uber, but any kind of company, including existing providers of services and distributors of products, are leveraging on competition laws by simply using somebody else’s investments to build their own business.

Why would you sign an exclusive agreement as a distributor/agent/dealer for A, when you can sign more convenient agreements with smaller ones, and use a non-exclusive agreement with A to supply you with the training and organizational support needed to deliver word-class services? 2

See 2015-06-27 #business #models and #work : the #uberisation of #society http://www.lemonde.fr/les-decodeurs/article/2015/06/26/de-quoi-l-uberisation-est-elle-lenom_4662261_4355770.html #disintermediation #dematerialization

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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THE (EXPECTED) RESULTS

Compliance, at least considering the projects and programmes where I either worked or had to review or audit, has impacts on the operational side (nothing new, here, I hope)- and might even dramatically affect your business model.

This implies that, whatever regulatory changes or evolutions will happen during the “delivery” phase, probably you will need first and foremost to minimize the impact on what was painstakingly negotiated before the compliance programme started.

Sometimes, the first choice is to “buffer” changes, i.e. add something that leaves intact what was already agreed, and add on top of that the changes.

Even when this option is feasible, the risk is to create what in French is called “usine à gaz”- an over-engineered set of results that would probably be impossible to maintain and evolve (if it is ever completed).

There are actually three approaches that enable a better long-term sustainability:   

Integrating stakeholders Building a competitive advantage case Triaging ownership and delivery.

Each approach will be briefly discussed on the right-hand page of this section across the three “delivery” episodes, with further analysis in future publications.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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Integrating

This episode is built around the “removing free-riders” theme, and in many business activities I saw attempts to solve this by introducing penalties tailored for free-riders.

As you probably noticed across the previous episodes, my attitude is different, and closer to that is variously described as “building a larger pie” or “every change and risk is an opportunity to rethink your business”.

Loyalty schemes used to be quite complex to manage, but Internet made that option both relatively less people-intensive, and certainly, if used properly, a business opportunity and incentive for all the players involved to keep playing.

You probably receive half a dozen messages a week that contain the “Big Data” concept- scratch that, ignore the “techie lingo” or “consultant speak” and just think: any communication and relationship chain that you channel through electronic means will generate data- data that you could use in business.

The “removing free-riders” case is a typical example of what you can achieve by expanding the use of electronic channels.

Your position as “collector and processor of data” can generate “Big Brotheresque” fears- but can also turn your wealth of data into a significant tool to increase the loyalty of your network, e.g. by providing free services.

Two future publications (on business intelligence and virtual companies) will share more ideas and practical examples than the limited space of this series allows.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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PLAN

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Unless your organization uses only internal staff also to distribute your products and services, you are eventually to deal with assorted third parties.

In each one of those business relationships with third parties there is always an element of investment in knowledge- from both sides1.

Obviously, it is a matter of relative size: a large supplier dealing with a large distributor usually have in place appropriate processes to minimize costs and manage any knowledge transfer to link costs and revenue (a “quid pro quo”).

The real issue is when the investment isn’t balanced, and this is the aim of the part of the business case discussed within this episode.

The new regulation discussed in episode 2015/0 created a one-sided obligation, mandating the provision of an information service for free- unwillingly creating an opportunity for some distributors to do some “knowledge arbitrage” (i.e. de facto “resell” knowledge that they received from suppliers).

As in previous episodes, this chapter contains a "storyline" adopting each time the perspective of a specific part of those involved- in this case, the business side.

Within this chapter, the left-hand page contains my commentary, while the righthand one presents excerpts of what you could get through the activities. See more details within http://www.robertolofaro.com/BFM2013

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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Extract from minutes of the first meeting discussing the new change

Regulators accepted that assuming that suppliers would act as watchdogs, coaches, and also trainers to their distributors and agents, and all this for free, would generate costs that somehow are going to be offset.

As part of the bartering process, the service is still to be delivered for free, as outlined in [refer to the documentation within episode 2015/0 on this fictional case], but with some additional conditions: 1. For non-exclusive distributors, parameters can be negotiated to ensure that, unless their sales exceed an agreed volume, the service, including training, can be deducted from any revenue recognition (commissions, bonuses, discounts, etc.) 2. The agreement, parameters, cost of the training, costs structure, service level agreements of any service that might be eventually billed must be detailed within an updated distributorship agreement 3. If distributors, agents, dealers will not act as resellers, but only as our representatives (i.e. if they will not hold inventory), then we will also have to audit their compliance, as, for the purposes of this regulation, they will be considered as if they were employees, and not third parties.

It is the usual horse designed by a committee- and creating a new bureaucracy while claiming to “simplify” an existing one.

From a business perspective, we would like instead to see this as an opportunity to create incentives for our direct distributors, agents, dealers.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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ACTION

In my experience, it is more difficult to alter the “guidelines” of a project or programme once they have been agreed, but not yet implemented.

The reason isn’t “technical”- it is more a matter of “business politics”. The point is the one discussed within the “method” chapter, i.e. balancing the motivation and involvement of three parties: altering anything that survived through a negotiation is relatively easier when a fourth actor (reality) intrudes.

Implementing a change at this stage might generate “some” resistance to change.

It might be reasonable for those that anyway could fulfil the conditions, as the new change (see previous section) is actually giving them an advantage against others.

If you consider compliance across time, also when you have “static compliance”, i.e. rules that do not change until they are first implemented, there might be evolutions that alter the balance of the commitments, often simply because part of the stakeholders (in this case, suppliers) are better at advocating their case with regulators- the “logic” of any change often is a social construct, not reality.

And this is the reason why decisions such as this one, involving potentially negative choices, should be under the stewardship of business, instead of being converted into a series of technical choices: it is a matter of strategy, not of mere tactics.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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Extract from minutes of the final “action meeting”

Instead of a “negative” approach, based on suddenly withdrawing a service if some requirements are not met, we will adopt a “positive” approach, i.e. focus on providing additional services and incentives, and filtering before, also to avoid a negative impact on customers.

Following our preliminary analysis and the concept that we adopted in the first meeting [see section “plan” above], the choice, agreed also with the representatives of the stakeholders, is to minimize the bureaucratic side by expanding eligibility criteria for distributorship, differentiating between new markets, existing ones, and new and existing distributors, as described in the Annex A [here would be the reference to the “distributors evaluation model” used to pre-select or confirm distributors].

In order to finance the service, it has been agreed that [amount]% of the emoluments and a matching sum from us will be pooled together, a new business unit created (structured de facto as a joint venture between us and our network), and the activities will be supervised by a steering committee with representatives as per Annex B [the three parties described within the “method” chapter].

This will allow to dispose of the “new optional bureaucracy”, as in effect the new business unit will be a joint-venture.

A yearly eligibility confirmation assessment will be started, and any information obtained through the delivery of the service will be used to provide feedback.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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TRANSITION

What happens when you have changes “en route”? “Transition”, the last element, involves first assessing what to do with what is affected, then phasing-out what is not needed anymore, and phase-in the changes.

The aim? To ensure that, by the completion of the project/programme activities, whatever changes you introduced are fully integrated with what was pre-existing.

This does not imply that the difference “disappears”- but while in computing and equipment often it is possible to be “integrated and distinct”, in other cases that could be just the best way to make it impossible to work.

Imagine that your programme, as in this case, delivers a service: would you think sensible to teach to your service representatives the “history” of each process that they are supposed to execute?

Wouldn’t be better (and less confusing) to simply teach them what they are expected to do?

While the right-hand page is focused on this episode, this introduction is shared between the three “delivery” episodes.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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“Laundry list” of the activities to “embed” the changes PHASE1 define the separation of the roles within the new service unit PHASE2 integrate the existing approach with service delivery with the new jointventure concept PHASE3 define staffing and staff training methods for the training, coaching, auditing, watchdog roles PHASE4 implement the existing plan by adding the required activities PHASE5 create the formal framework PHASE6 implement the communication plan and the associated roles during the release …. [This part would obviously contain more information on additional activities that would be required to make the new organization work.

The obvious benefit? By involving stakeholders into both delivering the service and assessing how it is being delivered and its evolution, all the parties involved would have a longer-term shared interest, as it is common practice in e.g. Lean Six Sigma or other “continuous improvement” frameworks].

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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WHY NOT?

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Whoever worked in business eventually looked at what other businesses were doing- it was so in 1980s, when I officially started working, and it is still true.

Nowadays, any company, no matter how small, can access information that until recently would have required having an organizational unit focused just on collecting, classifying, disseminating information- an expensive choice.

One my favourite books on information management is actually a “biography of an information desk” for a British newspaper1; I think that I read it first as a teenager trying to give a logic to the “acquisition guidelines” of my own library, pre-Internet.

Beside removing the need for staff, Internet also reduced the need for investments (books, subscriptions), as often freely available whitepapers are more informative (once you remove the obvious “buy me” messages) than many books written by consultants (like myself): as an American colleague once said, most articles on HBR discussing a forthcoming book… contain all the main ideas provided by the book.

The case discussed in this series is a typical by-product of some 1990s initiatives from international institutions, e.g. the OECD, promoting transparency and generating a new industry under the label of “e-government/e-governance”.

Another side-effect has been the dramatic increase of statistical and business information that is freely available and routinely updated. Weiner “Answering Any Question: How to Set Up an Information Office”, David&Charles 1974

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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But then there are at least two negative side-effects: 1. the increased specialization of those “publishing” reports etc. that are readily available to the public 2. the increased quantity of sources “dumping”, as part of their statutory role, huge volumes of data that should be filtered by generalist business readers (both in the private and public sector).

Actually, visit websites from the EU, IMF, World Bank, OECD, UN- some of the “transparency-oriented” documents require consultants to understood- to say nothing about implementing their advice.

be

read

and

The apparent “democratization” of access to information in reality generated a further differentiation, between organizations that are able to benefit from those sources, and those who can just by chance or through connections once in a while realize the same benefits.

Internet is supposedly based on the “disintermediation”, removing the middleman. This was true only at the beginning, when both readers and writers where mainly from the same environments, and were inclined to stay within the “knowledge boundaries” of their own domain: physicists from CERN would read on “the Web” what was affecting their activities, but few of them would look for scientific analysis on climate change.

Reality check: Internet created new “broker” roles. © 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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CHANGE = OPPORTUNITY

As discussed in the previous section, Internet is a powerful enabler: I remember a job interview in 1990 with a fashion retailer where I was told that they hired scores of people going around in “trendy” places to look at what people were wearingto prepare their collections for the next year- and this can be partially replaced by simply looking at Facebook, Instagram, etc. (it was for an IT manager role).

There is a dual moral hazard embedded in the Internet as it is today: small businesses looking at what large ones are doing and, de facto, acting as R&D entities to create new variants that overcome limits of what larger competitors had on the market: small is nimbler and, often, thinking in a more “systemic” way and less inclined to “think in knowledge silos”, so it can benefit from piggybacking on the investment of larger companies (but kill that “feed”, and those smaller “innovative” companies would be able to innovate exactly zilch).

As for larger organizations, losing their ability to innovate internally, they look around and keep buying and removing from the market (or copying) smaller organizations, de facto reducing the chance of further innovations.

Disintermediation has a parasitical element, but, as with any change, it generates opportunities for those that have access to resources.

I was born in an over-regulated country (Italy), where any business is supposed to deliver ancillary services on behalf not just of the State (e.g. payroll withholding of taxes), but, until recently, even of trades unions (i.e. withholding of dues by members).

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


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If you blend disintermediation, the increased amount of information, and overregulation (as any new international agreement generates a spate of checks and balances that you have to comply with), you end up with creating a new kind of intermediaries, the “knowledge brokers”, i.e. those able to make sense of it all.

A larger organization is able to allocate enough resources (internal, external) to study the impact of any regulation, and identify potential new benefits (generally, most “compliance” rules in reality create new barriers to entry into the market).

Within the “business case” chapter it was discussed the obvious case: if you are a multi-brand dealer, any benefit deriving from training and information provided by major brands becomes actually an enabler to let you extend those benefits also to smaller brands, those that probably have to give you a better revenue recognition (e.g. 50% or less on the official list price) in order to get into your own “shelf/showroom space” and reach your customers.

If market competition rules were to completely forbid mono-brand distributors, and mono-brand shops not owned by the brand and staffed with their employees, this would obviously affect business models based on franchising.

And, again, you will end up having to be creative to find ways to avoid subsidizing the business of your smaller, nimbler, competitors, that could rely on multi-brand intermediaries to benefit from your investments to develop their own business.

But “protecting the value” of your investments will be part of the discussion within the next two episodes.

© 2015 Roberto Lofaro http:/www.linkedin.com/in/robertolofaro


EPISODES SCHEDULE

#QuPlan - A Quantum of Planning - Episode 2015/3 - Ongoing - Removing Free-riders  
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