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@ Forrester IT Forum: Roland Paanakker, VP Lean Business Solutions, CIO, Nike

Keynote Speech: Taking The Lean Journey At Nike, Roland Paanakker, Vice President of Lean Business Solutions and Chief Information Officer, Nike

Nike’s Lean Business Solutions group embodies the business technology (BT) transformation. Nike’s corporate focus on categories and shared operating models across all brands requires unprecedented change in business processes, information needs, and enabling solutions. These changes require both a strong BT foundation and a focus on building for the future. Roland Paanakker is responsible for IT at Nike, and as his title indicates, he’s also responsible for continuous improvement and innovation at the company. He will discuss his company’s Lean journey, how it transcends IT and business boundaries, and how his group embodies Lean Thinking in its solution delivery.

During his presentation, you’ll also hear how he builds for the future with an emphasis on three tenets of BT:

• Driving process and technology architectures from business strategies.
• Enabling end-to-end information quality in key business processes.
• Creating a simpler next-generation technology infrastructure and ensuring flexible solutions.

After a cool video from the perspective of a football player (think FIFA) on the field, training and on the town, Paanakker checked the audience for Nike product ownership (we failed on the Nike Plus), and is now telling us 8 things about Nike.

8 Things about Nike

1. We love Sports
2. We are Global
3. We are a strong portfolio of Strong Brands
4. We lead with Innovative Product & Services
5. We connect with Consumers
6. We ignite & manage the Marketplace
7. We operate with Excellence
8. We are a Growth Company

Vision for Nike’s Lean Business Solutions organizations: Solutions to Ignite Growth and Deliver Value – Always.  Amplify business connection, accelerate opportunity and enable the benefits.  Paanakker: it’s not about projects, it’s about value.

Amplify business connection: Global Process & Technology Leaders.  Creating environments for collaboration, planning and accountability.  Right-sizing solutions. 

The portfolio of work for the LBS organization: Deciding on the Right Solution for the Business Challenge.  A solution could be as small as consultative dialog, or as large as a systems implementation.  Not all solutions require technology.  Critical to prepare the business for change.  Each solution is gauged for sustainability, factoring in corporate responsibility.  Sustainability is designed in.

Accelerate Opportunity: Portfolio Managing & Strategic Alignment: Planning with an end in mind.  Prioritzation, quantification, measurement, incentives, and monitoring/feedback.

Enable the benefits:  Three practices in use, coordinated throughout Nike: Lean, program management and change management.

5 Pillars to realize vision

1. Be easy to work with
2. Align with Inc. Strategies
3. Game-changing programs
4. Deliver global and local
5. Holistic Portfolio & Funding

Building for the future, Paanakker calls out the importance of a holistic information strategy. Data quality.  Business analytics.  To make people thrive, they are a learning organization.  In the Lean practice, they apply agile solutions and continuous improvement and innovation. 

Nike’s Lean Approach: Start with mutual Trust & Respect.  LBS as a function, ensures balance between solution provisioning and opportunity creation.  Nike’s approach is built from work in manufacturing, the Toyata Way, but has been tailored for use outside of manufacturing business.

Paanakker quickly went through some detail on the Lean practice.  Points that jumped out: (a) it’s not just about removing waste (efficiency), it’s also about quality, time and line of sight to strategic goals and (b) drive business intelligence through quality data.

LBS vision has a tagline: we create opportunities beyond horizons. 

Editorial comment: You might be thinking, wow lots of marketing speak from a CIO.  Yes.  But, that’s important. If you can’t sell your success, you’ll never be able to sell your ideas.

Counterintuitive: Creative Agency + ISO 9000 = Creativity Increase

The Van Halen brown M&M anecdote wasn’t the only interesting piece in the March issue of Fast Company.  I also found a good example of "optimization for innovation”, which I first wrote about on the Business Ecology Initiative blog.  The article, entitled Partners in Time, describes how Partners & Napier, a Rochester, NY based creative agency, streamlined its processes at the request of Kodak, resulting in increased productivity, billings and creative time for the agency, as well as cost savings for its clients. 

How did they do this?  By mapping out processes, to identify and remove wasteful steps and interactions.  According to the article, Partners went “all in, applying for and earning certification in ISO 9000, a quality-management system akin to Six Sigma that's normally used by manufacturing companies.”

Initially, the idea of applying process rigor to a creative business was met with skepticism:

"A creative embracing quality management may be unusual, but it also may be the model for how to handle clients' increasingly stringent ROI demands.  When Kodak first asked us to do this, people worried that no one understood how long it takes to get to a great idea," concedes Partners' CEO Sharon Napier. Chief creative officer Jeff Gabel says the opposite has happened. More often than not, Gabel says, creative work resembles a "giant hair ball." And that's fine with him. "You don't want to straighten it out," he says. "It's nonlinear, illogical, and often occurs at unpredictable hours." But, he says, if the time allotted to a project could be rejiggered so more time went to creating great ideas -- and less against the job's ancillary grunt work -- then he was game to try.”

The certification process and initial results:

“The certification process took six months and required each step of an assignment, from developing a brief to reviewing final work with the client, to be documented. It cost roughly $20,000 out of Partners' pocket, but it revealed some surprising inefficiencies, including a lot of time wasted in back-and-forths for approvals of briefs, concepts, ideas, and directors. Partners was able to trim the time on a job from eight weeks to three, save the client approximately 40%, and boost productivity by 3.5%.”

The on-going impact:

“…its creative output seems to have blossomed as a result, as the agency is increasingly turning out higher-quality work, it says, in significantly less time.”

“Partners has been so happy with the results that it now uses the same approach with other clients. It's winning more business because it can jump on opportunities once dismissed due to time constraints. Its billings have grown 300% in the past five years.

Still, the process is not without its flaws. All that hyper-efficiency can be exhausting, Gabel admits: "You've removed your slop factor."”

As you consider optimization opportunities in your organization, don’t limit yourself to traditional operational areas and boundaries.  Nor, fall victim to the “optimization = automation trap”.  Think about your creative types, strategists, and knowledge workers.  How can their work time be “rejiggered” to focus on value creation activities?

 

[Disclosure: Cross-posted from the Business Ecology Initiative (BEI) blog.  The BEI is a client of my firm, Elemental Links.]

Business Ecology: Optimization for Innovation

As I mentioned in my 2010 plans, one of my projects this year is writing and advocacy for the OMG’s Business Ecology Initiative (BEI).  This morning, we launched the new Business Ecology Initiative blog, and I published the following overview post on Business Ecology, the Business Ecology Initiative and Business Ecology enablers. 

As you read the post, you’ll notice several themes common to my on-going writings (soapboxes), which is why getting involved with the BEI is a no-brainer for me.  The original post follows.

What is Business Ecology?

Business Ecology is a business-technology imperative focused on streamlining business processes, removing waste from technology portfolios, and adjusting resource consumption, to optimize business operations and foster business innovation.

As the world economy emerges from a painful recession, organizations are confronted with the challenge of retaining bottom-line diligence, while pursuing market sustaining and gaining innovation. 

For many organizations, the answer lies in harvesting savings and trapped value from existing processes, resources and capabilities.  To accomplish this, organizations are turning to Business Ecology. 

Business Ecology is not a one-time fix, but rather a management philosophy concerned with business vitality over time, balancing current conditions, optimization and innovation focus areas, resource allocations, and longer-term business motivations, capabilities and outcomes.

An important enabler of Business Ecology is the use of technology beyond automation. Business Ecology practitioners employ technology to identify, measure, model and drive business change. 

Business Ecology adoption and execution requires a cross functional team, comprised of business and information technology professionals. Key team capabilities include business process thinking, business performance measurement and analysis, financial analysis, IT architecture, portfolio management, service delivery and iterative project management.

Successful Business Ecology initiatives adopt the principles and values of Business Technology.  The team communicates with each other, sponsors and constituents in a common, business based language.  Measurement is defined and reported in business terms.  Funding and governance decisions and mechanisms reflect a shared resource, investment portfolio approach.

As Business Ecology teams progress, technology and business savvy is exchanged, fostering a greater understanding of each other’s challenges, skills and tools, which leads to a break in the longstanding, constraining, business and IT divide.  A byproduct of successful Business Ecology is business-IT integration.

The Chief Information Officer (CIO), given his/her unique position to view business processes, resource consumption, and technology portfolios across the organization, most often champions Business Ecology adoption and execution.  C-level executives, including the CEO, CFO and COO, sponsor Business Ecology initiatives.

What is the Business Ecology Initiative?

OMG, via the Business Ecology Initiative, leads the drive towards Business Ecology. 

The Business Ecology Initiative provides education, advocacy and member programs to enable organizations to achieve Business Ecology success, employ Actionable Architecture^TM, and carve a path to business-IT integration.

Actionable Architecture^TM brings transparent business methodology to the definition and delivery of common IT infrastructure, platforms and services.  Emphasized business attributes include quality, efficiency, compliance, agility, value, effectiveness, ease of use, sustainability and business goal traceability.

Business-IT Integration is the organizational model for business and information technology convergence.  This model promotes collaborative strategy, planning, architecture and execution; shared decision-making, business-tech savvy personnel and service delivery at the point of value generation.   

What enables Business Ecology?

Techniques: LEAN, Six Sigma, BPM, Value Chain Analysis, Actionable Architecture^TM , Business Technology, Agile, Modeling, Simulation, Business Measurement, and Sustainability Analysis

Technology: SOA, BPM, Cloud Computing, Event Processing, Analytics, Master Data Management (MDM), and Open Standards

Measurement Models: Business Process Maturity Model (BPMM), Sustainability Assessment Model (SAM)

People: C-level executives, business and information technology professionals, who embrace the philosophy of Business Ecology

 

[Disclosure: The Business Ecology Initiative is a client of my firm, Elemental Links.]

Rise of Event Processing / Active Information Picks

Earlier this month, I made my first and only prediction for 2010, that we would (finally) see the “Rise of Event Processing”.  Often, when I speak of Event Processing, I refer to a broader context of Active Information and (when relevant) the establishment of an Active Information Tier.  This past week, I read several articles that are applicable to the event processing / active information space.  I’ve included excerpts and links to 5 of those articles.  [Emphasis is my own.]

Briefly… I was particularly heartened to see the MIT Technology Review article dispel the notion that real-time, and the real-time web, is solely the domain of Twitter and related social media technologies.  The Economist SIS and Fast Company Corventis pieces highlight interesting sense, analyze and respond use cases in the real (physical) world.  The Carol Bartz piece, also in The Economist, discusses leadership traits in the age of information deluge.  Finally, the Progress Software predictions echo my sentiment in “Rise of Event Processing”, which is “You can’t change what you can’t see”.

Rise Event Processing / Active Information Picks:

1. MIT Technology Review: Startups Mine the Real-Time Web, There's more to it than microblog posts and social network updates.

“The "real-time Web" is a hot concept these days. Both Google and Microsoft are racing to add more real-time information to their search results, and a slew of startups are developing technology to collect and deliver the freshest information from around the Web.

But there's more to the real-time Web than just microblogging posts, social network updates, and up-to-the-minute news stories. Huge volumes of data are generated, behind the scenes, every time a person watches a video, clicks on an ad, or performs just about any other action online. And if this user-generated data can be processed rapidly, it could provide new ways to tailor the content on a website, in close to real time.”

… “Richard Tibbetts, CTO of StreamBase, explains that financial markets make up about 80 percent of his company's customers today. Web companies are just starting to adopt the technology.

"You're going to see real-time Web mashups, where data is integrated from multiple sources," Tibbetts says. Such a mashup could, for example, monitor second-to-second fluctuations in the price of airline tickets and automatically purchase one when it falls below a certain price.”

… Real-time applications, whether using traditional database technology or Hadoop, stand to become much more sophisticated going forward. "When people say real-time Web today, they have a narrow view of it--consumer applications like Twitter, Facebook, and a little bit of search," says StreamBase's Tibbetts.”

2. The Economist: The World in 2010 – Big SIS (Societal Information-Technology Systems) is watching you

…“Thanks to Moore’s law (a doubling of capacity every 18 months or so), chips, sensors and radio devices have become so small and cheap that they can be embedded virtually anywhere. Today, two-thirds of new products already come with some electronics built in. By 2017 there could be 7 trillion wirelessly connected devices and objects—about 1,000 per person.

Sensors and chips will produce huge amounts of data. And IT systems are becoming powerful enough to analyse them in real time and predict how things will evolve. IBM has developed a technology it calls “stream computing”. Machines using it can analyse data streams from hundreds of sources, such as surveillance cameras and Wall Street trading desks, summarise the results and take decisions.

Transport is perhaps the industry in which the trend has gone furthest. Several cities have installed dynamic toll systems whose charges vary according to traffic flow. Drivers in Stockholm pay between $1.50 and $3 per entry into the downtown area. After the system—which uses a combination of smart tags, cameras and roadside sensors—was launched, traffic in the Swedish capital decreased by nearly 20%.

More importantly, 2010 will see a boom in “smart grids”. This is tech-speak for an intelligent network paralleling the power grid, and for applications that then manage energy use in real time. Pacific Gas & Electric, one of California’s main utilities, plans to install 10m “smart meters” to tell consumers how much they have to pay and, eventually, to switch off appliances during peak hours.

Smart technology is also likely to penetrate the natural environment. One example is the SmartBay project at Galway Bay in Ireland. The system there draws information from sensors attached to buoys and weather gauges and from text messages from boaters about potentially dangerous floating objects. Uses range from automatic alerts being sent to the harbourmaster when water levels rise above normal to fishermen selling their catch directly to restaurants, thus pocketing a better profit.

Yet it is in big cities that “smartification” will have the most impact. A plethora of systems can be made more intelligent and then combined into a “system of systems”: not just transport and the power grid, but public safety, water supply and even health care (think remote monitoring of patients). With the help of Cisco, another big IT firm, the South Korean city of Incheon aims to become a “Smart+Connected” community, with virtual government services, green energy services and intelligent buildings…”

3. Fast Company: Corventis's PiiX Monitor Promises to Predict Heart Failure

… “The company's first product, PiiX, is a wireless, water-resistant sensor that sticks to a patient's chest like a large Band-Aid and monitors heart rate, respiratory rate, bodily fluids, and overall activity. It transmits the data to a central server for analysis and review by doctor and patient.

The basic technology platform has already received FDA approval, but Corventis envisions the PiiX as much more than a simple monitoring system. The company is working to generate algorithms that can predict, for instance, when a patient is on the verge of heart failure by comparing trends in his or her vital signs to other cases. "When you apply it in the real world, the algorithm begins to learn," says CEO Ed Manicka. "Not from 5 or 10 patients, but from hundreds of thousands of patients, as the system is applied across the planet."

… "What Corventis is trying to do is fundamentally create a new type of machine intelligence that serves to manage the patient's overall health," he says. "It moves from the reactive approach of practicing medicine that is prevalent today to something that is much more proactive, preventative, and individualized."”

4. The Economist: The World in 2010 - Leadership in the information age, by Carol Bartz, CEO of Yahoo!

… “The second obligation that information creates for executives is to identify and mentor thought leaders. In the past, seeking out “high potential” employees typically meant looking for those who could climb the next rung of the management ladder. That remains important. But equally pressing is finding those employees who, though perhaps not the best managers, have the ability to digest and interpret information for others. Grooming these in-house ideas people helps foster a culture of openness to fresh thinking—the greatest energy an organisation can have.

The deluge of information is only going to rise. Leadership will increasingly mean leveraging that information, clarifying it, and using it to advance your strategy, engage customers and motivate employees. Business stakeholders are interested not only in your products and services, but also in your ideas.

So, welcome the information flood. Those who learn how to keep their head above it will be the most effective leaders.”

5. 2010: IT set to move from evolution to quiet revolution, predicts Progress Software

“Based on feedback from customers, as well as its own research and development, Progress Software sees five key technology trends set to shake up computing in 2010.

1. Real-time insight and business control will become a must-have, as organizations can ill-afford to lose money and customer through being slow to notice problems in delivery. In 2009, our research found that 67% of businesses only become aware of problems when customers report them. 80% of companies already have critical business events they need to monitor in real time. In 2010, insight into these events, powered by the right technology, will be essential to success.

2. Event-driven computing will accelerate, driven by business needs, and impacting both the way applications are built and how they are deployed in the enterprise. Architectures are increasingly being built around ‘events’, and this will increase to deal with both new sources of events appearing within the enterprise as well as external event sources from partners and customers.”

@ Gartner AADI: Val Sribar on Enterprise 2013

Session Abstract: “IT has undergone major change, but the pace of change that lies in the immediate future has never been experienced. New platforms driven by cloud computing, new sources of infrastructure and applications solutions, the changing technology stack and resulting impact on skills will provide significant challenges to IT over the next five years.

• What will the enterprise of 2013 look like, and what will be the business drivers for IT change over the next five years?
• What changes in technology and sourcing of solutions will impact IT strategies?
• How will IT adapt to absorb the incredible changes that are on the horizon?”

Val starts by setting up what Enterprise 2013 looks like, he is sharing the dimensions, but wants the audience to score themselves in each area, from minor to extreme change. 

Factors:

Macro level: Calibrating Executive Table and Core Lifecycle Changes: New Leadership, Changes in Strategy, Business Processes, Business Information, Metrics, Core Lifecycles (product, supply, customer etc).  [I would say: how does the business architecture / business design change]

Changes to user base: more online, broadband, mobile, social.  User base on mobile side will be dramatically bigger than those working on computer. 

IT Changes: Alternative delivery and consumption models, ie, Cloud Computing.  How many layers will you shift to cloud?  Servers, middleware, applications, information services, business services?  Extreme version is shifting the build of your apps to the cloud.  Staffing and sourcing.  Disciplines spanning IT: SDLC meets ITIL.

Applications Changes: methodologies; who does the work; what environment & tools will be used (Application architecture: SOA, SODA, SOBA, WOA, CEP, context aware, composition, orchestration, assembly)

Val is talking now about bringing things together via roadmaps, matching business roadmap, IT roadmap and vendor/provider roadmaps.

Asking the audience, most folks scored themselves in the extreme change realm, some in moderate change, none in minor change.

In discussing strategies for moderate change, Val is suggesting:

1. “hollowing & retiring legacy systems” – pull out value, remove waste (duplication)

2. hybrids of internal, cloud and BPO. There is an integration center to this picture.  First integration center box was ESB, B2B gateway etc.  Now, that integration box is replaced with a Business Process Platform.  Val is not suggesting buying BPM from one vendor.  He is talking about bringing together services you need, for your change and portfolio, to integrate the business services and information.

Extreme Change Strategies – Application Perspective

Val has referenced Proctor & Gamble’s Open Innovation program.  Suggests adopting that type of model for Open Applications Innovation.  Your organization consume services from cloud, and “plugs” services back into cloud. “Leading companies will offer an external service portfolio … that can be leveraged in many clouds”.

Val has put up a slide of an External Services Platform Strawman for the Public Sector.  In the center are business services, such as SSN, Citizen Information, etc. The right is Aggregate Information, non-PII.  Left is user experience.  Bottom was infrastructure (I think, slide moved).

Application 2013: Advanced Business Process Platform: “serious about BPM”, “serious about CEP & BAM”.  Also, the world gets more simple.  Val is calling out Salesforce.com, Twitter, iPhone.  Talking about application’s capability vs. value.  Excessive capability reduces an application’s value.

Applications 2013: Governance and Behavior: Business Alignment + Engagement and Accountability.  Current maturity of organizations is very low, just around repeatable.  Needs to be level 4 (think CMMI) quantitatively managed.

Enterprise 2013: Seek – Model – Adapt

Key Disciplines

- Pattern Seeking

- Performance Driven Culture

- Transparency

- Optempo Advantage: CEP comes into play.  Ability to slow down, speed up, or change direction as needed

Bottom line: where will innovation happen, at externally facing points; advanced business processing will be from complex event processing, simplify your apps, improve your maturity.