Jevon’s Paradox and IT

I came across Jevon’s paradox the other day (can’t remember where) and it connected with me on something I’ve been thinking about the last few weeks. Jevon’s paradox, from Wikipedia says:

In economics, the Jevons paradox (sometimes Jevons effect) is the proposition that technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource.

While not a direct application of this paradox or effect, it seems to me that a similar effect happens with IT work in a group, department or company.  Namely, no matter how much good work is done in that area, there will be still be a list of additional work to do the next time period. If you manage your portfolio of work by organization, no matter how much you do for that organization in a year, there will be a similar list of work to do the next year. No matter how much you do or how much better the organization gets, there will be a list of improvements to undertake next year.

This ‘infinite’ amount of work is one of the key problems in IT and why always working on improving portfolio management is a critical priority for IT leadership and the business. The IT leadership team has to be constantly working with business partners, customers and suppliers to make the smartest decisions possible about what to work on.  The amount of work is infinite so being busy or having a lot to do is meaningless. What counts is working on the right things.

I’m also thinking that this effect is causing me to pause and re-think some of my ideas or beliefs about how that portfolio management should be done. Perhaps, for parts of the business, you tightly constrain the resources available to work and let the most important or highest ROI type work bubble to the top. Then, divert the large fraction of your resources to work on the truly strategic part of your business. I have to think on this more.

I’d welcome your thoughts on the matter.

How much for IT?

I’ve been pondering the question of how does one determine the proper investment level for IT in a company if you don’t start with the current spending levels.   In other words, how does the leadership of a company determine the right dollar amount to invest without referring to the run rate?

There are various benchmarks that can be used to see how an industry sector invests.  For example, we can find out the average for the insurance industry or the retail industry.   But I’ve not seen anybody provide 2nd order statistics for the industry groups that would help us understand the spread around the mean.   I’ve also found cases where the companies in the study for my industry group were not at all like my company.   The grouping itself can be flawed.

Even if one knows the average for an industry group, what does that tell us about whether we should spend more or less?  I don’t typically want to be average.  It might make sense to spend a lot more than the average based on the specifics of your company and its situation.  One company might get huge leverage on their IT spending and thus more spending is appropriate and warranted.

There are two key components of IT spending.  One is called the Run component and it consists of the spending required to keep the lights on.   Typically, one would want to minimize this spending while maintaining a proper service level.  It does no good to keep cutting the Run spending if the quality of service is going down along the way.   The second component is a Grow or Innovate component and this is used to characterize projects that can help the business grow or innovate.  This second component is where the real discussions should take place and where conversations with the business leadership can make all the difference.  IT should be there to enable the business to move forward.   IT has to spend minimally to keep it running but it also has to spend to help the business innovate.

I think the answer to my question is that there are two answers and they are answered differently.   If there is lots of waste and redundancy in the Run part, then more spending might be warranted to streamline and consolidate to enable the Run component to get smaller later.   If the Run component is already lean with single instances of everything, etc. then perhaps Run can be determined based on what is required to keep the same steady-state.

The Grow/Innovate component is a conversation and partnership with all involved.  This part is where you can spend more or less depending on the story and ideas involved.

Thank You and Well Done

I was in a meeting years ago where a senior executive told us that he didn’t believe other senior leaders in an organization needed to be told ‘good job’ or ‘thanks’ regarding their work.   Senior leaders are self-starters and don’t need this kind of re-enforcement.

Wrong.  Everyone wants to be valued and hope that their work is making a difference.   Everyone.

This morning I got an email from a person who used to work in my organization.  He has since moved on to a new place and then another new place.   He said at one place where he worked after leaving here they ‘had no leadership at any level’ and at the other place the highest ranking person ‘has no idea how to lead.’  The purpose of his email was just to tell me that after seeing some other IT organizations, he just wanted to say ‘good job’ for what we are doing here.   He went on to talk about goal alignment, ethics and about making a difference while here.

This is one of the nicest emails I’ve ever received and he did not need to send it.   As you can guess, it made my day and I appreciate him taking the time to send this to me.

Whereever you are stop what you are doing and send someone a ‘good job’ note or a ‘thank you’ note.    Your act of kindness  might be the only one they get today.

Thirsty For Sure

Seth Godin’s post on being Thirsty is a good post to think about and consider for yourself.   I don’t know which comes first, the curiosity or the success.   However, I think that to sustain success, you better be curious and ask lots of questions and think about things in new ways.   You need to challenge yourself by reading things from different view points and you need to surround yourself with interesting people who will challenge your thinking.  You need to be constantly learning.

I used to live in Singapore and I’ve been fortunate to have the opportunity to travel in Asia and Europe numerous times.  I believe I have very good friends in Singapore and Thailand and other countries around the world.   Each time I travel and during my time living overseas, I feel like I’m learning new things and being stretched in new directions.

I once had a person from a charity come to visit me in my office and after they arrived and were talking to me, they said they didn’t know my background or anything about my company.   Do you think it might have been smarter to be curious about me and the company I work for and do a little research in advance?   Another person recently show up who had read a post on this blog that had been posted in the prior 24 hours.   That person had done some research.

However you do it, I think that we each need to keep learning, being curious and engaging with the world around us.

Comments welcome.

Rules of IT are Changing

Mark McDonald wrote an excellent article on the Rules for IT Are Changing and I wanted to highlight it here.   I read this weeks ago and keep thinking about it.

I really agree that the landscape of IT leadership is changing.   The big infrastructure investments that IT has made are just necessary to be in the game.   ERP is needed to be in the game, but it does not differentiate anything anymore.   We have to keep the networks up, telephones working, mail being delivered, etc.

Seems to me that once all the things above are well done and in control, the next difference maker or value creator is around collaboration and how well IT helps the company collaborate internally and with others.

BTW, Mark’s blog is excellent and recommended.