I read a lot of blog posts and I comment on many. I also have always quite a few discussions going on in places like LinkedIn. I try (but usually don’t manage) to keep my own posts short, because attention spans aren’t what they used to be in times of information overload. I don’t write as many posts as I would like to, but why do I even want to? I want my posts to contain some novel ideas rather than just reiterating the same old thing. I am already being accused of being single-minded about things like ACM, when that is not really the case. I am single-minded about delivering value in my writing. Hm, what is value? Is it related to money? Could we measure it? How would you define it?
Value is Perception only
I propose that value – just like beauty – is a perception and you can’t measure it. Many will disagree here and state that even if it is perception then one can ask people to report how valuable something is to them and — presto: Value has been measured. Then the 1-5 stars rating of this post defines it’s value? Most probably the immediate feedback is the best way to understand other people’s judgements. It is however not a ‘measurement’ of value as we don’t know why people did or didn’t rate. This leads to a clear requirement for social empowerment in business process execution that allows all involved to immediately provide their value perceptions and judgements. Not later in statistics, but NOW! While it is advisable to sleep over important decisions, you can be sure that the emotional basis for your decision has already been formed in the first few moments. All we do is to work out a rational explanation.
Why is immediacy important?
In one of Charles Schultz’ Peanuts cartoons, Snoopy – Charly Brown’s faithful dog, who often thinks he is a World War One flying ace chasing the triple-decker piloted by the Red Baron – lies on top of the roof of his dog house and contemplates for a day and a night, unable to sleep.
In the last frame Snoopy says: ‘If you think about something at noon and again at midnight you come to different conclusions.’ Nothing could be more true. Heuristics of human behavior show very clearly that we value things very differently depending on our emotional state. When hormones run high (especially testosterone) we are for example much more willing to accept risks. Therefore putting the idea of risk management into the realm of mythology. Risk, just like beauty, just like value, is perception too. We utilize emotional (and thus hormone influenced) decision-making because we NEVER have enough information to decide on risks rationally. We thus value risks very differently at different times and certainly not based on numbers. Well, I admit that some people are emotionally influenced by horsepower or cupsize.
Risk management supposedly makes sure that we look at all uncertain aspects of a business and assess their risks. Good. The real risk is now increased as we use a planning model for execution, a market model for trends, and a model for the risk calculation. All of these use a lot of numbers which we assign ‘valuations’ arbitrarily. We can add some probability of those models, plans and numbers being correct in our calculation, but one has to be aware that this is an incredible house of cards. Risk and value assessement are very much related and dependent. A bond that carries higher risk delivers a higher interest payment. But it is your own momentary judgement that decides. The biggest issue is whether you are willing to believe the rating agencies judgements.
Delivering value is much like creating art.
I posted before that managing is art and not a methodology or practice. What seems valuable to me as an executive is only my own sole perspective and may not be shared by anyone else. But if the people I manage don’t share my concepts of value, how well am I managing? Do we get different values from the same thing? What about the value of my blog? Would you pay to read it? I don’t think so, but I still get a lot of readers. Is value better defined by the number of people agreeing with me? Many put Google-Ads on their blogs and turn their ‘value’ into money this way. I give my opinion away for free. I notice however that my ideas and writings get copied without referencing me. I get neither money nor credit so where is my value? However, these plagiarists do in principle promote my ideas and increase their value perception in the community. Microsoft became the most widely used PC software through piracy and not Bill Gates’ genius! Social networks are solely judged by the number of users and not profitability.
How valuable is something? Really!
We need to ask a lot of questions. How valuable is the predicted value of a traded future — really? How valuable is risk management given that it can’t predict value perceptions? How valuable is any planning tool? How valuable is knowledge? How valuable is skill? How valuable is experience? How valuable is an idea or patent? How valuable is measured VALUE? How valuable is a certain software product? An iPhone App? A smartphone? The Internet? A good friend or a faithful spouse? To all of these questions there is no sensible ‘right’ answer or some number. Each one of you will however have an immediate answer that rings true. Value is a human judgement only.
Value is also a belief system.
Market value is about shared beliefs. If only I believe something is valuable it is a lot less so than if others believe it too. Which is why we continuously try to convince others that our beliefs are the right ones. Moral values are the most obvious proof of my point. Value is therefore not about measurement or proof or market price. Many accept things at ‘face value’ and don’t bother to dig deeper to see if that actually fits their own needs. Owning a brand product that gets recognized by others as such is valuable because we get judged accordingly. Value becomes a measure of happiness! If we share values we feel we belong and it makes us happier. Value is related to how it makes us FEEL in relationship to others. If others are willing to take the same risk, I am less risk averse for no good reason.
Enter the world of financial markets with complex derivatives that NO ONE UNDERSTANDS! Before a market crash many stocks are perceived incredibly valuable as they rise for no other reason that many believe they are. Once someone who owns a lot of them decides that he is going to cash in on that belief, exactly that stock becomes an incredible risk to anyone who still believes in it. Within days it gets dumped by all those who can do it in time. Once it is low enough those who cashed in on the sale go back to buying it as now it is even better value! It has now a lot more potential to increase again. It doesn’t seem that value is only what people are willing to pay. It has to do with potentials and expectations.
Perfect process execution does not reduce risk!
Allow me to apply these thoughts to the world of business and BPM. When businesses need to consider an investment, its potential return or ROI is used to promote a belief in achievable future value. Investments in BPM for example claim to deliver ROI through more revenue and better service, but mostly by doing more with less (people). The numbers are purely made up before and tuned afterwards, because how anyone can have the chuzpe (Jiddish for boldness) to claim that firing people while doing more revenue will improve service is beyond me. Risk is supposedly reduced as process execution is guaranteed. What gibberish nonsense. Obviously it has nothing to do with numbers, but with beliefs. If a charismatic leader makes people believe that what they do is the grandest thing then it delivers (emotional) value. It makes people happy to belong and they will do the most incredible things. Take for example Kenneth Lay as CEO of Enron, which was voted six years in a row America’s most innovative company by Fortune Magazine. A lot of perceived value based on made-up numbers. Hindsight makes us see former value calculations quite differently. At some stage the same will happen with stock markets and BPM. Caveat Emptor!
It is the reason why I don’t care for delivering fake ROI calculations for using ACM. Software or processes don’t deliver ROI. People do. ACM is about creating potential and opportunities for skilled people to simplify their job (efficiency), handle a larger workload with less errors (revenue) and transparently collaborate until customer value perception is satisfied (effectiveness). All of it is in the judgement of the people involved and can neither be predicted nor measured. But all know when it works!
(Just read this posts about ‘Loosing value in the process‘, which is not about BPM but value of printed versus digital media. It reiterates many of the things I said here from a value perspective. Filloux also rather wants more expensive perfection (=effectiveness) than standardized mediocrity.)