Organizations are like living organisms. Bill Gates makes this point in his book Business @ the Speed of Thought. Organisms and organizations both have a central nervous system. One is somatic, the other metaphorical. The body is a dynamic and living messaging system. Our bodies can respond to stimuli with immediacy and effectiveness; so too can the organization. The organization’s central nervous system is its information management system. And an organization is only as effective as its knowledge is good. This is why data collection and management are at the heart of the living organization – and the topic of this post.
Congenital analgesia is a rare condition where a person is insensitive to pain. When the central nervous system malfunctions there is no feedback loop, and patients suffer from self-inflicted harm. If you feel no pain, you won’t pull your hand away from a hot stove. You won’t know if you are biting off your own tongue. Similarly, impairment to an organization’s processes for gathering and managing knowledge inevitably causes harm. Good decisions are based on understanding relevant knowledge.
We use collected data to analyze, track, and communicate a portfolio of projects. Nevertheless, the most critical use of data collection for PPM is enabling effective decision making and selecting the right portfolio of projects. The quality of the data collected has a profound impact on the project and portfolio selection.
It’s Really About Knowledge Management
The beginning of wisdom is to call things by their right names.– Chinese Proverb
PPM capability is a process of manufacturing relevant knowledge in order to make effective decisions. But what is knowledge? Words take on different meanings depending on context, so we must start off by defining our terms.
Plato thought of knowledge as justified true belief. For millennia philosophers have been thoughtfully stroking their long, white beards while trying to define knowledge. Numerous theories have been proposed. Our working definition is knowledge is synthesis of information resulting in value. And this statement rightly leads you to ask: what is information? We shall get to that in a moment, but first I’ll spell out what I mean by variables and criteria.
The central nervous system responds to stimulation from the senses: sight, touch, smell, taste, and hearing. In the same way, a system receives input and translates it (in the best of worlds) into something useful. As you probably remember from math class, a variable is simply a container that accepts a value. For us, variables are changeable attributes or characteristics used to distinguish between one project and another, or between groups of projects.
A simple variable requires no derivation from other variables. This type of variable is almost always an assumption, but there are times when it will not be, for example when it’s a project-supporting strategy.
A complex variable is the result of a calculation of two or more variables. Example: Net present value (NPV) is derived from variables such as expected sales, project cost, and cost of capital.
A simple variable is a given. A complex variable is derived.
A criterion is a variable we use to make a choice. However, a variable is not necessarily a criterion. It may simply be an attribute of a project or portfolio. A criterion is a relevant variable and a single standard on which to base a decision.
Criteria are fixed groupings or a list of standards, rules, needs, or out-comes, sometimes referred to as items, contained in portfolio-analysis scorecards. A scorecard is a list of variables used to create relevant knowledge.
Information is a collection of structured criteria (such as the content of a scorecard) and data that can include words, numbers, pictures, graphical modals, and experience.
We can drown in data. There is usually plenty of it. It is the lowest level of abstraction from which information – and then knowledge – is derived. It is qualitative or quantitative attributes of a variable or set of variables. Many times, the term data, variable and criterion are used interchangeably.
Data typically comes from surveys, assessments, and measurements that can be the basis of graphical models, images, or observations of a set of variables that make up criteria.
Just remember, criterion is a single variable while criteria mean a collection of variables.
7. Information Integrity
Data integrity (or data quality) is not primarily concerned with verifiable accuracy. This statement may seem heretical, but accuracy alone is likely to lead us astray. If we are not aware of it, our own psychological need for certainly can derail us. We can easily be fooled into relying on accurate data simply because it’s there despite its irrelevance to our purpose. This is not because we are a bunch of nitwits, but because, in the absence of something better, we are vulnerable to the availability bias.
A person of integrity is going to do what she says she will do. Data integrity is derived from a thought process that is coherent, reliable, and, most of all, relevant.
If we cannot avoid living in a world that drenches us with information – still, we can and must select for our processing the information that is likely to be useful to us and ignore the rest.– Herbert Simon
But with so much data readily available, how do we know what to ignore? Without a capability to distil our data into something of value, these overwhelming quantities of data will be useless to us. In our following post, we explore data and information filters, positive ignorance and delve deeper into data integrity.
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Related Articles by Michael Menard:
The New Diamonds – Many companies who have implemented the new discipline project and portfolio capability have discovered their “Acres of Diamonds.” When implemented well, the return on a proven PPM capability can deliver dramatic payback.
Complexity Busting – The best-in-class project-selection process reduces complexity and accelerates good decision making.
Lost Keys – In the absence of a holistic view of your entire portfolio of projects and lack of defined process, you rely on guesswork. Under pressure or through habit you revert to doing what you know how to do. Rationality goes out of the window.
A Thousand Cuts – Each decision inflicts pain. Often this pain goes unnoticed – for a while. But sooner or later, the consequences make themselves felt. Weak growth, dwindling profit, and a slow erosion of value make up make up the predictable declining trajectory. Failure to create profit rarely comes from one single cataclysmic disaster.
A Mouthful of Fish – For the puffin, choosing the biggest fish is an instinctive demonstration of efficiency, value, and execution. So how do we know which are the biggest fish for us?
My Moment of Truth – The event that changed my career happened on December 14, 1996, at precisely 6.30 a.m. I was commuting. The radio was on. I wasn’t paying attention until these words hit me like a sock to the jaw: do not go to your grave with your music still inside you. Then the idea burst into being.