How Silos in the Marketing Organization Thwart Alignment with IT

According to a global survey of marketing professionals by Teradata, 74 percent of the respondents said that marketing and IT are not strategic partners in their companies

Data is an asset that should be shared across the organization to discover patterns of behavior and pinpoint areas of opportunity to be leveraged by sales, marketing and customer service. While data collection has historically occurred most often within the IT organization, the analysis of that data is often the responsibility of customer insights managers or data scientists, who must work cross-functionally with both marketing and IT. Greater collaboration and partnership between the worlds of marketing and IT power deep, actionable understanding of the customer—and companies who drive their businesses with customer data are best positioned to win.

However, using all the data together is what drives a great customer experience, and according to a McKinsey study, 70 percent of customers buy based on how they are treated. As for how IT can assist, it is truly about collaboration between marketing and IT, or between CMO and CIO, and the broader strategy of the company being driven by the C-suite. You might point readers to a post written earlier this year by our company president about why this need is so critical.

http://www.itbusinessedge.com/blogs/from-under-the-rug/how-silos-in-the-marketing-organization-thwart-alignment-with-it.html

Doherty Threshold

Update: The original version of this post incorrectly stated that the Doherty Threshold was not a real thing. That was incorrect. Here's the Doherty Threshold, listed on the IBM website, as described by author Walter J. Doherty in 1982. As shown in this episode of Halt and Catch Fire, it is when a computer has a response time of less than half a second:

When a computer and its users interact at a pace that ensures that neither has to wait on the other, productivity soars, the cost of the work done on the computer tumbles, employees get more satisfaction from their work, and its quality tends to improve. Few online computer systems are this well balanced; few executives are aware that such a balance is economically and technically feasible. In fact, at one time it was thought that a relatively slow response, up to two seconds, was acceptable because the person was thinking about the next task. Research on rapid response time now indicates that this earlier theory is not borne out by the facts: productivity increases in more than direct proportion to a decrease in response time.

Source: http://gizmodo.com/halt-and-catch-fire-episode-four-donna-is-here-to-solv-1594879529


The Economic Value of Rapid Response Time

A transaction consists of a user command from a terminal and the system's reply. It is the fundamental unit of work for online system users. It can be divided into two time sequences (Figure 1):
User Response Time. This is the time span between the moment a user receives a complete reply to one command and enters the next command. People often refer to this as think time.
System Response Time. This is the time span between the moment the user enters a command and the moment a complete response is displayed on the terminal. System response time can be further divided into:

• Computer response time, the time the computer actually spends processing and servicing the user's command
• Communication time, the transit time for a command to go to the computer and the time for the reply to come back

...
He and Richard P. Kelisky, Director of Computing Systems for IBM's Research Division, wrote about their observations in 1979, "...each second of system response degradation leads to a similar degradation added to the user's time for the following [command]. This phenomenon seems to be related to an individual's attention span. The traditional model of a person thinking after each system response appears to be inaccurate. Instead, people seem to have a sequence of actions in mind, contained in a short-term mental memory buffer. Increases in SRT [system response time] seem to disrupt the thought processes, and this may result in having to rethink the sequence of actions to be continued." 
...

But, bring system response time down to 0.3 seconds and the number of transactions the programmer can execute in an hour jumps to 371, an increase of 106 percent. Put another way, a reduction of 2.7 seconds in system response saves 10.3 seconds of the user's time (Figure 3). This seemingly insignificant time saving is the springboard for sizable increases in productivity.
...

Cost/Benefit Illustration

To bring the potential benefits of rapid system response into perspective, consider an illustration. Based on the data Thadhani published (Figure 2), the average user can complete 180 transactions per hour at three second response time (Figure 9). For simplicity, then, assume a task that involves 180 transactions and takes an hour to complete. Any one user can complete eight such tasks in a day. Further, assume the burdened value of the user's time is $35 per hour. These numbers will be held constant for the purposes of this illustration.
 

*  Based on Thadani's data (Figure 3) 

Figure 9. Computation of the Time a User Saves in a Day as System Response Time Improved from 3.0 Seconds to 0.3 Seconds

System Response Time (Seconds)	Transactions per Hour*	Task Time (Minutes)	Time Saved per Task (Minutes)	Time Saved per Day (Minutes)
3.0	180	60.0	-	-
2.0	208	51.9	8.1	64.8
1.0	252	42.9	17.1	136.8
0.6	279	37.7	22.3	178.4
0.3	371	29.1	30.9	247.2

As system response time improves, the time required to complete a task drops from the original 60 minutes to only 29.1 minutes. Since the average user completes eight such tasks in a day, the maximum amount of time that can be saved is 247.2 minutes, or 4.1 hours. In a month of 21 work days, the value of these saved minutes is $3,028. 

The number of simultaneous users an online system supports varies from organization to organization as does the amount of improvement in response time which is needed. But, in all cases in this illustration (Figure 10), the financial incentive for bringing system response time from three seconds into the subsecond range is substantial, ranging from $150,000 per month when only 50 people use a system at any one time to $908,000 when 300 people use the system simultaneously.

Source: http://www.vm.ibm.com/devpages/jelliott/evrrt.html

Architecture sketching

Three types of Architecture:

Application Architecture: Th internal structure of an application (classes, components, design patters)
System Architecture: High-level structure of a software components/services)
Enterprise Architecture: Structure and strategy across people, process and technology

Simon Brown considers software architecture as both Application and System Architecture

Architecture represents the significant decisions, where significance is measured by cost of change.

The C4 model (static structure):
System Context: The system plus users and system dependencies

Containers: the overall shape of the architecture and technology choices

Components: Logical components and their interactions within a container

Classes: component or pattern implementation details

A common set of abstractions is more important than a common notation

Tips:

Keep audience in mind when developing diagrams: non-technical, semi-technical, technical


Checklist for an effective sketch (diagram):

1. I can see the solution from multiple levels of abstraction
2. I understand teh big picture (context)
3. I understand the logical containers
4. I understand the major cmponents used to satisfy the important user stories/features
5. I understand the notation, colour coding, etc used on the diagrams
6. I can see the traceability between diagrams
7. I understand the major technology decisions
8. I understand the implementations strategy (frameworks, libaries, API's, etc)

"Sketches are Maps"

Just enough up front design to create firm foundations for the software product and its delivery:

From: https://skillsmatter.com/skillscasts/5109-simple-sketches-for-diagramming-your-software-architecture

Recruiting goes High School

http://www.bloomberg.com/news/2014-07-08/silicon-valley-s-talent-grab-spawns-high-school-interns.html

QRA

QRA - Quantified Risk Appetite

QRA of most corporations is 10-25% of Market Cap - important to note that QRA is a parameter in calculating risk adjusted value - not the most amount of money a company is willing to risk.  spreadsheet: http://www.sdg.com/ebriefings/on-demand/risk-tool
(Source: https://www.youtube.com/watch?v=orAyEtsfb3k&feature=youtu.be)

QRA is 10% of of market cap and small risks are 10% of QRA - e.g. 1% of market cap.  In this case, any decision that is less than that, then Expected Value is a very close equivalent to risk adjusted value.

All divisions of a company should use the same QRA to prevent value destroying opportunities - big bet decisions.  This pooling of risk gives large corporations an advantage over smaller corporations - giving up this advantage allows smaller companies to have an advantage if they are using appropriate risk.

WACC Definition

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.

The WACC equation is the cost of each capital component multiplied by its proportional weight and then summing:




Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate

Businesses often discount cash flows at WACC to determine the Net Present Value (NPV) of a project, using the formula:

NPV = Present Value (PV) of the Cash Flows discounted at WACC.

(source: http://www.investopedia.com/terms/w/wacc.asp)

Definition of 'Cost Of Equity'

In financial theory, the return that stockholders require for a company. The traditional formula for cost of equity (COE) is the dividend capitalization model:



A firm's cost of equity represents the compensation that the market demands in exchange for owning the asset and bearing the risk of ownership.

Investopedia explains 'Cost Of Equity'

Let's look at a very simple example: let's say you require a rate of return of 10% on an investment in TSJ Sports. The stock is currently trading at $10 and will pay a dividend of $0.30. Through a combination of dividends and share appreciation you require a $1.00 return on your $10.00 investment. Therefore the stock will have to appreciate by $0.70, which, combined with the $0.30 from dividends, gives you your 10% cost of equity.

The capital asset pricing model (CAPM) is another method used to determine cost of equity.

GRPI

GRPI Pyramid

Robin, Plovnick, and Fry, Task-Oriented Project Development

Source: http://www.create-learning.com/docs/GRPI/GRPI-TeamDevelopment.pdf

What Is GRPI?

GRPI is used to ensure practitioners gauge the factors critical to team development in a structured way – and act on these factors throughout the project. Teams and organizations can be viewed through GRPI based on four fundamental dimensions:

• Goals: Are the mission and goals of the team clear and accepted by all members? Are they in tune with the team’s environment?
• Roles and responsibilities: Are the roles and responsibilities clearly described and understood? Do the defined roles fully support the team goals?
• Process and procedures: Are there processes and procedures operating in the group (such as problem-solving methods, communication procedures, decision-making processes, etc.) that are 1) understood and acceptable and 2) supportive to the group’s goals and roles?
• Interpersonal relationships: Are the relationships among team members healthy and supportive of good team work? Is there an appropriate level of trust, openness and acceptance in the group? The I of GRPI is a function of the G, R and P. In order to achieve the I, there are two important items to keep in mind: 1) effective communication and 2) conflict avoidance and resolution.

Source: http://www.isixsigma.com/implementation/teams/grabbing-hold-of-the-grpi-model/


The GRPI model was first introduced by Richard Beckhard (1972) and highlights the different
aspects of team cooperation by identify goals, clarifying roles, responsibilities and processes and
the interpersonal relationships of team members.
Source: http://www.systemic-excellence-group.com/sites/default/files/raue_tang_weiland_wenzlik_2013_the_grpi_model_an_approach_for_team_development.pdf

During his work as a organisational development and transformation consultant, Noel Tichy
analysed team conflicts based on the GRPI framework, underlining the cascading character (cp.
Pritchett, Tichy, & Cohen, 1998; Tichy, 2002). He observed a ratio of 80:20 per cent of conflicts
accumulating at each level:

• 80% of conflicts in teams are attributed to unclear goals.
• From the remaining 20%, 80% are assigned to unclear roles.
• From the remainder there is again 80% to be found in the field of unclear processes.
• Finally, only 1% of the conflicts in teams can be attributed to interpersonal relationships.
Ambiguity at one level has an impact on the ensuing levels and problems at a lower level are often
symptoms of conflicts at a higher level.

• If goals are not clear, uncertainties in the individual roles will arise.
• If roles are unclear, this will result in cumulative conflict within the processes.
• If processes are unclear, accumulated conflicts at higher levels will appear at people level.
Therefore, it is crucial to establish absolute clarity at each level and to put in place a foundation of
shared commitment by installing ownership of and commitment to those goals across the team
and by identifying and addressing any issues which restrict the team from reaching their goals.
Source: http://www.systemic-excellence-group.com/sites/default/files/raue_tang_weiland_wenzlik_2013_the_grpi_model_an_approach_for_team_development.pdf

Futsal, basketball and ... padded parkour? Sounds like a strange three-sport athlete, and a perfect model for kids.

From: http://www.nytimes.com/2014/06/11/opinion/sports-should-be-childs-play.html

We should urge kids to avoid hyperspecialization and instead sample a variety of sports through at least age 12.

Nearly a third of youth athletes in a three-year longitudinal study led by Neeru Jayanthi, director of primary care sports medicine at Loyola University in Chicago, were highly specialized — they had quit multiple sports in order to focus on one for more than eight months a year — and another third weren’t far behind. Even controlling for age and the total number of weekly hours in sports, kids in the study who were highly specialized had a 36 percent increased risk of suffering a serious overuse injury. Dr. Jayanthi saw kids with stress fractures in their backs, arms or legs; damage to elbow ligaments; and cracks in the cartilage in their joints.

In the Loyola study, sport diversification had a protective effect. But in case health risks alone aren’t reason enough for parents to ignore the siren call of specialization, diversification also provides performance benefits.

Kids who play multiple “attacking” sports, like basketball or field hockey, transfer learned motor and anticipatory skills — the unconscious ability to read bodies and game situations — to other sports. They take less time to master the sport they ultimately choose.

A Swedish study of sub-elite and elite tennis players — including five who ranked among the top 15 in the world — found that those who topped out at as sub-elites dropped all other sports by age 11. Eventual elites developed in a “harmonious club environment without greater demands for success,” and played multiple sports until age 14.

USA Hockey (which has barred checking in youth games) recently invited adults to play on a 310-by-130-foot ice rink to show them what it’s like for an 8-year-old to play on a regulation rink. The grown-ups’ assessments: “too much time between the action”; “it’s hard to communicate because everyone is spread out so far”; “you end up spending a lot of time in open space.”