Monthly Archives: October 2016

90 or 99 – That is the Strategic Question

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Nicolas Taleb would have us believe that strategic planning is ‘superstitious babble’ (see Anti-fragile strategic planning).  In contrast, Kaplan and Norton make strategic planning a cornerstone of the Balanced Scorecard.  The reality is probably in the middle.

This blog however considers the question, how much time should an organization spend on planning?  Successful or not, when do you cut your losses for a year or when do you think that you are not doing enough?

How Much Is Enough?

On the one hand, strategic planning can become its own self-sustaining cottage industry.  Endless meetings are held and navels are closely examined with little to show for it.  On the other hand, the organization is so tied up in operations and ‘crisis du jour‘ that they wake up and discover the world (and even their organization) has completely changed around them.

What rule of thumb or heuristic can be used to know that you are doing enough Strategic Planning without decorating cottages?  My proposed answer is somewhere between the 1.0% and 0.1%. Although a full order of magnitude separates these values, a range is important due to the volatility of an environment an organization finds itself in.  Governments are likely on the low-end (closer to 0.1%) and tech start-ups on the higher end (1.0%).

For more on the basis for these heuristics, take a read of ‘A Ruling on 80, 90 and 99‘ for my thoughts and a review of such things as Vilfredo Pareto’s legacy and internet lurkers. A recap from this blog is as follows:

  • Pareto: 20% of an organization’s actions account for 80% of its results.
  • 90 Rule: 1% of the operational decisions are enacted by 9% of the organization affecting the remaining 90%.
  • 99 Rule: 0.1% of the strategic decisions are enacted by 0.9% of the organization which impacts the remaining 99%.

Thus the 99 Rule provides a minimum amount of time for an organization to consider strategic questions while the 90 rule provides a maximum amount of time.

Who Does What and What to Do with Your Time?

Consider a fictional organization of 1,000 people.  This is a medium sized business, typical government Ministry or employees of a large town or a small city.  Assuming there is about 1,700 productive hours on average per year per employee (e.g. after vacation, training, sick time, etc. see below for my guesstimation on this) this means the organization in total has 1,700,000 hours to allocate.  How much of this precious resource should be spent doing strategic planning?

I am recommending no less than 1,700 hours and no more than 17,000 hours in total.  In total means involving all people in all aspects of the process.  Thus if there is a one hour planning meeting with 20 people in the room, that is 20 hours.  To prepare for this meeting, 3 people may have spent 2 full days each – another 3 x 2 x 8-hours or another 48 hours against the above budget.

Measuring what Matters

The point of completing these measurements is to answer four fundamental questions:

  1. Is the organization doing enough strategic planning relative to the environment?
  2. Is the organization doing too much planning?
  3. Are we getting value for the investment of resources?
  4. How do we get better at the activities to reduce this total?

Is the organization doing enough strategic planning relative to the environment?

What happens if you discover you are not doing enough?  For example your 1,000 person organization is only spending 100 hours per year doing planning.  You may be very good and efficient and if so bravo to you and your planning folks!  On the other hand, you may be missing opportunities, blind sided by challenges and mired in the current day’s crisis – in which case maybe a bit more effort is needed.

Is the organization doing too much planning?

The 1,000 person organization may also be in a Ground Hog Day’esque hell of constantly planning with not much to show for it.  Perhaps you have a full time planning unit of five people who host dozens of senior management sessions and the best they can is produce an anemic planning document that is quickly forgotten.  In this case, measuring the effort of consuming 10 to 20 thousand hours of efforts for nought can lead to better approaches to the effort.

Are we getting value for the investment of resources?

The above two examples demonstrate how a bit of measurement may help you decide that 100 hours is more than sufficient or 20,000 hours was money well spent.  The output of the planning process is… well a plan.  More importantly it is a culture of monitoring, planning and adapting to changing organizational and environmental circumstances.  Thus setting an input target of planning to measure the quality of the output and the impact of the outcomes can answer the question if the planning effort were resources well spent.

How do we get better at the activities to reduce this total?

The advantage of measuring, evaluating and reflecting on the planning efforts is to get better at.  Setting a target (be 1.0% or 0.1%) is the first step of this activity and measuring against this target is the next.

Good luck with your planning efforts and let me know how much time your organization spends on its planning initiatives.

* How much Time Do You Have?

How much time does an organization have per annum to do things?  The answer is … it depends.  Here are two typical organizations.  The first is a medium size enterprise that works an 8-hour day, offers 3-weeks vacation per year, in addition to sick days and training (e.g. for safety, regulatory compliance, etc.).  On the other hand is a Ministry that offers a 7.25-hour day, 5-weeks of vacation plus sick and training days.

Organization Medium Size Company Government Ministry
Hours/day (1) 8 hours 7.25 hours
Work days per year (2) 254  250
Work Hours per year 2,032 1,812.5
Avg Vacation days x work hours (3) 120
(3 weeks)		 181.25
(5 weeks)
Avg Sick Days/year x work hours (4) 60
(7.5 days)		 54
(7.5 days)
Avg Hours of Learning/year (5) 42 29
Total productive hours/employee 1,810 1,548.25
  1. Few professionals work an 8-hour day let alone a 7.25-hour one.  Nevertheless, everyone has non-productive time such as bathroom breaks, filling up on coffee, walking between buildings.  So I am leaving the actual average productive hours at 8 and 7.25 respectively.
  2. For a cool site in adding this calculation, see: www.workingdays.ca.  Note this includes 3 days of Christmas Closure.
  3. 10 days is the minimum number of vacation days required to be given to an employee.  The average is a surprisingly difficult number to find (at least to a casual searcher).  15 days is based on an Expedia 2015 survey.
  4. Reference Statistics Canada: Days lost per worker by reason, by provinces.
  5. Sources vary.  I have chosen the high value for the for-profit organization as they often have stringent regulatory requirements for health and safety training.  For government I have chosen a medium value.  Sources:

Other Thoughts on Strategic Planning

A Ruling on 80, 90 and 99

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Heuristics or rules of thumb are of great benefit in formulating approximations and quick decisions.  They can just as easily lead one astray through over simplification.  In thinking about heuristics as they apply to organizations, I have been pondering three: the 80/20 Rule, the 90 Rule, and the 99 Rule.

The 80/20 Rule or Pareto Principle

The Pareto Principle is a heuristic that estimates cause and effect, it is defined as:

Also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity; states that, for many events, roughly 80% of the effects come from 20% of the causes.  Named after Italian economist Vilfredo Pareto (adapted from wikipedia).

While the Pareto Principle has reasonably good statistic evidence of its validity in estimating cause and effect, it does not do so well in predicting effort.  In other words, 20% of your future actions will yield 80% of the future value.  Which of the four out of five things will you do that will have no or limited impact on the 80%?

The 90 Rule

This rule is based on the observation of contributions to social media sites.

In Internet culture, the 1% rule is a rule of thumb pertaining to participation in an internet community, stating that only 1% of the users of a website actively create new content, while the other 99% of the participants only lurk (adapted from Wikipedia). 

It may seem strange to invoke an internet rule but compare this to an organizational structure. What is the relative proportion of shop floor workers to middle to senior managers?  Typically there is about a 1:10 ratio of doers versus managers.

Consider an organization of 1,000 people; a reasonable sized government ministry or medium-sized enterprise.  Within such an organization, there would be about 10 senior leaders (Assistant/Deputy Ministers, CEOs, Vice Presidents), 90 middle level managers (Directors, Managers, Assistant Managers) and 900 shop floor staff and immediate supervisors (clerks, sales people, workers, supervisors, etc.).

In other words the 90 rule is a reasonable heuristic to predict the allocation of resources and effort.  1% or the allocated resources will have a disproportionate effect on the next 9% which in turns controls or influences the final 90% of an organization.

The 99/0.9/0.1 Rule

A more lean view of the 90 rule is that 99 rule.  The 90 rule is accurate in the allocation of operational resources but I believe underestimates the effect of more strategic or exceptional events.  The CEO’s decision to close an unprofitable factory is not made by 10 people in the above fictional organization, but instead by 1 person.  Certainly the other 9 people support and (hopefully) validate the decision but the impact is then disproportionate to the remaining 990 individuals in an organization.

The 99 rule is a better tool to estimate strategic decisions within an organization.

Recap of the Rules

  • Pareto: 20% of an organization’s actions account for 80% of its results.
  • 90 Rule: 1% of the operational decisions are enacted by 9% of the organization affecting the remaining 90%.
  • 99 Rule: 0.1% of the strategic decisions are enacted by 0.9% of the organization which impacts the remaining 99%.

What are your thoughts?  Are the above heuristics reasonable and  valuable tool when allocating organizational resources?  Is there too much variability and the rules are a meaningless average?  Do you have any anecdotal experience with any of the above rules in either their cause or effect?

Monetizing Being a Public Servant

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Early season snow storms are dangerous things.  Not only for driving but also when you take a long walk and your brain slips into thought experiments.  For example, when you are walking along and your brain says – hey you could potentially retire in a few years and do something outside the public service where you currently work.

In other words the snow and my brain conspired to ponder the question, ‘How do you monetize your career as a public servant?’.

Monetizing the Problem

First a definition, what is monetization? There are a swack of definitions but they all generally boil down to trying to convert something to ready cash. The following extract from Wikipedia’s definition provides a good example:

… attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits.

So, what exactly are we monetizing in this context? How to have a career post public service that commands a similar level of pay, respect and respect. Not to put too fine of a point on it, but public servants have a (not)/justifiable reputation of being unemployable post government.

The Obvious Methods

So, after a career of say 25, 30 or more years, how do you convert that experience into a second career or even part-time income?  The obvious answers that came to me include:

  1. Maximize a Public Sector Pension and/or Semi-Retirement
  2. Gain Unique Experience of Value to Someone
  3. Retire from a Senior Position that has Cache and Contacts
  4. Keep Your Toe in the Real World

Maximize a Public Sector Pension and/or Semi-Retirement

This is the most obvious method is that you enjoy the government backed annuity otherwise known as a public sector pension.  Sure, maybe you will do some greeting at Wal-Mart or try to convert a hobby into a paying proposition – but generally you don’t monetize the experience.

There is of course a cliché here that public servants have gold-plated pensions and to certain extent it is true (to learn more about this subject, see the post-conference notes on public sector retirement by the FMI).  The other side of this cliché of course is the lack of stock options, bonus and other non-monetary factors related to be a public servant.  Nevertheless, a thirty-five year pension is a pretty sweet bit of monetization!

Gain Unique Experience of Value to Someone

The fellow who spent his career as a spot-mountain-frog-lip-taster-technician may discover that he has a very unique skill set.  Governments do things that business and organizations don’t so this is definitely a consideration for monetization – assuming there is a market for the specialization – and there is the rub.  No other organization may want to pay for (thus monetize) frog-lip-tasting.  However there are some less obvious examples of converting experience into post-retirement careers.

If you work in an administrative function, likely the experience can be monetized – to a point.  A human resource consultant, accounting clerk or procurement specialist can find (if they want) post-retirement employment.  Unfortunately, the more senior the public sector experience the less likely of making a lateral leap.  As an accountant, I have managed to avoid dealing with taxes, shareholder accounting and the like because I have focused on budgets, systems and governance.  As a result, most controller roles are closed to me because I lack this basic for-profit experience.  The same examples can be made for other administrative functions in human resources, procurement, etc.

Retire from a Senior Position that has Cache

Retiring as a Deputy Minister or City Manager may open up future opportunities.  Think of the senior politicians, for example, who have gone back into law firms or think tanks.  Alas often the value you can bring to an organization are the contacts and systems knowledge of the recently departed government.  This knowledge is perishable in the extreme, particularly if there is a subsequent change in government or significant re-organization.

Mandatory cooling off periods may further diminish the relative value of recent experience if one needs to wait six to twenty-four months before cashing in.  Nevertheless, if you got to be a senior civil servant, you probably have skills of value beyond a government context.

Keep Your Toe in the Real World

One method of ensuring the ability to work in the real world post public service is to not really ever leave it.  A toe in may range from owning real estate property, working part-time (e.g. doing taxes if you are an accountant) or teaching courses.  In this way you have non-government experience to point to.  A further upside is having additional income of doing some or all of these things.  A downside is working more than one job during your career.

Monetization May Mean More than Money

If you are willing to stretch the definition of monetization, there is more to life than a second (third, fourth or fifth) career.  You can also use your experience in a volunteer capacity helping our or other societies.  For example Canadian Executive Services Overseas takes retired executives and places them globally and here at home (e.g helping first nation communities).  Churches, non-profit boards and community leagues are other potential beneficiaries of a life time in the service of the public.

Not all of these will pay the bills if one’s pension is not fully maximized.  However if money is not a primary driver (hey, you did take a government job after all), then you may be paid in post-retirement experiences!

Thank you snow storm for helping me clear my thoughts whilst walking… now back to work because I am not quite at the point of being able to start monetizing….