Given a sequence of symbols the information content of the symbols is a well defined mathematical quantity – it is the number of bits needed to express the symbol. How many bits do we need to express a symbol? It depends on the “scarcity” of the symbol in the particular context. A very frequently occurring symbol in a context needs very few bits to express it, in English we can get by with skppng vwls and still communicate effectively. Using foreign language words which are not used as frequently requires more careful and complete communication. A very infrequent symbol represents a lot more information and it requires a lot more bits to express. While making changes in an organization, especially changes that are counter-intuitive in the existing culture, this need for extensive and detailed communication is an immediate barrier. This is the “cultural change” problem.
There is another way to look at information content and efficiency of expressing it using a symbol. If the transmitter and receiver have a lot of shared context the ideas represented by a symbol can be very efficiently transmitted. In this context a symbol can become very rich in content when we can express many associations with it. For example a person like Mahatma Gandhi becomes a symbol of peace and non-violence, a brand like “McDonalds” or “Apple” come to represent fast food or excellence in design. Information is richly encoded in these symbols because it is not just the bits used to represent the symbol but also the entire machinery of “thought” that these symbols bring to mind. Stories, associations, history and consequences for the world. A whole narrative is build into these symbols. Shared context makes the communication efficient. Shared assumptions about meaning defines a “culture”.
An extreme example of a very efficient symbol is the representation of the Mandelbrot set pictured above. The infinite intricacy of the set is represented by the convergence of a very simple iterative program z=z*z + c for complex values c starting at z=0. This set is beautiful in its intricacy but also infinitely rich.
The information content of symbols is very high when there is an underlying computation associated with it. Similarly highly information dense symbols have “programs of action” associated with them.
In the current environment where our ability to capture data is steadily increasing the struggle is on to find rich veins of information in this data. Data analytics is a rapidly growing technology. There are two approaches to finding relevant data – one relying on syntactic analysis of the data to find trends and correlations. This is a powerful approach with rich applications in marketing, health data analysis, public policy etc. There is another approach that relies on a deep understanding of the content to develop a rich model of cause and effect for a data source. This allows us to treat information as the “answer to the question asked“. (-Goldratt). In this model we can probe for a lot of content by examining very small amounts of data. By finding the crucial nuggets of information we can tap into rich causal connections that people already possess in their intuition.
Proceeding along the second model we can design effective measurements for a business organization by relying on our ability to pose the right questions. These are based on an underlying “cause and effect” model of the organization. The questions that we ask will help define the culture. The answers to these questions activate “programs of actions” that help guide the organization towards its goals. Creating this model requires tedious but rewarding work that multiplies the value of the measurements by increasing their information content. These “programs of actions” become shared assumptions in the organization creating a new culture.
For example asking the question – “what is the constraint for the organization?” is a very powerful question. In a factory the constraint may be a particular machine or the availability of a particular skill. Knowing the constraint for the organization allows all parts of the organization to decide how best to do their job to support the “flow” at the constraint. In the Theory of Constraints, the underlying model is one of flow and the constraints to flow. This creates a way of measuring queues, speed and time that make the flow and the constraints to flow explicit. For example in an airline “time aircrafts are available to be flying” is the constraint. Knowing this and organizing around this one constraint is extremely powerful. For example Southwest airlines appears to subordinate most actions to this one idea. They have quick turn arounds at gates, similar airplanes across the fleet to speed up maintenance, over capacity in ground staff to speed up all other processing. Even simple things like serving no food or free seating can be explained both from the perspective of reducing costs and reducing the turnaround time for an aircraft. This questions starts to create a culture that is focused on improving flow in the organization.
Alternative models of an organization can result in alternative sets of measurements. For example, treating an organization like a collection of independent entities and modeling their transactions based on “cost” of effort spent is an alternative to the model of flow. The “cost” model typically leads to a slower organization, with more embedded conflicts and inefficiencies. This is because the “programs of action” associated with the cost model do not align with the shared goals of the organization. Organizations imbued with these measurements experience a siloed and risk averse culture.
Recognizing that it is possible to find “relevant” cause and effect relationships that link our actions to organizational goals allows us to pose a rich set of questions that when answered creates powerful programs of actions. This is the task facing most organizations today, how to create the right simple measurements that can help align the actions of the entire organization? How to create the right culture? The tragedy is that most organizations are trapped in, at best ineffective models and at worst harmful models, that result in measurements which create conflict and move the organization further away from its own values and goals. Often this is accompanied by complaints about the culture. A deeply frustrating state of affairs!
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