Pattern-Based Strategy: A Survival Guide… Explained!

A Survival Guide

Since last August, Gartner has been releasing several dozen presentations on Pattern-Based Strategy.  I found it absolutely brilliant.  You could probably tell from my tweets but also from the many venues I presented at on this very topic, including my old blog.  

Without sounding too arrogant I hope, let me refer to one presentation.  I had the opportunity to present at ITxpo, the Gartner Symposium in Orlando last October.  It is a huge show, with gold star presenters like Eric Schmidt, Chairman and CEO Google, and Mark Hurd, Chairman and CEO HP.  I have been there many times but the show in 2009 was by far the best I have been to.  I had a concurrent session on “5 steps to Pattern-Based Strategies”.  I was amazed by the fact the room was so packed that we had to turn people away, and some had to sit on the floor inside the room!  Keep in mind that the audience is about 30% CIO…  sitting on the floor…  Must have been a topic they really cared about!  

While I surveyed the audience at all of my presentations, I realized that very few people actually knew about Pattern-Based Strategy.  I must admit that the name is not very telling.  When I attended some roundtable sessions at BPM Summit 2010, I also realized how confusing it was for the new comers:  

• First, there are already tons of reports on the subject – where to start?
• And second, it is often presented using different metaphors, different metrics or dimensions…

It is indeed easy to get confused or underwhelmed when you can’t get to the core of it.  

My challenge this week is to make it a little bit much more accessible to you all and sparkle some thoughts about the role decision management plays in this new approach.  

A new approach…  No?  

Well, actually, it is not really a new approach.  Many of the concepts are fairly common, very practical…  It is mostly about common sense.  This is the brilliant part!  Pattern-Based Strategy (I will refer to it as PBS although it is not a conventional acronym) taps into core principles but lays them out in a very down-to-Earth way that makes it palatable.  The roadmap to competitiveness can be spelled the same way regardless of your area of focus.  

As I joked with a friend, it is amazing how this simple approach is very applicable to building applications, as well as deploying larger systems (think ERP, CRM or HR for example), as well as your personal goals!  

One observation though is that PBS is very much in line with Decision Management.  I would certainly not claim that any problem is a Decision Management problem.  But when thinking about decisions that you may need to make as part of your processes, a Decision Management approach “by-the-book” would be compliant with the PBS guidelines.  That may be why I found PBS so brilliant: it resonated 100% with the vision I created for Decision Management.  In French, we have this expression “Les Grands Esprits se Rencontrent” which translates into “Great Minds Meet” or (less literally) “Great Minds Think Alike”.  This expression is not as pompous as it may sound, it is mostly a way to say “we came to the same conclusion”.  

Let’s look at the many different ways Gartner has been describing PBS in their presentations and reports.  

4 Pillars  

Those 4 pillars are the disciplines, techniques or technologies that are critical for the implementation of PBS.  

1. Seeking Patterns: We are surrounded by data streams…  It could be datapoints like your individual characteristics (height, weight, education, etc.), transactions like your credit card purchases, or trends like stock market tickers…  We often pay attention to some data elements more than others: how well our kids are doing in Mathematics, how high unemployment rate is, how often customers buy from you…  But by large there are some patterns that we consciously or not ignore.  Nassim Nicholas Taleb did a great job describing how black swans (very improbable events) can strike and have a far larger impact than expected modeled events.  Monitoring a larger array of data streams, tuning to more varieties of patterns would create a huge advantage as companies would be better educated about their environment and therefore in a better position to make a sound business decision.
2. Operational Tempo Advantage: This is an interesting one.  I always thought that the faster you change the way you do business the better.  This is Business Rules 101.  And this is part of the point that Gartner is making here.  The recommend that companies equip themselves with the ability to tune their business practices “at the right speed”.  In many cases, it would mean as fast as possible indeed.  In other cases, it means enabling a slower pace of change.  A good example here is anything HR-related.  If you have been interested in the workforce architecture discussions lately, you might be already aware of the recent progress in Talent Management.  The idea is to plot your workforce needs today and in the future, and derive a roadmap to enable your resources to evolve with the company, providing continuing value — which is a 2-way street of course.  Some companies believe that you can turn a switch and make one person or one entire team change role and responsibilities overnight.  This is a significant source of job dissatisfaction, poor performance or, at worst, turn-over.  Finding the right pace, the right technique, can actually have the exact opposite effect, increasing significantly your personnel’s commitment.
3. Performance-Driven Culture: With Business Activity Monitoring (BAM) being a recurrent subject, it sounds pretty obvious.  In order to increase your overall performance, you need to create an environment that allows each contributor (personnel or system) to track its individual performance.  This may be a bigger culture shift than you might think as more often than not performance is tracked at the contributor’s level, losing sight of the overall performance.  Let me illustrate with the never-ending story of sales-versus-marketing.  In all the companies I have worked for, I witnessed the finger-pointing game.  Marketing claims that, although they generate plenty of leads, Sales does not follow-up on them.  Sales claims that they do but the leads are very poor, totally unqualified.  This blaming game has made Sales Automation and Customer Relation Management (CRM) systems so successful in the past decade as it provides visibility into the Marketing / Sales hand-off, empowering Chief Operations Officers (COO) or Chief Marketing Officers (CMO) to make decisions about which Marketing expenses were justified.  The idea is that those opportunities exist throughout the organization.
4. Transparency: I love that one.  It has multiple facets.
   • Being focused for so long mostly on Financial Services, I was initially thinking compliance, compliance, compliance.  But there is a lot more to it than the visibility into accounting practices, etc. 
   • When you make the extra effort of describing your practices, your business rules or your business processes, you finally have something to share with other groups within the organization and get in alignment.  I have seen in the past very sound decisions made by different groups in the same company but when you get a chance to compare them, you see how dysfunctional that company may be.  A familiar example was an Insurance company that targeted very specific demographics in their ad campaigns.  The Underwriting group was not aware of the strategic direction that was committed to by the Marketing team and either gave those applicants very high premiums or declined them!  With a concerted effort to be more transparent about your objectives you can improve communication and as a result the overall coordination across organizational silos.
   • The new digital era has redefined how people trust, share and engage.  As a result, more transparency is expected from different angles, system themselves are more open for integration — so many services expose their APIs to let people mash them up –, companies are more open — they share information about their products, such as features and price lists of course but more and more companies crowd-source their innovation process too –, and people are also more open — blogs and social media sites like Twitter or Facebook let individuals share more “intimate” details about their thoughts, their aspirations, their frustrations.  There is a risk associated with it of course: the more open you are about what you are, what you do and what you think, the less uncertainty about your true brain power.  As an IDC analyst stated in an IDC Directions presentation this year “Never underestimate the power of stupid people in large groups”.  Regardless of the consequences, it is inevitable that companies will be more engaged with social activities and more truthful, as companies with little integrity or smarts will identify themselves.  Gartner encourages companies to increase their transparency to remain or become more competitive.

Those 4 pillars are quite generic on purpose.  Gartner does not prescribe how you should so each one of them as it may vary with your industry and your role.  The key take-away here is really to practice those disciplines in a way that makes sense to you and your company as a whole.  It may be frustrating to some.  One person told me “I am a practical guy, I need concrete guidance”.  But when you think about it, it is utopia to think that there can be a one size fits all strategy for anything and everything in that world.  

3 Actions  

I suspect that Gartner drilled down into that slightly different messaging around PBS to answer the “what to do” question they got back.  They framed those 4 pillars into a single more actionable roadmap that makes a lot of sense.  

1. Seek: This refers of course to the pattern seeking discipline we just talked about.  You need to start your adoption of PBS by building a framework that allows you to detect changes in trends, regardless of whether they are internal to your company or external.
   • In terms of Decision Management techniques, this would refer to the ability to analyze data of course.  Think Business Intelligence or Predictive Modeling.  Changes in your performance might also be analyzed with Business Activity Monitoring technology.
2. Model: With this knowledge, you are now able to model your business in accordance with your business objectives.
   • Decision Modeling, Simulation, Decision Optimization could be steps involved in validating your business strategies prior to deployment.
3. Adapt: Build flexibility in your runtime systems for change over time as your company evolves, as your competitors become more aggressive in some markets, as your customers become more sophisticated or more demanding.
   • Business Agility is typically derived from technologies such as Business Process Management (BPM) or Business Rules Management Systems (BRMS).  Techniques like A-B testing or Champion-Challenger as well as adaptive models allow to model and adapt potentially at once.

This is a very simple roadmap that mirrors in reverse what happens in real life in terms of adaptation.  Species evolve to reach an optimum level of capabilities for a given environment.  That principle applies to companies and systems the same way it applies to Nature, with the caveat that we have more control on what strategies we intend to deploy rather than pure randomness.  Instead of randomly changing until the current optimum gets statistically selected, this approach empowers companies to direct the evolution. 

5 Components 

The pillars and the roadmap describe very well what PBS is all about.  Gartner created yet another tool to help companies understand the needed transformation.  This spider diagram allows companies to plot where they are today and where they want to be, based on the world they live in. 

1. Defined:  There are typically defined processes that companies operate under.  They maybe for example your underwriting process, your claims processing process, your payroll process, etc.  Those are often well-defined and already automated to some degrees, ideally with a business process but sometimes hard-coded into applications.
2. Anticipated Exceptions:  Flows may account for a number of known exceptions that may occur.  During the course of a mortgage, you contract your mortgage and pay it off over time according to a known schedule.  Pre-payments or Property sale may be known exceptions.  Foreclosures may be other known exceptions. 
3. Unanticipated Exceptions:  There are some exceptions that your systems may not be anticipating like the recession or natural catastrophe like the many earthquakes we witnessed around the Globe.  For those, you may know that they could exist but your system may not know how to deal with them.  If they did, they would be anticipated exceptions…
4. Creative:  This category is somewhat interesting as the name changed a few times.  This refers to “new things” that we have never seen and that are revolutionizing the industry or simply changing the way you do business.  One now not-so-new example is Netflix.  Blockbusters and other enjoyed a fairly well-defined business of renting movies.  Netflix showed up with a revolutionary business model and pretty much killed the previous generation.  Another good example might be the Green initiative, with Smart Cities changing how communities think about development, transportation, energy, etc.
5.  Collective:  Collective refers to social media transformation.  Comcast is a good example of a company that started leveraging Twitter to improve its image via red-carpet treatment for the most vocal tweople.  It created a lot of publicity.  Those are obviously new processes that are changing the traditional approach.

This diagram can help companies understand where to apply a PBS approach in a way that will be effective for their strategic needs.  The spider diagram make people think about their priorities and the potential threats in a way that I find more productive that the typical SWOT analysis.  It does not replace it but it offers a fresh perspective. 

In conclusion, PBS is not that complicated a beast to look at and there can be some very tangible take-aways you can apply today.  This is really brilliant and very applicable to Decision Management, so please do not ignore it.  Take the time to think about it.  If you have questions, I would be happy to answer them!  As you can tell I have become very quickly a passionate advocate of this approach!