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That and a quarter’ll get you on the bus

December 19, 2010
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Right now I’m in the middle of a series that focuses in on my approach to taxonomy, which I introduced in a previous post (Irrelevant Taxonomies), both to contrast it with how I see taxonomy typically done as well as to solicit feedback, comments, and general heckling from you all out there–nothing like industry scorn to sharpen your ideas, right?

In that initial post, I introduced a number of dichotomies about relevant versus irrelevant taxonomies; in this series of posts, I’m taking the time to explain more about each of these dichotomies.

That having been said, let’s dive right in to the fourth dichotomy: Have no tangible, business relevant metric to impact versus have at least one tangible, business relevant metric to impact.

Who cares?

I think the most important thing to realize about project impact is that just having a measurable impact is not an indication of success—you need to be making the right impact. Here’s what I mean.

There are lots of needles you can move at an organization (hundreds, really) but there are only a three that anyone with a checkbook consistently cares about: increased revenue, decreased cost, and increased margins. Period.

These three are what we might call ultimate results, because they are ends in themselves and need no further justification. No one ever asks you why they should care about increased revenue, decreased costs, or increased margins.

Don’t get me wrong, lots of the needles you can move are absolutely, critically important. Things like efficiency, findability, speed to market, customer satisfaction, or quality–you can’t run a successful business without working to constantly improve these. But they’re what we might call proximate results, because they are not ends in themselves, but means to achieve one of the three ultimate results we discussed above.

Who can we fire?

You’ll often hear an executive pipe up during a presentation and ask, “So you’re saying that a better taxonomy will save us $850,000 (1 hr/employee x 10,000 employees x $85/hr fully loaded)—how will we realize that savings? When will we see that money? Can reduce headcount by 1/8?”, followed by hems and haws from the project team and then some backpeddling until this “result” is rendered a non-result because no one at the executive level cares.

The honest answer to this question, of course, is that the organization will never see dollar one from this improvement—it’s a net gain to productivity that cuts the time workers spend on needless tasks to give them time to do more critical tasks.

But from the executive’s perspective, nothing tangible has changed: she’s still cutting the same paychecks she did before your project, paying the same health benefits, taking in the same revenue, enjoying the same margins—so what have you really done, from her perspective?

“We’ve made employees more efficient, darn it!” you might be thinking, but the real issue is not how efficient you make them but what they’ll do with that newfound free time that the efficiency gives them. Until you have a better answer for that than “their real jobs”, no executive worth their salt will consider this a result worth paying for.

The final word

I’ll say it again, don’t think that I’m downplaying the importance of all the typical things a taxonomy project can offer the organization. Findability, relevancy, general efficiency and productivity–all of these are mission critical organizational improvements, but they’re just not ends in themselves. They must be linked to at least one of the ultimate results that executives care about in order to “matter” to an organization.

And there’s no reason they can’t. There isn’t a benefit that taxonomy provides that doesn’t in some way impact either revenue, cost, or margins, we just have to do some work to figure out how.

We have to understand the business, which means understanding how products are made and how they create value for customers; we have to understand the customers, which means understanding who they are and why they buy our products; and it means understanding the operating model of the organization, which means understanding how the organization gets work done across its different functions.

Gaining this level of knowledge about an organization isn’t easy, but it’s the only way to consistently deliver value through your taxonomy work…and be reasonably certain of getting executive support for your project.

In the next post, we’ll turn to the last dichotomy about irrelevant versus relevant taxonomies: are seen as ends in themselves or as a means to an end that is of questionable value to the organization versus are seen as a means to an end that is important to the organization.

But in the meantime, jump in and get the conversation started!

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