Census 2016 Case Study Part 6

Strategic Management

This is a case study of the Australian Bureau of Statistics’ 2016 online census project as a portrait of complete management failure by government, the ABS, and its principal contractor, IBM. The case study is split over several pages because of its length. The table of contents below offers quick navigation to the various sections. Scroll down to read the contents of this section.

Census 2016 case study introductionStrategic Management

Underlying all else any organisation does ought to be strategy – a plan that takes a high level view to recognise and plan for all external and internal factors in going about its overall mission and goals.

This sounds simple enough in theory, but is often the most difficult and neglected area of all management tasks. Just as a house built on weak foundations can be constructed of the best materials, but still collapse, so an organisation managed by world-class specialists can fail for lack of a sound strategic basis.

Failure need not be dramatic or complete; some parts of a foundation can be sound, supporting an organisation’s superstructure until the moment too much pressure is placed on the weaker points. That is what happened to the ABS when a combination of budget pressure, longitudinal failure to adapt to changing patterns of society and technology, and too little infusion of new ideas, led it to trigger the cascade of compounding mistakes that was the 2016 online census project.

As with all management failures, it began at the very top, with executive government and Parliament, where response to rapidly changing economic and social dynamics has been ponderously slow, and the leadership to drive efficiency and innovation has been invisible despite all the rhetoric politicians devote to these topics.

The root cause is that political practices and paradigms are still anchored in 19th century thinking, and no strategy based on bygone circumstances can really succeed in the contemporary world. In practical terms this means that the legislative framework of the ABS is unsuited to the outcomes government now seeks from the organisation. Nor is the fantasy of nominal independence as a statutory authority sustainable when successive governments have so obviously undermined that independence by reducing its budget to unworkable levels.

If efficiency was ever the goal of budget cuts, those cuts should have been combined with other enabling measures to allow the organisation to embark on strategic realignment, but no such measures have ever been put in place, and there is still no talk of them at a parliamentary level.

Perhaps the most effective change any government can make is to change the title of the ABS chief executive from Australian Statistician to something less restricted to that technical specialty. Both as a symbol, and in practice, it represents the idea that public service management hierarchies should be comprised of amateurs turned to technical specialists, and promoted beyond their competence into management positions. Public service organisations are not alone in making this mistake, but they suffer from having it written into binding legislation.

The management failure continues down the chain of command to the senior management of the ABS itself. Instead of acting to adjust to the reality of budget cuts and the impossibility of maintaining its operations unchanged in response, the organisation opted for the least innovative approach: cutting back on its activities and staff. But this accountancy-driven cost cutting is not strategic planning so much as the most unimaginative reaction possible. It is equivalent to aiming at weight loss by embarking on a water diet. That approach will certainly lead to weight loss, but also to progressive failure of faculty, and then to death as vital organs shut down. It is less a successful weight loss programme than a murderous misconception.

ABS senior managers might argue that they were restricted by law from developing more innovative responses to budget cuts, but the reality is that there is no evidence for even the attempt to realign the organisation. Such an attempt should at least have generated a thorough re-examination of the bureau’s strategic environment, and the options for re-aligning statutory responsibilities with changing technology and social dynamics.

The previous section on public affairs management already looked at how such a re-alignment might be visualised in terms of a variant of the traditional PEST analysis, where the acronym stands for an analysis of the political, economic, social, and technological environment in which an organisation operates. A possible outcome of such an examination is illustrated in Figure 12. The upshot should have been to recognise major areas of opportunity in using technology to improve efficiency, and the application of social media technology to generate both public support and potential new low-cost statistical products. There might even have been opportunities to earn commercial income from new products, even if legislative frameworks had forbidden all but proof of concept development of such products. At the very least a proof of concept might have swayed a government focused on private sector business models to back away from suggestions of inefficiency.

Paterns of a potential PESTL analysis for the ABS.
FIGURE 12: Patterns of a potential PESTL analysis for the ABS. Click on the image for a larger view.

Following on from recognising opportunity should have been a new approach to enterprise architecture to avoid the weaknesses discussed in the section on enterprise architecture above. The goal being to foster organisational capabilities in online and social media technology, leading to new value streams in technological efficiencies addressing concerns about ageing ABS computer systems and staffing levels, while also developing online voluntary surveys carried substantially by social media channels feeding into iteratively refined databases. Figure 13 illustrates how this might be achieved by following a strategic direction to extend a primary capability of statistical product development into the sub-capability of online product development, developing a new value stream by iterative process improvement methods. That development in itself would then have been the impetus for extending the skills of existing staff by allowing them to innovate and experiment with existing IT tools and services to establish an online presence, move it towards a workable online data gathering model, and sharpen organisational focus on those experimental products showing promise. Even if no new products became viable in the immediate future, this approach could have created the internal capability to better manage and resource an online census project.

Capability and product development.
FIGURE 13: Capability and product development. Click on the image for a larger view.

Moving on to structural change, the public ABS strategic plan talks generalities, like all strategic plans, about transformational changes for the bureau. However, the organisational chart remains the epitome of a silo structure with a top-down command-and-control management hierarchy. That structure alone is probably the single biggest obstacle to modernising management and team practices.

Conventional management wisdom is that silo structures are necessary only where employee skill and motivation is low. Maintaining it where skill and motivation are high stifles the exercise of skill and removes the motivation to innovate and improve performance.

Figure 14 describes a situational leadership model developed by Dr Paul Hersey and Ken Blanchard. It suggests that the less capable and motivated employees are, the more directive an appropriate management style needs to be. However, the obverse might also be that the more directive the management style is, the less able employees will be able to exercise professional judgement and the self-direction to succeed and innovate.

Situational leadership model with shaded areas indicating ABS shortcomings.
FIGURE 14: Situational leadership model with shaded areas indicating ABS shortcomings.

Looking at only at publicly visible evidence – news reportage and ABS online artefacts – a professional management assessment would likely find that the ABS uses a 19th century engineering/manufacturing management paradigm in a 21st century information age, roughly equivalent to the situation shown in quadrant 1 of Figure 14, perhaps incorporating parts of the characteristics of quadrant 2. Management professionals would be quick to recognise that opportunities to succeed in an information economy are tied to a capacity to embrace the characteristics and benefits shown in the shadowed quadrants 3 and 4 of Figure 14.

An opportunity has always existed for the ABS to loosen up its organisational structure into a more flexible platform in which more highly skilled and cross-functional teams are able to be deployed in matrix formations to achieve specific project goals as needed (see Figure 15 over the page for an illustration of the difference between silo and matrix structures).

A principal failing of silo structures is isolation of staff at all levels, beginning with executives who rose from specialist origins and who never experienced anything else, but progressively isolating themselves from their line managers and staff. Silo structures are usually demarcated along functional lines, meaning that managers and staff in one functional silo are isolated from their leaders as well as the specialists in other silos, reducing opportunities for cross-skilling and career diversification.

This segregation of staff and skills does not serve oragnisations well, creating single points of failure when key staff are absent or leave with no one else having been trained to perform their particular job rôle. Segregation also keeps managers and staff in the dark about how their functions fits into a larger pictures.

The matrix structure, particularly suited to project work, breaks down authority and functional barriers by creating the flexibility for staff to learn new skills as they move through a variety of rÔles. That flexibility applies to management as well, which shifts from nominal authority to owning a product or suite of products, and permitting delegation to offer career paths for specialist staff looking for that avenue of career advancement.

Governance and functional oversight can be preserved by putting an executive in charge of priorities for each product or suite of products. These concepts are illustrated in Figure 15.

Silo and Matrix organisational structures.
FIGURE 15: Silo and Matrix organisational structures.

Adopting a matrix structure could have supported much more agile and efficient allocation of human resources in the ABS, moderate staff reductions without losing organisational expertise and memory. It could also have laid the groundwork for the generation of new capabilities through cross-skilling and empowering specialists to have direct input into continuous improvement cycles and innovation.

An underlying idea for a more flexible structure is the discipline of iterative improvements and the Deming continuous improvement cycle as an ongoing management process embedded into all areas of ABS activity. The business process management lifecycle illustrated in Figure 13 is analogous to the Deming cycle. Continuous improvement can develop and embed new capabilities into the organisation rather than forcing it to seek them from external providers, and creates an incremental basis for reaching best practice standards.

The creation of such standards would permit the ABS to proactively advise governments on policy changes to facilitate further improvements. From a management perspective this is a far more positive approach than maintaining old fashioned practices and being forced to react to changes imposed from above.

It is irresistible, here, to mention that William Edwards Deming, who is credited with pioneering the continuous improvement cycle, was a statistician turned business consultant whose influence was instrumental in sparking the Japanese economic miracle of the 1960s and ‘70s. The strong implication is that innovative strategic management is not beyond the capability of ABS statistical specialists.

Seen from an SIS perspective, management and structural change would have to come with clear value propositions, which is where the architectural value streams should serve as practical examples of what might be achieved. Shareholders are likely to listen to professional advice on strategic change if it is well argued and presented.
A lay observer may be indifferent to management models, but could easily arrive at conclusions about an ossified management culture on the basis of media reports and David Kalisch’s wooden, bureaucratic media performance.

The strategic management profile of IBM in the online census debacle remains nebulous. Few professionals would doubt the corporation’s capabilities in this area, but they were not on display in this instance.

That may be because IBM operates on a consultancy model which is entirely profit focused with an absence of care to ensure that clients receive workable solutions. It is a well-established model shared by many of the international consultancy firms. It works by using top-tier talent to pitch a contract to clients, then using second-tier rising stars to carry the necessary contact with client executives, but delegating the execution phase to graduate interns or junior employees, leading to the sloppy configuration of system components experienced by the ABS, and the uncertainty about the meaning of IBM’s own reporting software reports.

Consultancy companies may argue that they have no greater duty of care than to maximise profit, and that the terms of their contracts do not make them responsible for client supervisory shortcomings. The question for clients, like the ABS, and by extension the Commonwealth Government, becomes whether it is advisable to continue doing business with corporations whose ethical base permits profiting from public funds while knowingly delivering products and services not fit for their purpose.

If there is to be blame for persisting with an outsourcing focus operating under such conditions, that blame rests squarely with the regulators: the succession of governments which have done little to address increasingly shameless corporate conduct.

IBM’s role in the online census project has all the appearance of unethical practice. Shareholders looking at losses on balance sheets are not going to be impressed. General observers are likely to ask whether the ABS was deliberately misled by an IT giant which should have known how to make the census product work without the failures that occurred.



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