Balance

Changes in a control system's outputs are driven based on changes in the input data.  The function of the input stage of the control system is to compare and filter input data.  Allowable output state may be constrained by the environment or limitations of the system. Feedback mechanisms compare the output with desired levels. Control loops must be carefully designed to respond quickly and accurately to changing conditions, while maintaining stability.  

A corporation is a control system. Management's responsibility is to weigh and filter inputs, and to drive timely change, within constraints, while maintaining stability.  

The current economy, compounded by an unprecedented pace of technological change make comparing and filtering of inputs difficult.  Getting it right is also more critical than during steady-state conditions.  Filtering out the signal from the noise is difficult at the best of times. And there are multiple control-loops controlling dozens of state variables. 

Times like these demand the type of leadership provided to Intel by Andy Grove.  In 1998 he gave a presentation at the Academy of Management. The text of this excellent presentation is available here:   http://www.intel.com/pressroom/archive/speeches/ag080998.htm.  

Here is an excerpt:

We have a phrase inside Intel. We are supposed to be a data driven company and the phrase is, "Don't argue with the emotions, argue with the data." And I'm going to say you have to argue with the data at times like this because the data that deal with your business are pertinent to your past, and don't say anything about your future. And the Strategic Inflection Point is a minor activity at present growing in the future and you will never find it in data.

So people who believe that you are dealing with Strategic Inflection Points collide with people who count on winning their argument in these debates based on actual data, and it is like arguing that the change that you are dealing with that is going to transform our future -- the future of the company -- is not real because it wasn't in the past. This is when you see divergence. Our very key phenomenon that has to take place in resolving the Strategic Inflection Point debate between members of management, technologists, and members of the sales force is that very often, because these are not data driven observations, they tend to become emotional arguments. It is extremely important to be able to listen to the people who bring you bad news and who are typically divided.

A control system's function is to achieve balance.  Likewise corporations strive to attain a balance between conflicting inputs. You have to find a balance between the things you want to do to react to changes in customer demands, the things that are enabled by changes in technology, and those that you have to do to satisfy the needs of established demands and services.  You have to find the right balance between CAPEX and OPEX, competing technologies, infrastructure and services, certainty and possibility, and discipline with flexibility. Taken one at a time, each of the many inputs and demands may seem reasonable. When taken together there will be contradictions.  And in any finite organization it's simply not possible to take on everything.  

In his presentation, Andy Grove used a financial balance sheet as a metaphor:

And one of the disciplines that you need to establish in any organization, with a finite organization, which is any organization, period, you have to balance out the stuff that you want to do, to respond to the new world precisely with the things that you are still doing because the only reason for you to continue to do them would be if the old world continued.

When I say the yeses have to equals the nos, that's what I mean. And everybody is very eager to give you advice how to put yeses to the balance sheet and nobody ever volunteers how to put nos. And really nothing challenges leadership as much -- leadership ability as an organization and the management of the organization rather -- than managing this balance between the yeses and nos.

There are strong reasons to continue exploiting established skills, procedures, and capital infrastructure. But we know that demands for services, bandwidth, scale, and latency are changing. When you take these demand changes together with changes in hardware and software technology, it is inevitable that the infrastructure will eventually change.  In my view, telecommunications infrastructure is reaching a strategic inflection point.