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Information Responsibility
Ever ask yourself why - in this age of information abundance and business intelligence and analytic systems - organizational foul ups and corporate and governmental disasters seem to be on the rise? Dig into them a little and I will guarantee you will find a major case of information irresponsibility - a risk the late management theorist Peter Drucker counseled about.
A man of truly brilliant insight, Drucker decades ago foresaw the rise of the knowledge worker, a person "who puts to work what he has between his ears rather than the brawn of his muscles or skills of his hands." Knowledge workers, Drucker wrote, would work in information-centric organizations whose raison d'être would be the creation and exploitation of information rather than the creation of physical products.
Drucker set out three basic requirements for a successful information-centric organization. First, of course, is the task of transforming data into usable information.
Second, an information-centric organization requires straightforward, common objectives that can be translated into specific actions by its members. The operating model of an information-centric organization is that of an ensemble of knowledge specialists performing a specific task, much like an orchestra, where each musician contributes to the playing of the score during a performance.
Third, and most important, is the communication of the right information to the right specialist at the right time. Drucker called this "information responsibility." It is the responsibility of every individual in the organization to ask, "What information do I need to accomplish my task? Who do I depend on for this information? Who in this organization depends on me for what other information? What is the time frame? How do I create and communicate information and how is information created and communicated to me?"
When you look at some recent high-profile disasters like those involving the shuttle Columbia or FEMA's response to hurricane Katrina, you find basic information responsibility missing. For instance, FEMA admitted that it did not have "accurate, timely and reliable information about true conditions on the ground," while the Columbia accident board wrote that, "deficiencies in communication ... were a foundation for the Columbia accident."
Drucker recognized that in information-centric organizations, information responsibility - or better, information irresponsibility - is a critical risk. In information-centric organizations, everyone is a decision-maker, someone who can materially affect the business. Just as a musician playing the wrong notes can ruin a performance, all it takes to increase the risk exposure of an information-centric organization is someone not asking for, producing or passing needed information onto others.
What's more, because of the inherent decision dependencies in information-centric organizations, the quality of individual decision-making becomes paramount to the potential success or failure of the organization. Strategic and tactical decisions become merged. As former Intel Chairman Andy Grove has said, "People formulate strategy with their fingertips. Day in and day out they respond to things by virtue of the products they produce, the price concessions they make, the distribution channels they choose."
Drucker also noted that the decisions in information-centric organizations are inherently "risk-taking judgments." Each individual decision-maker has to understand the level and types of risks that are included in every decision being made. Further, others affected by the decision as well as others depending on information from that decision-maker have to know - in fact, has the right to know - the risks involved as well. Otherwise, the organization can unknowingly and quickly create or take on a level of risk that in the right circumstance will prove fatal.
Drucker deliberately used the term "information responsibility" because he felt that every decision-maker in an organization has a deeply personal responsibility for the information they need and produce, and the decisions they make. In the Columbia accident, for instance, many engineers harbored doubts about the integrity of insulating tiles, but held back from voicing their concerns. Some managers also were concerned, but no one wanted to ask the "unspoken question" of what would happen to the astronauts if the tiles were to be damaged in the course of the shuttle's mission.
The accident board discovered that a lack of asking for information that might have shown Columbia was at risk was a systemic organizational and leadership problem. To Drucker, this would have been a matter of personal responsibility. Yes, organizational leaders need to ask for risk information, but individuals have a duty to pass up such information even when they are not asked.
Information-centric organizations can either be incredibly resilient or incredibly fragile. I can tell almost instantly which type of culture I have come across by observing how freely risk information flows within the organization. Organizations that value risk information have decision-makers at all levels who ask the "unspoken questions" and consider issues that other organizations prefer to ignore. Those that don't value risk information instead find themselves creating unnecessary risk.
This attitude amazes me as I continue to work with organizations that spend huge amounts of money on business intelligence and analytic systems, yet choose not to create risk information. Even worse in some cases, risk information is actively suppressed. Drucker wrote that information is endowed "with relevance and purpose" by knowledge specialists. Leaving out issues of risk - either on purpose or by accident - severely reduces information's relevance.
Information irresponsibility transforms what should be informed, risk-taking decision-making into mere guessing, or worse, gambling at bad odds. So, if your organization is seeking to reap great rewards, it needs to take the right risks at the right time, and that requires a strong commitment to information responsibility.
Robert Charette is president of risk management consultancy ITABHI Corp. and director of the Cutler Consortium's ERM & Governance practice. He can be reached at charette@itabhi.com.
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