Tuesday, May 02, 2006

10. Intrasystem vs extrasystem information

Have you ever thrown a peanut in the air and tried to catch it with your mouth wide open?

If you succeed, then you get to eat the peanut. If the peanut falls to the floor, then I highly recommend letting it go!

Similarly, the BMW workshop enables participants to create a business model so they know exactly what information is relevant, and what information is NOT relevant.

The relevant information -- just like the peanut -- enters the system and provides fuel (I don't know exactly how many calories a peanut contains, but you get my point!).

The problem is, people who don't have a business model will try to get a lot of information and knowledge, most of which are IRRELEVANT!

This is why Peter Drucker wrote about "information literacy." He said we don't know what information we need, and we don't know how to get it. Lester Thurow wrote the same thing, arguing that every company should have a Chief Knowledge Officer, whose job is more or less like the CIA director's job: to scout and scan the environment for information relevant to decision-making and policy design.

If you're running a business, you know what I'm talking about. You know about the importance of relevant information, because you know your decisions are only as good as your information.

But if you're an employee, you might wonder: "Why do I need to be information-literate? Why do I even need to create a business model?"

You need a business model because your job, whatever it is, IS a business. You were hired to produce "something," and in return, the employer pays you a salary that reflects the value of that "something."

To increase your salary, you can either increase the quality or the quantity of that "something." But to do either one (increase quality or quantity), you need to become a business manager! You need to see clearly the system that guides you in doing your job.

In the BMW workshop, we just teach people to make visible their business system. Since you can only improve and manage what you see, it makes sense to create a system or model that accurately shows HOW you actually create value.

Once you have your business system clearly drawn on paper, you can then easily determine which information coming your way is relevant, and which is NOT relevant.

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