Rethinking organizational functions and components in a freelance economy

An story on NPR this morning about Grind, a new co-working start-up raises some intriguing questions about where organizations may be evolving in an increasingly freelance economy.

 

GrindOfficeSpaceNYC

JaegerSloan: Workers share office space at Grind, a co-working company in New York City. Those who want to use Grind’s facilities are vetted through a competitive application process.

April 10, 2012

The recession brought widespread unemployment across the U.S., but it also prompted a spike in the number of freelance or independent workers.

More than 30 percent of the nation’s workers now work on their own, and the research firm IDC projects the number of nontraditional office workers — telecommuters, freelancers and contractors — will reach 1.3 billion worldwide by 2015.

Typically, freelancers get to choose when and where they work. Many opt to set up shop in “co-working” arrangements, where they can rent a cubicle and other office resources by the day or the month.

It was once a relatively simple process to sign up with a co-working site.

But now, more companies are adopting a selective approach known as “curated co-working.” One such company, New York City’s Grind, requires an application — and you have to be accepted to get started.

That means some would-be co-workers will find they don’t make the cut…

For Freelancers, Landing A Workspace Gets Harder : NPR: by KAOMI GOETZ

(Someday I will produce a rant about the overuse of the word “curated.”)

Two interesting questions come to mind:

  1. How will the application and profile process evolve? We are all social animals. We also have a pretty solid understanding of what differentiates successful groups and successful teams. As freelancers and as potential co-workers, will we become more mindful about how we manage our associations?
  2. Grind is testing the hypothesis that there is value in filtering the freelancers who will have access to their space. Is this a leading indicator that the physical, social, psychological, and economic functions of the organization can be effectively decomposed and rearranged in new formats?

It’s certainly time to reread Ronald Coase’s The Nature of the Firm. I might also take a look at Jay Galbraith’s Designing Organizations and Bob Keidel’s Seeing Organizational Patterns.

Defining Characteristics of Wicked Problems

I’m just wrapping up a course I’ve been teaching at DePaul’s School for New Learning on Understanding Organizational Change. I’ve grounded the course in a view of organizations as dynamic systems from the perspective of Jay Forrester, Donella Meadows, and Peter Senge. In the last few sessions, we’ve also been discussing the notion of Wicked Problems and the challenges they present in today’s organizational environment.

I introduced the following list of “defining characteristics of wicked problems” drawn from The Heretic’s Guide to Best Practices: The Reality of Managing Complex Problems in Organisations. I’m not yet finished with that book, although it is excellent so far. I’ll post a review when I’ve finished it. Here is their list:

  • There is no definitive formulation of a wicked problem. In other words, the problem can be framed in many different ways, depending on which aspects of it one wants to emphasise. These different views of the problem can often be contradictory. Take, for example, the problem of traffic congestion. One solution may involve building more roads, whereas another may involve improving public transport. The first accommodates an increase in the number of vehicles on the road, whereas the second attempts to reduce it.
  • Wicked problems have no stopping rule. The first characteristic states that one s understanding of the problem depends on how one approaches it. Consequently, the problem is never truly solved. Each new insight or solution improves one s understanding of the problem yet one never completely understands it. This often leads to a situation in which people are loath to take action because additional analysis might increase the chances of finding a better solution. Analysis paralysis, anyone?
  • Solutions to wicked problems are not true or false but better or worse. Solutions to wicked problems are not right or wrong but are subjectively better or worse. Consequently, judgements on the effectiveness of solutions are likely to differ widely based on the personal interests, values, and ideology of the participants.
  • There is no immediate and no ultimate test of a solution to a wicked problem. Solutions to wicked problems cannot be validated as is the case in tame problems. Any solution, after being implemented, will generate waves of consequences that may yield undesirable repercussions which outweigh the intended advantages. (Offering Britney Spears a recording contract is a classic example).
  • Every solution to a wicked problem is a one-shot operation because there is no opportunity to learn by trial-and-error, every attempt counts significantly. Rittel explained this characteristic succinctly, with the example One cannot build a freeway to see how it works.
  • Wicked problems do not have an enumerable (or an exhaustively describable) set of potential solutions. There are no criteria that allow one to test whether or not all possible solutions to a wicked problem have been identified and considered.
  • Every wicked problem is essentially unique. Using what worked elsewhere will generally not work for wicked problems. There are always features that are unique to a particular wicked situation. Accordingly, one can never be certain that the specifics of a problem are consistent with previous problems that one has dealt with. This characteristic directly calls into question the common organisational practice of implementing best practices that have worked elsewhere.
  • Every wicked problem can be considered to be a symptom of another problem. This refers to the fact that a wicked problem can usually be traced back to a deeper underlying problem. For example, a high crime rate might be due to the lack of economic opportunities. In this case the obvious solution of cracking down on crime is unlikely to work because it treats the symptom, not the cause. The point is that it is difficult, if not impossible, to be sure that one has reached the fundamental underlying problem. The level at which a problem settles cannot be decided on logical grounds alone.
  • The existence of a discrepancy representing a wicked problem can be explained in numerous ways. The choice of explanation determines the nature of the problem s resolution. In other words, a wicked problem can be explained in many ways with each explanation serving the interests of a particular group of stakeholders.
  • The planner has no right to be wrong (planners are liable for the consequences of the actions they generate). Those who work with wicked problems (town planners, for example) are paid to design and implement solutions. However, as we have seen, solutions to wicked problems cause other unforeseen issues. Planners and problem solvers are invariably held responsible for the unanticipated consequences of their solutions.

Culmsee, Paul; Kailash Awati (2011-12-02). The Heretic’s Guide to Best Practices: The Reality of Managing Complex Problems in Organisations (Kindle Locations 2759-2839). iUniverse. Kindle Edition.

Richard Feynman On The Folly Of Crafting Precise Definitions

I’ve often struggled with the notion of definitions when working in organizations. On the one hand, too many of us hide our ignorance and uncertainty behind a wall of jargon and terminology. Terms fall in and out of favor and their relationship to the underlying real world is often less important than their value from a marketing perspective.

On the other hand, new terms and language can help us point to and see new ideas and new opportunities for action. Here’s a recent post from Bob Sutton that sheds light on these challenges and is worth thinking about.

One of my best friends in graduate school was a former physics major named Larry Ford. When behavioral scientists started pushing for precise definitions of concepts like effectiveness and leadership, he would sometimes confuse them (even though Larry is a very precise thinker) by arguing “there is a negative relationship between precision and accuracy.” I just ran into a quote from the amazing Nobel winner Richard Feynman that makes a similar point in a lovely way:

We can’t define anything precisely. If we attempt to, we get into that paralysis of thought that comes to philosophers one saying to the other: “you don’t know what you are talking about!”. The second one says: “what do you mean by talking? What do you mean by you? What do you mean by know?

Feynman’s quote reminded me of the opening pages of the 1958 classic “Organizations” by James March (quite possibly the most prestigious living organizational theorist, and certainly, one of the most charming academics on the planet) and Herbert Simon (another Nobel winner). They open the book with a great quote that sometimes drives doctoral students and other scholars just crazy. They kick-off by saying:

“This is a book about a theory of formal organizations. It is easier, and probably more useful, to give examples of formal organizations than to define them.”

After listing a bunch of examples of organizations including the Red Cross and New York State Highway Department, they note in words that would have pleased Feynman:

“But for the present purposes we need not trouble ourselves with the precise boundaries to be drawn around an organization or the exact distinction between an “organization” and a “non-organization.” We are dealing with empirical phenomena, and the world has an uncomfortable way of not permitting itself to be fitted into clean classifications.”

I must report, however, that for the second edition of the book, published over 20 years later, the authors elected to insert a short definition in the introduction:

“Organizations are systems of coordinated action among individuals and groups whose preferences, information, interests, or knowledge differ.”

When I read this, I find myself doing what Feynman complained about. I think of things they left out: What about norms? What about emotions? I think of situations where it might not apply: Doesn’t a business owned and operated by one person count as an organization? I think of the possible overemphasis on differences: What about all the times and ways that people and groups in organizations have similar preferences, information, interests, and knowledge? Isn’t that part of what an organization is as well? I could go on and on.

I actually think it is a pretty good definition, but my bias is still that I like original approach, as they did such a nice job of arguing, essentially, that if they tried to get more precise, they would sacrifice accuracy. Nonetheless, I confess that I still love trying to define things and believe that trying to do so can help clarifying your thinking. You could argue that while the outcome, in the end, will always be flawed and imprecise, the process is usually helpful and there are many times when it is useful pretend that you have a precise and accurate definition even if you don’t (such as when you are developing metrics). “

Richard Feynman On The Folly Of Crafting Precise Definitions – Bob Sutton:

Euan Semple on nurturing a knowledge ecology

This gem from Euan Semple made the rounds earlier this summer. I was too busy then to do more than note it.

Ten ways to create a knowledge ecology

TUESDAY, JUNE 28, 2011 AT 7:08AM

A tweet yesterday prompted me to remember sage advice from Dave Snowden which I took to heart in my work with social tools at the BBC. “You can’t manage knowledge but you can create a knowledge ecology”. I thought it might be useful to others to list the ten most important things I learned about doing this.

1, Have a variety of tools rather than a single system. Not everyone sees the world the same way or has the same needs so mixing up different tools with different strengths allows people to find one that works for them. Avoid single platforms like the plague.

2. Don’t have a clear idea where you are headed. The more fixed you are in your aspirations for your ecology the less likely you are to achieve them. Be prepared to go where people’s use of the tools takes you and enjoy the ride.

3. Follow the energy. Watch where the energy in the system is and try to copy the factors that generated it. Get others interested in why energy emerges and they will want some of it themselves.

4. Be strategically tactical. You can have an overall strategy of behaving in certain ways depending on how your ecology develops. It is possible to sell this as a strategy to those who need strategies.

5. Keep moving, stay in touch, and head for the high ground. Keep doing things, keep talking about what you are doing and why, and have a rough idea of where the high ground is.

6. Build networks of people who care. Don’t try to manage your ecology by committee but cultivate communication and trust between those who care that it works and have the commitment to do something about it – whoever they are and whatever their role.

7. Be obsessively interested. Notice everything that happens and consider why. Tell great stories about what you are observing.

8. Use the tools to manage the tools. Blog about what is going on with your corporate blogging, ask questions in your forum about security, tweet when something is changing in your ecology and ask people why it is interesting.

9. Laugh when things go wrong. If you are pushing limits and exploring new territory things will occasionally blow up in your face. Having a sense of humour and enjoyment of the absurd will help you stay sane.

10. Unleash Trojan Mice. Don’t do big things or spend loads of money. Set small, nimble things running and see where they head.

(- The Obvious? – Ten ways to create a knowledge ecology)

The paradox of organic approaches to change is that while they appear to be simple and mundane, they also appear to be the only thing that works with any regularity in complex situations. For all the rhetoric of bold plans and audacious goals, the reality is that most change occurs inch-by-inch.

Focusing on mission – why asking why is where to start

Morry Fiddler is a friend and one of my personal trusted advisors. During one of our recent breakfasts, he recommended the following TED talk by Simon Sinek on how leaders inspire action.

 

Since then, I’ve found myself weaving Sinek’s thinking into my own work and recommending it to others.

I also made a point to get my hands on the book version of Sinek’s thinking: Start with Why: How Great Leaders Inspire Everyone to Take Action.  While it helps fill in some holes in his argument, I think most will find the TED talk more than sufficient to grasp Sinek’s argument and start adapting it to their particular situations.

As you’ll discover, Sinek believes that the differentiating role of leadership is to define and ultimately embed into an organization’s culture a clear sense of "why" the organization exists.

Sinek’s arguments and examples are sufficient to encourage me to make the why/mission question more explicit in my work and I’m already seeing it bear fruit in several settings. Sinek makes an effort to anchor his ideas in what we’ve been learning about the organization of the human brain. While he makes an interesting case, I think it’s a bit of a stretch and not essential to his argument.

What Sinek does do is give you both a framework and some plausible examples to support important conversations with organizations and leaders who are struggling to find their focus.

One deeply informed view of IT as a transformational tool

Blind Spot: A Leader’s Guide To IT-Enabled Business Transformation, Feld, Charlie

In the 1980s a handful of organizations established that the right combination of strategic and technology insights and execution could lead to results worth the attention of CEOs and Boards of Directors. One of those successes was a major transformation in the sales and distribution systems of Frito-Lay during their rise to prominence as a national player in the snack business. Frito’s CIO, Charlie Feld, was at the helm of this effort and was one of the individuals who defined the modern CIO role in the process. After Frito, Feld created a specialty consulting firm that spearheaded similar transformation in a variety of other firms and industries. Blind Spot captures Feld’s reflections on the challenges of using IT as a transformational tool and how to manage them.

The heart of Feld’s argument is this:

Most senior leaders have learned enough about the workings of their businesses to feel comfortable engaging in a new-product dialogue or a complex financial debate or a major litigation. But few have adequate background to understand and lead wide-scale changes that are technology enabled….To most executives, IT is a blind spot–a discipline that is confusing and hard to understand.

My belief is that information technology should not be viewed as a complex functional area. It is an integrating discipline that enables other functions to operate as a seamless, well-run business. Instead of some mysterious black box, IT can be less complex and easier to understand than marketing, operations, finance, sales, and other traditional operating disciplines. This is because it is fundamentally all about the way a business should operate, manifested in information access, workflows, networks, and business rules. And instead of a blind spot, information technology can and should be a highly visible and well-understood part of every business leader’s knowledge base,

(Feld, Blind Spot, p. xvii-xviii)

To tackle that problem, Feld shares a framework he has developed in the course of his efforts to drive IT transformation at Frito-Lay and elsewhere. Like any good framework, it’s simple enough to sketch on a whiteboard or on the back of a placemat, yet it can anchor and center an extended conversation about change. Contrast Feld’s framework with the Byzantine complexity of many systems development methodologies.

 

FeldFrameworkBlindSpot-2010-04-6-1621

The "Journey" that Feld describes is straightforward. The most interesting aspect is his emphasis on time-boxing the phases in order to establish and maintain momentum.  At the same time, he recognizes the importance of taking enough time at the outset, in the Strategy and Turn phases, to get the overall direction and plan directionally correct. His experience calls for these first two phases to take about 90-days each. Subsequent phases are designed to deliver visible results every 6 to 9 months.

The second dimension of Feld’s framework, what he labels as "4 Planks for Change," is where things get much more interesting. This is where Feld devotes the bulk of his attention and he uses his experiences from Frito-Lay, Burlington Northern Santa Fe, Delta Airlines, Home Depot, and Southwest Air to illustrate his approach. These planks address four core questions about a proposed business transformation effort:

  • Why do anything at all?
  • What will we do?
  • How will we do it?
  • Who will lead and manage the change?

The value of these questions is that they are well suited to the debate and discussion that you want to be having in the C-suites and Board meetings about business transformation. They also help redirect the technically enamored from bright shiny objects to business value.

When I try to wrap my head around frameworks or approaches, I always look for is the "perform magic" step. Somewhere among the boxes and flows, there will be one spot where the essential design decision gets made or the case gets cracked or the strategy reveals itself. In Feld’s framework, i believe this essential creative step occurs in working out the What of the transformation Strategy.

Frito-Lay, for example, to maintain its growth, needed to give its route drivers local flexibility over product mix while maintaining close central control over manufacturing and quality. Their solution was to equip drivers with early hand-held point-of-sale terminals that let the drivers manage the diverse range of Frito-Lay products and accurately report sales activities back to corporate on a daily basis. In the case of Burlington Northern Santa Fe, the challenge was to synchronize  the electronic picture of where all of its rolling stock was with the physical reality in near real time. In these, and other, cases Feld deftly sketches the essential strategic What.

There is a common thread in Feld’s strategic analyses. The strategic choice in large organizations is whether to focus on operational efficiencies or customer intimacy. More often than not, this leads to efforts that bounce back and forth between bouts of centralization and decentralization. The strategic promise of IT is to change the answer in these debates from "either/or" to "both" by making a hybrid business feasible. Here’s how Feld describes it:

It is not about centralization versus decentralization–both have their virtues and liabilities. It is about common versus unique processes, standard versus disjointed information, and leveraged versus fragmented IT platforms and networks. If you are common, standard, and leveraged in your systems, data, and processes, you can continuously flex between centralized and decentralized where it is appropriate, like Wal-Mart. However, if those things are unique, disjointed, and fragmented, you are locked into those structures and change is expensive and slow, like Home Depot’s was….It may seem counterintuitive, but the more standardized your systems and processes are, the more flexible you can be.

(Feld, Blind Spot, pps. 144-45)

Feld’s third question is "How will we do it?" Because his primary audience is business leaders, he rightly keeps his focus at an executive level emphasizing the importance of sound architecture, concrete deliverables, and effective program management. These tend to be topics that cause most executives’ eyes to glaze over. In general, Feld makes the case for the relevance of this question as a co-equal part of the transformation process. He avoids the temptation to get caught up in either technical or process minutia. This may annoy some readers, but is the right decision for his target audience.

Feld closes with a look at the critical importance of leadership and management. He strongly favors an IT organization built to reflect stable, core, business processes rather than attempting to mirror more dynamic organizational structures. he sketches a basic IT organization that calls for 50-100 competent leaders. Successful business transformations like those he’s been describing call for a corresponding leadership cadre from the business side of the organization. This is a richer, more pragmatic, view of the leadership demands of this kind of technology enabled transformation than you will find elsewhere.

Blind Spot is a useful synthesis. It’s rooted in the ground truth of its case studies as told by someone who was there, start to finish. From that ground truth, Feld constructs a framework that can shape and guide comparable efforts without forcing them into too narrow a path. It’s most useful for those readers who can bring their own experience base to the task of understanding the framework and making it their own. Given the ongoing role of IT as a potential strategic tool, this is a set of ideas that belong in your toolkit.

 

 

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What evolutionary biology has to tell us about organizational behavior

Driven: How Human Nature Shapes Our Choices,

Lawrence, Paul R. and Nitin Nohria

What happens when you combine what we are learning about evolutionary biology with what we have learned about how organizations work? One of the wellsprings of thinking about organization and organization design has been the Organizational Behavior group at the Harvard Business School. The Hawthorne Effect was articulated based on the earliest research efforts of this group in the 1920s.

Paul Lawrence has been part of this group since the 1950s and Nitin Nohria has been part of it since the 1980s. Their laboratory has been large-scale organizations and their primary methods have been anthropological and ethnographic. They’ve been in the field observing how real people operate inside real organizations. In Driven, Lawrence and Nohria take time away from the field to reflect on that knowledge in the light of what others have been learning about evolutionary biology. The result is a fascinating and provocative book. Warren Bennis, in an Editor’s Note, describes it as a near perfect book "applying the truths of one domain, the biological and neurological sciences, to another, the embryonic and needy organizational sciences."

Instead of working with the overly simplistic theories of human behavior that seem to underlie most current business and economic thinking, Lawrence and Nohria develop a simple theory grounded in the biological sciences that may account for what we actually observe in organizations in the wild.

They propose an model of human behavior built on top of four fundamental drives. Each drive is distinct and like elementary particles in differing combinations they account for all the more complex behaviors we see in organizations. It’s a strong claim but Lawrence and Nohria make a strong case for why their hypotheses are plausible in light of what we do know. Moreover, they propose straightforward ways we could go about testing them.

The four drives they propose are:

  1. To acquire – both actual and reputational assets and power
  2. To bond – with other individuals and with groups
  3. To learn – new things and new skills
  4. To defend – the above against threats

Lawrence and Nohria draw on everything from fMRI studies to ethnographic accounts to establish that they choices are plausible. In the process, they take us through a powerful synopsis of what multiple scientists in multiple disciplines have to tell us about human behavior. In an effort to develop a unified theory, they pursue of strategy of triangulating from these multiple perspectives to close in on a likely underlying model.

Given this hypothesis of four fundamental drives, Lawrence and Nohria then turn their attention to how these drives interact with cognition and emotions to create behavior. They synthesize their model using the following schematic:

Lawrence-Nohria-Driven-BrainModel-2010-01-28-1505

One of the more interesting aspects of this model is the central role that emotions play in decision making. Lawrence and Nohria believe that their fundamental drives operate through the brain’s limbic center. First, signals from the outside world are filtered through the drives and essentially prioritized in terms of their emotional relevance. Nothing gets through to the rational centers of the brain unless it has been tagged as emotionally relevant by one or more of these underlying drives. Second, emotions provide the motivating energy to translate thought back into action.

Although the principle goal of this book is to lay out a theory consistent with what we’re learning from the biological sciences, Lawrence and Nohria do draw on four broad case examples to test the essential plausibility of the emerging model. They examine GM, HP, Russia, and Ireland in terms of how their model helps interpret where these institutions have been and where they are likely to go. They do so in enough depth to make a plausible case for their model.

Lawrence and Nohria have been engaged in working out the implications of their model since Driven was first published in 2002. Lawrence is at work on a new book extended his thinking and developing materials can be found at http://www.prlawrence.com/. In the meantime, if you are trying to make sense of the complex world of the human animal operating in complex organizations, Driven ought to be at or near the top of your reading list. Warren Bennis made the following claim at the beginning of this book:

When you dig in and begin to understand the four-drive framework of human nature, I doubt that you will ever look at your organization, your work group, your world, your family in the same way. Or yourself, for that matter. I also doubt that you will cling to or be content with a simplified hegemony of one basic Uber Alles motive anymore; the sort of stuff we read in the pages of economic texts that venerate acquisition and self-interest exclusively or in the classic Freudian writings that elevate the psychosexual drive to the exclusion of others, or certainly in the faux-heroic pages of Ayn Rand
                                                    (Warren Bennis, Editor’s Note, pp. xiii-xiv)

I thought this was a bit of marketing puffery before I finished Driven. Since then, I think Bennis has it just about right. More and more, I am finding myself integrating the ideas from this book into my thinking and my practice.

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Gary Hamel and innovations in management

The Future of Management, Hamel, Gary

 

Gary Hamel has been an astute observer of organizations and management for several decades now. For all the reasons that seemed to make sense at the time, this book sat on my shelf for a while before I got to it. Based on the current state of the economy, I suspect a number of executives who could have benefitted from Hamel’s insights also failed to get them in a timely fashion. Hamel’s central thesis is that management is a mature technology and is ripe for disruptive innovation. Although he makes only passing reference to Clay Christensen’s work, there are important points of linkage between these two management thinkers.

The underlying rationale behind management philosophy and practices was largely laid down in the early decades of the twentieth century during the growth and ascendancy of the large multi-divisional industrial organization. In other words, most managers continue to operate with the mindset and practices originally developed to handle the problems encountered by the railroads, GM, IBM, and the other organizations making up the Dow Jones average between 1930 and 1960. While we’ve experienced multiple innovations in products, technologies, services, and strategies, the basics of management have changed little. Here’s how Hamel puts it:

While a suddenly resurrected 1960s-era CEO would undoubtedly be amazed by the flexibility of today’s real-time supply chains, and the ability to provide 24/7 customer service, he or she would find a great many of today’s management rituals little changed from those that governed corporate life a generation or two ago. Hierarchies may have gotten flatter, but they haven’t disappeared. Frontline employees may be smarter and better trained, but they’re still expected to line up obediently behind executive decisions. Lower-level managers are still appointed by more senior managers. Strategy still gets set at the top. And the big calls are still made by people with big titles and even bigger salaries. there may be fewer middle managers on the payroll, but those that remain are doing what managers have always done–setting budgets, assigning tasks, reviewing performance, and cajoling their subordinates to do better. (p. 4)

Hamel sets out to explore what innovation in the practice of management would look like and how organizations and managers might tackle the problems of developing and deploying those innovations. I don’t think he gets all the way there, but the effort is worth following.

The first section of the book lays out the case for management innovation as compared to other forms. the second examines three organizations that Hamel considers worthy exemplars: Whole Foods, W.L. Gore, and Google. The last two section build a framework for how you might start doing managerial innovation within your own organization.

Hamel does a good job of extracting useful insights from the case examples he presents. Hamel’s own preference is for a managerial future that is less hierarchical and less mechanical. At the same time, he wants each of us to commit to doing managerial innovation for ourselves. This leaves him in a bit of a bind. I suspect that Hamel would like to be more prescriptive, but his position forces him to leave the prescription as an exercise for the reader. While I agree with Hamel that both individuals and organizations need to be formulating their own theories of management and experimenting on their own, this is not likely to happen in most organizations and particularly so in the current economic climate. Necessity is not the mother of invention; rather it forces us to cling to the safe and familiar. We need a degree of safety and a degree of slack to do the kinds of thinking and experimenting that will produce meaningful managerial innovations. I fear that may be hard to come by in the current environment; no matter how relevant or necessary.

What you can do in the interim is research and reflection to discover or define opportunities for possible managerial innovations. This book is one excellent starting point, but insufficient on its own.

Is this an agenda worth pursuing? What else would you recommend to move forward?