A New Age of Digital Exploration

The first question you may have here is what do I mean by “digital exploration”? Is exploration being disrupted by digital, or does digital require exploration? The answer is yes to both. Although the focus of this piece is on the latter, my thinking about it was triggered by the first. In 2013, my son, Jeremy, was named one of National Geographic’s “Emerging Explorers of The Year”. This was not for grinding trudges dragging dugout canoes through tropical areas, although that was to follow, but for his work in data visualization – translating unimaginable blurs of information into something we can see, understand, and feel—data made human through visualizations that blend research, art, software, science, and design.

img_2788aAs a result of this, and meeting another National Geographic explorer, Steve Boyes, Jeremy became one of the four leaders of the Okavango 2014 expedition (that’s him on the left) – the first ever live-data expedition  across Botswana’s amazing Okavango Delta. Like the expeditions of old, they were pushing into the unknown, in search of measurements but, unlike previous expeditions, they used a set of open-source tools to develop a system that puts every piece of data collected onto the web, in near real-time, for anyone in the world to use and share. This data included wildlife sightings, water quality measurements, and the four leaders’ exact GPS location, heart rate, and energy consumption.

As I reflected on this expedition, and how it was positively disrupting exploration, I went back to thinking about how our use of technology has evolved and continues to evolve. I started to question how I have been describing this evolution. I have described, as depicted in the image below, three stages of evolution: the automation stage, which I characterized as the appliance era; the information stage, characterized as the rewiring era; and the transformation stage, characterized as the rebuilding era.

Slide1

I have always felt uncomfortable with the term transformation – a much over-used and abused word. When the initial version of this image appeared in The Information Paradox, almost two decades ago, it was being used to describe the implementation of ERP, CRM, SCM etc. While these were certainly complicated endeavours, and often required significant organizational change (a requirement usually recognized too late and poorly managed), they were primarily about integrating information, and making it more accurate, accessible and timely. There were  proven practices available to do this, although, they were all too often not adopted, or adopted too late. They did not essentially change what organizations did – they just did it differently and, hopefully, better. It certainly involved major organizational change, but was hardly transformational.

Since that time, there has certainly been real transformation in a number of industries, including entertainment, media, communications, retail and consumer goods, financial services, automotive, as well as around the edges of others, but we are now seeing this happening, or at least the potential for it to happen, across all industries. Indeed, across all organizations, public or private, large or small. This is taking us into unknown territory – moving beyond a complicated world to a complex one. One in which :

  • Technology itself, how technology is delivered, how it used, and by whom are changing at an ever-increasing pace;
  • Everything and everyone will be connected, anywhere, any time;
  • Technology is increasingly embedded in everything we do, and in ourselves;
  • Everything is becoming “smart’ – phones, cars, houses, buildings, cities, etc.;
  • Robots, cognitive computing and machine learning play an increasing role;
  • We are becoming increasingly embedded in everything technology does;
  • Data is available about everything;
  • Analytics are available to anyone; and
  • Everything is available as a service.

This increasingly complex world is moving us to  the next stage of evolution in our use of IT – exploration, as illustrated in the images below.

Slide1This first figure adds the exploration stage to my original three. This is a somewhat different and more fluid stage, as what emerges from the exploration stage could become a combination of automation, information, and transformation type uses of IT. In the next image I take a degree of licence in  integrating the four stages with the concepts of David Snowden’s Cynefin Framework – an analytical, decision-making framework based on understanding the nature of the systems you are working with – simple/ordered, complicated, complex or chaotic, and selecting the appropriate approach and practices to manage them.

Slide2The first three of the Cynefin system types: simple/ordered; complicated; and complex are  mapped to the four stages. Automation, and some basic examples of the information stage map to simple/ordered. Some of the more integrated information and simple transformation map to complicated. Broader transformation and exploration map to complex. The mapping again draws on David Snowden’s work in positing that best practices are appropriate for the simple/ordered systems, proven practices can be selected based on analysis and/or expert opinion for complicated systems, and new/novel practices emerge during the exploratory era.

Slide3While, as proven and best practices emerge, the nature of systems may change, i.e. they may become a combination of simple/ordered, complicated and complex, this last figure shows that when we attempt to apply best practices to a complex system, the result is the fourth Cynefin system type – chaotic. In today’s complex digital world, while proven practices are emerging, most of what we are doing is still very much exploratory in nature.

 

 
As organizations move into the digital world, they will still have simple/ordered systems, although most of these may be XaaS in the Cloud, and complicated systems, some/all of which may also be in the Cloud, but an increasing amount of what they do will be in the complex space. In this space, it will not just be just practices around delivery of products that will be emerging, but also new models of how work is organized, managed, lead and governed. It is, or should be becoming clear that our traditional industrial-age, top-down hierarchical control-oriented approach to leadership and management is simply not cutting it, and certainly won’t do so in a digital world. The engagement level of employees with their organizations is abysmal – ranging between ~13-30% (and its not much better for managers). This is sometimes attributed to generational differences, particularly the rise of the “millennials”, and is certainly not helped by the rising disparity between C-Suite pay and that of the median worker. However, I don’t believe that the aspirations of millennials are any different than mine were when I started work over 50 years ago.

What has changed is the global and social context within which we live and work. We are more globally aware and socially connected, and have 24/7 access to pretty much unlimited knowledge, information and expertise. We are exposed every day to how other organizations are already embracing technologies, including social, mobile and analytics, enabling greater engagement and two-way communication with and between employees, and orchestrating self-managing teams who can work collaboratively in a much more agile and responsive way with limited but relevant and appropriate oversight. Organizations who are “democratizing” their approach to leadership and governance – letting their people use their brains again.

We know what the future of work could be, but don’t see that anywhere close to being universally realized. The challenge ahead is to break out of the straightjacket of more than a century of hierarchical, siloed industrial age mindsets at work which are controlling, mistake-averse and “know it all”. To evolve them into mindsets that are enabling, learning and willing to try new things and fail. To move to a more agile and inclusive approach to governance, leadership and management. A value-focused, data and analytics driven, agile, sense and respond approach that transcends functional and organisational boundaries, and engages employees, customers and other key stakeholders – locating accountability and decision-making at the most appropriate level (based on the principle of subsidiarity), while supporting decisions with broader and more knowledgeable input.

All this is will require a fundamental rethinking of how digital businesses are governed and managed, and the capabilities that are required to ensure and assure that the use of technology contributes to creating and sustaining business and societal value in the digital world Replacing current top-down, hierarchical and siloed processes with leadership across and beyond the C-suite with leadership capabilities recognized, nurtured, and empowered throughout organizations. It will all be part of a new era of digital exploration and transformation.

Does this mean that we have to throw out everything that has come before? No – but we do have to question everything? We do have to look at everything with the understanding of “what could be”, not “what has been”. We have to be careful here not to “throw the baby out with the bathwater” – this must all be done without losing sight of the fundamentals of governance as described in Back to the Basics – The Four “Ares” and A Value-Driven Framework for Change.

Digital Leadership – Much More Than IT Leadership

There has been much discussion of late on who should be responsible for “digitization”. The role of the CIO is being continually questioned, particularly as it relates to the CMO, and. a new position, the CDO, is appearing. And, of course, let’s not forget the CTO. A recent post by Michael Krigsman describing Intel’s IT leadership and transformation pyramid got me thinking yet again about this. The pyramid, shown below, is a brilliantly simple depiction of how digital leadership must evolve (in my words) from an operational “factory” to a business partner to a transformational leader.

 

intel-it-transformation-pyramid

As Michael Krigsman says, “The pyramid reflects the complex reality of IT / business relationships and the need for IT to deliver at multiple levels simultaneously.” This reminded me of discussions I had in New York last month at the Innovation Value Institute (IVI) Spring Summit around their IT Capability Maturity Framework (IT-CMF). The discussion centred around the digital economy, and the fact that organizations are taking an increasingly business-centric view of IT, with the focus shifting from the delivery of the “T” to the use of the “I”. That technology itself, how technology is delivered, how it is used, and by whom are changing at an ever-increasing rate. And that this is blurring the roles and responsibilities of IT and the Business functions, and giving rise to a fundamental rethinking of how IT, and it’s delivery and use is governed and managed, and the capabilities that are required to ensure and assure that the use of technology contributes to creating and sustaining business value.

In an earlier post, The Digital Economy and the IT Value Standoff, I reiterated my long-leld view that the business change that IT both shapes and enables must be owned by business leaders, and they must accept accountability, and be held accountable for creating and sustaining business value from that change. This cannot be abdicated to the IT function. Yet today, in all too many cases, we have a stand-off where the business doesn’t want to take ownership, and the IT function doesn’t know how, or doesn’t want to give up control.

The key question that arose from the Summit discussion was “Why can’t we get our business leadership engaged in this discussion?” Certainly not a new question – how to do so was essentially the underlying theme of The Information Paradox when it was first published back in 1998. The answer to the question, going back to the leadership pyramid, is that the IT organization has to achieve operational excellence before it can start to change the conversation from bottom-up delivery of technology to top-down value from business change. This requires a maturity level of around 2.5, where 5 is the highest maturity – most organizations are still not yet at this level, most being somewhere between 1 and 2.

So, what does this mean for the CIO? Much has been written about CIOs themselves having to transform to fulfil the 3 leadership roles of the pyramid – running the factory, partnering with the business for value, and strategic transformational leadership. There is no doubt that all these roles are required – but is it reasonable, or necessary to expect that they will be found in one individual. Certainly, there are CIOs who have stepped up to the plate, but many more that haven’t, and possibly cannot.  Professor Joe Peppard at the  European School of Technology and Management in Berlin has put many hundreds of participants through an IT leadership program. He describes in a recent article how, using Myers Briggs typing, he has found that 70% of CIOs fall into one particular type: ISTJs (Introversion, Sensing, Thinking, Judging). Further, along the dimension of where they get their energy, 85% have a preference for introversion. In terms of moving up the pyramid, the very things that may contribute to success in their technology role, can be what leads to downfall in a business leadership position. Even where an individual does have the ability to handle all 3 levels, the day-to-day operational demands all too often leave little time for the other 2 levels. Demands that, while they will definitely change with the advent of the cloud and “everything as a service”, will not go away.

The real issue here is not so much, as Michael Krigsman says, “the need for IT to deliver at multiple levels simultaneously”, but understanding the range of digital leadership capabilities and responsibilities required in the digital economy, and where they should reside. The answer is not as simple as renaming the CIO position, getting a new CIO, or appointing a few new CXOs. It requires recognizing that digitization cuts across organizational silos, and across all levels of organizations.. It will take digital literacy and collaboration across the C-suite to ensure that their organization has, as EY’s David Nichols said in a recent CIO Insight interview, “an integrated and holistic plan to really leverage digital”. It will also require recognizing that the digital economy both enables and requires a different view of leadership. As Sally Helgesen said in a recent post, “‘Leadership’ isn’t Just for Leaders Anymore”, leadership no longer, or should no longer equate with positional power and has, or should become broadly distributed.

If organizations are to succeed in the digital economy, they cannot constrain themselves to the knowledge of a few individuals – to put it a more brutal way, they cannot be constrained by the habits or ego(s) of their leader(s)! Organisations must tap into the collective knowledge of all their people. We need effective governance that reaches out to and involves key stakeholders – retaining appropriate accountability, based on the law of subsidiarity – an organizing principle that matters ought to be handled by the smallest, lowest or least centralized competent authority. This means locating accountability and decision-making at the most appropriate level, while supporting decisions with broader and more knowledgeable input.

As a former colleague of mine, Don Tapscott,  has said for decades “Leadership can come from anywhere”. For organizations to survive and thrive in the digital economy, this is not an option!

Transforming governance and leadership for the digital economy

The digital economy

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The digital economy is not primarily about technology, nor is it just about the economy. Yes, it is being shaped and enabled by increasingly significant and rapid technological change. And, yes, it will have significant economic impact. But it is much more than that. It is part of a broader digital revolution. One in which, as in the case of the industrial revolution, we will see seismic shifts not just in technology, but in the nature of our lives, our work, our enterprises – large and small, public and private, and our societies. A shift that will not just change the nature of products and services, and how they are developed and delivered, but also how we govern and manage our lives, work, enterprises and societies.

Technology is becoming embedded in everything we as individuals, enterprises and societies do, and, indeed, we are increasingly becoming embedded in everything technology does. If we are to deliver on the promise of the digital revolution, we have to acknowledge that the way we have governed and managed IT in the past has proven woefully inadequate, and that continuing on this path will be a huge impediment to delivering on that promise. Governance of IT has been a subject of much discussion over the last two decades. Unfortunately, most of the discussion has focused on the technology, the cost of technology, failed IT projects, and generally questioning the value that technology and the IT function deliver to the enterprise. Despite all this discussion, not much has materially or broadly changed over the last 50 years, including:
• An all too often blind focus on the technology itself, rather than the change – increasingly significant and complex change – that technology both shapes and enables;
• The unwillingness of business leaders to get engaged in, and take ownership of this change – preferring to abdicate their accountability to the IT function;
• Failure to inclusively involve the stakeholders affected by the change, without whose knowledge, understanding and “buy in” failure is pretty much a foregone conclusion;
• A lack of rigour at the front-end of an investment decision, including, what is almost universally a totally ineffective business case process;
• Not actively managing for value; and
• Not managing the journey beyond the initial investment decision.

We still have what is predominately a “culture of delivery” – “build it and they will come”, rather than a “culture of value” – one that focuses on creating and sustaining value from an organization’s investments and assets.

We have been having the wrong conversation – we need to change that conversation!

Governance of “IT”

GovernanceTreating IT governance as something separate from overall enterprise governance, labeling and managing investments in IT-enabled business change as IT projects, and abdicating accountability to the CIO are the root cause of the failure of so many to generate the expected payoff. Business value does not come from technology alone – technology in and of itself is simply a cost. Business value comes from the business change that technology both shapes and enables. Change of which technology is only one part – and increasingly only a small part. Technology only contributes to business value when complementary changes are made to the business – including increasingly complex changes to the organizational culture, the business model, and the operating model, as well as to relationships with customers and suppliers, business processes and work practices, staff skills and competencies, reward systems, organizational structures, physical facilities etc. Ultimately, it is people’s intelligent and innovative use of the information captured, organized, distributed, visualized and communicated by technology that creates and sustains value. This is not a technology issue – it is a business issue.

Much of the discussion around the digital economy today is on improving the customer experience – as indeed it should be, although we have been saying the same for decades with, at best, mixed success. We will come nowhere close to achieving this unless we put equal focus on our people, and rethinking how we govern, manage and organize for the digital economy such that we maximize the return on our information and our people.

Surviving and thriving in the digital economy is not an IT governance issue, it is an enterprise governance issue. Successfully navigating the digital economy requires that we change how we govern, lead and manage our enterprises – including, but certainly not limited to IT.

What needs to change?

ChangeIn work I have been doing with Professor Joe Peppard at the European School of Management and Technology in Berlin, we have identified 8 things that business leaders, starting with the CEO, need to do. These are:
1. Don’t see IT as something separate from your core business – technology today is embedded in, and an integral part of most, if not all parts of your business processes.
2. Don’t focus on the technology alone – focus on the value that can be created and sustained through the business change that technology both shapes and enables.
3. Do recognize that you are ultimately accountable for the overall value created by all business change investments – and ensuring that accountability for the realisation of business benefits anticipated from each investment is appropriately delegated to, and accepted by, other executives and managers.
4. Do demand rigorous analysis of every proposed business change investment, whether or not IT is involved. Ensure that you and your team know and can clearly define expected outcomes, that there is a clear understanding of how value is going to be achieved, that all relevant stakeholders have bought in to the required changes, and that they are capable of making or absorbing them and delivering on the expected outcomes.
5. Do recognize that the business case is the most powerful tool that you have at your disposal to manage business change investments – insist on complete and comprehensive business cases, including desired outcomes, benefits, costs and risks, and clear explanation of how each benefit will be achieved with unambiguously assigned accountabilities, supported by relevant metrics.
6. Do recognize that benefits don’t just happen and rarely happen according to plan – outcomes and plans will change – don’t think business case approval is the end of the story. Mandate that the business case be used as the key operational tool to “manage the journey”, updated to reflect relevant changes, and regularly reviewed.
7. Do know if and when it’s time to stop throwing good money after bad, or when there are better uses for the money and “pull the plug.”
8. If your CIO doesn’t “get” the above points, and hasn’t already been talking to you about them, get one who does and will!

Enterprise governance must evolve beyond a model rooted in a culture of delivery (of technical capabilities) to one based on a culture of value – creating and sustaining value from investments and assets. In the context of IT, this means recognizing that we are no longer dealing with “IT projects”, but with increasingly complex programmes of organizational change.

Leadership

LeadershipThe most important aspect of governance is leadership. Effective governance in the digital economy requires that leaders truly lead – moving beyond tactical leadership to strategic and transformational leadership. Understanding and taking ownership of the organizational, cultural and behavioural change that will be required to succeed in the digital economy – change that starts with the leaders themselves. We also need to get away from the cult of the leader to a culture of pervasive leadership. As Joel Kurtzman says in his book, Common Purpose, leaders need to move beyond the traditional “command and control” model to establishing a ”common purpose” and creating a “feeling of ‘we’ among the members of their group, team or organization”. This will require leaders who can “park”, or at least manage their egos, break down silos, and really engage with and empower all employees – fostering leadership across and at all levels in the organization. It will also require a dynamic, sense and respond approach to enterprise governance – one that is focused on value, while balancing rigour with agility. Only then will the full potential value of IT-enabled change in the digital economy be realized. The technology exists to support this today – what is lacking is the leadership mindset, will and capability make the change.

There is certainly not for a lack of proven value management practices. Since The Information Paradox was published, there has been an ever-growing proliferation of books, frameworks, methods, techniques and tools around the topic. The issue is the lack of serious and sustained adoption of them. The real challenge is one of overcoming the “knowing – doing gap”, as described by Jeffrey Pfeffer and Robert Sutton in their book of the same name. We know what to do, and the knowledge is available on how to do it. Yet, so far, there has simply been little or no appetite for, or commitment to the behavioural change required to get it done, and stick with it. This has to change!

As I said in my previous post, this will not be easy to do – very little involving organization, people and power is. However, the cost in money wasted and, more importantly, benefits and value lost, eroded or destroyed is appalling. It’s way past time to move beyond word to action. For enterprises to survive, let alone thrive in the digital economy, and for the potential individual, community and societal benefits of the digital economy to be realized, the status quo is not an option! To quote General Erik Shinseki, a former Chief of Staff of the US Army, “If you don’t like change, you’re going to like irrelevance even less!“

The Siren Call of Certainty

In Greek mythology, the sirens were three bird-women who lured nearby sailors with their enchanting music and voices to shipwreck on the rocky coast of their island. The term siren call, from which this derives, is described in the Free Dictionary, as “the enticing appeal of something alluring but potentially dangerous”. In today’s increasingly complex and interconnected world, it is the siren call of certainty that is luring many organizations into failures akin to shipwrecks, particularly, although not limited to their increasingly significant investments in IT-enabled change. More accurately, it is their failing to recognize, accept and manage uncertainty, that leads to these wrecks.

Yet again here, what we have is a failure of governance, and of management – a failure that starts with how strategic decisions are made. In a recent McKinsey paper, How CFOs can keep strategic decisions on track, the authors make the point that “When executives contemplate strategic decisions, they often succumb to the same cognitive biases we all have as human beings, such as overconfidence, the confirmation bias, or excessive risk avoidance.” My discussion here covers the first two (excessive risk avoidance essentially being the opposite of these, and equally dangerous). Executives are often so certain about  (overconfident in) what they want to do that others are unwilling to question their certainty or, if they do, they are dismissed as “naysayers” (and quickly learn not to question again) or the executive only chooses to hear those parts of what they say that confirm their certainty (confirmation bias). I must admit that I have probably been guilty of this myself, in language if, hopefully, not intent, when I have told my teams, “I don’t want to hear why we can’t do this, I want to hear how we can do it.” What I really should have added explicitly was “…and then tell me under what conditions it might not work”.

To resist the lure of the siren call, we require an approach to strategic decision-making  that is open to challenge – one in which multiple lenses are brought to bear on the decision, where uncertainties, and points of view contradictory to those of the person making the final decision, be that the CEO or whoever, are discussed, and where individual biases weigh less in the final decision than facts.

I am not suggesting here that uncertainties should prevent investments being approved, if they did we would never do anything. I am saying that they should not be buried or ignored – they must be surfaced, recognized, mitigated where possible, and then monitored and managed throughout the life-cycle of the investment. This means acknowledging that both the expected outcomes of an investment, and the way those outcomes are realized will likely change during the investment life-cycle. It means managing a changing journey to a changing destination. Unfortunately, once again the siren call of certainty also gets in the way of this.

When investments are approved they are usually executed and managed as projects, all too often seen as technology projects (I use the term broadly here). In a 2010 California Management Review article, “Lost Roots: How Project Management Came to Emphasize Control Over Flexibility and Novelty”, authors Sylvain Lenfle and Christoph Loch, discuss the history of Project Management, and suggest that the current approach to Project Management promises, albeit rarely delivers, greater cost and schedule control, but assumes that uncertainty can be limited at the outset.”

The origins of “modern” project management (PM) can be traced to the Manhattan Project, and the techniques developed during the ballistic missile projects. The article states that “the Manhattan and the first ballistic missile projects…did not even remotely correspond to the ‘standard practice’ associated with PM today…they applied a combination of trial-and-error and parallel trials in order to [deal with uncertainty and unforeseen circumstances] and achieve outcomes considered impossible at the outset”. This approach started to change in the early ’60s when the focus gradually changed from ‘performance at all costs’ to one of optimizing the cost/performance ratio. Nothing inherently wrong with that, but along came Robert McNamara who reorganized the planning process in the Department of Defense (DoD) to consolidate two previously separate processes – planning and budgeting. This integration was supported by the Program Planning and Budgeting System (PBS), which emphasized up-front analysis, planning and control of projects. Again, nothing inherently wrong with that, but the system resulted in an emphasis on the complete definition of the system before its development in order to limit uncertainty, and a strict insistence on a phased “waterfall” approach. The assumptions underlying this approach are i) as decisions taken by top management are not up for discussion, the PM focus is on delivery, and ii) rigorous up-front analysis can eliminate and control uncertainty – these underlying assumptions are still very much part of Project Management “culture” today.

Again, I am not saying here that there is no need for sound analysis up-front – quite the contrary, I believe that we need to do much more comprehensive and rigorous up-front analysis. What I am saying is that, no matter how good the up-front analysis is, things will change as you move forward, and there will be unexpected, and sometime unpredictable surprises. We cannot move blindly ahead to the pre-defined solution, not being open to any questioning of the outcome (destination) or approach (journey), and focusing solely on controlling cost and schedule. The history of large projects is littered with wrecks because, yes, there was inadequate diligence up-front, but equally, or even more so, because we failed to understand and manage uncertainty – forging relentlessly on until at some stage, the project was cancelled, or, more often, success was re-defined and victory declared.

The article suggests that “Project Management has confined itself in an ‘order taker niche’ of carrying out tasks given from above…cutting itself off from strategy making…and innovation”. Many organizations, particularly those embracing agile development approaches, do apply a combination of trial-and-error and parallel trials in order to deal with uncertainty and unforeseen circumstances, and to achieve outcomes either considered impossible at the outset, or different from those initially expected. But, as the authors say, “these actions happen outside the discipline of project management…they apply [these approaches] despite their professional PM training.”

The tragedy here, with both strategic decision making, and execution is that we know how to do much better, and resources exist to help us do so. Strategic decision making can be significantly improved by employing Benefits Mapping techniques to ensure clarity of the desired outcomes, define the full scope of effort to achieve those outcomes, surface assumption, risks and uncertainties around their achievement, and provide a road-map for execution, supporting decision making with an effective business case process, and by applying the discipline of Portfolio Management to both proposed and approved investments. The successful execution of investments in the portfolio can be increased by moving beyond the traditional Project Management approach by taking a Program Management view, incorporating all the delivery projects that are both necessary and sufficient to achieve the desired outcomes in comprehensive programs of change. Many of the elements of such an approach were initially discussed in The Information Paradox, and subsequently codified in the Val IT™ 2.0 Framework.

We know the problem, we have the tools to deal with it – what is still missing is the appetite and commitment to do so.

Addressing the Behavioural Challenges

In my previous post, Behavioural Change – The Crux of the Value Challenge, I suggested that we don’t need any more frameworks – there is no shortage of books, frameworks, methods, techniques, tools etc. to address the effective governance and management of IT and the use of IT to create and sustain value. It is the adoption of these that is painfully slow. It is human behaviour – or rather our inability to change it –  that is at the core of the challenge. I am currently working – both individually and with others – on a number of initiatives around the need to change how we think, manage, and act – to change behaviour – both individual and group behaviour – from the Boardroom to the front-line.

I also said that I would be looking for ways to broaden the dialogue and to engage with practitioners who are wrestling with these issues on a daily basis. My silence on the blog front has largely been the result of my being engaged with a number of individuals and groups in this space, including a quick trip to Europe and the UK last week, where I met and talked with a number of enterprises – some of whom have been on this value journey for 10 years or more. These discussions, and subsequent reflection, have crystallized a number of thoughts in my mind. These include:

  1. A critical factor in determining success or failure of value management is the presence or absence of a clear owner of the value management issue or process.
  2. The “tipping point” – when value management practices start to get traction and become embedded in enterprises – is when the executive and senior management move beyond awareness and understanding of the issue to commitment to action – beyond “talking the talk” to “walking the talk”. This is illustrated in the figure below (figure and text below is adapted from The Information Paradox). Slide1At the thinking, or cognitive level, we recognize and become aware of a need to change. This often translates itself fairly rapidly into talk: “We at Thorp Inc. have to make fundamental changes to our organization.” All too often, the nature of those changes is not understood, and the definition of them is delegated, or more accurately abdicated. The reaction to this is often “This too will pass,” and all too often, it does. It is only when we wake up at three in the morning, reaching for the antacid, as we feel our stomach churning with the realization of the implications of the change and the breadth and depth of what has to change, that we begin to reach understanding. This is the precursor to commitment. The bottom line here is that we can only “walk our talk” when we fully understand what we are saying. Treating the implementation or improvement of value management practices as an organizational change programme – which it is – the use of some form of benefits modeling, which is discussed later, can bring you to an earlier awakening. When we have the understanding necessary to build commitment, to understand the full extent of what we are committing to, then, and only then, are we ready to act. Even then, we can act only if we have the resource capability and capacity to do so.
  3. Those enterprises that have passed this “tipping point” have been able to effectively apply value management practices to guide informed and intelligent decision-making during the current economic crisis – those that haven’t generally fell back to “old ways” with often across the board cost cuts.
  4. Value management practices are most effective when they are closely integrated with, and part of the business planning process. Going beyond this, they are most effective when they are integrated with overall enterprise governance.
  5. Incremental approaches to implementing and improving value management practices are more successful than  “big bang” ones.
  6. The areas of value management that appear to provide the greatest improvement in value management practices and outcomes are:
    1. Improving the business case process; and
    2. Taking the portfolio view.
  7. The factors that continue to constrain effective adoption of value management practices include:
    1. Failing to define, accept or put rigour into accountability for performance; and
    2. Clearly related to the above, failure to align the reward system such that there are consequences – both positive and negative.
  8. The interventions that appear to have been the most successful in changing behaviours, and helping enterprises move beyond awareness and understanding to commitment and action include:
    1. Inclusive engagement of all the stakeholders through workshops (for more on engagement, see The Challenge of Business Engagement);
    2. Use of benefits modeling techniques in workshops to get everyone “on the same page” – building a broader base of understanding of, and support for value management, including the need for business cases with clear accountability, relevant metrics and an aligned reward system;
    3. One-on-one coaching, and
    4. Active and on-going executive and senior management involvement where they are seen to be “walking the talk”.

In preparation for a workshop with one of the groups I am working with, I put together a short survey with the objective of:

  • Understanding the current and target levels of maturity related to value management (based on  the Value Governance [VG] domain high-level maturity model in ISACA‘s Val IT™ Framework 2.0.);
  • Understanding how long it has taken to reach the current level of maturity, and how long it is anticipated to take to reach the target level;
  • Identifying the factors that have either supported or constrained adoption, and to what extent they have done so;
  • Identifying interventions and the extent to which they have enabled adoption; and
  • Understanding the organizational context of the responding enterprise (optional).

Again, in the interests of broadening the dialogue, I would like to extend this survey to a broader audience. The survey is targeted at individuals who are involved in improving value management practices, including, but not limited to some or all of: leadership behaviour; process implementation and adoption (including business cases, portfolio, programme management and project management); roles, responsibilities and accountabilities (for both supply and demand); organizational structure (including Investment Decision Boards, and Value / Portfolio / Programme / Project Management Offices); information requirements (including metrics and reporting); and supporting tools (data collection, analysis and reporting).

You can access the survey here. The survey should not take much more than 10 mins to complete. The survey has 3 pages, and contains 10 questions.  Questions regarding “Current and target maturity levels”, and “Constraints to adoption and interventions to address” must be answered, but answers to “Organizational Context” questions are optional. Assuming that I get enough responses to yield a meaningful result, I will post results on this site in a later post. All information will be aggregated, and specific information about your organization, if provided, will be treated as confidential and will not be published without your express permission.

One of the challenges that we all have in trying to implement or improve value management practices is the perceived – and indeed real – enormity of the task. As per one of my observations above, this is why an incremental – and often pragmatic and opportunistic – approach is required. The business case, as discussed in an earlier post Lies, Damn Lies, and Business Cases, is the foundation on which all else is built, and, as such, sows the seeds of success or failure. Portfolio management is a powerful tool but if it is populated with “toxic” business cases, it will only give the illusion of progress. This is leading me to focus my attention on the business case and think about how, through workshops and benefits modeling, supported by one-on- one coaching we can change the view of business cases as a bureaucratic hurdle to be got over and then forgotten to being one of the most powerful tools available – turning it from an enemy to a valuable friend! If we can do this, we will have a solid foundation on which to further improve value management practices.

Reflections on SIMposium09

I had the opportunity to attend and speak at SIMposium09 in Seattle last week. As Seattle is a great town and close to Victoria,  I took the opportunity to take Diane and we both enjoyed Seattle and spent a few very relaxing “Internet-free” days at the wonderful Lake Quinalt Lodge on the Olympic Peninsula after the conference. Having now had time to reflect on the conference, I offer a summary of my thoughts (and in doing so, draw on a number of my earlier posts).

Introducing the sessions on Tuesday, the Moderator, Julia King, Executive Editor of Computerworld, said that what she had taken away from the conference up to that point were three things – people, process and productivity. While productivity – specifically doing more with less – was a common theme, and there was considerable emphasis on people and some on process, I would expand on this somewhat. From what I heard, both through formal presentations, and in informal discussions, the things that I left thinking about, and which I will expand on below were – value (including but not limited to productivity), leadership, innovation (where I would include process), people, and change (specifically management of strategic change). I will talk a bit more about each of these below.

Value

It should come as no surprise that this is my first point. I was pleased that a number of sessions did focus on value, and it was mentioned to varying degrees in others. I was however disappointed when Jerry Luftman presented the results of the 2009 SIM IT trend survey that the word was not mentioned in any of the top ten CIO issues. In fairness, I do understand that in order to plot trends, there has to be some consistency in questions year over year. While it could be argued that the “alignment” question may be a proxy for value (although many people told me they never wanted to hear this question again), and that it is implied in others – I believe we have to make value explicit and  put it front and centre. Certainly, productivity is one aspect of value, but only one aspect – one that tends to focus on doing more with less, and by inference cost. In The Information Paradox, we talked about 3 aspects of value: alignment (NOT the infamous “Aligning IT with the business” topic which, in my mind, makes about as much sense as talking about “aligning our heart with our body”, but rather ensuring that investments are aligned with the enterprise’s strategic objectives); financial worth (which I now refer to as business worth including both financial and non-financial aspects); and risk (both delivery risk and benefits risk).  The Val IT ™ framework further defines value as “total life cycle benefits net of total life cycle costs adjusted for risk and (in the case of financial value) the time value of money”. We need to shift the discussion from the cost of technology to the value of the business change that it enables. We need to create a culture of value in our enterprises.

Leadership

A quick scan of the agenda shows that this was by far the most prevalent topic – not surprising given SIM’s target constituency. There is absolutely no denying that we need more and better leadership – but what do we mean by that? Are we talking about grooming those few who will rise to the corner offices in the top floor of corporate HQ, or are we/should we be talking about something beyond that?  A former colleague of mine, Don Tapscott, used to say (may still say) that “leadership can come from anywhere”. I have been thinking for a while about the “cult of leadership” – in his book, The Wisdom of CrowdsJames Surowiecki identifies one of the challenges is that we put too much faith in individual leaders or experts, either because of their position or track record and that these individuals also become over-confident in their abilities. I don’t want to question the ability and competence of all leaders or experts – while I certainly have seen my share of bad ones, most are good people doing the best they can. However, in today’s increasingly complex and fast-paced knowledge economy, much of which is both enabled by and driven by technology, it is unrealistic to expect individuals, however good they are, to have all the answers, all the time. The reality is that neither position nor past success is any guarantee of future success.

If organisations are to succeed in today’s knowledge economy, they cannot constrain themselves to the knowledge of a few individuals – to put it a more brutal way, they cannot be constrained by the habits or ego(s) of their leader(s)! Organisations must tap into the collective knowledge of all their people – retaining appropriate accountability, based on the law of subsidiarity – an organizing principle that matters ought to be handled by the smallest, lowest or least centralized competent authority. This means locating accountability and decision-making at the most appropriate level, while supporting decisions with broader and more knowledgeable input.

Innovation

We hear a lot about innovation and the potential for CIOs to become Chief Innovation Officers. Interestingly, a number of recent surveys show that executive leadership is disappointed with the lack of innovative ideas from CIOs. But what is innovation? The Oxford Dictionary defines innovation as [t0] bring in new methods, ideas etc. often followed by making change. All too often, we believe that innovation requires new technologies. In a recent Entrepreneur article, Tim O’Reilly, who launched the first commercial website, coined the term “Web 2.0” and was instrumental in the popularization of open-source software, isn’t buying the hype: He calls the era of the I-word “dead on arrival.” “If it is innovative, everybody will know,” O’Reilly says. “Adding words to it does not help.” The current “innovation” overload is the result of folks who don’t know what true invention is trying to pass themselves off as trailblazers. He’s seen companies throw away great ideas because it wasn’t immediately obvious how to make money from them. Then smaller companies and entrepreneurs would come along and play with the idea, just because they’re passionate about it. And they would be the ones to unlock the idea’s potential and grow into the money. While new technologies do indeed enable new methods and ideas, they are not necessary for innovation. Innovation is equally powerful, and often easier, by simply coming up with new and creative ways of using existing technologies.

People

Ultimately, it is people who lead, people who innovate, and, as a result, people who create value. Over the last few decades, much has been said and written about empowering the people within an enterprise – unfortunately little of that talk and writing has translated into reality. As James Surowiecki says, “Although many companies play a good game when it comes to pushing authority away from the top, the truth is that genuine employee involvement remains an unusual phenomenon.” As a result of this, information flows – up, down and across organisations – are poor, non-existent or “filtered” in all directions, decisions are made by a very few with inadequate knowledge and information, and there is limited buy-in to whatever decisions are made. As Peter Senge says in The Fifth Discipline Fieldbook , “…under our old system of governance, one can lead by mandate. If you had the ability to climb the ladder, gain power and then control that power, then you could enforce…changes…Most of our leaders don’t think in terms of getting voluntary followers, they think in terms of control.” I should add here, based on Monday’s closing keynote “It’s about the People”, given by Bill Baumann, Vice President of Information Technology for REI, that REI does appear to be one enterprise that does understand empowerment.

In this context, although there was not a specific session on the topic, social networking (including Web 2.0 and crowd-sourcing etc.) was discussed in many of the sessions, and in informal discussions. As I have said before, I am becoming increasingly interested in how social networking, rather than being viewed as a potential problem to be managed within the “traditional” view of governance and management – today still largely based on beliefs and structures that are a hundred years old – has enormous potential to revolutionize governance and management. In doing so, we could truly tap in to the experience of all employees (and other stakeholders) – not be limited to the knowledge/experience of those few anointed leaders or experts. This could actually make the much-abused term empowerment mean something by giving people the opportunity to contribute to/participate in decision-making, actually be listened to and, as a result, re-engage and really make a difference.

Change

The challenge facing enterprises today is not implementing technology, although this is certainly not becoming any easier, but implementing IT-enabled organisational change such that value is created and sustained, and risk is known, mitigated or contained. The creation and sustainment of value from innovation requires understanding and effective management of change in how people think, manage and act, i.e. change in human behaviour. Unfortunately, as we were reminded in one session by Jeffrey Barnes and Cheryl White, studies have shown consistently over the last 25 years that the failure rate of strategic change initiatives is between 85-90%. Let’s look at a number of scenarios where such initiatives can come to a premature halt.

The first of these is implementation by fiat, without an adequately thought out plan and commensurate resources. There is all too often a tendency for executives to believe that once they say something should be done it is – this is rarely the case. I sometimes describe this as the “Star Trek school of management”. Executives, just like Captain Picard, say “Make it so!” – they often don’t fully understand what “it” is or how they will know when they get there, and  the people they say it to all run off with very different ideas of what “it” is creating a lot of activity – often in conflicting directions. As Larry Bossidy and Ram Charam suggest in Execution, The Discipline of Getting things Done, the role of the executive when saying “make it so” is to ensure that no-one leaves the room until the executive is confident that they all understand what “it” is and, when they come back with a plan, that they don’t leave the room until he/she is confident that the plan has a good chance of delivering “it”.

In other cases, organisations take on too much in the first bite – this either results in “sticker shock” with no action being taken or, particularly when, as is often the case – especially in the current environment of short-termism – the time-frame is unrealistic, failure. The opposite can also be true, doing too little and/or taking too long to do it such that patience runs out and/or interest diminishes to the point of backing off.

Also, where progress is being made, success is not always promoted and built on – without demonstrated and recognized success it can be very difficult to maintain the interest and attention of executives to sustain the change initiative, especially one that may take many years, as many, if not most such initiatives can do. This can become particularly evident if a new executive comes on the scene and asks “Why are we doing this?” Without a sound response, this is often followed by “We did just fine without this where I came from!”

Many of these scenarios are exacerbated when insufficient thought has been given to metrics – measurements that must include both “lag” metrics – are we there yet? – and “leading” metrics – are we on track to get there?, as well as tangibles and intangibles. As Faisal Hoque, Chairman and CEO of the Business Technology Management Institute says, “…technology [itself] warrants evaluation with a tangible set of measures. But the majority of what technology actually does falls more into the sphere of the intangibles”. Understanding how those intangibles (often lead indicators) can contribute to tangibles (often lag indicators) is a key part of value management.

John Zackman offered another explanation for the challenge of change when positioning enterprise architecture – in the context of the overall enterprise – as being about managing complexity and change (which I very much agree with). John said “If you can’t describe it you can’t build it or change it.” John’s comments raise a number of  interesting questions which I won’t attempt to answer here.  Is it actually possible to “reverse architect” today’s complex global enterprises that have, somewhat like London’s Heathrow airport, grown ad hoc over time without any underlying architectural framework or design? If not, are they doomed to eventually fail? Will new and emerging enterprises take a more disciplined approach or will they follow the same pattern such that the cycle continues?

For more on the topic of change, go to Managing Change – The Key to Realizing Value and The Knowing-Doing Gap.

I will explore some or all of these topics more in subsequent posts.

Best Practice – the Enemy of Good Practice!

Susan Cramm’s latest blog, Why Do We Ignore “Best Practices”?, has stimulated an interesting discussion about what really is the $64,000 question (actually a lot more these days!) – why do we often ignore the “blindingly obvious” and not do what we know is the right thing to do?  I discussed aspects of this question in a recent blog The Knowing-Doing Gap which referred to the book of the same name by Jeffrey Pfeffer and Robert I. Sutton. In the book, they say “…so many managers know so much about organizational performance, and work so hard, yet are trapped in firms that do so many things that they know will undermine performance.” They found that “…there [are] more and more books and articles, more and more training programs and seminars, and more and more knowledge that, although valid, often had little or no impact on what managers actually did.”

However, I don’t want to go more into the Knowing-Doing Gap here – what the blog and the associated comments caused me to reflect upon was the term “best practice”  – a term I dislike and avoid for a number of reasons:

  • Voltaire said  “the best is the enemy of the good”. We rarely need, or can afford, “the best”, and, in any event, what is best for one organization, or one situation, may not be best for other organizations, or different situations.
  • The term “best” can also create an erroneous and dangerous belief that there is no need for further improvement. The world doesn’t stand still – changes to the global economy, the regulatory environment, business models, and technology will continue at a fast rate. We must continue to learn, adapt and improve our practices – standing still is not an option.
  • Voltaire also said  “common sense is not so common” which is also relevant here. “Best practices” are all too often seen as a substitute for judgment or common sense – or for good, experienced people. As a result, they are treated as checklists to be followed blindly without the need to think. After all, “if all you have is a hammer, every problem looks like a nail”. In many cases, more focus is put on following the practice than on the desired outcome – with the means becoming more important than the end. As one commentator on Susan’s post, Mike Myatt says in his blog, The Downside of Best Practices, “My experience has been consistent over the years in that whenever a common aspect of business turns into a “practice area” and the herd mentality of the politically correct legions of consultants and advisers use said area as a platform to be evangelized, the necessity of common sense and the reality of what actually works often times gets thrown out the window as a trade-off for promotional gain.”
  • Another problem with “best”, which I see all the time, is that it implies a competition. When an organization determines that they need to improve their practices, they undertake an evaluation of “competing” practices to determine which is the best. As yet another saying goes – “the less you want to do something the more you study it”. Rather than trying to select the best – organizations should pick one and “just do it”!
  • The term that I have preferred to use, and that we use in Val IT™, is “proven practices”. We do, however, need “proven practices” that are “fit for purpose” – adapted intelligently and innovatively to specific organizational cultures and situations based on sound judgement and common sense. In this context I use one of the many definitions of common sense – “shared understanding” – which could well be extended to mean “shared values”.

All of the above notwithstanding, the real challenge here is that we are trying to get people to change their behaviour to conform to rational, logical practices. People are not always logical or rational – often egos, emotions, old habits and a variety of other factors cause them to behave  differently. Changing such behaviour requires a well-orchestrated organizational change plan (even this is badly expressed as it is not organizations that change – it is individuals). We need to move beyond what is often mandated compliance to getting “buy in” and understanding of the need to behave differently, and the value in doing it – to the organization and the individual. We need to create those shared values within which proven practices are adopted but can be adapted to meet specific situations with an appropriate balance of rigour and agility.  Unfortunately, organizational change management is still largely paid lip service to and rarely done in most organizations.

If we are to deliver on the promise of IT – if we as individuals, organizations and societies are to realize the value of IT-enabled change – we need to change the way we manage that change. We have to stop asking: “When will they do something about this?”. We are “they” – all of us – we need to change how we think, manage and act. Only when we do this will we truly realize the potential value of the changes that IT can enable!

Value-Driven IT

As  the weather did not fully cooperate on the last week of my vacation, I spent some more time catching up on my reading, including reading Cliff Berg’s Value-Driven IT. I have to admit that Cliff sent me the book some months ago, but it has lain too long on my desk while I travelled the world. I am glad that I have taken the time now.

The overall thrust of the book – as described in it’s sub-title is Achieving Agility and Assurance Without Compromising Either. Cliff describes himself as “…an IT architect at heart, but one who has had business-level responsibility and who appreciates the business side of things.” In the book, he “makes the case for connecting business value with IT efforts” and goes on to recognize that “this has been tried countless times before, but today only a minority of firms are able to make this connection. It is a hard problem, and the gulf between IT and the business is as great as it ever was. The view from the ground is not pretty: ground level IT staff have a deep disrespect for policies, compliance, paper processes, and indeed for the entire mindset that is represented by the parts of the business that represent these. This is due to ignorance and a lack of communication between these two important parts of the business. The view from the middle is not pretty either: mid-level executives in IT and in  business units do not know how to change their organization s to address the resistance that they experience when it comes to implementing change. Finally, the view from the top is best characterized as misinformed: executives think that their IT staff have a handle on their technology and the executives do not realize how far their people are from having the skills that are really needed to get the job done.”

The book has four main premises:

  1. Business Agility – lead by a potent champion for change, with a mission to ensure consistency;
  2. Assurance within IT with regard to risks – with the champion for change introduced above having a mission to ensure that all enterprise concerns are addressed in a balanced manner;
  3. Accountability (transparency) for IT decisions – focusing on quantifying and measuring the business value of IT choices, recording the reasoning behind IT decisions, and measuring the actual value produced by IT; and
  4. Amplification – increasing IT’s value by using IT resources to amplify the effectiveness of the rest of the organization and being more transparent about IT’s value when this amplification is achieved.

Implied (and made explicit in the book) in these premises is that business value needs to be integral to IT. Yet, Cliff shares my view of the current state of IT governance saying that “the term ‘IT governance’ as used by the IT industry is a legacy of the separateness between business and IT.” As Mark Lutchen, says in the Foreword to the book: “Business value and IT – For some executives, even placing those words in the same sentence can be considered an oxymoron. Others might argue that you can focus on achieving business value and get it right or you can focus on delivering IT and get it right, but never the twain shall meet. I would argue that the real imperative within organizations today is to ensure that business value and IT are so commingled and intertwined with each other, that to not focus on getting them both right or to not understand how dependent each is upon the other, is to set up your organization for potentially disastrous failure.”

I couldn’t agree more. Having, over the last couple of weeks, read this book, and Stephen Jenner’s Realising Benefits from Government ICT Investment – a fool’s errand, which I discussed in a previous post A Fool’s Errand, I am pleased that more practical guidance is being offered in this space. At the same time, I am once again left wondering just how many more books need to be written about this topic before more than a minority of enterprises start doing this. To repeat Donald Marchand‘s conclusion in his testimonial to the Stephen Jenner’s book: “The big question is will [public sector] managers and executives have the “will” to put the book’s prescriptions and methods into everyday practice with ICT projects?” History would suggest that we still have much work to do before this happens – and not just in the public sector. Much of what I and others have been espousing over the last 10 – 20 years, and what Stephen and Cliff present in their books, is common sense – unfortunately, as I said in my last post, common sense is still far from being common practice!

Why is this?  As discussed by Jeffrey Pfeffer and Robert I. Sutton in their book The Knowing-Doing Gap, “…there [are] more and more books and articles, more and more training programs and seminars, and more and more knowledge that, although valid, often had little or no impact on what managers actually did.” There are many  proven approaches available to address the challenge of realizing business value from IT investments, including, but certainly not limited to Val IT™, yet adoption of these approaches continues to be limited and, as a result, value from IT investments remains elusive. One of the key findings presented in The Knowing-Doing Gap is that knowledge is much more likely to be acquired from ‘learning by doing’ than from ‘learning by reading’ or ‘learning by listening’. If we are to move beyond reading and listening to taking action, we need to focus on understanding the behavioural constraints to adopting such solutions, and identifying and implementing approaches to overcoming those constraints. Ultimately, as I discussed in an earlier post, Managing Change – The Key to Delivering Value, it all comes down to changing people’s behaviour – from the Board to the front line.