Bridging the Gap between Value Selling and Value Realization

All enterprises exist to deliver value to their stakeholders. Over the last few decades, the way that we use technology – and who uses it, has changed dramatically. Yet one thing that has not changed is the on-going questioning of the value received from our investments involving technology. As we move into an increasingly digital universe, with technology becoming embedded in everything we do, there has never been a more critical time to address this question

As I have discussed in previous posts – “Partnering for value”, and “The IT Value standoff”, technology per se is just a cost – it is how the business uses technology, and manages the change that technology both shapes and enables, that determines whether the technology contributes to business value.

What has been lost in all this is the understanding of, and accountability for managing the increasing breadth and depth of business change that technology both shapes and enables, and which is required if value is to be created and sustained! We need to change the conversation – to change it from one largely about the cost of delivery of technology to one focused on creating and sustaining value from business change.

Business value will only be realized from our increasingly significant and complex investments in IT-enabled change when complementary changes are made in the business – including changes to the governance, business and operating models, business processes and practices, people’s work, and the skills and competencies required to successfully get the work done, reward and incentive systems, organizational structures, physical facilities etc. And, the most difficult, changes to organizational culture, and group and individual behaviour.

The value journey starts with the sales cycle, and it is here where the seeds of success or failure are first sown. Did you know that:

  • Over 95% of B2B buyers demand proof that the vendor will deliver value, demanding financial justification / ROI quantification prior to purchase approval (IDC)
  • Yet, only 7% of buyers say the vendors’  content and sales reps are value-focused (The Economist).

But, buyers’ concerns don’t end when the sale is made:

  • Recent research from IBM (IBM Strategy & Change, Survey of Fortune 1000 CIO’s) reported that organizations said that 40% of total IT spending brought no return to their organization
  • The Standish Group has reported on the success of “IT projects” annually since 1994, with success factors being: on time, on budge; and delivering the expected features. The 2015 report redefined success as being: on time; on budget; and with a satisfactory result, where satisfactory includes:on-target (% requirements);  satisfied (very high to very low); value (very high to very low); and alignment with strategic corporate goal (precise to distant). They then summarized the outcomes of projects over the last five years using the new definition of success factors, as shown in the table below.

Standish2015

The number of successful projects is relatively unchanged over the 5 years at a dismal 27 – 29%. In fact, in every year since the  report was first published in 1994, the percentage has been close to that range. It is little wonder, given these numbers, that we are seeing an increased concern around value.

As enterprises move into the digital age, if we continue to do things the way we have been, the challenge will only increase:

  • McKinsey, in a recent report (The digital tipping point. McKinsey Global survey results 2014) reported that most organizations have only a basic grasp on the value that digital can create, need to understand better how to match priorities and investments with the areas of highest value, and must work to ensure that their structures and business processes are set up to take full advantage of the opportunities that digital efforts offer.

This is both a challenge and an opportunity for sales professionals. Building  awareness, understanding, and commitment to make the necessary changes should be a joint responsibility of vendors (as well as consultants) and their enterprise clients. This has been the “elephant in the room” for the last 2 – 3 decades, and we will come nowhere near to realizing full business value of these enterprise investments in IT-enabled change is we don’t surface and deal with it.

I have recently been working with a group of sales professionals and consultants in setting up the Value Selling and Realization Council (VSR Council). The proposed charter of the Council is to:

Maximize value from investments in IT-enabled change by establishing, promoting and adopting value management methods, standards, practices, tools, and training that enable B2B solution providers and enterprise corporate executives to collaborate in developing and executing a “roadmap to value” approach, in order to optimize the business outcomes from such investments.

This is an ambitious agenda – one which, if it is to be successful, and not fall into the old “don’t confuse sell with install” mindset, has to address the “elephant in the room” by adding the missing piece between selling value – getting the client to understand the potential value of the proposed investment, and realizing value – the client actually realizing or even exceeding the expected value. This missing piece is enabling value – building the awareness, understanding, and commitment to make the complementary business  changes that are required for value to be realized.

The figure below provides a model of Value Management, and illustrates that a value mindset and supporting structures, processes, roles, responsibilities, and metrics must be established as part of enterprise governance, and that value enablement is a very significant piece of the Value life-cycle – the bridge between selling value and actually realizing it.

Slide3Unfortunately, it is the piece that has been largely ignored, or paid lip service to up till now. This is where the VSR Council has the opportunity to make a real difference, by building a pro-active community of value-focused individuals, including sales professionals, industry analysts, value consultants, and client enterprise professionals and leaders.

The Council is only a few months old, but already boasts a long list of senior level managers from companies such as IDC, SAP, Oracle, Workday, Adobe, Microsoft, Alexander Group, Unisys, Sirius Decisions, Finlistics, Alinean, DecisionLink, IBM, Accenture, JDA, NetApp, EY, KPMG, VMware, Effisoft, etc. Take a few minutes and watch a short video from a few of the founding members (I’m the oldest looking one!).

I attended a first meeting of the Council in Dallas in October. I have to say that I went with some skepticism, not knowing how many people might show up, what their experience might be, how open as competitors they would be with each other, or what their views of value management were – particularly value enablement and realization. By the end of the day, my skepticism had disappeared. We were expecting 15 attendees, and 22 showed up, there was a breadth and depth of understanding of the value space, and a very open discussion, displaying both a broad understanding of the challenges of value management, and a passion to work collaboratively to address them.

As a non-profit, the VSR Council depends upon the time contributions of its members. If  you are  interested in furthering the work of the Council, and “connecting the dots” to value, individual Community membership is free – just click here to register to become a member and join the community. To connect with the community, you can also join the VSR Linkedin Group here. Also, please consider becoming an active member by volunteering yourself or someone working with you on one of the working committees. Help the Council build something great and connect those dots!

A great way to kickstart your involvement in the community is by attending the upcoming VSR Summit, a networking and educational event scheduled for February 29th thru March 1st, 2016 at the Marriott Courtyard DFW North in Grapevine, Texas.  There is a cost to attend and capacity is limited so, if you or anyone else you may know are interested, you should register soon.

We are today at a “tipping point” where, if we are to come anywhere near realizing the full potential of a digital world, we need to connect the dots from ideas to the realization of value. We will not do this with traditional siloed and fragmented disciplines and approaches. The VSR council provides the opportunity to create a professional value management community, connecting those dots, and providing leadership in enabling organizations to create and sustain value from technology-enabled change. I hope that I have the opportunity in the months and years to come to meet and work with many of you in this community to achieve this goal.

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.