The Real Alignment Challenge

It has, yet again, been a while since my last post – this partly because of both work and personal pressures – I have been helping Diane run one of the largest juried art shows in our province, but also because I haven’t seen anything that caused me to “lift up my pen”. A number of articles and posts that I have seen over the last few days have now pushed me to do so.

Yesterday, I read an interview with my old colleague, Don Tapscott, by Shane Schick in Computerworld Canada  in which he discusses yet another new book, his follow on to Wikinomics –  Macrowikinomics: Rebooting Business and the World (which Tapscott wrote with collaborator Anthony D. Williams). The book is based on the idea of mass collaboration both within companies and between them, with their partners, customers and other stakeholders. Since his first book, Paradigm Shift (which he co-authored with Art Caston), Don has been a visionary in the IT space – he has helped many individuals and organizations, including myself, to have a broader understanding of what could be. Whilst I would also like to think that I am somewhat of a visionary, I am primarily interested in what it takes to turn vision into reality – a reality where the potential of IT turns into realized value. Unfortunately, the gap between vision and reality (and, by inference, concept and implementation) continues to be large, and, as another former colleague of mine, Michael Anderson, once said (or, possibly, quoted), vision without action is hallucination.

This leads me to the second article by Chris Kanaracus in Computerworld – ERP woes blamed for lumber company’s bad quarter . On first seeing this, I thought here’s yet another ERP failure story to file away which, to some extent it is in that, as the article says “Lumber Liquidators is attributing a weak third quarter to a complex SAP implementation, saying the project imposed a significant drain on worker productivity.”  The article goes on to say that  “…lower productivity led to an estimated $12 million and $14 million in unrealized net sales, according to the company. Net income fell nearly 45% to $4.3 million.” Lumber Liquidators’ CEO Jeffrey Griffiths, in saying that “There were a few things that didn’t work quite right, a few things that were unique to our business that we didn’t see as well ahead of time…” , attributed the problems in the quarter to employees’ having difficulty adjusting to the SAP software, which he nonetheless praised. The article concludes by saying that “The situation differs from other troubled SAP projects, such as one conducted by Waste Management that led to a bitter lawsuit, which was ultimately settled.” It may differ in that it did not result in a lawsuit, and the SAP system is still running, but it certainly does not differ in that the significant loss of income, and the resulting drop in share value of 14%, was due to a problem that could and should have been anticipated and headed off – this did not have to happen! The problem here usually comes down to focusing too much on the technology – not the change that technology shapes, enables and require, not applying due diligence at the front-end – to understand the scope and breadth of the change, and not effectively and pro-actively managing the change. In Lumber Liquidator’s case, this view would appear to be supported by today’s ZDNet Article by Michael Krigsman – Understanding Lumber Liquidators’ ERP failure.

The next article, Business as Organism, Mechanism, or Ecosystem by Bob Lewis in CIO provides some useful insights into the nature and behaviour of organizations today. Introducing the article, he asks “Do you envision your organization as an organism, mechanism, or ecosystem?”

In the case of an ecosystem, he suggests that “The enterprise is organized, if that isn’t too strong a word [such that] employees at all levels interact to further their own self-interest. Furthering the interests of the enterprise is an accidental byproduct at best. More usually it isn’t a byproduct at all. The enterprise is left to look out for itself. And so, organizational ecosystems devolve to silos within silos within silos. It’s no way to run a railroad. Or any other organization, from an enterprise down to the smallest workgroup.”

He then goes on to say that, as a result of this proliferation of silos, “Many business executives choose to view their organizations as mechanisms instead — collections of gears, cams, cogs, levers and buttons, connected so as to achieve a coherent result. It’s business-as-automobile and business-leader-as-driver. It’s the view preferred by process consultants of all religious persuasions … lean, six sigma, lean six sigma, theory of constraints and whole-hog process re-engineering for the enterprise as a whole; ITIL for IT, and other process frameworks (I imagine) for other business disciplines. All start by describing an organization as a collection of processes and sub-processes that feed each other’s inputs and use each other’s outputs to achieve the organization’s purpose… the purpose of the executive in charge … the CEO for the enterprise as a whole and the other C-level executives…Business-as-mechanism is far superior to business-as-ecosystem because mechanisms, whether they’re automobiles, power tools or computers, can and do achieve the purposes for which they’re designed, so long as they’re operated by people who (a) have the appropriate skills to use the mechanism; (b) know what they’re trying to accomplish with it; and (c) have chosen to try to accomplish something for which the mechanism is suitable.” Relating back to the SAP challenge described above,  it is this last statement that contains the root of the problem.  Many executives choose to implement ERP solutions, such as SAP, as a way to address the silo problem. However, if insufficient effort is put in up front as part of the change management process to ensure that managers and employees think beyond their individual silos, have a clear and shared understanding of the purpose of the change that they are being asked to make, and how their roles and responsibilities will change across the silos, and if they are not trained such that they have the appropriate skills to operate in the changed environment, the result will be, at best, disruptive, and, at worst, highly visible outright failure.

Bob then goes on to contrast the above with organizations that operate as organisms, saying that “Unlike mechanisms, the organism’s purpose belongs to every part of it. That’s what lets it adapt to changing circumstances. Feet build callouses, muscles harden and bulk up, skin tans when exposed to more sunlight — each part supplies its own energy and figures out the details of its operation on its own without subverting the overall purpose of the critter it’s part of. Organizations that are organisms are rare because leaders willing to invest the effort to build them, and to forgo the gratification of being the sole driver, are rare. While evidence is sparse … Business Management theory hasn’t yet reached even the level of reliability associated with Economics … what evidence we have suggests organizations that operate as organisms are the most successful in both the short and long run.”

The above caused me to again reflect on Joel Kurtzman’s book, Common Purpose, which I referenced in an earlier post The Traveller Returns, in which Joel provides a very insightful critique of today’s leaders. (As I threatened in the previous post, I will review this book in greater detail shortly). What I took away from Bob’s article, and what I see in my everyday work across the globe is a serious mis-alignment between enterprises whose leaders have an ecosystem mindset, but  adopt mechanistic solutions to change what are becoming increasingly complex organisms – this is the real alignment problem! If we are to solve this problem, if enterprises are to survive and thrive, we need to get away from what I have described in previous posts as the cult of leadership. As Joel says in his book, 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. Only then will the full potential value of IT-enabled change be realized!

Helping Businesses Help Themselves

This morning, I spent little over an hour listening to Susan Cramm on the above live HBR webcast. I always enjoy what Susan has to say. She is a former CIO and CFO who definitely “gets it” when it comes to enterprises realizing value from IT-enabled change.

My takeaways – not new but very much reinforcing – from Susan’s webcast, which was based on her book “8 Things We Hate About IT” and the study which it describes, are that:

  1. It’s time to align authority and accountability for IT – in that the same way that we don’t expect the HR function to manage all our people, or the finance function to manage all our finances, we shouldn’t abdicate (my word) accountability for the intelligent (my word again) use of IT to the IT function.
  2. This means we need to re-architect our IT capabilities – key points being business leaders going from being “IT-dumb” (as the study reports 75% are today) to IT-smart, moving beyond thinking of IT as an organizational function to IT as a business asset, and moving beyond oversight to accountability, i.e. acknowledging their decision “obligations” (again, my word).
  3. The IT function should retain responsibility and accountability related to fiduciary, economies of scale and enabling infrastructure, while the business units must accept responsibility and accountability for delivery.
  4. The IT function stops doing things for the business that the business should be doing for themselves – shifting from an “IT Provides – Business Helps” model to an “IT Helps – Business Provides” model.

Basically, business leaders need to stop thinking of IT as a technology they can leave to IT specialists  to a business asset/tool that they need to manage such that it creates and sustains value for their enterprise and their stakeholders.

While it seems improbable that this has not yet happened, we know, as reinforced by Susan’s study, that this has not happened. From my experience:

  • A CEO told me, not that long ago, that while he knew IT was important, he was much more comfortable focusing on the “core business”. Years – no decades – ago, this might have been OK but today, in most enterprises, IT is embedded in most if not all aspects of the “core business”.
  • When we were developing Val IT 2.0, we added a practice within the VG1 process, Establish Informed and Committed Leadership, that was  VG1.3 Establish a Leadership Forum. The objective of this practice was to “…help the leadership understand and regularly discuss the opportunities that could arise from business change enabled by new or emerging technologies, and to understand their responsibilities in optimising the value created from those opportunities.” I was amazed – and somewhat disheartened – during the review process how many people questioned the need for this practice.
  • There is a consultant living just over the water from me who facilitates CEO forums and has become very successful at it. I approached her to see if we could work together to introduce the topic of CEO responsibilities, and accountabilities related to realizing value from IT or, more specifically IT-enabled change. Her response was “CEOs don’t want to talk about IT – they leave that to their CIOs.”

I am giving a keynote speech in November at the ER 2010 Conference in Vancouver. As I was listening to Susan, I reflected on the work of Steven Alter – a recognized authority in the evolving ER (or, more accurately, conceptual modeling)  space, who says: “IT success isn’t just about IT, it is about the effectiveness of people and organizations – IT usage makes an important difference only when it is part of a work system, and IT success is really about work system success.”

In the same way as the IT function – even if it were willing and capable – cannot be held accountable for the ultimate success of IT-enabled change, they cannot be held accountable for the ultimate success of work systems. They are undoubtedly accountable for delivering the enabling infrastructure, and responsible for working in partnership with the business to help them better understand potential opportunities – and the business responsibilities  and accountabilities related to successfully exploiting those opportunities, but cannot be held accountable for their ultimate success.

For this to happen requires significant behavioural change – there is and will continue to be resistance from both business and IT leadership. For this change to happen, we need – as Susan said today to “engage senior leadership in exploring the appropriate role for IT” and, I would add, their role responsibility and accountability in the context of that role. We need that leaderhip forum – an ongoing forum – that we proposed in Val IT 2.0 so that we can get “the right people in the room having the right discussion”.

The response from a number of listeners to the webcast, which is the same as I always get when I present, was “you have given us a lot to think about here.” Yes, we always need to think, but thought must be balanced with action. We have been talking about the role of business leadership related to IT-enabled change for well over a decade now – it’s time to move beyond thinking to action!

If you missed Susan’s webcast, you can watch a recording at http://s.hbr.org/cR3qlT

The Traveler Returns

To quote Mark Twain, “The reports of my death are greatly exaggerated!” Understandable, however, as it has indeed been quite some time since my last post. This is largely because I have been traveling extensively – a mix of business and  personal time – including Toronto, Asia, Alaska, Vancouver, the UK and Greece. Part of the personal time included a 23 day cruise from Beijing to Vancouver. A quick scan of emails on my return – once I eliminated the 90% related to the (aptly named) Cloud –  had me yet again shaking my head and wondering whether I had not been on a cruise ship at all – rather traveling in Dr Who’s police box time machine – backwards! Here are just a couple of examples:

  • In his May 21st blog, Project Managers Need to Engage IT At the Right Time, commenting on a project predictability seminar, Jim Vaughan says “It was noted that problems with requirements management are rarely with the IT organization and process. This caught me by surprise at first because I usually thought of IT, myself included, as the source of the problem.To get to the right requirements you need the right people to define those requirements. These are not the IT people. If we let the IT people define the requirements we will likely get into trouble. That is why people will blame IT for failed projects. The correct people to define the requirements are the business people and end users.” As this is what I have done for more than 45 years – and what I assumed was well understood, if not common practice – I was amazed that Jim should be surprised by this.
  • In a May 24th Computerworld article by Julia King, These CIOs go way beyond IT-business alignment, she discusses “an admittedly unscientific short list of pioneers in IT-business convergence including  The Progressive Corp., Southwest Airlines Co. and The Procter & Gamble Co.” as well as Vanguard Group and Zappos.com where “business and IT are virtually indistinguishable” and “IT doesn’t just support the business; it enables and continually transforms the business, often creating new revenue and profit streams.” I think that this is great – but why, when we have been talking about this for decades, are there still only a small group of pioneers doing this?

On a more positive note, I attended the CICA conference in Toronto at the end of March, where I gave a Val IT™ workshop, and was pleased to have some people talk to me about Val IT before they even knew who I was, and also to discover that an increasing number of organizations, including the Office of the Auditor General of Canada, are using it, or planning to do so.

In May, I presented at the first annual CMC BC Consulting Conference in Vancouver – how could I resist speaking at a conference with the theme “Charting a course to value”. Among the other topics, there was much discussion about social media and networking and I was pleased to see a tweet sent from Chris Burdge of bWEST who was attending my presentation saying that he was finding it “surprisingly fascinating”. He has subsequently invited me to participate on a panel at a  SocialMediaCamp he’s organizing for October. My son, Jer (blprnt), is quite active in the social media scene, and has a digital art practice in which (I quote) he “explores the many-folded boundaries between science and art”. He and I have been spending quite a bit of time lately discussing the intersection of governance and social media/networking – not just the current preoccupation with how to control social media/networking but, beyond that, how it could be used to improve governance, specifically the quality of decision-making, by tapping into a much broader experience/knowledge base. I may need to spend more time with him before October.

After Vancouver, I headed off to Greece to speak at the Thessaloniki Business Conference. There was an impressive line up of speakers, all of whom had a strong focus on value.  Many of the messages resonated with me, including:

  • Professor Leslie de Chernatony, Professor of Brand Marketing Universita della Svizzera italiana and Aston Business School, who spoke about “Growing out of a recession through more effective brand strategies” stressed that that companies needed to focus on value – not price, to move beyond product quality to outcome quality, and to “watch how you invest”.
  • Howard Stevens, CEO of The HR Chally Group, talked about “Unlocking the Science of Sales Development” and reinforced the value and outcome quality messages saying that there is only a 2-3% difference in product quality between the serious players, all products can be replicated, and what really differentiates the players is the “customer experience”. He also discussed the importance of business analytics and contended that we have information management (IM) backwards – we start with the company executives when we should be starting with the customer.
  • Harold Stolovitch of HSA Learning and Performance Solutions spoke on “Maximizing Workplace Performance in Tough Economic Times” and reiterated the importance of really “walking the talk” when it comes to treating people as “your most important asset” and said that study after study shows that the most important performance blocks are failing to set expectations and failing to provide feedback.
  • Jeremy Hope, Director of the Beyond Budgeting Round Table talked about “How to save 20%-30% on costs, by managing operational bureaucracy and the introduction of modern tools for the running of the Finance Department”, claiming that replacing the annual budget with rolling plans and forecasts could save 90% of time currently spent on the budget process. This is certainly in line with my thinking as expressed in The Budgeting Circus.
  • Dr David Hillson, Director at Risk Doctor & Partners, covered the topic of “Managing risk in innovation projects”. In defining risk as “uncertainty that matters”, he suggested that risks present opportunities as well as threats, with both needing to be managed proactively, and made the case that Risk Management addresses both threats & opportunities in a single integrated process.

I spoke on the role of IT in the economic crisis, and the challenge of maximising the value from IT. I made the case that, while Nicholas Carr might say that “IT [as a commodity] doesn’t matter”, how we manage the change that IT both shapes and enables determines the success or even survival of our enterprises, and business leaders must own and be accountable for this –  it is far too important to be abdicated to the IT function.

En route to and from the Greek conference, I read Joel Kurtzman’s book, Common Purpose. The need for leadership came across in most of the above presentations, and Joel provides a very insightful critique of today’s leaders, and the need for them 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”. I will review this book in greater detail in a later post.

On the subject of books, I am also reading Susan Cramm’s latest book, 8 Things We Hate about IT – as always, Susan is “right on the money” and, again, I will shortly post a review. Also, I  have received a copy of Stephen Jenner’s latest book, Transforming Government and Public Services: Realising Benefits through Project Portfolio Management, which I hope to be able to get to soon and – yes – will again be posting a review.

Hopefully, it will not be 3 months before my next post, but, as I will be slowing down somewhat through the summer – if it ever comes, it may be a while before I get back to being as prolific as I have been in the past.

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.

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.