The order to abandon ship was given at 5 p.m. For most of the men, however, no order was needed because by then everybody knew that the ship was done and that it was time to give up trying to save her. There was no show of fear or even apprehension. They had fought unceasingly for three days and they had lost. They accepted their defeat almost apathetically. They were simply too tired to care.
She was being crushed. Not all at once, but slowly, a little at a time. The pressure of ten million tons of ice was driving in against her sides. And dying as she was, she cried in agony. Her frames and planking, her immense timbers, many of them almost a foot thick, screamed as the killing pressure mounted. And when her timbers could no longer stand the strain, they broke with a report like artillery fire.
By 7 p.m., all essential gear had been transferred to the ice, and a camp of sorts had been established on a solid floe a short distance to starboard. The lifeboats had been lowered the night before. The date was October 27, 1915. The name of the ship was Endurance. The position was in the icy wasteland of the Antarctic’s treacherous Weddell Sea, just about midway between the South Pole and nearest known outpost of humanity, some 1,200 miles away.
Much is said today about the need for:
• IT to have a roadmap,
• IT to obtain critical business buy-in (i.e., to be aligned with the business),
• IT to prepare for the inevitable changes the future will bring (i.e., IT becoming a shared service – Future State CIO), and
• CIO’s to become game-changers (CIO Executive Council)
The bottom line is that IT needs to move the business forward.
But how does IT move the business forward? How does it become transformational? How does it become innovational?
While I do not have all the answers – I myself and S-K are on this same journey – let me state that moving the business forward (at a minimum) requires:
• A firm foundation,
• A proven process, and
• A culture of innovation.
Or stated differently, IT needs to be:
• Foundational,
• Transformational, and
• Innovational.
I plan on using the story of Shakleton’s Incredible Journey (as told by Alfred Lansing) as a framework for our discussion on moving the business forward.
Sir Ernest Shackleton was an English explorer and one of the principal figures of the period known as the Heroic Age of Antarctic Exploration. After the race to the South Pole ended in 1912 with Roald Amundsen's conquest, Shackleton turned his attention to what he said was the one remaining great object of Antarctic journeying — the crossing of the continent from sea to sea, via the pole. To this end he made preparations for what became known as the 1914 Imperial Trans-Antarctic Expedition.
Two ships would be employed: Endurance would carry the main party into the Weddell Sea, aiming for Vahsel Bay from where a team of six, led by Shackleton, would begin the crossing of the continent. Meanwhile a second ship, the Aurora, would take a supporting party to McMurdo Sound on the opposite side of the continent. This party would then lay supply depots across the Great Ice Barrier as far as the Beardmore Glacier, these depots holding the food and fuel that would enable Shackleton's party to complete their journey of 1,800 miles (2,900 km) across the continent.
Despite the outbreak of the First World War on August 3rd, 1914, Endurance was directed by the First Lord of the Admiralty, Winston Churchill, to "proceed", and left British waters on August 8th, 1914. After final preparations, Endurance then departed from South Georgia for the Weddell Sea on December 5th, heading for Vahsel Bay.
As the ship moved southward, early ice was encountered, which slowed progress. On January 15th, 1915, there were within 200 miles of Vahsel Bay. Unfortunately, a northerly gale blew up and before they could do anything to save themselves, Endurance became frozen fast in an ice floe. What happened was simple enough. The northerly gale compressed and crowded the whole Weddell Sea pack against the face of the land, and no force on earth could open up the ice again – except another gale from the opposite direction.
On February 24th, realizing that they would be trapped until the following spring, Shackleton ordered the abandonment of ship's routine and her conversion to a winter station. The sled dogs were moved off the boat. Seals were killed for blubber (fuel) and meat. Eventually 5,000 pounds was accumulated (storage was not a problem in the sub-zero temperatures) so that they would not have to dip into the tinned food items.
In early May, 1915, the sun appeared over the horizon for the last time, then slowly dropped from sight and the Antarctic night (with an average temperature of -17) began. In all the world, there is no desolation more complete than the polar night. It is a return to the Ice Age – no warmth, no life, no movement. On July 17th, just as the men’s thoughts began to turn to Spring (and the opportunity to make a new assault on Vahsel Bay), the sounds of ice flows grinding together (pressure) began.
On August 1st, the ship briefly broke free from the ice, rose, and resettled at a 5 degree angle. Three more times the ship was attacked by the ice and withstood the pressure. But on October 24th, the worst fear of the men began to come true. Two ice flows pinned the boat and slowly began crushing the hull. Shackleton had no choice – on October 27th, Shackleton gave the order to abandon ship.
The order to abandon ship, while it signaled the beginning of the greatest of all Antarctic adventures, also sealed the fate of the one of the most ambitious of all Antarctic expeditions. Evidence of the scope of such an undertaking is the fact that after Shackleton’s failure, the crossing of the continent remained untried for 43 years. Even that expedition which was equipped with heated, tracked vehicles, powerful radios, and guided by reconnaissance planes and dog teams, was strongly urged to give up. It was only after a tortuous four month effort that it was accomplished.
Few men have borne the responsibility Shackleton did at that moment. They were for all practical purposes alone in the frozen Antarctic seas. It had been very nearly a year since they had last been in contact with civilization. Nobody in the outside world knew they were in trouble, much less where they were. They had no radio transmitter with which to notify any would-be rescuers, and it is doubtful that any rescuers could have reached them even if they had been able to broadcast an SOS. Their plight was naked and terrifying in its simplicity. If they were to get out – they had to get themselves out.
The crew went from the comfort of a ship to living in crammed tents, lying in reindeer sleeping bags, on bare ice. They were castaways in one of the most savage regions of the world, drifting they knew not where , without a hope of rescue, subsisting only so long as Providence sent them food to eat.
Though their floe remained undamaged throughout the summer, Shackleton did not want a false sense of security to develop among the men. On November 15th he put in place an emergency plan with specific duties for each man (that they regularly practiced) if they had to suddenly strike camp. By April 7th their floe measured only 200 yards across. It was surrounded on all sides by open water. Finally, on April 9th, their ice floe broke into two, and Shackleton ordered the crew into the lifeboats, to head for the nearest land.
After five harrowing days at sea -- enduring gale force winds, 30’ rollers, and dodging ice bergs intent on steamrolling them -- the exhausted men landed their three lifeboats at Elephant Island. This was the first time they had stood on solid ground for 497 days. To be continued…..
Tuesday, April 17, 2012
Saturday, March 10, 2012
What Keeps Me Up at Night (And What I Can Do About It) Part 5
Issue #6 – Fill in the Blank
Carl Armerding recounted his experience of watching a wildcat in a zoo. "As I stood there," he said, "an attendant entered the cage through a door on the opposite side. He had nothing in his hands but a broom. Carefully closing the door, he proceeded to sweep the floor of the cage. I observed that the worker had no weapon to ward off an attack by the beast. In fact, when he got to the corner of the cage where the wildcat was lying, he poked the animal with the broom. The wildcat hissed at him and then lay down in another corner of the enclosure. I remarked to the attendant: ‘You certainly are a brave man.’ ‘No, I ain't brave,’ replied the attendant as he continued to sweep. ‘Well, then, that cat must be tame.’ ‘No,’ came the reply, ‘he ain't tame.’ ‘If you aren't brave and the wildcat isn't tame, then I can't understand why he doesn't attack you.’” Armerding said the man chuckled, then replied with an air of confidence: "Mister, he's old -- and he ain't got no teeth."
The sixth thing that keeps me up at night are those items that irritate, frustrate, and exasperate me at work. What are those things? Fill in the blank! For each of us, the list of things that irritate and frustrate is as unique as a fingerprint. But unlike the story above, more than likely they do have teeth! Let me explain by giving you one example that I have wrestled with on numerous occasions – our Board.
This Board has members that are smarter than anyone else. It speaks with the language of one having a “long-term” view but acts like one having a “short-term” view. It sees IT as being a cost center and capable of cutting expenses indefinitely. It has mandated an outside assessment to evaluate the competency and expected opportunities for additional waste reduction three years in a row! The fact that IT spend as a percentage of revenue has dropped from 2.9% in 2009 to 1.9% in 2011 (actual IT spend dropped $4 million) is not good enough. The fact that IT headcount has dropped drop by 10% in the same period of time is seen as merely a down payment in cost reduction. This Board even reviewed annual bonuses – employee by employee – a year ago.
Because of this rather non-supportive Board, I have had many sleepless nights. On several occasions it was due to having another outside consulting firm (a set of IT experts who are supposed to know more about IT than S-K’s IT management team) assessing our organization, strategy, and spend. On other occasions it was the frustration of building a budget that drove down costs and increased productivity only to be told: “It is not enough!” On one occasion it was a wrestling match to justify technology that had been in place for several years (and was benefitting the company) that they no longer liked. It would be bad enough if each “event” only caused one night of lost sleep. The truth is – each event usually resulted in days, if not weeks of lost sleep.
Do not take away from this posting that I am “trashing” the Board. For purposes of this posting, I wanted to openly and honestly share with you an example of an irritant that keeps me up at night. If I did not provide you with some of the details (there are many more that I have withheld), the sense of frustration that I face would make no sense. And truth be known – each of us has at least one “dragon” like this that they need to slay.
Since I do not like to be a victim, how did I handle this repetitive struggle? What were the strategies that I invoked to solve this problem? While these strategies will not work for each of you and for each of your irritants, maybe they will be of value. First, I never linked my self-esteem to what the Board thought. S-K’s IT management team of five had an accumulative 125+ years of IT management experience. We have had a long history of delivering success. We could even mentor most of the consultants who “assessed” us. If the Board was uncertain of how I was managing IT, I did not allow their skepticism to destroy my self-esteem. Not wanting to be arrogant or blind, I sought and found validation for our efforts from peers, outside consultants, and vendors that we worked with.
Second, I focused on doing what is right and allowing the chips to fall where they may. We are hired to do a job, to be a good steward, to transform department and companies. It is important that we not allow skepticism or ignorance to de-rail what needs to be done. CIO’s are hired to be confident and decisive. We need to take a position and boldly execute a strategy. If we are convinced that it is the correct strategy, then we need to execute that strategy and reap the results and consequences. We need to allow the outcome – not the perception of a Board – to be the basis for our appraisal.
Third, I worked to build deep and broad partnerships with other members of the Executive Team. Benjamin Franklin said it best: “We must all hang together, or assuredly we shall all hang separately.” There is strength in numbers. There is wisdom that may be gained from others. There is support in a group. We must choose to link our success and career to that of the company team. Otherwise, it is easy to become the proverbial “sacrificial lamb.”
Fourth, I performed and marketed those achievements. While this may sound arrogant, it is a fact of life. CIO’s should be measured on how they increase revenues, decrease expenses, increase efficiencies, and decrease risks. Since most of our successes are beyond the understanding of non-IT employees (and Board members), it is imperative that we educate and market those successes continually.
A logical question must be asked – “Did these strategies actually work?” Yes and no. Yes, in the sense that all three assessments confirmed what we knew – S-K IT was doing a very good job. No, in the sense that in the end -- they don’t really care. Their perception of the world remains unchanged and IT continues to focus on delivering value and aiding the business in growing revenues and profits.
In closing, I want to encourage you. First, you will face irritants and frustrations as an IT leader. Those irritants may be common to others or unique to your situation. You are not alone. All of us will have our set of challenges at one time or the other. As such, reach out to others and share your compassion as they do the same with you. Second, don’t play the “victim.” Do not sit back and lose sleep, night after night. Be proactive. Be decisive. Undertake tactics and strategies to diminish or eliminate those irritants. It will enable you to sleep better at night – even if the problem never goes away!
Carl Armerding recounted his experience of watching a wildcat in a zoo. "As I stood there," he said, "an attendant entered the cage through a door on the opposite side. He had nothing in his hands but a broom. Carefully closing the door, he proceeded to sweep the floor of the cage. I observed that the worker had no weapon to ward off an attack by the beast. In fact, when he got to the corner of the cage where the wildcat was lying, he poked the animal with the broom. The wildcat hissed at him and then lay down in another corner of the enclosure. I remarked to the attendant: ‘You certainly are a brave man.’ ‘No, I ain't brave,’ replied the attendant as he continued to sweep. ‘Well, then, that cat must be tame.’ ‘No,’ came the reply, ‘he ain't tame.’ ‘If you aren't brave and the wildcat isn't tame, then I can't understand why he doesn't attack you.’” Armerding said the man chuckled, then replied with an air of confidence: "Mister, he's old -- and he ain't got no teeth."
The sixth thing that keeps me up at night are those items that irritate, frustrate, and exasperate me at work. What are those things? Fill in the blank! For each of us, the list of things that irritate and frustrate is as unique as a fingerprint. But unlike the story above, more than likely they do have teeth! Let me explain by giving you one example that I have wrestled with on numerous occasions – our Board.
This Board has members that are smarter than anyone else. It speaks with the language of one having a “long-term” view but acts like one having a “short-term” view. It sees IT as being a cost center and capable of cutting expenses indefinitely. It has mandated an outside assessment to evaluate the competency and expected opportunities for additional waste reduction three years in a row! The fact that IT spend as a percentage of revenue has dropped from 2.9% in 2009 to 1.9% in 2011 (actual IT spend dropped $4 million) is not good enough. The fact that IT headcount has dropped drop by 10% in the same period of time is seen as merely a down payment in cost reduction. This Board even reviewed annual bonuses – employee by employee – a year ago.
Because of this rather non-supportive Board, I have had many sleepless nights. On several occasions it was due to having another outside consulting firm (a set of IT experts who are supposed to know more about IT than S-K’s IT management team) assessing our organization, strategy, and spend. On other occasions it was the frustration of building a budget that drove down costs and increased productivity only to be told: “It is not enough!” On one occasion it was a wrestling match to justify technology that had been in place for several years (and was benefitting the company) that they no longer liked. It would be bad enough if each “event” only caused one night of lost sleep. The truth is – each event usually resulted in days, if not weeks of lost sleep.
Do not take away from this posting that I am “trashing” the Board. For purposes of this posting, I wanted to openly and honestly share with you an example of an irritant that keeps me up at night. If I did not provide you with some of the details (there are many more that I have withheld), the sense of frustration that I face would make no sense. And truth be known – each of us has at least one “dragon” like this that they need to slay.
Since I do not like to be a victim, how did I handle this repetitive struggle? What were the strategies that I invoked to solve this problem? While these strategies will not work for each of you and for each of your irritants, maybe they will be of value. First, I never linked my self-esteem to what the Board thought. S-K’s IT management team of five had an accumulative 125+ years of IT management experience. We have had a long history of delivering success. We could even mentor most of the consultants who “assessed” us. If the Board was uncertain of how I was managing IT, I did not allow their skepticism to destroy my self-esteem. Not wanting to be arrogant or blind, I sought and found validation for our efforts from peers, outside consultants, and vendors that we worked with.
Second, I focused on doing what is right and allowing the chips to fall where they may. We are hired to do a job, to be a good steward, to transform department and companies. It is important that we not allow skepticism or ignorance to de-rail what needs to be done. CIO’s are hired to be confident and decisive. We need to take a position and boldly execute a strategy. If we are convinced that it is the correct strategy, then we need to execute that strategy and reap the results and consequences. We need to allow the outcome – not the perception of a Board – to be the basis for our appraisal.
Third, I worked to build deep and broad partnerships with other members of the Executive Team. Benjamin Franklin said it best: “We must all hang together, or assuredly we shall all hang separately.” There is strength in numbers. There is wisdom that may be gained from others. There is support in a group. We must choose to link our success and career to that of the company team. Otherwise, it is easy to become the proverbial “sacrificial lamb.”
Fourth, I performed and marketed those achievements. While this may sound arrogant, it is a fact of life. CIO’s should be measured on how they increase revenues, decrease expenses, increase efficiencies, and decrease risks. Since most of our successes are beyond the understanding of non-IT employees (and Board members), it is imperative that we educate and market those successes continually.
A logical question must be asked – “Did these strategies actually work?” Yes and no. Yes, in the sense that all three assessments confirmed what we knew – S-K IT was doing a very good job. No, in the sense that in the end -- they don’t really care. Their perception of the world remains unchanged and IT continues to focus on delivering value and aiding the business in growing revenues and profits.
In closing, I want to encourage you. First, you will face irritants and frustrations as an IT leader. Those irritants may be common to others or unique to your situation. You are not alone. All of us will have our set of challenges at one time or the other. As such, reach out to others and share your compassion as they do the same with you. Second, don’t play the “victim.” Do not sit back and lose sleep, night after night. Be proactive. Be decisive. Undertake tactics and strategies to diminish or eliminate those irritants. It will enable you to sleep better at night – even if the problem never goes away!
Saturday, February 11, 2012
What Keeps Me Up at Night (And What I Can Do About It) Part 4
"Governance? Resource contention? Process ownership? Prioritization? Resource management?" Those are the actual words I used in a recent presentation given to S-K’s Senior Leadership Team. I was educating them as part of a proposal for a new model of IT governance. I was also introducing them to an approach that had the potential to become just another failed attempt at getting our hands around how to manage scarce IT resources (the fifth thing that keeps me awake at night). Yet, I knew that for S-K to move forward – to enable our desired corporate transformation and to sustain effective on-going operations – a new model of IT governance was needed.
But let me step back and allow you to understand the genesis behind this new proposal related to IT governance. Like every other CIO, demand for IT capacity far exceeds the ability of IT to deliver at S-K. Everyone who makes a request of IT considers theirs to be a priority and wants it done as soon as possible. There is considerable frustration from these requesters when their work is not getting addressed or has been put on-hold to address other priorities. There is also considerable frustration within the IT Department. We do not want to have to wear the “black hat” and always be the one saying “no,” “not now,” or “later.” We do not want to have to “tamp down” on our own staff who try to squeeze in a small or quick fix to be more customer-service friendly. We do not want to wrestle with low morale resulting from the stress of demand exceeding supply.
If we want to transform S-K and fix this all-too-common problem, a new approach was needed. In simple terms, we needed an approach that ensures that IT capacity is working on the right things at the right time to enable business goals. We needed a set of controls that focuses on organizational success while managing associated risks. Sounds simple, right? Unfortunately, the devil is in the details!
Why is IT governance so difficult to implement? Business leaders want to do the right thing. They want the business to succeed and they will work hard to make that happen. But all too often, they are motivated and rewarded by having their small part of the organization succeed. IT governance requires that the scarce resource of technology capacity be diligently distributed across the organization for overall business success. In other words, it requires that IT cannot be allocated on the basis of individual team needs but rather on collective, organizational goals.
How does IT governance work at S-K? All technology investment requests are brought to a single committee (at S-K we are calling this the Process Owner Committee) and the merit of every request is debated and a decision is arrived upon. Membership of the board is made up of the process owners in the company (order to cash, customer acquisition, etc.) that have been selected by the Senior Leadership Team at S-K.
What are the “core” values that will ensure IT governance works at S-K? The core values required are the willingness to wear a “corporate hat” and the ability to compromise. If participants are focused on the success of the entire business, compromise becomes easier. This new committee will need to learn that there is a better way to manage your scarce IT resources.
Is IT governance optional? No! There are many ways to implement IT governance, but the principles remain the same. While we can debate the method of implementation, some form of IT governance must be part of your organizational processes. Bureaucratic? Sure. Essential? Definitely.
How is the new approach working at S-K? We have formed the committee. We have a clear roadmap of IT projects that have been agreed and approved to move forward on. We have a clear list of projects that are in the queue. We are educating the members on the criticality of getting all project owners to clearly define the ROI of their projects. We are all holding hands and wearing a “corporate” hat. But the bottom line is – it is too early to tell! We are merely starting on a journey.
While we don’t have all the answers (and I do not want to bore you with the details), what are some of the elements of a world class governance model that we are attempting to incorporate into our approach here at S-K:
1. Corporate Perspective
Projects are prioritized from a corporate perspective. Members are asked to make the best business decision for the company, not for their constituency.
2. Working Committee
This is not an informational meeting. It is a working meeting.
3. Forward Looking Committee
It is a forward-looking committee. Projects already “in flight” are only discussed if there are issues to resolve or risks to mitigate.
4. Single Governance Model
While there are three governance committees (we have individual committees that prioritize break-fixes and small enhancements for each functional area, we have the Process Owner Committee that prioritizes projects and major initiatives over a man-month, and we have an IT Executive Steering Committee that resolves conflicts and resource/funding issues arising from the Process Owner Committee), we have a single governance model. All requests (changes, enhancement, and projects) are entered into the same system. All requests over a man-month are reviewed by the Process Owner Committee (something that the IT Executive Steering Committee does not have the patience for). The executives and subordinates understand that the Process Owner Committee has to sign off on all requests (either by assigning IT resources to work on break-fix/enhancement requests or by assigning IT resources to projects).
5. Senior Management Support/Involvement
Senior management remains involved in the process. They select the members of the committee, they empower the committee members to be ambassadors for the corporation, they review committee decisions on a monthly basis, and they resolve any and all conflicts (resource and funding-related). Communicating and supporting IT governance is the single most important IT role of senior leaders.
6. Exception Handling Process
Inevitably, exceptions challenge the status quo, particularly the IT architecture and infrastructure. Some requests for exceptions are frivolous but most come from a true desire to meet business needs. If the exception proposed by a business unit has value, the Process Owner Committee will work with IT (and possibly the IT Executive Steering Committee) to make a change to the IT architecture that can benefit the entire enterprise. Formally approved exceptions offer a second benefit in that they formalize organizational learning about technology and architecture.
7. Incentive & Compensation
A common problem encountered with IT governance is a misalignment of incentive and reward systems with the behaviors and priorities the IT governance approach is designed to encourage. We are working with senior management to ensure that executive sponsors of projects have the successful completion of that project as one of their accountabilities/objectives for the year. We are also discussing how we might add IT-related objectives (e.g., meeting the IT budget) to the accountabilities/objectives for the Process Owner Committee members in future years. It is hard to overestimate the importance of aligning incentive and reward systems to governance arrangements.
8. Technology Expertise
IT assets are more and more important to the performance of most enterprises. A reliable, cost-effective, regulation-compliant, secure, and strategic IT portfolio is more critical today than ever before. The persons added to the committee must understand what the technology is and is not capable of. It is not the technical details that are critical but a feel for the two-way symbiotic connection between technology and business.
9. Transparency and Education
It's virtually impossible to have too much transparency or education about IT governance. Transparency and education often go together—the more education, the more transparency, and vice versa. The more transparency of the governance processes, the more confidence in the governance. In the future, S-K will be utilizing portals or intranets to communicate IT governance. The less transparent the governance processes are, the less people follow them. The more special deals are made, the less confidence there is in the process and the more workarounds are used. The less confidence there is in the governance, the less willingness there is to play by rules designed to lead to increased firm-wide performance. Special deals and non-transparent governance set off a downward spiral in governance effectiveness.
10. Outlaws Outlawed
We are experimenting with having the IT Executive Steering Committee (the Senior Leadership Team largely makes up this committee) acting as the “Sheriff.” There are many things that will undermine the success of this new IT governance approach but allowing “outlaws” to freely roam guarantees failure. What do I mean? It is imperative that senior management squelch rogue IT projects, disallow the building of shadow IT organizations, disallow funding of unapproved projects, and discourage quick-fix, throw-away solutions.
But let me step back and allow you to understand the genesis behind this new proposal related to IT governance. Like every other CIO, demand for IT capacity far exceeds the ability of IT to deliver at S-K. Everyone who makes a request of IT considers theirs to be a priority and wants it done as soon as possible. There is considerable frustration from these requesters when their work is not getting addressed or has been put on-hold to address other priorities. There is also considerable frustration within the IT Department. We do not want to have to wear the “black hat” and always be the one saying “no,” “not now,” or “later.” We do not want to have to “tamp down” on our own staff who try to squeeze in a small or quick fix to be more customer-service friendly. We do not want to wrestle with low morale resulting from the stress of demand exceeding supply.
If we want to transform S-K and fix this all-too-common problem, a new approach was needed. In simple terms, we needed an approach that ensures that IT capacity is working on the right things at the right time to enable business goals. We needed a set of controls that focuses on organizational success while managing associated risks. Sounds simple, right? Unfortunately, the devil is in the details!
Why is IT governance so difficult to implement? Business leaders want to do the right thing. They want the business to succeed and they will work hard to make that happen. But all too often, they are motivated and rewarded by having their small part of the organization succeed. IT governance requires that the scarce resource of technology capacity be diligently distributed across the organization for overall business success. In other words, it requires that IT cannot be allocated on the basis of individual team needs but rather on collective, organizational goals.
How does IT governance work at S-K? All technology investment requests are brought to a single committee (at S-K we are calling this the Process Owner Committee) and the merit of every request is debated and a decision is arrived upon. Membership of the board is made up of the process owners in the company (order to cash, customer acquisition, etc.) that have been selected by the Senior Leadership Team at S-K.
What are the “core” values that will ensure IT governance works at S-K? The core values required are the willingness to wear a “corporate hat” and the ability to compromise. If participants are focused on the success of the entire business, compromise becomes easier. This new committee will need to learn that there is a better way to manage your scarce IT resources.
Is IT governance optional? No! There are many ways to implement IT governance, but the principles remain the same. While we can debate the method of implementation, some form of IT governance must be part of your organizational processes. Bureaucratic? Sure. Essential? Definitely.
How is the new approach working at S-K? We have formed the committee. We have a clear roadmap of IT projects that have been agreed and approved to move forward on. We have a clear list of projects that are in the queue. We are educating the members on the criticality of getting all project owners to clearly define the ROI of their projects. We are all holding hands and wearing a “corporate” hat. But the bottom line is – it is too early to tell! We are merely starting on a journey.
While we don’t have all the answers (and I do not want to bore you with the details), what are some of the elements of a world class governance model that we are attempting to incorporate into our approach here at S-K:
1. Corporate Perspective
Projects are prioritized from a corporate perspective. Members are asked to make the best business decision for the company, not for their constituency.
2. Working Committee
This is not an informational meeting. It is a working meeting.
3. Forward Looking Committee
It is a forward-looking committee. Projects already “in flight” are only discussed if there are issues to resolve or risks to mitigate.
4. Single Governance Model
While there are three governance committees (we have individual committees that prioritize break-fixes and small enhancements for each functional area, we have the Process Owner Committee that prioritizes projects and major initiatives over a man-month, and we have an IT Executive Steering Committee that resolves conflicts and resource/funding issues arising from the Process Owner Committee), we have a single governance model. All requests (changes, enhancement, and projects) are entered into the same system. All requests over a man-month are reviewed by the Process Owner Committee (something that the IT Executive Steering Committee does not have the patience for). The executives and subordinates understand that the Process Owner Committee has to sign off on all requests (either by assigning IT resources to work on break-fix/enhancement requests or by assigning IT resources to projects).
5. Senior Management Support/Involvement
Senior management remains involved in the process. They select the members of the committee, they empower the committee members to be ambassadors for the corporation, they review committee decisions on a monthly basis, and they resolve any and all conflicts (resource and funding-related). Communicating and supporting IT governance is the single most important IT role of senior leaders.
6. Exception Handling Process
Inevitably, exceptions challenge the status quo, particularly the IT architecture and infrastructure. Some requests for exceptions are frivolous but most come from a true desire to meet business needs. If the exception proposed by a business unit has value, the Process Owner Committee will work with IT (and possibly the IT Executive Steering Committee) to make a change to the IT architecture that can benefit the entire enterprise. Formally approved exceptions offer a second benefit in that they formalize organizational learning about technology and architecture.
7. Incentive & Compensation
A common problem encountered with IT governance is a misalignment of incentive and reward systems with the behaviors and priorities the IT governance approach is designed to encourage. We are working with senior management to ensure that executive sponsors of projects have the successful completion of that project as one of their accountabilities/objectives for the year. We are also discussing how we might add IT-related objectives (e.g., meeting the IT budget) to the accountabilities/objectives for the Process Owner Committee members in future years. It is hard to overestimate the importance of aligning incentive and reward systems to governance arrangements.
8. Technology Expertise
IT assets are more and more important to the performance of most enterprises. A reliable, cost-effective, regulation-compliant, secure, and strategic IT portfolio is more critical today than ever before. The persons added to the committee must understand what the technology is and is not capable of. It is not the technical details that are critical but a feel for the two-way symbiotic connection between technology and business.
9. Transparency and Education
It's virtually impossible to have too much transparency or education about IT governance. Transparency and education often go together—the more education, the more transparency, and vice versa. The more transparency of the governance processes, the more confidence in the governance. In the future, S-K will be utilizing portals or intranets to communicate IT governance. The less transparent the governance processes are, the less people follow them. The more special deals are made, the less confidence there is in the process and the more workarounds are used. The less confidence there is in the governance, the less willingness there is to play by rules designed to lead to increased firm-wide performance. Special deals and non-transparent governance set off a downward spiral in governance effectiveness.
10. Outlaws Outlawed
We are experimenting with having the IT Executive Steering Committee (the Senior Leadership Team largely makes up this committee) acting as the “Sheriff.” There are many things that will undermine the success of this new IT governance approach but allowing “outlaws” to freely roam guarantees failure. What do I mean? It is imperative that senior management squelch rogue IT projects, disallow the building of shadow IT organizations, disallow funding of unapproved projects, and discourage quick-fix, throw-away solutions.
Friday, January 6, 2012
What Keeps Me Up at Night (And What I Can Do About It) Part 3
Issue #4 – The Rapid Pace of Technology Change
The fourth issue that keeps me up at night is the rapid pace of technology change. For example:
o New social media services appear and sometimes disappear or fall out of favor in a matter of months.
o New online services become available that didn’t exist before.
o The power of computers double every 18 months (Moore’s Law).
o Storage gets cheaper but data becomes more difficult to analyze.
o Mobile applications, hardware, and services are evolving at a frightening pace.
Since businesses are directly dependent on the technology used to create products and deliver services, technological change is both our best friend and our most bitter rival. Staying on top of this relentless wave is a full-time job. It is also enough to make you throw in the towel and head to the beach. But you have to be able to deal with it. That is because your company’s very existence is made possible by this rapidly evolving technology, so you can’t exactly spit in its face or refuse to keep informed. For example:
o The website for many retailers is pretty much your entire business. It’s your base of operations.
o Much (if not most) of your marketing (e.g., search marketing, social media marketing) and communications is done online (e.g., VOIP, Skype).
o If you sell information, you’re creating information products using desktop and/or online software.
o Your customer portals provide a constellation of online services to operate your business: payment processing, invoicing, service scheduling, document recovery, etc.
The challenge of addressing this pace of change is not all you have to be concerned with. There is also incredible pressure on technology leaders to be knowledgeable and innovative. And there is a great impatience in the user community when the continuum of innovation slows.
How do I stay on top it all without going crazy? How do I decide what to do and not do? First, I use technology sites that keep track of hardware, software, and what people are doing with hardware and software. Pick a couple of sites (e.g., TechCrunch, Gizmodo) and use them to help you keep track of technology changes.
Second, establish a set of “filters” or criteria to utilize in evaluating technology change.
o Does this matter to me right now? If not, how soon will it matter? If it matters now, I learn more. If it won’t matter until later, I may only make a mental note of it and let it go.
o Is the innovation being used? I look to see if the technology being trumpeted is actually being utilized in the real world to deliver products or services. Software companies are notorious for trying to sell software products that few embrace and few adapt.
o Does this make communication between people easier? If so, it’s probably a winner. If not, it’s going to eventually fade away in this social networking-crazy world.
o What is being disrupted, if anything? When an entire industry is threatened (e.g., newspapers, record companies, television stations) you need to pay attention. Why? Because not only will your own life change as a result, but depending on your business, your business may be impacted.
o Who is profiting from this, and how? Follow the money trail. For example, the advance of big box stores (disruption) appears to be killing off mom-and-pop stores everywhere, until you start looking at small shops that are responding in creative ways and thriving. There are probably lessons for you in what those business owners are doing.
Third, recognize that the rapid pace of technology change creates not only chaos but opportunity. As human beings, we’re wired to desire status quo and we dislike rapid changes. However, we’re also wired to look out for ways to survive and advance. Survival and advancement are now tied to technology advancements. Don’t fear or struggle with technological change. Look for opportunities to take advantage of the chaos brought on by the rapid pace of technological change.
Fourth, remember what doesn’t change. Even though it may feel like the ground is unsteady beneath your feet, there is much that will never change and you’d do well to remember:
o There will always be rich and poor.
o People will always want to improve their lot.
o There will always be a shortage of talented resources.
o There will always be those ready to invest in a successful idea.
o Opportunity will come to those prepared to receive it.
The fourth issue that keeps me up at night is the rapid pace of technology change. For example:
o New social media services appear and sometimes disappear or fall out of favor in a matter of months.
o New online services become available that didn’t exist before.
o The power of computers double every 18 months (Moore’s Law).
o Storage gets cheaper but data becomes more difficult to analyze.
o Mobile applications, hardware, and services are evolving at a frightening pace.
Since businesses are directly dependent on the technology used to create products and deliver services, technological change is both our best friend and our most bitter rival. Staying on top of this relentless wave is a full-time job. It is also enough to make you throw in the towel and head to the beach. But you have to be able to deal with it. That is because your company’s very existence is made possible by this rapidly evolving technology, so you can’t exactly spit in its face or refuse to keep informed. For example:
o The website for many retailers is pretty much your entire business. It’s your base of operations.
o Much (if not most) of your marketing (e.g., search marketing, social media marketing) and communications is done online (e.g., VOIP, Skype).
o If you sell information, you’re creating information products using desktop and/or online software.
o Your customer portals provide a constellation of online services to operate your business: payment processing, invoicing, service scheduling, document recovery, etc.
The challenge of addressing this pace of change is not all you have to be concerned with. There is also incredible pressure on technology leaders to be knowledgeable and innovative. And there is a great impatience in the user community when the continuum of innovation slows.
How do I stay on top it all without going crazy? How do I decide what to do and not do? First, I use technology sites that keep track of hardware, software, and what people are doing with hardware and software. Pick a couple of sites (e.g., TechCrunch, Gizmodo) and use them to help you keep track of technology changes.
Second, establish a set of “filters” or criteria to utilize in evaluating technology change.
o Does this matter to me right now? If not, how soon will it matter? If it matters now, I learn more. If it won’t matter until later, I may only make a mental note of it and let it go.
o Is the innovation being used? I look to see if the technology being trumpeted is actually being utilized in the real world to deliver products or services. Software companies are notorious for trying to sell software products that few embrace and few adapt.
o Does this make communication between people easier? If so, it’s probably a winner. If not, it’s going to eventually fade away in this social networking-crazy world.
o What is being disrupted, if anything? When an entire industry is threatened (e.g., newspapers, record companies, television stations) you need to pay attention. Why? Because not only will your own life change as a result, but depending on your business, your business may be impacted.
o Who is profiting from this, and how? Follow the money trail. For example, the advance of big box stores (disruption) appears to be killing off mom-and-pop stores everywhere, until you start looking at small shops that are responding in creative ways and thriving. There are probably lessons for you in what those business owners are doing.
Third, recognize that the rapid pace of technology change creates not only chaos but opportunity. As human beings, we’re wired to desire status quo and we dislike rapid changes. However, we’re also wired to look out for ways to survive and advance. Survival and advancement are now tied to technology advancements. Don’t fear or struggle with technological change. Look for opportunities to take advantage of the chaos brought on by the rapid pace of technological change.
Fourth, remember what doesn’t change. Even though it may feel like the ground is unsteady beneath your feet, there is much that will never change and you’d do well to remember:
o There will always be rich and poor.
o People will always want to improve their lot.
o There will always be a shortage of talented resources.
o There will always be those ready to invest in a successful idea.
o Opportunity will come to those prepared to receive it.
Friday, December 16, 2011
What Keeps Me Up at Night (And What I Can Do About It) Part 2
Issue #3 – The Changing Business Environment
The third issue that keeps me up at night is the changing business environment. A serious study of the current environment should lead one to the conclusion that great “uncertainty” abounds. Yes, we have seen similar business cycles – high unemployment, low interest rates, flat growth, etc. Yes, we have seen similar political cycles – gridlock in Washington, an unpopular President, a pivotal upcoming election, etc. Yes, we have seen similar international cycles – the collapse of European economies, the rise of Islamic radicalism (the Arab Spring), the dangers from rogue regimes (e.g., Iran), the rise of a new military power (China), etc. So, is this really new?
Call me a cynic, a pessimist, or a prophet – but I think we now operate in a business environment that is completely different than anything we have ever faced. The core fundamentals of this new environment are different. The rules by which we are expected to play in this new environment are different. And the challenges we face in this new environment are different.
What makes this new business environment so different? Why do I think that the rules of how to operate have changed? Why has the business landscape changed? Let me offer five reasons that separately, and in combination, fundamentally change the business environment we operate in.
1. Regulatory Matters
The regulatory environment that businesses now operate in has never been more complex or punitive. The Federal Register at the end of 2010 was 81,405 pages long of which 46,758 pages were dedicated to rules or proposed rules. This is nearly double the number of pages dedicated to rules or proposed rules as compared to the 1980’s. This mountain of regulation makes it more difficult and expensive to open a business, operate a business, hire an employee, keep an employee, fire an employee, purchase equipment, maintain equipment, dispose of equipment, etc. As long as businesses are hesitant to invest, grow, and hire – the economy will remain for the near-term in a slough (think a swamp or a swamp-like region). This hostile and uncertain regulatory environment is new and unprecedented in American history.
2. Structural Matters
Continuing a 20-year trend of polarization in the labor market, employment losses in the 2008-2009 recession were more severe in middle-skill white and blue collar jobs than in either high-skill, white-collar jobs or low-skill service occupations. Strong productivity gains driven by labor-saving technological and organizational changes mean that many of the lost middle-skill jobs are gone for good. Many of the displaced workers, especially those unemployed for long periods of time, do not have the training and experience required for new high-skill jobs. Nor will new entrants to the labor force with just a high-school education. (That’s one reason why the unemployment rate of those with just a high-school education is more than twice the unemployment rate of those with a college education or higher.) As the economy attempts to recover, labor-saving and skill-based technological change will continue to drive further polarization of employment opportunities. This will mean even more structural unemployment, reflecting a growing mismatch between the demand for skills and the supply of skills. Whereas industrialization in general and electrification in particular (see Nicholas Carr) created as many new office jobs as they made factories more efficient, computer automation is not creating a broad new class of jobs to take the place of those it destroys. Even the arrival of universal grid computing portends a very different kind of economic realignment. Rather than concentrating wealth in the hands of a small number of companies, it may concentrate wealth in the hands of a small number of individuals, eroding the middle class and widening the divide between haves and have-nots. These fundamental, structural changes are new and unprecedented in American history.
3. Debt Matters
You have heard that the size of the federal debt now exceeds $14 trillion. You have heard that it equates to about $48,000 per person. You have heard that the interest alone to fund that debt exceeds $1 billion a day. While I find those statistics interesting, they are not particularly comprehendible. Enter Dave Ramsey: “If the US Government was a family, they would be making $58,000 a year, they would be spending $75,000 a year, and they would have $327,000 in credit card debt…..These are the actual proportions of the federal budget and debt, reduced to a level that we can understand." I find those statistics outright concerning! While the size of the federal debt has been an issue in the past, there are two differences this time. First, the size of the federal debt has grown to the level that our economy cannot grow fast enough to carry this burden. For the first time, the size of the federal debt is serving as an anchor. Second, the only reason that federal government finances have not fallen apart completely already is because the federal government is still able to borrow huge amounts of money very cheaply. In 2010, the U.S. Government paid out just $413 billion in interest even though the national debt soared to $14 trillion. If interest rates on U.S. government debt return to historically “average” levels (around 5.7%), the U.S. Government would see $4.9 trillion added to the cumulative deficit by 2020. Thus, it is safe to say that a return just to “average” levels is going to be absolutely catastrophic. What happens if rates go above “average”? The state of our federal debt is new and unprecedented in American history.
4. Polarization Matters
Nicholas Carr noted in “The Big Switch” that electrification hastened the expansion of America’s mass culture, giving people a shared set of experiences through popular television shows, radio programs, songs, movies, books, magazines, newspaper stories, and even advertisements. The rapid advent of the internet and social networking is likely to do the very opposite. Psychologists have long recognized that the more people converse or otherwise share information with other people who hold similar views, the more extreme their views become. Given how easy it is to find like-minded people and sympathetic ideas on the internet and given our innate tendency to form homogenous groups, we can see that “ideological amplification” is likely to result. Each extra piece of confirming information heightens their confidence in the rectitude of their opinion and, as their confidence increases, their views tend also to become more extreme. Not only will the Internet tend to divide people with different views, it will also tend to magnify the differences. In the long run this will pose a threat to the spirit of compromise and the practice of consensus-building that are at the heart of democratic government. As Brynjolfsson and Van Alstyne suggest: “The balkanization and the loss of shared experiences and values may be harmful to the structure of democratic societies.” This “balkanization” of our civil society may explain why we see gridlock in Washington, Occupy Wall Street, uncivil discourse, teachers squatting in a state capital, bombastic rhetoric, and class warfare. The advent of such polarization is new and unprecedented in American history.
5. Constitutional Matters
The founding fathers birthed a country was an aberration in history. It was an experiment. They formed a government that intentionally was not a monarchy, not an autocracy, and not a democracy. They saw the sinfulness of man (read the Federalist Papers) and created a constitutional republic with three branches of government (each with checks and balances) that intentionally avoided “mobocracy” (my definition of democracy) and implemented a bi-cameral legislature (the Connecticut Compromise) with equal representation for small states. This governmental structure ensured that government would serve the people (the people would not serve the government). It would ensure that we maintain our liberties (to worship, to assemble, to bear arms, to be free of tyranny, etc.). The Constitution embodied “American Exceptionalism.” Yet, for the first time in our country’s history, we are poised to throw American Exceptionalism away. Whether it is a President who has a disdain for American Exceptionalism, an educational establishment that seeks to undermine its’ historical roots, a Supreme Court who wants to re-write the Constitution by reading into the Constitution that which was never intended by its authors, or a populace that is ambivalent to our greatness and uniqueness – we are entering a new and unprecedented time in American history.
O.K. Mr. Pessimist, if half of what you say is true, “What are we to do?” First, become a student. Read books on history, politics, economics, and philosophy. Base your ideas on knowledge and truth. Second, become engaged in politics. Work to elect politicians who embrace the Constitution, American Exceptionalism, fiscal restraint, and lower regulation. Third, be creative. Recognize that even in this new, uncertain environment that products will be needed and services required. Fourth, never lose hope. God raises up kings/governments and takes kings/governments down (Dan. 2:20). We must bow to His wise, sovereign plan knowing that “God causes all things to work together for good (think Christlikeness) to those who love God, to those who are called according to His purpose.” Finally, embrace the challenge. This new, unprecedented set of matters does keep me up at night – but it does not paralyze me and it does not scare me. It motivates me to prayerfully consider how I can best be of service to God and those who He has given me to serve – my family, my friends, and my neighbors, and my co-workers.
The third issue that keeps me up at night is the changing business environment. A serious study of the current environment should lead one to the conclusion that great “uncertainty” abounds. Yes, we have seen similar business cycles – high unemployment, low interest rates, flat growth, etc. Yes, we have seen similar political cycles – gridlock in Washington, an unpopular President, a pivotal upcoming election, etc. Yes, we have seen similar international cycles – the collapse of European economies, the rise of Islamic radicalism (the Arab Spring), the dangers from rogue regimes (e.g., Iran), the rise of a new military power (China), etc. So, is this really new?
Call me a cynic, a pessimist, or a prophet – but I think we now operate in a business environment that is completely different than anything we have ever faced. The core fundamentals of this new environment are different. The rules by which we are expected to play in this new environment are different. And the challenges we face in this new environment are different.
What makes this new business environment so different? Why do I think that the rules of how to operate have changed? Why has the business landscape changed? Let me offer five reasons that separately, and in combination, fundamentally change the business environment we operate in.
1. Regulatory Matters
The regulatory environment that businesses now operate in has never been more complex or punitive. The Federal Register at the end of 2010 was 81,405 pages long of which 46,758 pages were dedicated to rules or proposed rules. This is nearly double the number of pages dedicated to rules or proposed rules as compared to the 1980’s. This mountain of regulation makes it more difficult and expensive to open a business, operate a business, hire an employee, keep an employee, fire an employee, purchase equipment, maintain equipment, dispose of equipment, etc. As long as businesses are hesitant to invest, grow, and hire – the economy will remain for the near-term in a slough (think a swamp or a swamp-like region). This hostile and uncertain regulatory environment is new and unprecedented in American history.
2. Structural Matters
Continuing a 20-year trend of polarization in the labor market, employment losses in the 2008-2009 recession were more severe in middle-skill white and blue collar jobs than in either high-skill, white-collar jobs or low-skill service occupations. Strong productivity gains driven by labor-saving technological and organizational changes mean that many of the lost middle-skill jobs are gone for good. Many of the displaced workers, especially those unemployed for long periods of time, do not have the training and experience required for new high-skill jobs. Nor will new entrants to the labor force with just a high-school education. (That’s one reason why the unemployment rate of those with just a high-school education is more than twice the unemployment rate of those with a college education or higher.) As the economy attempts to recover, labor-saving and skill-based technological change will continue to drive further polarization of employment opportunities. This will mean even more structural unemployment, reflecting a growing mismatch between the demand for skills and the supply of skills. Whereas industrialization in general and electrification in particular (see Nicholas Carr) created as many new office jobs as they made factories more efficient, computer automation is not creating a broad new class of jobs to take the place of those it destroys. Even the arrival of universal grid computing portends a very different kind of economic realignment. Rather than concentrating wealth in the hands of a small number of companies, it may concentrate wealth in the hands of a small number of individuals, eroding the middle class and widening the divide between haves and have-nots. These fundamental, structural changes are new and unprecedented in American history.
3. Debt Matters
You have heard that the size of the federal debt now exceeds $14 trillion. You have heard that it equates to about $48,000 per person. You have heard that the interest alone to fund that debt exceeds $1 billion a day. While I find those statistics interesting, they are not particularly comprehendible. Enter Dave Ramsey: “If the US Government was a family, they would be making $58,000 a year, they would be spending $75,000 a year, and they would have $327,000 in credit card debt…..These are the actual proportions of the federal budget and debt, reduced to a level that we can understand." I find those statistics outright concerning! While the size of the federal debt has been an issue in the past, there are two differences this time. First, the size of the federal debt has grown to the level that our economy cannot grow fast enough to carry this burden. For the first time, the size of the federal debt is serving as an anchor. Second, the only reason that federal government finances have not fallen apart completely already is because the federal government is still able to borrow huge amounts of money very cheaply. In 2010, the U.S. Government paid out just $413 billion in interest even though the national debt soared to $14 trillion. If interest rates on U.S. government debt return to historically “average” levels (around 5.7%), the U.S. Government would see $4.9 trillion added to the cumulative deficit by 2020. Thus, it is safe to say that a return just to “average” levels is going to be absolutely catastrophic. What happens if rates go above “average”? The state of our federal debt is new and unprecedented in American history.
4. Polarization Matters
Nicholas Carr noted in “The Big Switch” that electrification hastened the expansion of America’s mass culture, giving people a shared set of experiences through popular television shows, radio programs, songs, movies, books, magazines, newspaper stories, and even advertisements. The rapid advent of the internet and social networking is likely to do the very opposite. Psychologists have long recognized that the more people converse or otherwise share information with other people who hold similar views, the more extreme their views become. Given how easy it is to find like-minded people and sympathetic ideas on the internet and given our innate tendency to form homogenous groups, we can see that “ideological amplification” is likely to result. Each extra piece of confirming information heightens their confidence in the rectitude of their opinion and, as their confidence increases, their views tend also to become more extreme. Not only will the Internet tend to divide people with different views, it will also tend to magnify the differences. In the long run this will pose a threat to the spirit of compromise and the practice of consensus-building that are at the heart of democratic government. As Brynjolfsson and Van Alstyne suggest: “The balkanization and the loss of shared experiences and values may be harmful to the structure of democratic societies.” This “balkanization” of our civil society may explain why we see gridlock in Washington, Occupy Wall Street, uncivil discourse, teachers squatting in a state capital, bombastic rhetoric, and class warfare. The advent of such polarization is new and unprecedented in American history.
5. Constitutional Matters
The founding fathers birthed a country was an aberration in history. It was an experiment. They formed a government that intentionally was not a monarchy, not an autocracy, and not a democracy. They saw the sinfulness of man (read the Federalist Papers) and created a constitutional republic with three branches of government (each with checks and balances) that intentionally avoided “mobocracy” (my definition of democracy) and implemented a bi-cameral legislature (the Connecticut Compromise) with equal representation for small states. This governmental structure ensured that government would serve the people (the people would not serve the government). It would ensure that we maintain our liberties (to worship, to assemble, to bear arms, to be free of tyranny, etc.). The Constitution embodied “American Exceptionalism.” Yet, for the first time in our country’s history, we are poised to throw American Exceptionalism away. Whether it is a President who has a disdain for American Exceptionalism, an educational establishment that seeks to undermine its’ historical roots, a Supreme Court who wants to re-write the Constitution by reading into the Constitution that which was never intended by its authors, or a populace that is ambivalent to our greatness and uniqueness – we are entering a new and unprecedented time in American history.
O.K. Mr. Pessimist, if half of what you say is true, “What are we to do?” First, become a student. Read books on history, politics, economics, and philosophy. Base your ideas on knowledge and truth. Second, become engaged in politics. Work to elect politicians who embrace the Constitution, American Exceptionalism, fiscal restraint, and lower regulation. Third, be creative. Recognize that even in this new, uncertain environment that products will be needed and services required. Fourth, never lose hope. God raises up kings/governments and takes kings/governments down (Dan. 2:20). We must bow to His wise, sovereign plan knowing that “God causes all things to work together for good (think Christlikeness) to those who love God, to those who are called according to His purpose.” Finally, embrace the challenge. This new, unprecedented set of matters does keep me up at night – but it does not paralyze me and it does not scare me. It motivates me to prayerfully consider how I can best be of service to God and those who He has given me to serve – my family, my friends, and my neighbors, and my co-workers.
Monday, November 14, 2011
What Keeps Me Up at Night (And What I Can Do About It)
Introduction
The story is told of a monastery in Portugal, perched high on a 3,000 foot cliff and accessible only by a terrifying ride in a swaying basket. The basket is pulled with a single rope by several strong men, perspiring under the strain of the fully loaded basket. One American tourist who visited the site got nervous halfway up the cliff when he noticed that the rope was old and frayed. Hoping to relive his fear he yelled down to the monk in charge: "How often do you change the rope?" The monk in charge replied: "Whenever it breaks!"
Fear is an amazing sensation. In some, its presence can result in paralysis. In others, it is the impetus that results in spectacular success. It is something that must be minimized. It is also something that must be managed. For CIO’s, fear is that sensation that occurs at the end of a long day when one divorces themselves from the busyness of the job and contemplates those issues that are not in one’s complete control. It is those issues that keep a CIO up at night!
The purpose of this primer is to discuss six issues that require my consideration and study. These six issues cannot be ignored. These six issues must be managed. These six issues are in no particular order. They merely represent what I believe are the biggest issues keeping me up at night – and what I can do about them.
Issue #1 – Consumerization of IT
The consumerization of IT is a rather ambiguous phrase. Some describe the consumerization of IT as the penetration of employee-purchased mobile devices like the iPhone, iPad, and Android phones/tablets into the internal IT environment. Unfortunately, this oversimplifies what the trend really represents. Consumerization of IT isn’t only about employees bringing consumer devices into the internal IT environment (i.e., a bring your own device [BYOD] world). It’s also (and more importantly) about consumers – employees, customers, partners, and/or suppliers -- becoming the primary users of internal IT applications. And the number of these consumers is far greater than the company’s internal user base.
This proliferation of consumers becoming primary users of internal IT applications will be a difficult challenge for every IT organization. First, if you think your current internal users have a variety of devices, wait until you see what the rest of the world has! The notion of building an “approved device list” will be laughable. Second, application loads will become much more variable. Predicting loads based upon a known user population and common use patterns is simple. Predicting loads based upon an undefined set of user with unknown use patterns will be daunting. Third, application loads will likely be much higher. You will be subject to new consumer use profiles which will likely drive enormous traffic to your internal IT systems. Finally, your systems will need to be easy to use and the functionality will always have to work. In the old days of enterprise applications, users could grumble, but what options did they have? They were employees and employees could in essence be told: “Open up and swallow!” In the new consumerized world of IT, your users will include customers, suppliers, and providers. And these consumers will not be so lenient!
As difficult as these two challenges are, it is a something else related to the consumerization of IT that keeps me up at night. What keeps me up at night is the perceived expertise claimed by these new consumers. “I can go to Staples, buy a laptop, and have it operational in hours. Why does it take two days to get a laptop through the PC depot?” “Why do I have to have a passcode to connect to the WiFi at the office? I don’t have to have one at the house?” “Isn’t there an ‘app’ that will allow me to enter my time sheet information into Kronos using my cell phone?” “Why can’t I schedule a pickup much less view the status of goods that are in shipment via a web site?”
The users we serve perceive themselves to be as or more knowledgeable of technology as those in IT. Unfortunately, they do not understand how the proliferation of devices, users, interfaces, and applications greatly complicate the environment that IT must support. They do not understand that IT is responsible for meeting security, privacy, SOX, and PCI requirements. They do not understand that a web site can be operational in 48 hours but integrating it with other internal IT applications can take time (and require extensive user testing!). Their view of technology is simple. The reality is that it is not. Their perceived expertise – just enough knowledge to be dangerous – and the inability to understand the complexity of the technical infrastructure required to support and enable the functionality they request is the first thing that keeps me up at night.
What can I do about this? First, I must accept that this phenomenon will not go away any time soon. It is here to stay. Second, I need to understand what they are really asking for. Sheila Jordan (VP of Communications and Collaboration at Cisco) says it best: “The end users might be saying they want Facebook and they want Twitter, but that’s not necessarily exactly what they want. What they really want are the capabilities. They want the user-friendly features and functionalities of social media, but they want them integrated and tied into their business systems.” Third, I need to get ahead of the users. I need to partner with vendors to learn what will make up the next generation of tools and toys that consumers will want to use to access internal IT applications. Pursuing a pro-active strategy may enable me to evaluate and/or pilot those devices and capabilities to discern how they may be of value to my consumers. Fourth, I need to educate my internal consumers (i.e., employees) of the complexity that surrounds the tools and devices that they are requesting and using. Good luck! Finally, I need to be collaborative. I need to work with them and not against them.
In summary, the consumerization of IT is far more profound than slapping a pretty interface on a decade-old enterprise application. That's just lipstick on a pig. It's even more than enabling BYOD in your environment. It's all about recognizing that the boundary between your company and the rest of the world is getting blurry. Letting our consumers engage with our systems can transform our business relationships and our economics. We just need to be sure that we are ready for the real consumerization of IT and the perceived experts that this trend is birthing.
Issue #2 – Employee Retention
The second issue that keeps me up at night is employee retention. When it comes to customers, retention matters even more than acquisition. With customers, the usual figure is that repeat customers are five to ten times more profitable than newly acquired ones. Likewise, great employees are worth at least ten times what average ones are worth. [1] Given that there is a shortage of talent and given that the marketplace is actively seeking for talent, what can I do to retain this talent? Let me give you five practical things you can do to keep great employees.
1. Know Them [2]
First, know your employees. Lincoln revealed the cornerstone of his own personal leadership philosophy, an approach that would become part of a revolution in modern leadership thinking 100 years later when it was dubbed “Management By Walking Around” by Tom Peters and Robert Waterman in their 1982 book -- “In Search of Excellence.” It has been referred to by other names and phrases, such as: “roving leadership,” “being in touch,” or “getting out of the ivory tower.” Whatever the label, it’s simply the process of stepping out and interacting with people. It is simply the process of establishing human contact.
We need to know how our people will respond in any given situation. We need to know who will have a tendency to get the job done on his own, or who will be more likely to procrastinate and delay. We need to know who can be counted on in an emergency and who can’t. We need to know who are the brighter, more able, more committed people. We need to know who shares are strong sense of ethics and values.
The most important asset a business organization has is its employees. So why not spend some time and money striving to more thoroughly understand who are your really great employees?
2. Listen to Them [7]
In his book, “Leadership Gold”, John Maxwell tells the story:
“A couple of rednecks are out in the woods hunting when one of them falls to the ground. He doesn’t seem to be breathing and his eyes are rolled back in his head. The other guy whips out his cell phone and calls 911. He frantically tells the operator, “Bubba is dead! What can I do?” The operator, in a calm, soothing voice says, “Just take it easy. I can help. First, let’s make sure he’s dead.” There is silence, and then a shot is heard. The guy’s voice comes back on the line and says, “Okay, now what?””
It is no accident that we have one mouth and two ears. Steven Covey writes: “When we listen with the intent to understand others, rather than with the intent to reply, we begin true communication and relationship building. Opportunities to then speak openly and be understood come much more naturally and easily.”
This is particularly an important point to know when it comes to great employees. Great employees really want to be listened to, respected, and understood. When leaders listen to them and use what they hear to make improvements that benefit the organization, then those great employees put their trust in those leaders. They want to work with those leaders. When leaders do the opposite – when they fail to listen – it damages the leader-great employee relationship. When great employees no longer believe that their leaders are listening to them, they start looking for someone who will.
3. Lead by Being Led
Third, lead by being led. As just stated, great employees want to be listened to. Great employees want their suggestions and recommendations considered and implemented. Our goal is to foster an environment in which our great employees sense little oversight and a large amount of freedom to “set the pace.” With great employees, we merely need to direct or point them in the proper path and allow them to lead us down that path. Rather than ordering or dictating, we need to refine our ability to direct others by implying, hinting, or suggesting.
One of the marks of true leadership genius is to create an environment that great employees relish to work in. Paraphrasing Lao Tzu: “A good leader is one who talks little, and yet, when his work is done, his aim fulfilled, all his followers will say: ‘We did this ourselves.’” [3]
4. Don’t Send Your Ducks to Eagle School [7]
In his book, “Leadership Gold”, John Maxwell shares a lesson learned from Jim Rohn:
“The first rule of management is this: don’t send your ducks to eagle school. Why? Because it won’t work! Good people are found, not changed. They can change themselves, but you can’t change them. If you want good people, you have to find them. If you want motivated people, you have to find them, not motivate them…..Chalk it up to mysteries of the mind, and don’t waste your time trying to turn ducks into eagles. Hire people who already have the motivation and drive to be eagles and then just let them soar.”
This counsel very much applies to “retaining” great employees. Once you “know” who your great employees are, don’t try and turn your ducks into eagles. It just doesn’t work. Here’s why it doesn’t work:
o If you send ducks to eagle school, you will frustrate the ducks. Ducks are not supposed to be eagles – nor do they want to become eagles. Who they are is who they should be. Ducks have their strengths and should be appreciated for them. They’re excellent swimmers. They are capable of working together in an amazing display of teamwork and travel long distances together. Ask an eagle to swim or to migrate thousands of miles, and it’s going to be in trouble. Leadership is all about placing your great employees in the right place so they can be successful. As a leader, you need to know your great employees and let them work according to their strengths. As a leader, you should always challenge people to move out of their comfort zone, but never out of their strength zone. That is one reason you don’t send ducks to eagle school. Secondly…..
o If you send ducks to eagle school, you will frustrate the eagles. Eagles don’t want to hang around with ducks. They don’t want to live in a barnyard or swim in a pond. Their potential makes them impatient with those who cannot soar. People who are used to moving fast and flying high are easily frustrated by people who want to hold them back.
As a leader, your job is to help your ducks to become better ducks and your eagles to become better eagles – to put individuals in the right places and help them reach their potential. You shouldn’t ask someone to grow in areas where they have no natural talent.
5. Give Them the Credit/You Take the Blame [2]
Finally, if you want to retain great employees, give them the credit and you take the blame. As leaders, we’d like to think that when people leave, it has little to do with us. But the reality is that we are often the reason. Some sources estimate that as many as 65 percent of people leaving companies do so because of their managers. We may say that people quit their job or their company but the reality is that they usually quit their leaders. [7]
So what is one solution to retaining great employees? Always give credit where credit is due and, conversely, accept responsibility when things go wrong. When a great employee does a good job, praise, compliment, and reward the individual. On the other hand, be prepared to shoulder the responsibility when they make mistakes. Always let your great employees know that the honor will be all theirs if they succeed and the blame will be yours in they fail.
Abraham Lincoln practiced this laudatory style right up to the final days of his life. During his last public address, made to gathering of people outside the White House on the evening of April 11, 1865, he was filled with modesty for himself and praise for the soldiers who had won the union victory: “No part of the honor, for plan or execution, is mine”, he asserted. “To General Grant, his skillful officers, and brave men, all belongs.”
Likewise, the president readily accepted responsibility for the battles lost during the Civil War. He tried to let his generals know that if they failed, he too failed. Throughout the war Lincoln accepted public responsibility for battles lost or opportunities missed. In the days following the battle of Gettysburg, for example, the president was distressed Meade’s delay in pursing Lee before his army made it back across the Potomac River. Well after the battle, in an attempt to spur the general into an active confrontation with Lee, the president sent him a letter urging an immediate attack. “If you can now attack him on a field no worse than equal for us,” said Lincoln, “and will do so with all the skill and courage, which you, your officers, and men possess, the honor will be yours if you succeed, and the blame will be mine if you fail.”
Endnotes
[1] Adapted from “A Manifesto for 21st Century Information Technology” by Bob Lewis
[2] Adapted from “Lincoln on Leadership” by Donald T. Phillips
[3] Adapted from “It’s Your Ship” by Captain D. Michael Abrashoff
[4] Bits & Pieces, May 28, 1992, Page 5-6
[5] Adapted from “The Mark of a Leader” by Doug Keeley
[6] Adapted from “The Ten Rules of Good Followership” by Colonel Phillip S. Meilinger
[7] Adapted from “Leadership Gold” by John Maxwell
The story is told of a monastery in Portugal, perched high on a 3,000 foot cliff and accessible only by a terrifying ride in a swaying basket. The basket is pulled with a single rope by several strong men, perspiring under the strain of the fully loaded basket. One American tourist who visited the site got nervous halfway up the cliff when he noticed that the rope was old and frayed. Hoping to relive his fear he yelled down to the monk in charge: "How often do you change the rope?" The monk in charge replied: "Whenever it breaks!"
Fear is an amazing sensation. In some, its presence can result in paralysis. In others, it is the impetus that results in spectacular success. It is something that must be minimized. It is also something that must be managed. For CIO’s, fear is that sensation that occurs at the end of a long day when one divorces themselves from the busyness of the job and contemplates those issues that are not in one’s complete control. It is those issues that keep a CIO up at night!
The purpose of this primer is to discuss six issues that require my consideration and study. These six issues cannot be ignored. These six issues must be managed. These six issues are in no particular order. They merely represent what I believe are the biggest issues keeping me up at night – and what I can do about them.
Issue #1 – Consumerization of IT
The consumerization of IT is a rather ambiguous phrase. Some describe the consumerization of IT as the penetration of employee-purchased mobile devices like the iPhone, iPad, and Android phones/tablets into the internal IT environment. Unfortunately, this oversimplifies what the trend really represents. Consumerization of IT isn’t only about employees bringing consumer devices into the internal IT environment (i.e., a bring your own device [BYOD] world). It’s also (and more importantly) about consumers – employees, customers, partners, and/or suppliers -- becoming the primary users of internal IT applications. And the number of these consumers is far greater than the company’s internal user base.
This proliferation of consumers becoming primary users of internal IT applications will be a difficult challenge for every IT organization. First, if you think your current internal users have a variety of devices, wait until you see what the rest of the world has! The notion of building an “approved device list” will be laughable. Second, application loads will become much more variable. Predicting loads based upon a known user population and common use patterns is simple. Predicting loads based upon an undefined set of user with unknown use patterns will be daunting. Third, application loads will likely be much higher. You will be subject to new consumer use profiles which will likely drive enormous traffic to your internal IT systems. Finally, your systems will need to be easy to use and the functionality will always have to work. In the old days of enterprise applications, users could grumble, but what options did they have? They were employees and employees could in essence be told: “Open up and swallow!” In the new consumerized world of IT, your users will include customers, suppliers, and providers. And these consumers will not be so lenient!
As difficult as these two challenges are, it is a something else related to the consumerization of IT that keeps me up at night. What keeps me up at night is the perceived expertise claimed by these new consumers. “I can go to Staples, buy a laptop, and have it operational in hours. Why does it take two days to get a laptop through the PC depot?” “Why do I have to have a passcode to connect to the WiFi at the office? I don’t have to have one at the house?” “Isn’t there an ‘app’ that will allow me to enter my time sheet information into Kronos using my cell phone?” “Why can’t I schedule a pickup much less view the status of goods that are in shipment via a web site?”
The users we serve perceive themselves to be as or more knowledgeable of technology as those in IT. Unfortunately, they do not understand how the proliferation of devices, users, interfaces, and applications greatly complicate the environment that IT must support. They do not understand that IT is responsible for meeting security, privacy, SOX, and PCI requirements. They do not understand that a web site can be operational in 48 hours but integrating it with other internal IT applications can take time (and require extensive user testing!). Their view of technology is simple. The reality is that it is not. Their perceived expertise – just enough knowledge to be dangerous – and the inability to understand the complexity of the technical infrastructure required to support and enable the functionality they request is the first thing that keeps me up at night.
What can I do about this? First, I must accept that this phenomenon will not go away any time soon. It is here to stay. Second, I need to understand what they are really asking for. Sheila Jordan (VP of Communications and Collaboration at Cisco) says it best: “The end users might be saying they want Facebook and they want Twitter, but that’s not necessarily exactly what they want. What they really want are the capabilities. They want the user-friendly features and functionalities of social media, but they want them integrated and tied into their business systems.” Third, I need to get ahead of the users. I need to partner with vendors to learn what will make up the next generation of tools and toys that consumers will want to use to access internal IT applications. Pursuing a pro-active strategy may enable me to evaluate and/or pilot those devices and capabilities to discern how they may be of value to my consumers. Fourth, I need to educate my internal consumers (i.e., employees) of the complexity that surrounds the tools and devices that they are requesting and using. Good luck! Finally, I need to be collaborative. I need to work with them and not against them.
In summary, the consumerization of IT is far more profound than slapping a pretty interface on a decade-old enterprise application. That's just lipstick on a pig. It's even more than enabling BYOD in your environment. It's all about recognizing that the boundary between your company and the rest of the world is getting blurry. Letting our consumers engage with our systems can transform our business relationships and our economics. We just need to be sure that we are ready for the real consumerization of IT and the perceived experts that this trend is birthing.
Issue #2 – Employee Retention
The second issue that keeps me up at night is employee retention. When it comes to customers, retention matters even more than acquisition. With customers, the usual figure is that repeat customers are five to ten times more profitable than newly acquired ones. Likewise, great employees are worth at least ten times what average ones are worth. [1] Given that there is a shortage of talent and given that the marketplace is actively seeking for talent, what can I do to retain this talent? Let me give you five practical things you can do to keep great employees.
1. Know Them [2]
First, know your employees. Lincoln revealed the cornerstone of his own personal leadership philosophy, an approach that would become part of a revolution in modern leadership thinking 100 years later when it was dubbed “Management By Walking Around” by Tom Peters and Robert Waterman in their 1982 book -- “In Search of Excellence.” It has been referred to by other names and phrases, such as: “roving leadership,” “being in touch,” or “getting out of the ivory tower.” Whatever the label, it’s simply the process of stepping out and interacting with people. It is simply the process of establishing human contact.
We need to know how our people will respond in any given situation. We need to know who will have a tendency to get the job done on his own, or who will be more likely to procrastinate and delay. We need to know who can be counted on in an emergency and who can’t. We need to know who are the brighter, more able, more committed people. We need to know who shares are strong sense of ethics and values.
The most important asset a business organization has is its employees. So why not spend some time and money striving to more thoroughly understand who are your really great employees?
2. Listen to Them [7]
In his book, “Leadership Gold”, John Maxwell tells the story:
“A couple of rednecks are out in the woods hunting when one of them falls to the ground. He doesn’t seem to be breathing and his eyes are rolled back in his head. The other guy whips out his cell phone and calls 911. He frantically tells the operator, “Bubba is dead! What can I do?” The operator, in a calm, soothing voice says, “Just take it easy. I can help. First, let’s make sure he’s dead.” There is silence, and then a shot is heard. The guy’s voice comes back on the line and says, “Okay, now what?””
It is no accident that we have one mouth and two ears. Steven Covey writes: “When we listen with the intent to understand others, rather than with the intent to reply, we begin true communication and relationship building. Opportunities to then speak openly and be understood come much more naturally and easily.”
This is particularly an important point to know when it comes to great employees. Great employees really want to be listened to, respected, and understood. When leaders listen to them and use what they hear to make improvements that benefit the organization, then those great employees put their trust in those leaders. They want to work with those leaders. When leaders do the opposite – when they fail to listen – it damages the leader-great employee relationship. When great employees no longer believe that their leaders are listening to them, they start looking for someone who will.
3. Lead by Being Led
Third, lead by being led. As just stated, great employees want to be listened to. Great employees want their suggestions and recommendations considered and implemented. Our goal is to foster an environment in which our great employees sense little oversight and a large amount of freedom to “set the pace.” With great employees, we merely need to direct or point them in the proper path and allow them to lead us down that path. Rather than ordering or dictating, we need to refine our ability to direct others by implying, hinting, or suggesting.
One of the marks of true leadership genius is to create an environment that great employees relish to work in. Paraphrasing Lao Tzu: “A good leader is one who talks little, and yet, when his work is done, his aim fulfilled, all his followers will say: ‘We did this ourselves.’” [3]
4. Don’t Send Your Ducks to Eagle School [7]
In his book, “Leadership Gold”, John Maxwell shares a lesson learned from Jim Rohn:
“The first rule of management is this: don’t send your ducks to eagle school. Why? Because it won’t work! Good people are found, not changed. They can change themselves, but you can’t change them. If you want good people, you have to find them. If you want motivated people, you have to find them, not motivate them…..Chalk it up to mysteries of the mind, and don’t waste your time trying to turn ducks into eagles. Hire people who already have the motivation and drive to be eagles and then just let them soar.”
This counsel very much applies to “retaining” great employees. Once you “know” who your great employees are, don’t try and turn your ducks into eagles. It just doesn’t work. Here’s why it doesn’t work:
o If you send ducks to eagle school, you will frustrate the ducks. Ducks are not supposed to be eagles – nor do they want to become eagles. Who they are is who they should be. Ducks have their strengths and should be appreciated for them. They’re excellent swimmers. They are capable of working together in an amazing display of teamwork and travel long distances together. Ask an eagle to swim or to migrate thousands of miles, and it’s going to be in trouble. Leadership is all about placing your great employees in the right place so they can be successful. As a leader, you need to know your great employees and let them work according to their strengths. As a leader, you should always challenge people to move out of their comfort zone, but never out of their strength zone. That is one reason you don’t send ducks to eagle school. Secondly…..
o If you send ducks to eagle school, you will frustrate the eagles. Eagles don’t want to hang around with ducks. They don’t want to live in a barnyard or swim in a pond. Their potential makes them impatient with those who cannot soar. People who are used to moving fast and flying high are easily frustrated by people who want to hold them back.
As a leader, your job is to help your ducks to become better ducks and your eagles to become better eagles – to put individuals in the right places and help them reach their potential. You shouldn’t ask someone to grow in areas where they have no natural talent.
5. Give Them the Credit/You Take the Blame [2]
Finally, if you want to retain great employees, give them the credit and you take the blame. As leaders, we’d like to think that when people leave, it has little to do with us. But the reality is that we are often the reason. Some sources estimate that as many as 65 percent of people leaving companies do so because of their managers. We may say that people quit their job or their company but the reality is that they usually quit their leaders. [7]
So what is one solution to retaining great employees? Always give credit where credit is due and, conversely, accept responsibility when things go wrong. When a great employee does a good job, praise, compliment, and reward the individual. On the other hand, be prepared to shoulder the responsibility when they make mistakes. Always let your great employees know that the honor will be all theirs if they succeed and the blame will be yours in they fail.
Abraham Lincoln practiced this laudatory style right up to the final days of his life. During his last public address, made to gathering of people outside the White House on the evening of April 11, 1865, he was filled with modesty for himself and praise for the soldiers who had won the union victory: “No part of the honor, for plan or execution, is mine”, he asserted. “To General Grant, his skillful officers, and brave men, all belongs.”
Likewise, the president readily accepted responsibility for the battles lost during the Civil War. He tried to let his generals know that if they failed, he too failed. Throughout the war Lincoln accepted public responsibility for battles lost or opportunities missed. In the days following the battle of Gettysburg, for example, the president was distressed Meade’s delay in pursing Lee before his army made it back across the Potomac River. Well after the battle, in an attempt to spur the general into an active confrontation with Lee, the president sent him a letter urging an immediate attack. “If you can now attack him on a field no worse than equal for us,” said Lincoln, “and will do so with all the skill and courage, which you, your officers, and men possess, the honor will be yours if you succeed, and the blame will be mine if you fail.”
Endnotes
[1] Adapted from “A Manifesto for 21st Century Information Technology” by Bob Lewis
[2] Adapted from “Lincoln on Leadership” by Donald T. Phillips
[3] Adapted from “It’s Your Ship” by Captain D. Michael Abrashoff
[4] Bits & Pieces, May 28, 1992, Page 5-6
[5] Adapted from “The Mark of a Leader” by Doug Keeley
[6] Adapted from “The Ten Rules of Good Followership” by Colonel Phillip S. Meilinger
[7] Adapted from “Leadership Gold” by John Maxwell
Monday, October 10, 2011
Entrepreneurism & The Corporate Perspective (Pt. 2)
Myth #3 – Entrepreneurs Who Are Also Great Leaders Never Fail
Many organizations hold romantic views of entrepreneurial heroes. Even those organizations that are unmoved by exaggerated tales of inspired underdogs overcoming long odds, can be tempted to embrace stories about how great leaders are able to always implement great ideas.
This is simply not true. While not dismissing the importance of choosing the right innovation leader, choosing a talented leader is never enough. This is because innovation and ongoing operations are always and inevitably in conflict. What do I mean? The greatest strength of a successful organization is repeatability and predictability. By definition, innovation is neither repeatable nor predictable. It is exactly the opposite. It is non-routine and uncertain. Thus, the inherent conflicts between innovation and ongoing operations are simply too fundamental and too powerful for one person to tackle alone. Entrepreneurs who are also great leaders need the support of the organization and assistance from its resources to have any chance of being successful.
Jeffrey Hazlett told a group of CIO’s the story of a great marketing campaign that was intended to revolutionize Kodak. Having seen its consumer film business decrease from $18 billion to less than $1 billion in three years (the digital camera revolution), Kodak decided to take on HP laser jet printers. Their value proposition was to offer a printer at a fair price and charge 50% less for ink than HP. (Did you know that if you had to buy HP ink to fill up your car that it would cost you over $450,000!) To launch this new printer they decided to run an advertisement before a set of first run movies and have the movie-goers send a text to Kodak with their address/contact information.
The advertisement was a piece of genius. It begins with Vinnie Pastore from the Sopranos (aka “The Big Pussy”) opening up a trunk. He immediately begins telling the occupant of the trunk how disappointed he is in them, how they have been unreliable, and how they have been wasteful. The camera changes to allow you to view who he has been talking to – an HP printer. The next scene shows the HP printer in the middle of a road next to the car and not very far from the East River. Standing above the HP printer is Vinnie Pastore with a baseball bat. After delivering a final “Godfather-like” verdict, Vinnie beats the printer into oblivion. The advertisement ends with Vinnie back in the driver’s seat with his arm around a Kodak printer in the passenger seat proclaiming to the printer – “Welcome to the family.”
Hazlett, the CMO of Kodak at the time knew that the advertisement had graded out “off the charts” in preview tests. That first evening of the campaign, he went from movie theater to movie theater watching the audience roll in the aisles in laughter. In the morning he could barely wait to find out how many texts Kodak had received. They had spent millions on this advertising launch.
When he got to the office, his team met him in a conference room. They pushed a report showing the results of the program across the table. The number “2” was on the bottom of the report. He said: “2 million!” They shook their head. He said: “200,000?” They shook their head. Kodak had received only 2 texts!
Hazlett immediately summoned his entire marketing department into a conference room and proceeded to ask a series of questions. “What did we do wrong? How did this happen? What could possibly have been the reason for such a monumental failure?” After telling everyone that they could not leave the room until they found out the answer to this problem, one person sheepishly raised their hand. Hazlett asked him to speak up. He said: “What is everyone asked to do before the movie trailers start?” That’s right! They turn off their phones. The moral of this story is that even great innovation leaders – Hazlett is legendary in how he almost single-handedly enabled Kodak to reinvent itself – can and do fail.
Myth #4 – Effective Entrepreneurs Must Be Rule Breakers
Entrepreneurs are often called risk takers, mavericks, and rebels. The fact that innovation and ongoing operations are inevitably in conflict makes it easy to create a mythical drama. What will our hero do? What obstacles will our hero have to overcome? Who in the big, bad organization is our hero’s arch villain?
This romantic story usually results in our hero overcoming the stubborn forces arrayed against innovation by “breaking the rules.” It is important that you don’t want to let this notion take hold in your organization. This is because:
o Innovation leadership is not best thought of as civil disobedience. The odds are stacked against rebels and mavericks. Moreover, an organization full of rebels and mavericks fighting the system is not an innovation powerhouse -- it is an undisciplined and chaotic mess.
o Innovators need the organization. Innovation may very well signify the future. But the successful organization is the proven foundation, and if it crumbles, there is no future.
o Conflict is not due to the organization being evil, rather, it derives from the endeavors of good people doing good work. It arises from efforts to achieve the most basic goals of every business – producing, delivering, selling, marketing, servicing, and more with speed and efficiency.
The bottom line: innovators must do no harm to the organization’s existing capabilities.
Myth #5 – Everyone Can be an Entrepreneur
Most employees desire to be empowered. They liked to be viewed as being “special.” They believe that they have something unique to offer. They believe that they can innovate. But this mindset overlooks a harsh corporate reality – resources are scarce, and the bulk of resources in any established organization must be dedicated not to innovation but to ongoing operations. As such, resources for innovation must be allocated carefully.
A “turn the masses loose” approach ensures that resources are thinly and indiscriminately spread. Spreading resources in this fashion will result in three specific disappointments. First it will produce a disjointed overall effort. Second, it will favor very small initiatives. Individuals pursuing their own inspirations with their limited free time can only execute tiny experiments. Third, it will overemphasize the front end of the innovation process. It will overlook the back end – execution.
Ideation is everyone’s job. Employees should strive to make small improvements in their direct sphere of responsibility. Just be realistic enough to recognize that companies must concentrate their scarce resources for innovation to a subset of employees working on a handful of ideas. You can’t ask the whole organization that is in charge of today to also be in charge of tomorrow. This is because the urgent always squeezes out the important.
As an example of how one corporation addressed this problem, consider USAA. USAA opened an Innovation Center. This center takes up nearly 11,000 square feet in the corporate office. At any point in time, nearly 80 full-time employees are assigned to this Center. While there, they are relieved of their day-to-day responsibilities and are dedicated to working on “innovation.” The Center has numerous rooms with multiple white boards, markers, stickers, and computers so that ideas can be captured. The Center has space for building prototypes – physical and virtual. The Center has its own kitchen so that people can eat at any time of the day. Space is even set aside for people to play games and take a break from idea creation.
The first Innovation Center was so successful – hundreds of new ideas have led to tens of millions of dollars in new revenue and bottom line earnings – they are in the process of opening four more Innovation Centers across the world. (Demo the on-line check deposit capability introduced by the USAA Innovation Center.)
Myth #6 –Innovation Requires Wholesale Organizational Change
Most liken innovation projects to “running face first into a concrete wall.” That is because most organizations are poorly designed for innovation. Proven organizations are designed for ongoing operations, not for innovation.
This leads some to believe that an organization must be broken down and built back up in order to innovate. The problem with this approach is that it may be successful! It may make an organization much better at innovation but lousy at ongoing operations.
Innovation does not always require extensive change -- it requires targeted change. Support functions must be willing to make exceptions to standard policies for the Innovation Team. For example: HR must allow for a different bonus/commission plan for the Innovation Team. IT must be willing to support an effort that consumes disproportionate amounts of resources. Finance must be willing to use different ROI metrics than are normally used for projects/initiatives.
Just remember -- Your first obligation is to do no harm to the existing organization. Innovation may divert resources from ongoing operations, it may even cannibalize the existing business over the long run, but it may not dismantle or damage the on-going organization. (Comment on “How Stella Saved the Farm.”)
Myth #7 – Innovation Can’t Be Measured
How should innovation initiatives be managed? Some innovation leaders have a quick and ready answer: “Don’t even try. Innovation is unpredictable. It cannot possibly be managed.” While there are different rules for innovation, the innovation team must still be measured. Different does not mean undisciplined. While it is true that innovation initiatives are unpredictable, this does not make them unmanageable. The innovation team must be just as disciplined as the on-going organization. Companies must adopt a distinct but disciplined approach to innovation.
What does a distinct but disciplined approach to innovation look like? First, one must formalize the experiment. The organization should write a custom plan for each initiative, with custom metrics and cost categories. Second, be prepared to evaluate innovation leaders subjectively. While this cannot be done for the larger organization due to the risk of “favoritism” or “discrimination”, it does make sense for innovation projects. Just know that it will require closer than normal observations. Third, be willing to apply unique metrics. Never assume that metrics and standards used to evaluate the existing business have relevance for the innovation initiative.
Conclusion
This concludes our survey of the seven myths surrounding “innovation and the corporate environment.” I hope that you will have learned that the limits to innovation have nothing to do with creativity, nothing to do with technology, and nothing to do with the size of the organization. They have everything to do with management capability. Thus as entrepreneurs in a college setting, do everything you can to learn management skills that will make innovation possible in whatever type and/or size of organization you choose to go to work in.
Many organizations hold romantic views of entrepreneurial heroes. Even those organizations that are unmoved by exaggerated tales of inspired underdogs overcoming long odds, can be tempted to embrace stories about how great leaders are able to always implement great ideas.
This is simply not true. While not dismissing the importance of choosing the right innovation leader, choosing a talented leader is never enough. This is because innovation and ongoing operations are always and inevitably in conflict. What do I mean? The greatest strength of a successful organization is repeatability and predictability. By definition, innovation is neither repeatable nor predictable. It is exactly the opposite. It is non-routine and uncertain. Thus, the inherent conflicts between innovation and ongoing operations are simply too fundamental and too powerful for one person to tackle alone. Entrepreneurs who are also great leaders need the support of the organization and assistance from its resources to have any chance of being successful.
Jeffrey Hazlett told a group of CIO’s the story of a great marketing campaign that was intended to revolutionize Kodak. Having seen its consumer film business decrease from $18 billion to less than $1 billion in three years (the digital camera revolution), Kodak decided to take on HP laser jet printers. Their value proposition was to offer a printer at a fair price and charge 50% less for ink than HP. (Did you know that if you had to buy HP ink to fill up your car that it would cost you over $450,000!) To launch this new printer they decided to run an advertisement before a set of first run movies and have the movie-goers send a text to Kodak with their address/contact information.
The advertisement was a piece of genius. It begins with Vinnie Pastore from the Sopranos (aka “The Big Pussy”) opening up a trunk. He immediately begins telling the occupant of the trunk how disappointed he is in them, how they have been unreliable, and how they have been wasteful. The camera changes to allow you to view who he has been talking to – an HP printer. The next scene shows the HP printer in the middle of a road next to the car and not very far from the East River. Standing above the HP printer is Vinnie Pastore with a baseball bat. After delivering a final “Godfather-like” verdict, Vinnie beats the printer into oblivion. The advertisement ends with Vinnie back in the driver’s seat with his arm around a Kodak printer in the passenger seat proclaiming to the printer – “Welcome to the family.”
Hazlett, the CMO of Kodak at the time knew that the advertisement had graded out “off the charts” in preview tests. That first evening of the campaign, he went from movie theater to movie theater watching the audience roll in the aisles in laughter. In the morning he could barely wait to find out how many texts Kodak had received. They had spent millions on this advertising launch.
When he got to the office, his team met him in a conference room. They pushed a report showing the results of the program across the table. The number “2” was on the bottom of the report. He said: “2 million!” They shook their head. He said: “200,000?” They shook their head. Kodak had received only 2 texts!
Hazlett immediately summoned his entire marketing department into a conference room and proceeded to ask a series of questions. “What did we do wrong? How did this happen? What could possibly have been the reason for such a monumental failure?” After telling everyone that they could not leave the room until they found out the answer to this problem, one person sheepishly raised their hand. Hazlett asked him to speak up. He said: “What is everyone asked to do before the movie trailers start?” That’s right! They turn off their phones. The moral of this story is that even great innovation leaders – Hazlett is legendary in how he almost single-handedly enabled Kodak to reinvent itself – can and do fail.
Myth #4 – Effective Entrepreneurs Must Be Rule Breakers
Entrepreneurs are often called risk takers, mavericks, and rebels. The fact that innovation and ongoing operations are inevitably in conflict makes it easy to create a mythical drama. What will our hero do? What obstacles will our hero have to overcome? Who in the big, bad organization is our hero’s arch villain?
This romantic story usually results in our hero overcoming the stubborn forces arrayed against innovation by “breaking the rules.” It is important that you don’t want to let this notion take hold in your organization. This is because:
o Innovation leadership is not best thought of as civil disobedience. The odds are stacked against rebels and mavericks. Moreover, an organization full of rebels and mavericks fighting the system is not an innovation powerhouse -- it is an undisciplined and chaotic mess.
o Innovators need the organization. Innovation may very well signify the future. But the successful organization is the proven foundation, and if it crumbles, there is no future.
o Conflict is not due to the organization being evil, rather, it derives from the endeavors of good people doing good work. It arises from efforts to achieve the most basic goals of every business – producing, delivering, selling, marketing, servicing, and more with speed and efficiency.
The bottom line: innovators must do no harm to the organization’s existing capabilities.
Myth #5 – Everyone Can be an Entrepreneur
Most employees desire to be empowered. They liked to be viewed as being “special.” They believe that they have something unique to offer. They believe that they can innovate. But this mindset overlooks a harsh corporate reality – resources are scarce, and the bulk of resources in any established organization must be dedicated not to innovation but to ongoing operations. As such, resources for innovation must be allocated carefully.
A “turn the masses loose” approach ensures that resources are thinly and indiscriminately spread. Spreading resources in this fashion will result in three specific disappointments. First it will produce a disjointed overall effort. Second, it will favor very small initiatives. Individuals pursuing their own inspirations with their limited free time can only execute tiny experiments. Third, it will overemphasize the front end of the innovation process. It will overlook the back end – execution.
Ideation is everyone’s job. Employees should strive to make small improvements in their direct sphere of responsibility. Just be realistic enough to recognize that companies must concentrate their scarce resources for innovation to a subset of employees working on a handful of ideas. You can’t ask the whole organization that is in charge of today to also be in charge of tomorrow. This is because the urgent always squeezes out the important.
As an example of how one corporation addressed this problem, consider USAA. USAA opened an Innovation Center. This center takes up nearly 11,000 square feet in the corporate office. At any point in time, nearly 80 full-time employees are assigned to this Center. While there, they are relieved of their day-to-day responsibilities and are dedicated to working on “innovation.” The Center has numerous rooms with multiple white boards, markers, stickers, and computers so that ideas can be captured. The Center has space for building prototypes – physical and virtual. The Center has its own kitchen so that people can eat at any time of the day. Space is even set aside for people to play games and take a break from idea creation.
The first Innovation Center was so successful – hundreds of new ideas have led to tens of millions of dollars in new revenue and bottom line earnings – they are in the process of opening four more Innovation Centers across the world. (Demo the on-line check deposit capability introduced by the USAA Innovation Center.)
Myth #6 –Innovation Requires Wholesale Organizational Change
Most liken innovation projects to “running face first into a concrete wall.” That is because most organizations are poorly designed for innovation. Proven organizations are designed for ongoing operations, not for innovation.
This leads some to believe that an organization must be broken down and built back up in order to innovate. The problem with this approach is that it may be successful! It may make an organization much better at innovation but lousy at ongoing operations.
Innovation does not always require extensive change -- it requires targeted change. Support functions must be willing to make exceptions to standard policies for the Innovation Team. For example: HR must allow for a different bonus/commission plan for the Innovation Team. IT must be willing to support an effort that consumes disproportionate amounts of resources. Finance must be willing to use different ROI metrics than are normally used for projects/initiatives.
Just remember -- Your first obligation is to do no harm to the existing organization. Innovation may divert resources from ongoing operations, it may even cannibalize the existing business over the long run, but it may not dismantle or damage the on-going organization. (Comment on “How Stella Saved the Farm.”)
Myth #7 – Innovation Can’t Be Measured
How should innovation initiatives be managed? Some innovation leaders have a quick and ready answer: “Don’t even try. Innovation is unpredictable. It cannot possibly be managed.” While there are different rules for innovation, the innovation team must still be measured. Different does not mean undisciplined. While it is true that innovation initiatives are unpredictable, this does not make them unmanageable. The innovation team must be just as disciplined as the on-going organization. Companies must adopt a distinct but disciplined approach to innovation.
What does a distinct but disciplined approach to innovation look like? First, one must formalize the experiment. The organization should write a custom plan for each initiative, with custom metrics and cost categories. Second, be prepared to evaluate innovation leaders subjectively. While this cannot be done for the larger organization due to the risk of “favoritism” or “discrimination”, it does make sense for innovation projects. Just know that it will require closer than normal observations. Third, be willing to apply unique metrics. Never assume that metrics and standards used to evaluate the existing business have relevance for the innovation initiative.
Conclusion
This concludes our survey of the seven myths surrounding “innovation and the corporate environment.” I hope that you will have learned that the limits to innovation have nothing to do with creativity, nothing to do with technology, and nothing to do with the size of the organization. They have everything to do with management capability. Thus as entrepreneurs in a college setting, do everything you can to learn management skills that will make innovation possible in whatever type and/or size of organization you choose to go to work in.
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