Part 3: Time for Action
Taking action to address the problem
The previous two articles in this series discussed the problem of realizing value from IT-enabled change, and the underlining causes of the problem. This final article in the series discusses the path forward.
When there is understanding of the problem, and the desire and commitment to act, the first question now is “Where do we start?” This is usually quickly followed by “How will we know that we have been successful?” and, sometime later by “How do we keep this going?” The good news is that there are resources available to enterprises to help answer these questions. However, before discussing these, let’s look at a number of scenarios where action can come to a premature halt.
The first of these is implementation by fiat, without an adequately thought-out plan and commensurate resources. There is all too often a tendency for executives to believe that once they say something should be done it is – this is rarely the case. I sometimes describe this as the “Star Trek school of management”. Executives, just like Captain Picard, say “Make it so!” – they often don’t fully understand what “it” is or how they will know when they get there, and the people they say it to all run off with very different ideas of what “it” is creating a lot of activity – often in conflicting directions. As Larry Bossidy and Ram Charam suggest in Execution, The Discipline of Getting things Done the role of the executive when saying “make it so” is to ensure that no-one leaves the room until the executive is confident that they all understand what “it” is and, when they come back with a plan, that they don’t leave the room until he/she is confident that the plan has a good chance of delivering “it”.
In other cases, organizations take on too much in the first bite – this either results in “sticker shock” with no action being taken or, particularly when, as is often the case, the time-frame is unrealistic, failure. The opposite can also be true, doing too little and/or taking too long to do it such that patience runs out and/or interest diminishes to the point of backing off.
Also, where progress is being made, success is not always promoted and built on – without demonstrated and recognized success it can be very difficult to maintain the interest and attention of executives to sustain the change initiative, especially one that may take many years, as many, if not most such initiatives can do. This can become particularly evident if a new executive comes on the scene and asks, “Why are we doing this?” Without a sound response, this is often followed by “We did just fine without this where I came from!”
Many of these scenarios are exacerbated when insufficient thought has been given to metrics – measurements that must include both ” lag” metrics – are we there yet? – and “leading” metrics – are we on track to get there?, as well as tangibles and intangibles. As Faisal Hoque, Chair of The BTM Institute says “…technology [itself] warrants evaluation with a tangible set of measures. But the majority of what technology actually does falls more into the sphere of the intangibles.” Understanding how those intangibles (often leading indicators) can contribute to tangibles (often lag indicators) is a key part of value management.
The challenge of business engagement
The underlying challenge however remains getting the business appropriately engaged. As long as the business continues to see anything to do with IT as an IT problem, we will continue to have significant challenges around realizing value from IT. Only when IT is seen as an integral part of enterprise governance will the issues around realizing value from IT investments be addressed. A 2007 report from the BTM Institute confirms that enterprises focused on converging their business and technology disciplines exhibited superior revenue growth and net margins relative to their industry groups and exhibited consistently greater rates of return than those of their competitors.
Boards and executives need to understand that they can no longer treat IT as a “black box”- something distinct and separate from their core business. In enterprises, to varying degrees, IT is now embedded in the enterprise, and in the enterprise’ s business processes – as one colleague of mine describes it “IT comprises the electronic bits of business processes.” In The IT Value Stack Ade McCormack says “Information technology isn’t an optional extra, it is a condition of entry to most markets. It is the enabler of business sustainability. The CEOs who don’t get that are either in the wrong job or have done some calculations in respect of their retirement date and this reality dawning on the shareholders.”
The need for dialogue
A number of years ago, a senior Australian public sector executive said to me “I need to get the right people in a room having the right discussion.” His statement captures the essence of the problem. We need to break down the current siloed view of IT and the business – the “two solitudes” as I often describe them. We need to create and sustain an on-going dialogue between the business and IT leaders. Whilst an important part of this will be informal, this is necessary but not sufficient. We need a formal governance framework which promotes and supports such a dialogue.
Depending on the current maturity of an enterprise, this dialogue needs to include a number of key elements:
- Understanding the role of IT in an enterprise – a role that has evolved over the last few decades from automating transactions to fundamentally transforming the nature of the enterprise;
- Understanding what constitutes value for the enterprise, how value is created and sustained, and how IT contributes, or can contribute to creating and sustaining value. We need to get away from trying to measure IT’s precise value which is a meaningless exercise guaranteed to keep ranks of MBA toting consultants busy, to understanding how IT contributes to value;
- Understanding the roles, responsibilities and accountabilities of the board, executive management, business unit and IT function management in maximizing the contribution of IT to business value;
- Developing a comprehensive program of change to implement or improve governance processes and practices around value management, focused initially on key “pain points” where early results can be achieved;
- Managing the journey – learning by doing, leveraging successes and continually improving the processes and practices.
Enterprises do not have to start from scratch when undertaking such a program. As I mentioned in the the first article, there is a growing body of knowledge in this space. Since The Information Paradox was first published more than 20 years ago in 1998, many more books and articles have been written on this subject and many organizations such as the IT Governance Institute (ITGI), the Office of Government Commerce (OGC) and the Project Management Institute (PMI), as well as academic institutions such as Cranfield and UAMS, and vendors such as Fujitsu have developed frameworks and methodologies to assist enterprises on this journey. I worked with Fujitsu in developing their Enterprise Value Management approach (and supporting Macroscope™ methodology), as well as with ITGI to develop their Val IT framework. However, a word of caution here. You cannot approach enterprise governance, value and benefits management, or other areas such as change management as a “grab a framework and tick the boxes” exercise. Frameworks provide valuable guidance as to what needs to be considered, and how you might approach it, but the organizational context will drive what approaches work. You may well draw ideas from a number of different sources, and indeed create some of your own. This is definitely an area in which one size certainly does not fit all.
When I asked a CIO of a large Canadian company why he thought the rate of adoption of effective enterprise governance of IT, and approaches is so glacially slow, his response was “It’s not easy.” His view is confirmed by research conducted at University of Antwerp Management School- ITAG Research Institute which reveals that important governance practices such as benefits management and reporting are perceived as being very difficult to implement. However, many things in life are difficult, but we have to get them done. In the case of realizing value from IT investments, until we take action the problem will remain. The question, as posed earlier, is “Where do we start?”.
It’s all about managing change
Whilst the availability of frameworks can help the transition from words to action, at its core, any initiative to implement or improve value management is about change. Over the past couple of decades, many enterprises have undertaken programs to improve corporate performance, yet many of these have failed. The underlying cause of these failures is that most failed to persuade groups and individuals to change their behaviour.
Here, even the use of the term ” organizational change” can set false expectations by overlooking the emotional aspects of change. George H. Sejits and Grace O’Farrell of the Richard Ivey School of business in London, Ontario wrote “One of the more important reasons that change efforts fail is that the idea of ‘organizational change’ is an illusion. Organizations do not change. It is the individuals within organizations that change their behaviours. Unless the need to change is perceived as an effort to create positive outcomes including… the expansion of personal power and a more interesting job, individuals can be expected to resist the initiatives that are part of the overall change effort.” In the context of value management, this can be even more difficult as it is individual board members and executives that are being asked to change their behaviour – behaviour that they may feel has served them well in the past.
Effecting change requires a well-defined and disciplined change management program. Such a program depends upon a number of critical success factors. One is strong and visible executive championship. Another is a clear and realistic vision of the future state. Another is adequate resources – change almost always requires an investment in expertise, funding, and infrastructure over and above the normal costs of conducting ongoing business operations. Management of the program must also be flexible enough to change the journey and, possibly, the destination as more information is known and/or internal or external circumstances change.
A critical element of any change management program is communication – a change-related communications plan should address the following four elements- as defined by William Bridges in his book, Managing Transitions:
- Purpose: Why are we doing this
- Picture: What will it look like when we get there?
- Plan: How will we get there?
- Part: What will be my role, both in getting there, and when we get there?
While all four of these elements are important, it is the last one – What is my part? – that is typically the most challenging. Make sure that not only is the question “What is in it for me?” answered, but also, and perhaps even more importantly, recognize that resistance to change, whether calculated or unconscious, is a common challenge when working with both individuals and groups. Naturally, people question why change is necessary and wonder whether it will hurt them – it is “loss” which most people fear most of all from change. The initial reaction to change is “What am I losing?” Take the time to understand and acknowledge what benefits, rights, privileges or freedoms key stakeholder groups believe they are losing – again, don’t forget that individual board members and executives are human beings with emotions too – they will also be feeling this way, possibly more than others.
Don’t forget the reward system. As another colleague of mine once said “The good thing about reward systems is that they work – the bad thing about reward systems is that they work!” Align the reward system with the desired future state. Provide incentives for change. Define how achievements will be measured. And link these objectives to outcomes within the scope of each individual’s responsibility.
A call to action
Finally, if we are indeed to move beyond words, we must place an emphasis on action – on engagement and involvement at every level of the enterprise. One of the key findings presented in The-Knowing Gap is that knowledge is much more likely to be acquired from ‘learning by doing’ than from ‘learning by reading’ or ‘learning by listening’ . This strongly suggests that an iterative step journey toward value management will yield, for each individual, a discrete set of opportunities for learning that, taken together across an organization of people, form the stepping stones toward cultural transformation and the achievement of real and sustainable change. As Sun Tzu says in The Art of War,, ” Every journey starts with the first step.” I urge you to move beyond words and take that first step – I can’t promise that the journey will be easy, but without it, value from investments in IT-enabled change will remain elusive.
 Tzu, S. The Art of War. USA. Oxford University Press