We see in the headlines business and our global economy is faced with a digital transformation; we are at the beginning of the fourth industrial revolution.
“The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace…” – Klaus Schwab, Founder and Executive Chairman, World Economic Forum
The most difficult challenges for business not prepared for this transformation center on outdated modes of operating processes, and an unprepared workforce.
Those businesses; small or large; who have the foresight to look down the road ahead will be able to harness competitive advantages the transformation brings.
Ask anyone “what is digital transformation” and you will get different answers; the reality is that very few people agree on what the term “digital transformation” means.
Where we can agree is that the rapid pace of technology advancement is impacting business in ways few would have predicted; we need only look at the effects that digital commerce has on consumer transactions to appreciate the disruption.
“…Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.” – Klaus Schwab, Founder and Executive Chairman, World Economic Forum
Small business and non-profits are the most exposed to these disruptions; small business owners and small NPO MD are focused almost solely on the day to day necessities of running their businesses and reaching their constituents. Many times, they have neither the bandwidth nor expertise to really understand the impact; and honestly, we wouldn’t expect these managers to understand the effects.
Unprepared, that’s the word that comes to mind for many small businesses. Given 47.5% or 58.9 million people in the workforce are employed by the 30.2 million small businesses in the United states; being unprepared should be concerning to those small business owners.
Guidance and digital age Sherpas are needed to assist along the rocky trails and ensure that the backbone of the American economy continues to remain competitive on the global landscape.
Yet those small businesses are the very enterprises that need guidance the most, at the same time can afford it the least.
Over the next several articles, we will explore specifically, how we facilitate the digital transformation of small business and NPOs, and the commensurate economic impact on these businesses in real dollars. Leveling the playing field allowing small business to outpace their peers that are reticent to embrace the coming changes.
I was interviewed for a local blog article on Information Technology and the leadership challenges of integrating with business, managing change, and risk. I believe it’s worthwhile to share some of those thoughts here.
Q: How do go about applying technology to solve business challenges?
A: When I think about solving challenges in the business, it’s never simply one thing, e.g. technology, that solves the problem. The solution always comes about through a combination of people, process, and tools. Technology is simply a tool. A tool can be purchased and implemented in an afternoon. Think about going to the hardware store and purchasing a hammer and nails; in the hands of a person who’s never used a hammer before all you will get is a swollen thumb and a piece of wood with a bunch of bent nails. However, in the hands of a skilled craftsman, you will get the cathedral Notre-Dame de Paris. So the craftsman (people) have the motivation, and ability, to choose the correct hammer (the tool) and select the right nails and material and know how to use the hammer and material (the process).
If we think about change adoption it looks like a bell curve; with 25% of people championing change; and 25% actively resisting change; then there’s the 50% on the fence. Yet as managers; where do we spend most of our time? On the bottom 25%; attempting to “convince” them to come along. Taking such an approach alienates the champions “we’re working so hard and not getting kudos and they are stalling progress”; and shifts the middle 50% to becoming blockers resisting change, “If they are having to drag that many people along, this change can’t possibly be a good thing”.
We should be spending our change efforts to working and fostering the ‘super man/woman” in the top 25% and top half of the middle 50%, the blockers will either come along because of peer pressure or simply leave the business.
Q: How do you go about convincing business leadership to make major technology investments?
A: There have been very few times in my career where I’ve had to “convince” senior leadership of anything. If IT has a seat at the executive table; and access to the board of directors; and IT is actively engaged in the strategic planning process of the business; the required objectives and commensurate people, process, and tools becomes self-evident through the organic planning process.
In those cases where something arises that requires a major investment, and it’s out of the planning cycle, e.g. an acquisition or some other event; again, the need and commensurate people, process and tools are self-evident.
If I am in a position of having to “convince” or “sell” anything to senior leadership, one of two things is not occurring and need drastic change; either IT is not included in the overall planning process of the business and sitting at the table; or I am not listening to the strategic needs of the business and aligning technology services accordingly.
Q: What are some of the most important skills when evaluating and making staffing decisions?
A: While some people believe that a person having an exceptional technical acumen is the most important attribute. Flexibility and adaptability are far more important overall; many technical skills can be taught; if you are an engineer who understands object oriented design, learning the differences between C# and Java are a matter of semantics. However if you don’t possess the ability to be flexible enough to adapt to changes from a structured design model, to an object oriented model then no amount of skill development can compensate for the deficiency.
When it comes down to people, I look at three things; do they have the desire or drive to accomplish something, do they have an amount of ability to accomplish something in a reasonable time, and do they have the opportunity to accomplish something. I can provide the opportunity, and I can provide the tools to help build the ability to some degree. I cannot provide the drive and desire.
Q: How do you decide on what technology investments to make; if it’s new and emerging technology, and how do you go about managing that risk?
A: While there are some non-negotiables in the technology investment cycle; e.g. licensing (if you use it, you pay for it). Every decision about investment should be made through the lens of strategic alignment or returns provided to the business (even if they are soft or cost avoidance). In cases where I haven’t performed adequate due diligence on the investment; risk avoidance becomes a paramount concern.
When we implement technology solutions for a business, unless the business is in the technology development sector, technology should never be implemented for technologies sake; most businesses are not in the technology business, so the use of investments should be primarily focused as a lever to drive revenue (top line) growth; e.g. an eCommerce solution that would generate sales, or improve efficiency and thus increasing organizational bandwidth and reducing operating expense; e.g. ERP.
While there is always risk in any investment; managing the risk is primarily about insuring that you not only identify the big risks; e.g. project change, or change adoption; but just as important managing the incremental day to day risks; competing priorities, lack of clear direction. While in many cases the day to day risks are easier to manage largely because they are incremental; many times they are not managed well (how many times during the course of project work you procrastinate on a detail because you simply “don’t feel like it” or a conversation is too much of a pain in the neck because of another stakeholder – because, you know, it’s always the other person and not me who’s the problem).
Not addressing the day to day risks will accumulate over time and create significant project delays, and cost overruns. So I handle these types of issues using regular cadence meetings with only three agenda items (taking from the Chesney book ‘The 4 Disciplines of Execution’):
What was accomplished on the objectives from the last reporting period?
What items need to be accomplished in the upcoming reporting period to move the needle on the project?
What are the roadblocks preventing the person from completing the upcoming reporting period?
The reality is that in any leadership position, our jobs involve us becoming the CRRO – the Chief Roadblock Removal Officer for the stakeholders, teammates, and direct reports we serve.
In Summary
Most of the topics I was asked about during the interview were things I don’t really think about anymore and have, for me, become a matter of habit. Someone pointed out to me that not everyone understands what I do, so sharing these experiences would be beneficial for leaders struggling with the same thing.
In March of this year, I appeared on stage at the North American CIO Summit at Microsoft headquarters in Redmond, Wa, delivering a talk on the challenges of information protection and Cybersecurity for global mid-market companies.
After the presentation, I was interviewed by Channel 9 the Microsoft Technology Showcase channel.
Here are excerpts from the interview and a link to the Channel 9 page (below):
Why I didn’t write this nearly 30 years ago is beyond me, it’s a topic that I’ve wrestled with for that long. Huh? You’re asking yourself… What’s he talking about?
I’ll start with my background and how I got here. You can easily read from my LinkedIn profile, that I started out life as a technical practitioner in IT, and nearly 30 years later I’m still in IT. So I guess you can call me career IT.
IT isn’t exactly the easiest career path to stay on, especially in the world of business.
The product practitioners and software engineers look down at you because you’re obviously not good enough to do REAL product development. The business and financial practitioners look down on you because you’re the geeks who don’t understand business, speak a language they can’t relate to and are at best a fixed expense to be managed and minimized. The business and financial people at least tolerate the quirkiness of engineers, because they produce a revenue generating product, usually.
Sound familiar?
So after 27 years, two masters degrees and four companies why am I still fighting the daily battle that is a discipline called Information Technology? Because I have the firm belief that there is a direct contribution that this discipline can make to facilitate and generate top line revenue growth for a business; I believe in a world of cost reduction and technology commoditization, that Information Technology can and must become a competitive advantage to business in the 21st century.
Nicolas Carr wrote in 2003 a watershed article entitled “IT Doesn’t Matter,” in his article, published in the May 2003 edition of the Harvard Business Review, Carr asserts the notion that in an environment where every business has an IT department to write management reports and process data, having the ability to do so no longer is a competitive advantage. He continues to assert that as these technologies become more widely available they should become costs to control rather than invest in.
When I first read the article, it took me some time to understand the perspective Carr was fostering. At the time the article was written, Carr was correct, and at some level still is. As traditional IT becomes increasingly commoditized in an ever increasing cloud world, Services, servers, and infrastructure do become operational expense that should be outsourced and controlled.
But traditional IT is changing; IT must truly become a driver to the business, IT and the role of the CIO must transform from a support expense to business technologist, share increasing evangelist; dare I say visionary partner to the others in the “C” suite about how the business market can be transformed through the use of enabling technology.
It was after reading Carr’s article I committed to understanding business, the drivers behind markets, and the sensitivity to market share that every CEO and business leader are concerned about; and then demonstrating the value that IT brings to the table to facilitate revenue growth, and improve shareholder value making IT a competitive advantage in the hands of the right person.
IT’s has a real challenge in dealing with the business
Why is it such a struggle for IT practitioners to communicate with the business owners in such a way that both sides of the table understand where the other is coming from? I mean we are all on the same team, right? We all believe that when the business succeeds as a whole we as team members succeed, right?
While perception of ‘when the team wins we all win’ is absolutely right; the technical practitioners in IT, and the business owners look at the world through completely different sets of lenses.
Eliyahu Goldratt said in his seminal 1984 book “The Goal” that “the goal of the business is to make money.” And everything related to a business must contribute to removing the constraints of obtain the goal.
That’s how the business owners view the world, through the lens of making a profit from the business (while some business owners might want to appear to take a more altruistic approach, I would argue that if you weren’t running an enterprise with the purpose of turning a profit, you’re probably in the wrong pursuit).
The finance and accounting practitioners look at the business through a similar lens, adding that they are to produce the financial statements used to measure the profit, and identify sources of cost that sub-optimize profit generation.
IT, however, tends to look at things in terms of how to leverage tools to accelerate execution or improve communication, or secure the business from risk. While ITs view of the world isn’t incorrect, it is challenging to communicate to non-technical practitioners the meaning and impact of ITs agenda on the business, especially given the highly technical nature of ITs solutions.
And the last paragraph is exactly the reason why the communication breaks down so frequently and thoroughly. IT is often attempting to forward the IT agenda… NEWS FLASH: It’s not ITs Agenda it’s the BUSINESS’, but when IT speaks it is frequently doing so in such a way that it sounds like gibberish to the business and finance practitioners. And when the gibberish to the business practitioners sounds something like “we need to implement a high availability virtual cluster built on Hyper-V, and attached to our global MPLS data network.” The business owners hear “blah, blah blah” becoming yet another reason for IT to become irrelevant.
A great example of this is the movie Pearl Harbor starring Ben Affleck. When my wife and I saw the movie for the first time, we both loved it, but for entirely different reasons. When a friend asked me what I thought of the movie, I said I thought it was a great representation of some of the lesser known historical facts of WWII and the events before and after the attack. When the same question was asked of my wife, she said it was a great love story.
We both saw the same movie, at the same time, but we both looked at the movie through two very different lenses.
And I believe that’s the fundamental struggle in communication between the technical practitioners of IT and the business and financial practitioners charged with running the business.
Add to this miscommunication, that there is very little crossover or trust between disciplines, and that the situation can be compounded by the technical practitioners somewhat smug and occasionally outright condescending self-righteous attitude toward non-technical practitioners, and the whole thing becomes a recipe for disaster.
Finally, articles written by the trade journals are typically written by either the financial professionals fostering the need for more governance and control over the IT function, because they are incapable of doing it themselves.
Or articles written by the technical practitioners complaining that the business and accounting functions aren’t qualified to make decisions or govern the technical function because they don’t have the technical acumen and decisions shouldn’t be made on finance alone.
Ok, so what, this is all well and good you say, but what needs to change?
If IT wants a seat at the table, to be a meaningful contributor to the business, and help drive profit and change, then IT needs to earn it’s seat at the table.
It means that IT leadership MUST become a business leader, the CIO must not only understand what drives profit in the enterprise, he or she must also understand the market channel the enterprise plays in, and how IT can make a meaningful contribution to exploiting the drivers to drive sales, increase revenue and profit.
The CIO MUST learn the vocabulary of business, to be able to communicate with his or hers business peers in a way they can relate.
It also means that the CIO absolutely must get out from behind the desk and build relationships with the business leadership, because in the end, that is going to be the ONLY way to understand what drives product and profit.
It means Mr or Ms CIO, that you must learn how to read a balance sheet and income statement, you have to understand the impact you can have on cost of sales and operating income. Developing an understanding of the market drivers for your industry doesn’t hurt either.
It also means to check the technical ‘alpha’ ego at the door. Business and technical practitioners, you might be the smartest person in the room; but if you don’t know how to work together, and relate to people, that smart mass just means you’re a jerk.
But this isn’t a one way street either.
Mr or Ms CFO or business leader, it also means that you must develop at least a basic understanding of what drives the use of technology in the enterprise; it doesn’t mean you have to become a network or database engineer; but it does mean that you need to understand the impact of the tools and trends on the business. For example can you explain in simple terms why social media is important to driving customer and employee engagement in your enterprise?
It’s a process.
I’d like to say that as an IT evangelist I’ve been completely successful, and most days I feel like I am. But I continue to struggle with staying relevant, communicating with the business in ways that are meaningful to them, and not fall in to the trap that the truth (at least to me) is self-evident.
And I find it ironic and (most of the time today) funny that in a room full of officers, board members, venture capitalists, and business executives, everyone continues to turn to me when there’s a problem with the WiFi at a conference center where we are having an investor’s meeting. (sigh) Forever the printer repairman.
Very real opportunities exist for investment in China;
China continues to struggle fueling it’s economic growth; partly because it’s been paying for all of the infrastructure through borrowing, which as of right now is at about 250% of it’s GDP, adding to the fire is the forecasted economic growth not expected to hit 7.0% in 2015.
The amount of building that’s going on here is crazy… roads, high rise office towers, everything.
China recognizes the need to improve the lives of the citizenry rests in producing sustainable growth and participate globally.
In order to do that, China is going to have to shift from low end manufacturing to high end production.
Such a move requires that China reduce all of the heavy government spending and borrowing to fuel its growth, and move toward a consumer market with a focus on increasing the services sector. The services sector has risen 46% over the last 10 years, and will need to continue to grow and outpace the low end manufacturing.
We combine the rise in services with the strong dollar gives China a chance to increase exports to the US.
Now here are the clinchers, president Xi Jinping has eased up on visa restrictions to enter and stay in the country, I literally received a 10 year visa this year after having to renew my visa yearly for the last 10 years; the easing up on visa restrictions will allow more talent to enter the country more frquently from foreign companies.
Next while the Shanghai stock exchange has suffered some eratic performance recently, the fact that the Chinese equity markets have been opened to foreign investment is huge. In fact several mainstay Chinese companies are actively seeking foreign investment capital.
Haiku Deck (and Nancy Duarte’s Book – Resonate) has changed the way I present content in and speaking; I hope to see them at SXSW 2014 – Unlocking Inspiration for Visual Storytelling – http://ow.ly/odxEG
