CHAPTER 1: SURVIVING IN A WORLD OF CHANGE
In 1859, Charles Dickens began his Tale of Two Cities with the words: ‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness’.
He could have been writing about the plight of IT leaders – they, too, face an uncertain future and have little in the way of tradition or track record to fall back on. In their short history, IT leaders have enjoyed many titles; recently there has been a trend towards the epithet ‘chief information officer’ (CIO) – as recently as the 1980s this term was unheard of and, in most instances, the incumbent never really embraced the I of information, but rather concentrated on the T of technology, and therefore assumed the default position of CTO – chief technology officer. Indeed, many IT leaders, whatever their role name, have a tendency to become bogged down in the technical aspects of the role. This has consequences, not least of which is that they tend to spend a lot of time dealing with challenging questions such as:
• Why is IT so expensive?
• How can we reduce our IT costs?
• Why did our major supply chain rationalisation project overrun on budget and deliver late?
• Why is it that we have doubled our investment in IT over the last five years, but have seen no improvement in productivity?
• Why do I read about other companies transforming their performance through the use of latest Web 2.0 technologies, but we appear to be stuck in the last century?
It is difficult to be influential when you are constantly on the back foot justifying your very existence. IT leaders rightly believe that they can, and should, influence the strategic use of information technology to drive new levels of business performance. However, all too often they have little or no voice when it comes to strategy decisions; indeed, less than half of all IT leaders are members of operational boards and only about 30% report directly to the CEO.1
So what is the future for the IT leader – is it to be the worst of times, a retrenchment to the mechanic’s role of chief technology officer, consigned like Star Trek’s ‘Scotty’ to the bowels of the engine room and destined never to go on an away mission? Or will they model themselves on Captain Kirk and boldly go where no IT leader has gone before, on their continuing mission to discover brave new business models and enable technology-led business opportunities previously unimagined? If they take this new route, the IT leader could evolve into the CTO – chief transformation officer – and really contribute to the development and success of their business enterprises.
Our contention is that, whilst this change may appear to be evolutionary in terms of technical skills and contribution, if it is to happen, it will require a revolutionary change in attitude, perception and relationship structures. The good news is that this is all possible and it is firmly in their own hands. In this book we will provide access to the understanding necessary to develop the reflective capacity to shape the journey, along with a range of tools and techniques that can be used to navigate along the way.
Influential management thinkers, such as C.K. Prahalad,2 argue that the very shape of business is changing, and that to be successful we need to rethink business models and relationships with customers, suppliers and partners. Specifically, he suggests that:
• The way companies create value is shifting from products to solutions to experiences.
• At any given time, the people best equipped to solve our most pressing problems probably work for somebody else. Therefore, to be successful we need mechanisms that allow us to access the talent, materials, products and services from the best source, wherever that is in the globe. This realisation is at the heart of the current shift towards Open Innovation in many organisations.
• Both internal management systems and current IT infrastructures are the largest obstacles to success in the new world.
These first two ideas and the recognition of the power of the third inhibitor have the potential to reshape our industries. Perhaps surprisingly, the early indicators are not just that it is information-intensive sectors that are embracing these changes, but also that traditional heavy-manufacturing giants are leveraging the power of individualised services and global partnering and sourcing.
At the core of this transition, is a move away from segmenting consumers in classes based upon average demographics towards engaging on an individual basis with a consumer around their individual needs and behaviours, and then co-creating a value proposition directly with that consumer. The implications of operating in this way are significant and, as a minimum, demand:
• flexibility – the ability to reconfigure resources (from both internal and external sources) to dynamically meet demand
• collaboration – networks of partner-providers and solution-finders – a model that moves away from ownership to a world of privileged access and influence
• improved decision making – in order to allocate resources dynamically to meet changing patterns of demand and one-to-one relationships with customers, we need real-time, reliable analytics, so that managers can move from intuition-based decisions to fact-based decisions
• open access – the right resource from the right source at the right time – shifting the thinking from who is available in the department to who is available in the world. The focus is, therefore, on access and influence, rather than on ownership and control.
An underpinning assumption in the trends outlined above, is that in terms of value creation, the power of IT lies not in its capacity to enable more joined-up transactions processing across diverse supply chains, but rather in its ability to support decision making around the deployment of resources to dynamically meet changing business patterns. In this respect, we need a renewed focus on the I in IT – a world where we use information to transform and enable new modes of value creation, rather than using information (data) to transact existing business and value chains. When we look at those organisations that stand out as leaders in the application of technology to enable new business models, we see nimble and highly flexible entities who are comfortable with risk and uncertainty and who frequently experienced many setbacks and failures before becoming overnight successes. Anyone in the research and development business will testify that every market-leading product is built on the back of a series of failures, probably a ratio in excess of 10 to one. However, many IT leaders behave as if this statistic doesn’t apply to IT systems development. They appear to believe that they can find the right solution first time every time and that, if we can only improve our analysis and planning, we can bring every solution into operation. This is patently nonsense. In order to get new and innovative solutions, we need to constantly experiment, we need to provide an incubation environment for breakthrough ideas and solutions and we need to tolerate failure, as long as we learn from it.
We would, therefore, argue that in the modern world the IT leader needs to be a master of imperfectly seizing the unknown, rather than working to perfect the known.
For well over 20 years, there have been clarion calls for IT directors and CIOs to produce an IT strategy that is linked to the business strategy and supportive of desired business outcomes. When such a clear and explicit linkage is not evident, the excuse is often that the business strategy is ill-defined or shifting, or that it is out of phase with the needs of the IT planning cycle. Yet such claims misunderstand the nature of strategy formulation. In the 1960s and 70s, it was not unusual for large organisations to have a staff function whose remit was strategic planning, a constant scanning of the environment and the articulation of long-term plans and goals. Now, however, these staff functions are largely defunct. Strategy is seen to be a ‘wicked problem’3 – these, by definition, are problems that have no clear cause-and-effect relationships and tend not to submit themselves to analytical solutions. In such circumstances, strategy is seen as dynamically emerging through a process of ongoing and open dialogue between all stakeholders, as opposed to the product of an élite and gifted few.
So we have a situation where business strategy now tends to emerge through a process of ongoing dialogue in response to ill-defined, dynamic and often unpredictable market conditions. Many IT leaders have no voice in this ongoing dialogue because they have not established a sufficiently wide sphere of influence based on trust and personal credibility. They are not keyed into the organisational network, and their introspective focus on technology often leads to them being labelled as having no business acumen.
It is a given that the IT leader must be technically capable and keyed in to emerging trends and technologies; they must also be keyed in to the latest business thinking in a wide range of industries, keyed in to how business models are developing and the role of technology in enabling those business models. These qualities are hygiene factors – they are must-haves, they represent a licence to practise. However, relationship-building, strategic influencing, consensus-building, leading through conversations, communication, negotiation, networking, stakeholder management – these are the skills that make a difference, open doors and provide a licence to transform.
It is becoming clear that effective IT leadership needs a blend of hard techniques and excellent people skills. Traditionally, IT professionals have been stereotyped as having poor interpersonal and communication skills – this may or may not be true, but what is certainly true is that success in the future requires a lot more than technical excellence. The IT leader of the future will be focused on business issues and, in order to be effective, must be part of a broader coalition of leaders who, together, find innovative ways to drive business value and create sustainable advantage. A recent survey of 1,345 CIOs across Europe revealed what they deemed to be key skills in a downturn (see Figure 1).
Interestingly, in their view of key skills there is no mention of technical excellence, adoption of best practice, or ability to carry out benchmarking and raise process standards. The focus is very much on working through people and relationships to provide leadership. The only tangible skill mentioned was managing the detail, and this from only around 10% of respondents. These findings just confirm that technical excellence only gets you so far; the really hard stuff is the soft stuff. So why do we find it so difficult to create open, transparent relationships with our peers that promote collaborative action and collective discovery?
It is tempting to assume that there is just one shared reality and that, when we witness something, everyone else sees the same thing, takes away the same facts and is left with the same impressions. Actually, around 80% of the data we use to make decisions is already in our heads before we engage with a situation. Our power to perceive is governed and limited by cognitive filters, sometimes termed our ‘mental model’. Mental models are formed as a result of past experience, knowledge and attitudes. They are deeply ingrained, often subconscious, structures that limit what we perceive and also colour our interpretation of supposed facts. Each person has a different mental model and, therefore, potentially a different interpretation of the Facts. The danger comes when we start to assume that our interpretation of the Facts is the only interpretation and we believe that what we see and think is the Truth, and that there is only one Truth.
Recent research in neuroscience suggests that we deal with information overload using what might be termed ‘pattern recognition’. When presented with a new situation, our brain will seek to find a pattern based upon prior experience. Further, our brain is highly tuned to this task and will find a pattern even when the information is very sparse. Once we have found a match, we tend to become wedded to that view, even though subsequent information may contradict our initial assessment. It would appear, then, that the brain relies for decision making on two hard-wired processes:4
• our brains assess what is going on using pattern recognition; and
• we react to what is going on because of ‘emotional tags’ that are stored in our memories.
These ideas complement work done by the Swedish neurobiologist David Ingvar, where he proposes a concept which he terms ‘memories of the future’.5 Ingvar suggests that the human brain is constantly involved in future-focused action-planning. We mentally rehearse possible futures based upon the information that is available to us; these possible future plans can have either positive or negative outcomes. Our brains store these patterns as a sort of memory of things that have not yet happened. Thus, when our brain looks for patterns as a result of a new situation, it could match with a real memory or with one of these possible future memories. The main purpose of ‘memories of the future’ is, therefore, as an aid to pattern recognition in so far as incoming information is only deemed to be meaningful if it matches one of our stored alternative paths into the future.
These two pieces of work from the field of neuroscience suggest that far from acting upon what we see, we only see what we deem to be relevant and supportive of things we already know: our stored view of how things work. Our mental models ensure that what we perceive is governed more by what is already in our head than what is in front of our eyes.
Whether you call these neural pathways ‘mental models’ or ‘memories of the future’, what is clear is that they are deeply-held views of the way that the world works or should work. At a subconscious level, these models may be largely hidden from ourselves; we react apparently instinctively as a result of deeply hidden views that we are not aware of and could probably not articulate if asked. Because of this, mental models are difficult to shake or change. We are all prisoners of our past experience; we view the present through the lens of the past.
Why is this important? Well, there is an old expression that goes along the lines of:
If you always do what you always did, you will always get what you always got.
The truth in this statement is that much of what our eyes see is discarded by the brain as irrelevant because it does not fit with currently-stored patterns. Our brain will find a pattern, but there is no guarantee that it will be the right pattern. Our ability to perceive is governed by our mental model, and the range of possible actions is prescribed by what we perceive and our standard models of assessment. This means that most of us spend most of our time locked into what might be termed a ‘Do–Get loop’ (see Figure 2).
Our past (mental model) governs what we perceive (See) and how we make sense of it (Assess). This, in turn, prescribes our range of possible actions (Do), which leads to results (Get). We are therefore trapped into repeating well-understood, but possibly ineffective, patterns of behaviour and can Get sub-optimal results. The cycle is both self-fulfilling and self-reinforcing – we tend to apply the same assessment techniques to review what we get, thus further reinforcing our mental model and further limiting our ability to perceive the unusual or the remarkable.
Our mental model governs what we see, how we think about things and how we act, but is this just an individual phenomenon, or can whole communities and professions share a common mental model, a shared view of reality? This is a tricky area, and much like other collective phenomena, such as organisational learning, there is no clear consensus of opinion. What is beyond doubt is that all professions have their own vocabularies, lexicons, tools and techniques. These models, techniques and ways of analysing things are not value-free; they represent a way of seeing the world. When we select and use them we are subconsciously buying into that way of thinking and, inevitably, we are also reinforcing our own mental model of cause and effect. We tend to expend significant effort in understanding the inner workings of a new tool or practice, but we give scant attention to the thought paradigm that underpins it. Like it or not, knowingly or not, we all as IT professionals subscribe, to some extent, to a common mental model of how the world works. This model is encapsulated in our techniques for analysing and documenting our organisations and systems. It finds its way into our modes of working and thinking and is enshrined in volumes of ‘best practice’. It even shapes the way we think about managing, leading and inspiring our people.
Like any professional group, IT leaders have a way of viewing the world: we know how things work, why they work that way and what to do when they stop working. We have tried-and-trusted techniques for understanding our world and for resolving issues. We have well-engineered processes and best practices that have been shown to produce results. We strive to be as good as, or better than, other people and organisations that see the world in exactly the same way that we do. This is both comforting and potentially very valuable. It is also the greatest single threat to our ability to envisage different ways of doing things and ways of seeing anew.
Albert Einstein is credited with many thought-provoking quotes; here are two that are particularly apt as a means of rounding out this discussion:
• ‘We cannot solve problems by using the same kind of thinking we used when we created them.’
• ‘The only thing that interferes with my learning is my education.’
If we are to play a full part in leading the transformation of our industries, we need to examine and be conscious of the way we think and why we think in that way. We need to have the courage and capacity to think differently and lead differently.
If we are to lead our organisations, we will need to examine our assumptions about the art and practice of leadership and how we might best structure our actions and communications to achieve our organisations’ aims. The art of leadership is a complex and much-debated subject; typing the phrase ‘leadership styles’ into Google will produce over 26,000,000 hits! There are many theories and models of leadership and it is not our aim to get lost in this debate. Our contention is that to be successful, the prospective IT leader will, at times, need to abandon their tried and tested management techniques and find new ways to direct, inspire and motivate their teams. To aid in understanding the nature of this journey, we would point to recent discussion about Transactional versus Transformational Leadership.
At its heart, Transactional Leadership6 is based upon the premise of incentives and/or punishments for compliance with and acceptance of authority, thus, a reciprocal exchange of work for reward. The theory builds upon the ideas of Max Weber and is firmly rooted in the behaviourist paradigm. Key assumptions are that:
• employees are primarily motivated by reward and punishment
• social systems, and hence organisations, work best when there is a clear chain of command and limits to authority
• the primary purpose of a subordinate is to do what their manager tells them.
Most leadership theorists and, indeed, most people reading this book, would probably consider this concept to be outmoded and to have no place in our modern organisations. If asked about their own leadership style, they would, in all likelihood, claim to exercise a somewhat more enlightened approach. Nonetheless, virtually all the mechanisms, checks and balances at our disposal as managers are firmly rooted in this paradigm. Planning, budgeting, key performance indicators, management by objectives, targets, performance measurement, reporting, appraisal, and so on, are all predicated on a transactionally-based agreement between manager and worker. As managers, much of our education and training has prepared us for transactional-type relationships with our subordinates and our clients. The analytical techniques that we learned as business and systems analysts, and the tools we use to model and describe business processes and business rules, are all rooted in the thinking that underpins the transactional style of leadership.
There is nothing inherently wrong with the transactional style of leadership. Indeed, it is particularly effective in a steady-state production environment where repeatability and consistent application of process is important. It is much less effective when communities are undergoing significant change, and in professional-service-type environments where individual autonomy and devolved decision making are prevalent, or where virtual or extended teams are the norm.
Table 1 summarises the types of behaviour associated with the transactional model of leadership.
Has a bias for functional and hierarchical organisations (command and control)
Favours well-defined role definitions and individual specialisation
Solves problems by involving a few trusted individuals, cultivates a culture that values heroic effort
Approach to work
Allocates individual tasks and rigorously monitors progress, looks for compliance with agreed process
Is focused on activity (doing work, completing assigned tasks) and achieving expected results. Emphasis on performance management and measurement
Encourages and values detailed planning because good planning eliminates surprises and controls risk and exposure
Knows what to do because they have seen it and done it before
Uses language to describe
Shares information selectively
Encourages agreement and consensus; seeks closure
Approach to change
Treats people as part of a machine – rational beings who can be influenced by logical argument and will act in accordance with their own self-interest
Change is like a jigsaw puzzle, put all the pieces in place and you get the right result
People need a clear roadmap so they know how to make the required change
The antithesis of Transactional Leadership is Transformational Leadership. This was first identified by Burns, and has since been developed by writers, such as Bernard M. Bass and Margaret Wheatley.7 Transformational Leaders seek to inspire their followers to achieve more that they thought possible by linking action to a compelling vision of a desirable future state that benefits all and appeals to the follower’s sense of the greater good. Transformational Leaders’ key traits are integrity and authenticity and positive role modelling through congruence of action and words.
Senior IT leaders find themselves in a difficult situation, in that IT is seen as a cost centre, a production environment where adherence to service-level agreements is key, and incremental change is delivered through detailed planning and tightly managed projects. In this role, the IT manager needs to be an adept Transactional Leader. Yet, at the same time, IT is seen by the Board as key to achieving transformation and sustainable competitive advantage. The IT leader, therefore, needs to foster and sustain high levels of individual initiative, innovation, nimbleness and flexibility; these qualities are quickly subjugated and wither in a command-and-control environment that values measurement and centralised decision making. So, we have a dynamic tension where the IT leader needs to deliver business as usual through a strong transactional focus, but, at the same time, enable change and innovation through vision-led Transformational Leadership. Success requires a form of ambidextrous leadership that is a difficult balancing act.
We will return to look in more detail at Transformational Leadership in Chapter 4, but first we need to take a closer look at how our behavioural preferences and personality type determines how we see and are seen by our colleagues. We will see that influencing and networking are key skills of the Transformational Leader, and we therefore need to understand how to form and sustain winning relationships.
• What percentage of your current workload is devoted to perfecting the known? Are you focused on renovation or innovation?
• How tolerant are you of failure? What can you do to increase your comfort with the idea of imperfectly seizing the unknown?
• How often do you challenge the things that you hold to be true? Are your universal truths really true, or are they just the result of your own biased listening?
• What can you do now to give you an insight into how other people view the world? What activities can you engage in that would give you a freshness of approach?
• When was the last time you granted yourself time to really reflect on your own decision-making processes, and what did you learn from the act of reflection?
• Jim Harris, The Learning Paradox, John Wiley and Sons (2001).
Good chapters on the power of paradigms and the leader’s role as an innovator of paradigms.
• Bernard M. Bass, Transformational Leadership, second edition, Lawrence Erlbaum Associates, Inc. (2006).
Prime reading for any leader who wants to develop a deeper understanding of the underpinning theory of Transformational Leadership.
• C.K. Prahalad and M.S. Krishnan, The New Age of Innovation: Driving Co-created Value through Global Networks, McGraw Hill (2008).
Provides a glimpse of the power of co-creation in transforming our organisations and of the role that IT can play in the process.
1Harvey Nash, 2009 IT Leadership Report; a survey of 1,345 CIOs across Europe.
2C.K. Prahalad and M.S. Krishnan, The New Age of Innovation; Driving Co-created Value through Global Networks, McGraw Hill (2008).
3John. C. Camillus, ‘Strategy as a Wicked Problem’, Harvard Business Review (May 2008). Wicked problems are problems with many stakeholders with differing values and priorities. Their roots are complex and tangled, and the nature of the problem changes with every attempt to address it. These types of challenge are unprecedented, and therefore there is nothing to indicate the right answer to the problem.
4Andrew Campbell, Jo Whitehead and Sydney Finkelstein, ‘Why Good Leaders Make Bad Decisions’, Harvard Business Review (February 2009).
5David Ingvar, The Memory of the Future, referenced in Arie P. de Geus, ‘Why Some Companies Live to Tell about Change’, Journal of Quality and Participation (July–August 1998).
6James McGregor Burns, Leadership, Harper and Rowe (1978).
7Bernard M. Bass, Leadership and Performance, Free Press (1985); Margaret J Wheatley, Leadership and the New Science, Berrett Koehler 1992.