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“In our quest for productivity gains, we have paralyzes the heart of the company (IT) to secure future competitiveness in the digital landscape.”

During the last year, I have met a number of CIOs and IT managers to discuss the affects of digitalization on the IT organization. It is well known that a digital tsunami is sweeping across many industries redefining the business rules, and the role of IT. Traditional governance needs to be replaced by agile management methods to secure future competitiveness. A large majority of companies and IT organizations are, based on latest research, ill prepared for the affects of digitalization and I try to understand the reason why. How come many CIOs and IT managers who heard about digitalization, NEXUS for forces and Internet of Everything for many years still do nothing? The answer is often the same, regardless of industry:

“Yes, your analysis is precise and correct about digitalization and we have a great challenge ahead of us, but you must understand that we do not have the time or energy to think about it. We are drowning in operative issues that need to be solved.”

From my perspective, the answer is not surprising. A majority of CIOs and IT managers work in an unhealthy environment with higher and higher workload and fewer and fewer resources to deal with the daily operations. IT is a popular area to focus on for cost reduction. Our constant quest for productivity gains that left many IT organizations out of synch with business challenges causing dangerous levels of organizational fatigue. CIOs and IT managers are caught in endless steering group meetings, outsourcing contract issues, platform implementations, and software license contract negotiations (to name a few). Little time is spent on reflection, understanding, and analyzing. The fact is that few CIOs and IT managers have time to actually drive change and innovation, and understand the role of IT in the “new normal”. That explains the latest research (Harvey Nash, 2014) stating the Swedish CIOs are below global average in meeting digitalization and supporting business success. Does that mean that Swedish IT organizations are subject to higher level of organizational fatigue? It might be the case.

It is interesting to view the effects of organizational fatigue from another perspective. Experiments show that people with high level of fatigue have reduced cognitive performance (mental and social). “Cognition” is a word that dates back to the 15th century when it meant “thinking and awareness”. In other words, reduced ability to process information, apply knowledge and change preferences. It also affects our ability to reason, problem solving and decision-making. Don’t we see the same behavior in many IT organizations? Even though we see the wolf (digitalization), we do not have the cognitive power to deal with it and is mainly paralyzed. We see the wolf, but we cannot process the information, analyze it or come to a decision of what to do. But the wolf (digitalization) will not disappear; it will eat you alive if you are not prepared to act. The situation is this. In our quest for productivity gains, we have paralyzes the heart of the company (IT) to secure future competitiveness in the digital landscape. Not a good scenario!

What we can conclude is that companies that are successful (revenue growth and customer value) have high cognitive capability. These organizations are not too stressed (no fatigue) and therefore have the ability to understand and analyze the IT and business challenges, and uses new agile management methods to optimize business success. Others, living in the shadows of fatigue do not possess this capability and will not provide the adequate value to master the digital landscape. The fact that 80% of change management project (change is key for mastering the digital landscape) fail is not a surprise but rather a symptom of the stress levels in the organizations and level of cognitive capabilities.

Recommendations:

  1. Take a big breath and cancel the next meeting. Think about what this blog post actually means. Are you stressed? It is healthy? What can you do about it?
  2. Build awareness in the organization. What is your cognitive capacity in your organization?
  3. Map how much of your time is spent on operational issues (steering group meetings, outsourcing negotiations, software contracting, controlling etc) and how much is spent on strategic analysis (understanding the business environment, discussing innovation, analyzing IT’s new role in value chain, etc). Is the balance correct?
  4. A potential cure to raise cognitive capability is to focus on team self-governing and the ability for teams to make strategic decisions themselves. How does this work in your organization?
  5. Do not seek too high productivity gains in the IT organization but let it live in harmony with high cognitive powers. It will pay of in the future!
  6. Contact The Goodwind Company for further discussion and support.

“Yes, your analysis is precise and correct about digitalization and we have a great challenge ahead of us, but you must understand that we do not have the time or energy to think about it. We are drowning in operative issues that need to be solved.”

Just last week I received the statement in a Round Table discussion at CIO Excellence conference. It left me thinking about the difference between productivity and performance. These are two words that we often tend to mix up and equal. Productivity is about producing more for less using lean, outsourcing and structuring internal processes (ITIL), while performance is about achieving a strategic objective (business success), which often is moving. Traditionally, the two words have been the same as IT organizations have focused on productivity gains (cost reduction) in a predictable environment to create value. But with introduction of digitalization and unpredictability, the two words diverge and performance is key to the future. It is the ability, with cognitive powers (understanding, analyzing and taking right decisions), to support business to achieve customer value with digital tools and hence achieve revenue growth. Still, many IT organizations still mix the words up and drive productivity too far with serious consequences for performance. The problem is not that IT is too expensive – it is that IT is too cheap to drive change and business success. And you get what you pay for!

“The problem is not that IT is too expensive – it is that IT is too cheap to drive business success in digital landscape.”

– Hans Gillior

Hans Legend 1