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What is the cost of mediocre strategic analysis and decisions? Ask Kodak, Facit and Blockbuster. The challenge is how to avoid strategic mediocrity and a first step is to improving the organizational cognitive capabilities. It is time to review how organizations are governed to free-up time for reflection, analysis and great decisions – and avoiding digital stress.

A couple of years ago, I participated in a discussion about the future of administrative staff in the IT organization. The situation was that we faced an executive directive to improve productivity in the IT department and senior managers looked at the administrative staff as an easy way to reduce staff. The administrative staff supported the IT organization with various tasks, such as on-boarding consultants, administrating workspaces and arranging retirement parties. Looking from a productivity perspective, with an aim “to do more, with less resources”, it was a clear case to remove the administrative staff – but would we do the same judgment in a digital (“new normal”) surrounding?

The fact is the digitalization is driving fundamental change in many industries forcing businesses to focus on value creation, innovation and customer experience. The are no industries nor companies protected from the affects of digitalization and senior managers across the globe need to challenge previous strategies of productivity and operational excellence. The winners in the digital world are those with a agile and adaptive approach to strategy and management – and abandon the traditional “command and control” culture.

No industry or company is protected from digitalization – forcing business leaders across the globe to review strategies to build digital competitiveness! 

What I find interesting is that impact of digital stress in many organizations (see blog post: https://hansgillior.wordpress.com/2015/03/31/digital-stress-and-mindful-governance) with information overload is limiting our cognitive abilities. The cognitive abilities help us to analyze a situation and making sound and rational decisions. We see in many organizations with “burn out” symptoms due to digital stress where managers and employees face information overload – and only focus on “doing” and not able to understanding or analyzing. What we need today in not more information or workload – but probably less to free up time to re-build our cognitive abilities.

Do we really need to attend all meetings we are invited to? Do we really need to receive all emails passed around for information? When was the last time you had some time to reflect over the situation in your organization or learn something new?

There are good examples of companies, fresh digital companies such as Spotify and Google, which have another management philosophy. Here it is a matter of reducing centralized governance to a build self-governance, trust and innovation. Many of these companies have implemented a system where employees are allowed to use 10-20% of their time to experiment with something new, or study something they are interested in. The main purpose is to free up time, motivation and build the necessary cognitive power to compete.

One can only conclude that success in the digital era is, among other factors, about cognitive powers and avoiding digital stress – by freeing up time for understanding, analysis and decision-making. But how does this conclusion align to the “administration dilemma” described in the beginning of the blog post. The truth is that the IT department probably needed more administrative staff to free up time for reflection, analysis and decision making based on cognitive abilities. Not the other way around! The decision, from a digitalization perspective, was clearly not correct – probably due to lack to strategic analysis.

“Yes, I understand you point but all IT departments are under pressure to reduce cost and improve productivity. We cannot just hire an army of administrators to free up time for managers! How do we motivate that cost increase to the executives?”

The question we need to ask ourselves is – what is the cost of mediocre (IT) strategic analysis and decisions? What is the cost for business not having a complete view on how IT contributes with business value? What is the business value of constant IT service interruptions? What is the price of not having IT supporting innovation and customer experience? It is obviously tricky to put a concrete figure on these costs but nevertheless these are huge virtual costs that need to be cut. The basis for these costs is digital stress and lack of cognitive abilities in the organization. What is the cost of a bad strategic decision? In today’s digital environment, the cost of a bad strategic decision is lost market shares. What is the price of digital stress and lack of time!

“What is the price of bad strategic decision in the digital era?”

My recommendation is quite contradictory to other advisors as I view the dilemma from a digital perspective. My view is that IT organizations should hire more administrators to free up 10% of manager’s workday for reflection, understanding and analysis. The short-term cost might seem high but the long-term affect might be the difference between surviving or being phased out in the digital market place. The choice is easy!

To conclude, the way we view time and administrative staff in IT is very much related to how we see our IT’s role in the value chain and how we create value. If we see ourselves as a production unit chasing efficiency gains – then administrative staff need to be cut out. On the other hand, if we view ourselves in a digital context with a focus on value creation, innovation and customer experience, then we need to free up time (with help of administrative support staff) to build cognitive abilities. Simple as that! The problem is that digitalization is pushing organizations into a digital context but still focus on operational excellence harming the competitive capabilities (value creation) of the organization.

My recommendation:

  • Ask yourself how you create value for your internal customer. How much time do you need for reflection and analysis to do a great job?
  • Delegate to an assistant or business support to attend your meeting, filter your email and free up time for you to reflect, analyze and decide.
  • Contact Sofigate – we are senior advisors in the digital affects on IT organization. We are your coach to a great IT organization!

I remember the discussion around the administrative staff and how the decision was based on FTE targets in an Excel spreadsheet. No one raise the issue around value creation, innovation and cognitive abilities to master the digital era. But on the other hand, we now see the company’s competitiveness going quickly downhill – not able to make the digital transition. These kinds of discussions are not unusual but we need to change in order to survive the challenges of the New Normal. The thing is that your new digital competitors have a completely different view on governance, leadership and cognitive power and are waiting to challenge your Excel-based culture.

Read more blog posts by Hans Gillior at hansgillior.wordpress.com