Increased governance and control becomes a tool to bridge the funding gap of IT – as many IT organizations today, according to me, are under-financed. But how does this mindset affect performance (value creation) and the ability to manage instability? It is believed that business gets more out of the IT budget with high governance and control – nothing could be further from the truth! Adding control and governance on a value adding IT activity, in an unpredictable environment, is not creating business competitiveness. Nothing grows in the comfort zone!
A couple of days ago, I visited a Lean Coffee to discuss Agile Governance here in Stockholm. A number of topics were discussed by one specific one stuck in my mind. The topic related to service quality and if it is ever improved by adding more governance? It is often the case in large organizations that senior managements try to enforce control by adding governance (routines and control) in an area of weak performance. Is that a good idea?
A couple of years ago, I discussed with a Senior Manager in a large organization about the goals for the coming year. There were distinct objects and plan of what he wanted to achieve and the needed KPIs to ensure this progression. In the final sentence he articulated the most important part of the next year:
“…but most of all – no surprises!!”.
It might be seen as a minor comment but expressed very clearly the culture of the organization. What it actually means is that the Senior Manager does not tolerate any deviations to plans – and hence that his own leadership is based on “command and control” and ultimately fear. What does this kind of behaviour message the rest of the organization? Play it safe – no risk! This is not uncommon and probably explains the fact that only 14% of employees are motivated at work. Also, a reason for why almost half of all IT organizations do not create business value. Nothing grows in the comfort zone!
One lesson I have learnt working in and with large IT organizations is that deviations will happen – regardless of leadership style and level of governance. It is part of live and why business and IT is so exciting. What is important is how to deal with incidents, learn from the incidents and be motivated to respond with high ambition. All of these factors are based on a motivation, trust and willingness to take responsibility. To understand the big picture and purpose in work. How is that stimulated in a “command and control” culture?
So, why do we see this management behavior over and over again? Well, most Senior Manager have been promoted because of their ability to provide a “no surprise environment” to their superiors and focused largely on command and control to achieve this. What surprises me though is that this mindset still exists in 2015 in a time of digitalization, unpredictability and agile management? If the senior manager is not willing to let go of his/her “control” policy – how will others learn how to take responsibility and be motivated to enhance value creation and innovation?
When looking at organizations that focus on increased governance to improve performance, I see a clear common trend. These are IT organizations that generally are under-financed and had a long tradition of cost reduction programs. The value of the IT department is defined in terms of productivity (more for less) and efficiency rather than effectiveness (value creation). Governance becomes a tool to bridge the funding gap and almost replace the lack of IT funding. The belief is that IT can get out more of the IT budget by adding governance and control! Not true! You get what you pay for – and increased governance will not create more value!!
My point of view is that IT has only one purpose – and that is to create business value (competitiveness). The funding must be proportional to the value IT is obligated to create. That means that everything IT does and investments must have a direct or indirect linkage to value creation for business. To my understanding, added control and governance on a value adding activity is not creating business competitiveness. To achieve this, we must allow for higher degree of self-governance and trust as value is created in the business IT units far from centralised governance. It is in the interaction between IT and business on daily basis. IT Senior Manager need to understand what value actually means and how to optimize value – by creating an atmosphere of trust and performance – in an unpredictable environment. How much value do you create? What is your role? The world is changing – and so do we!
Now, let us go back to the Lean Coffee discussion. Obviously, all of us discussing the topic quickly came to the same conclusion. But still this is a topic haunting IT employees in 2015 – and very little is done to change the pattern. In the end, it is all about confidence – daring to be challenged and meeting the unexpected. We do this everyday outside office hours – why is this so difficult in our working environment? Is it a sign weakness? Does increased governance and control bridges our lack of confidence in managing IT? What do I know? What is interesting though is that many companies build confidence by focusing on “fail fast – learn fast” culture. If you never test new ideas or methods – you will never grow or lean – and never increase your performance. Many digital companies also reduce centralized governance to build value and motivation in the teams – that is where it happens. The initial question tells me that the IT organization is lacking the confidence, is under-financed and not ready to take the next step in the digital evolution.