“It is like changing the engine of a car running at 100 mph on the highway” the CIO said. His face was filled with frustration and worry as he reflected on how his IT organization needed to change. “It is not possible – and I will tell you why”.
The quote from a CIO located in Sweden is not an uncommon way to express the challenges of IT going forward to address the digitalization. It is a challenge of transforming the core capabilities of IT to meet the future demand and at the same time, uninterrupted, deliver value to business in a cost efficient way. An impossible mission what most CIOs are facing today – and keep many CIOs awake at night. But how is this even possible? The answer comes from somewhere unexpected.
The basis for the quote was actually a discussion about how digitalization is affecting the CIO’s IT organization. During the last 10 years, the purpose and mission of IT has change drastically to address business and customer expectations, rather than providing cost efficient operations. Cost efficient operations (operational excellence) were the purpose of IT before digitalization when business and customer demand was predictable and stable. We could then build operating models and process to maximise efficiency with a long-term perspective where demand was stable and constant. In this pre-digitalization environment, people where recruited and organised to optimise efficiency – in a stable environment with complex processes and operating model. Every penny counted! Today, it is different! We no longer have a stable business environment and efficiency no longer counts – today it is about flexibility and agility! IT needs to react fast to changes in the industry and guide business towards products and business models. That is the reality of digitalization!
“No, it is impossible! You see, I have a set of resources (mainly service managers) and way of working, and we cannot just replace it over-night with business and innovative oriented way of working. It is what we need to do – but it is not possible! We have to live with staff and capabilities we have.”
So, what do we do? The answer is easy – nothing! Studies show that most IT organization fail to react to digitalization in the right way (digital transformation) but rather focus more on what they are good at – more processes and cost control. Doing the same thing and expect different result is not a good strategy going forward. We also see that many CIOs are waiting for a moment to peace and calm to run the transformation – after the next re-organization, cost cutting initiative or business strategy workshop. Sorry, but peace and calm will no longer exist! The fact is that business demand will never again be stable and predictable but rather changing with various levels of speed and magnitude. That is the current characteristics of digitalization.
A couple of years ago, I spend some time in Japan to finish my master thesis. Next to my apartment, there was a convenient store called Lawson and they had as a strategy to constantly change their products and services to maximize the customer experience and revenues. Products not selling enough were immediately phased out and new products replaced the old ones. New products and services where constantly tested and evaluated. Speed, change and learning were the core capability of the convenient store. Frankly, going into the store, you never knew what you would find – only that it was the best and most interesting stuff. Lawson was an expert of determining what delivered value and experience to their customer (fast changing requirements) and focused on re-allocating resources to optimize value-creation. Great stuff!
My point of view is that the digital challenges that IT organizations face today are mostly in our minds. We have been taught over the years how to run and change an organization and when we face challenges stretching the boundaries of our experience and imagination, we fail to respond in the best way (sometimes at all). But there are examples of organizations that succeed to manage continuous change – going 100 mph on a highway – mainly because they have an uncompromised view of the new role of IT. They have challenged their comfort zones, the traditional way of working and acknowledged that change is here to stay. They are also great at marketing the new role of IT in the company and educating key stakeholders about how digitalization is affecting business and IT. It is all about leadership in terms of attitude and challenging everything you know and believe in. Yes, it is possible! By stating that change is impossible – you have already failed.
I fully understand the reaction of the CIO that I interviewed. Reality can seem hopeless with endless (contradictory) demand from business, finance and HR – but who said it would be easy? A good starting point is actually to understand what activities that deliver value – and what does not. Focus on re-allocating resources to where value is created and find alternative methods to deal with non-value adding activities (outsourcing or terminate). This is not a method but a mindset that must influence everything the IT organization does – and the learning/adjustments must be done in rapid pace. When a CIO tells me that they are not able to change – it tells me that they do not fully understand how they create value. They are then locked up in their own comfort zone far from where value is created.
- Understand what activities that create value to your business counterparts and customer – but also what does not create value.
- Challenge your own comfort zones! That is the biggest hinder to your success!
- Understand the new role of the IT organization in the digital environment – and stick to the new role in an uncompromised way. Follow your believes!
- Contact Hans Gillior and Sofigate – we are experts on digital transformations of IT/Business organizations. We deliver results, value and change!
During the last 10 years, digitalization has been all about new technology, social media, mobility and new exciting tech-companies revolutionizing the business landscape. Does new technology strengthen our competitiveness? Yes, but only momentarily. Digitalization 2.0 is about leadership, mindset and innovative management methods. It is a way to react fast to disruptive trends and opportunities/threats in the market. It takes an IT organization approximately 18-24 months to react to a change utilising traditional IT governance style. How much damage/change has Google (or other digital giants) been able to achieve during that time in the market? It is all about mindset and change management! IT transformation is possible – but only if you believe in it, and are willing to accept the new rules of digitalization. Success is in your hands!
firstname.lastname@example.org – hansgillior.wordpress.com – @digitalgillior