Does your company have an IT department? Does this type of organisational structure look familiar?
This quote from Mark Schwartz suggests that traditional IT Leadership is about delivering a service to a set of requirements – implicit or explicit – to a customer (the ‘business’) who holds IT to account and who are often dissatisfied with the result.
The way traditional hierarchical businesses work, planned approaches may have given us a perception of control, but that control is just an illusion. There are always too many unknown factors to really have control. Using agile approaches allows us to continuously correct the course as we discover new insights that help us to navigate the unknown.
IT Leadership in an agile world
Every company must make delivering value to its customers the whole reason for its being in business. If you’re not enhancing your products and services then you're not staying relevant to the market and your customers.
Digital transformation refers to the company moving with speed and agility rather than a reference to technology. Speed and agility may be better defined as velocity, which gives momentum, focus which ensures direction and governance, and flexibility which provides the enabling environment for success.
True digital transformation involves transforming the very focus and structure of the organisation.
Time-honoured organisational structures and funding methods are no longer relevant. In order to create a customer-centric business it's time to pivot the organisation and place Enterprise Architecture, Product Management and Engineering at the heart of the company.
A product-led organisation is one which is organised to create products (and services) which continually deliver value to customers.
This means that Busness Product Owners decide what will be valuable, and will work with the rest of the business to see that the value is delivered.
Each Product Owner has a cross-functional team who constantly iterate through new implementations of the product, each containing an incremental improvement on the value delivered to the customer.
This team is sized to include all of the organisational skills needed to deliver these product increments. In effect the team members are ring-fenced and work for the Product Owner irrespective of their subject matter skill.
This leaves the current IT Leadership in an interesting space. Although they have suffered over the years for being in an arms-length contract with the rest of 'the business' that they didn't really want, now that that has changed, it is the business who are taking the lead on how products are developed.
IT leaders must redefine the relationship between their IT organisation and the rest of the enterprise to take advantage of the agility and shortened cycle times provided by the promises of digital transformation.
In this new, agile environment, it no longer makes sense to make investment decisions at the granularity of “projects”; nor to determine success or failure, status or progress, based on capex funded projects.
We therefore conclude that IT leadership should be about obtaining outcomes for the business, not about delivering on requirements handed to it, and this in turn requires deep changes in how we think about governance, risk, team structure - and ultimately, the very relationship between IT and the rest of the enterprise.
Examples of business outcomes include increased customer retention rates, improved customer acquisition rates, increased revenue, reduced costs, process improvements or efficiencies, culture change, increased profitability, increased word of mouth, increased conversion, and more upsell and cross-sell opportunities. IT must be an integrated part of the business, not a supplier to it. IT can't change this relationship on its own, the Exec Committee must come to this realisation.
IT Leadership – Essential actions in an agile world
Enterprise Architecture & Product Management
We need to stop looking at IT delivery in terms of projects and systems. We must manage an enterprise-wide asset with an “as-is” state and a “to-be” state. We must groom this asset in perpetuity — as the company changes and develops—by adding, removing, and improving its capabilities.
We must build in agility and optionality; risk mitigation, and usability. The totality of our IT capabilities is an economic asset that will be used to derive profits or accomplish mission, and we might as well just call this the company’s Enterprise Architecture.
Developing products within a known enterprise architecture and constantly reviewing both the architecture and the products build on it, is a skill that must exist within the company.
Planned Approach v Agile Approach
The greatest thing holding back better productivity is poor leadership – the behaviour of people in leadership roles who cannot see beyond a command and control paradigm, and the stranglehold of governance and reporting processes that are a manifestation of out-dated hierarchical cultures.
Instead, we need to focus on user/customer needs, to get comfortable with exploring and living with uncertainty, making decisions by experimenting and learning, empowering people who are closest to the work to decide how best to achieve the desired outcomes.
This new skill is about being adaptive, not predictive.
We need to think very differently about risk - risk logs have never worked. Our plans require us to accurately predict the future, and we’ve never managed to do that either.
The way that we control risk is to make changes as circumstances develop.
Creating experiments to help us understand how to navigate the risks is going to be the new skill that we all need.
Build vs Buy
The cost of building software used to be so high that it always made sense to buy.
The problem with buying is that you never quite get what you need.
This all changed when the cost of building tumbled with the emergence of low-code products and because of the wide availability of on-demand Cloud services. Capabilities like functional micro-services allow us to build something that is a 100% fit for what we need, by quickly creating new single outcome micro-services and integrating a number of pre-existing micro-services which already exist in the Cloud and are known to work.
Building micro-services in the Cloud and integrating them with others, then iteratively and regularly delivering functional improvements to surprise and delight customers is a new skill that many of your team need.
The new role of the senior IT Leader
The senior IT Leader role has changed from being a reluctant enforcer of the arms-length contractor model to one whose role is to create an environment where self-managing teams can thrive.
Leadership can no longer be focused on control, it needs to be focused on people - nowadays things are just too complex, too unpredictable, and too fast and dynamic to all be controlled.
In the new world, IT leaders are the:
- Steward of People Assets – ensuring that the right people with the right skills are in the right place
- Contributor of Technology Knowledge – technologists have a deep and different knowledge to the business
- Orchestrator of Chaos – technology, and the business it is part of, are complex and must be orchestrated
- Impediment Remover – help teams do what they do by sorting out the bumps in the road
- Manager of Uncertainty - IT is full of uncertainty and we must make decisions by experimenting and learning
- Process Improver – constantly seek better ways of working, and challenge the team to do likewise
- Agile Advocate – focus on enabling activities rather than trying to mandate what they are.
IT Leaders remain responsible for:
- Infrastructure – even if much has been moved to the Cloud, the IaaS model leaves plenty to manage.
But what of the Chief Digital Officer?
A Chief Digital Officer’s (CDO) focus is on the transformation of traditional operations using digital processes. CDOs aim to generate new business opportunities, revenue streams and customer services from the adoption of digital technologies. That could take any form from the relatively mundane right through to reorganising entire business units.
Many digital initiatives have traditionally been initiated by the Chief Marketing Officer (CMO). Similarly there is an overlap with the Chief Information Officer (CIO) position, and there's some competition as a result.
Yet, rather than being experts in IT implementation, CDOs are commonly characterised as product owners and change agents.
Some organisations appointed CDOs to see through a digital transformation programme. KPMG research suggests that when companies have appointed digital chiefs, half are dedicated CDOs and the other half are CIOs acting as CDOs. The emerging term for this important role is CDIO.
The UK Government sees it's CDIO as responsible for shaping and delivering the government's innovation and transformation strategies, overhauling its legacy IT systems, strengthening its cyber security, improving capability, and leveraging data and emerging technologies to design and deliver citizen-centric services.
Digital transformation is too often defined as a one-off process, but should be thought of as a continual work in progress. Where it can go wrong is when the CDIO is dragged into commodity IT work at the expense of innovation, or where the Exec Committee don't truly appreciate that transformation is far-reaching, whole company change.
Traditional organisations can only deliver their customer-centricity, agility and culture of continuous experimentation when they are competently and inspirationally led, having developed or acquired specific digital competencies, and when staff embrace new working methods. Analogue-native companies should aim to develop new leadership roles focused on the transformation of traditional operations using digital processes. New leadership should aim to generate new business opportunities, revenue streams and customer services from the adoption of digital technologies.
Whatever we call our digital leader …
- the availability of data,
- the power and availability of technology,
- the rise of mobile and cloud computing, artificial intelligence and 5G
- customers’ raised expectations and the need to see value, and a
- shift to more agile ways of working
... demand that we rethink how technology serves the organisation.
Digital transformation is not about technology (although obviously that is important), but is about the cultural changes needed to make the company entirely customer-centric. It is discussed in What is Digital Transformation?
Digital transformation may be defined as the integration of digital technology into all areas of a business, resulting in fundamental changes to how the business operates and how it delivers value to customers. Leaders must reimagine and reinvent the business itself. In How to turn your company Digital find out what questions an organisation should ask itself so that it can operate, adapt and thrive in a rapidly evolving financial, political and social world. Covid-19 moved the dial from a Digital First strategy to one of Digital Only. Where is your company on its digital journey?