Tag: driving change

What Venture Capitalists Can Teach Us about Driving Transformation | Sherpas in Blue Shirts

The current way we buy complex services through a purchasing department is to come up with elaborate detailed requirements, which often can only be implemented over several years. We put these out to bid, forcing the vendor community to respond with far more detail and waterfall project plans laying out in excruciating detail how they will architect and migrate this environment to the new desired state. We then conduct the services version of the limbo dance – how low can we go – where providers compete the price of the solutions. But there is a huge fallacy in this procurement methodology.

We have a long history of unhappy results from this methodology, a body of work spanning 10 to 15 years demonstrating that these procurement efforts mostly result in unmet expectations, cost overruns, and evolving service levels. This is insane. Insanity is doing the same thing again and again and expecting a different result.

The fallacy of the procurement methodology

By using this methodology, we effectively try to articulate a transformational journey in an overly precise way even though we have only a limited understanding of both the existing and future environments. The result is exercises in creative writing with overly precise work plans and cost estimates. The only thing we can be sure of is that the plans are wrong because of the lack of information (no matter how much time we spend on the plans), and the fact that the world changes during this timeframe. So we’re guaranteed to be wrong.

Therefore, our preferred way to purchase services is flawed. It pretends that we know with precision things we don’t know and it does not adequately accommodate for the nature of change in technology, business process and business conditions.

What can venture capitalists teach us?

For years VCs have faced a similar problem. How do they develop breakthrough, compelling new technology products, fund them, manage them cost-effectively and, most importantly, how do they get to great offerings?

They achieve these objectives by accepting that, although the vision for the journey can be had, the length of the journey is unknown, the amount of money required to accomplish is unknown, and the exact nature of the end product is also unknown.

This is very similar to the problem we find in most service transformations. We know the direction we want to head, but we can’t describe accurately and precisely where we’ll end up, can’t quantify how much it will cost, don’t know how many resources it will take to get there or how long it will take to get there. All of these factors vary. Yet, using the procurement methodology, we pretend we know these details and set up artificial constructs.

Applying the VC principles to transformation services

Why don’t we do what the venture capitalists do? First of all, they break the project down into a series of gates. The only detailed road map is the one between where you currently are and the next gate. That requires a detailed plan. One of the parts of the plan is to develop a plan for the next gate.

Using VC principles, the vision and the dimensions of what you want to accomplish are clearly stated. For example, “I want to bring the cost of IT down by 40 percent” or “I’m going to standardize my components and move them into an elastic or consumption-based model, and I’m going to develop agile vehicles to integrate the components.” But how you will do that and how it will involve your current environment is unknowable.

All that is knowable is how you develop a proof of concept and how you move from POC to rapid implementation. You can fund each step much like VCs do (Series A, Series B, and Series C funding) and break it down to create funding associated with milestones that get you to the next gate.

This is a broad application of the VC philosophy, and there’s much more to it. But I believe by applying these principles, we can change how we drive transformation. We can dramatically lower the interaction costs of the purchasing process, and we can spend that money and time instead on the actual transformation. And we can deal with our providers or ecosystem partners in a much more transparent and direct way.

It’s best to apply this VC-based methodology where the benefits of design and architecture drive the value, instead of price reduction as the driver. You can still get lower unit prices, but the old procurement process is dead. That process is useful if you’re trying to take a stable environment and reduce its unit price. But it is not useful where you are driving a transformational agenda, which cannot be precisely defined. Using the old methodology for a transformational agenda tends to waste time, frustrate ecosystem partners and create false promises.

Breakthrough Metrics for Solutioning a Customer Transformation Journey | Sherpas in Blue Shirts

There’s no silver bullet for driving change; it’s a challenge in any organization and services providers and their clients struggle with this. In working with providers and buyers on transformation deals over the years, I observed the need for breakthrough metrics to drive the change through the buyer’s organization.

As I mentioned in my previous blog post, transformation needs to start with defining the business outcome goal from the customer perspective and then translating it into issues and organizational implications that the delivery organization can align against. Those issues include metrics that you must clearly articulate at three levels in the buyer’s organization:

  1. C-level vision – Here the highest level of metrics calibrate the benefits and what needs to change in the status quo to accommodate the benefits. In the event you find you can’t get to the goal with what you conceive for the journey, you need to start again and conceive the journey differently.
  2. Direct reports responsible for executing on the vision – These metrics focus on the implications for the delivery organization.
  3. Technical talent – Metrics at this level focus on the tools, talent, and process changes that the goal affects. What are the details that the architects need to understand as they solution the goal?

Having metrics at each level puts business transformation not in light of those who are doing it but, rather, those who are experiencing it.

Service providers need to keep in mind that this shouldn’t be a roadmap with a detailed plan. But people at each level in the client enterprise need assistance in understanding what they are trying to do, how they have to measure themselves against that goal, and what the implications are to technology, talent, policy, process, and sourcing. The metrics can’t be prescriptive.

If you’re an executive, you can break through your organization’s obstacles to change by driving change through the benefit goal and the metrics that allow the organization to understand and configure against the goal. First define the experience you’re looking for. Then ask how to accomplish that. You’ll end up with a set of metrics that defines what you have to do to get to that experience.

As an example, let’s say you want to improve the speed of the employee onboarding process. What are the technologies you have to put in place? What talent issues do you have to think through? What policies and processes do you need to think through? What are the consequences of changes to those technologies, talent, policies, and processes? Now you have the metric and sub-metrics that help guide those implications.

Once the client organization is committed to the transformation journey at each level, the service provider can then engage with them around how that should be done.


Photo credit: Flickr

Technology Is Advancing Quickly; So Why Are Organizations Changing So Slowly? | Sherpas in Blue Shirts

The pace of new technology is advancing exponentially. But organizations change so slowly. This is particularly frustrating if you’re a senior executive who sees the opportunity to drive efficiencies or value and by making big changes in your organization, yet you find it’s painful and difficult to drive change and you can only make incremental progress. It’s also frustrating if you’re a service provider trying to sell a new vision to a slow-changing organization. What causes the slowdown?

Incentive

People do what they are incented to do and what is in their best interest. Just because technology makes something possible doesn’t mean that people are prepared to change. And driving change is dependent on relationships with other people; highly dependent technologies also impact change. It’s not that individuals want to thwart change; it’s just that change will be thwarted because people always do what is in their best interests, as they perceive it.

Making a change in technology forces change in policies, processes and relationships; and that requires realignment. Alignment is complicated. It’s a combination of organizational incentives, personal incentives, metrics and what we measure, proximity to people, how we relate to one another and technology.

The tragic mistake that clients and providers so often make is believing that changing one aspect – the technology or perhaps a few people – will drive others to change. But it won’t. Driving change requires realigning the organization and ecosystem.

Complexity

Borrowing from the old adage, human behavior is like water – it flows to the lowest point or takes the easiest path. This is a defining principle about why Apple has been so successful: it makes it easy to operate an iPhone or iPad. When we fail to make those same accommodations and think through technology change thoroughly, we can’t drive the organizational and behavioral change we’re looking for.

Change and adopting new technologies is so simple for the architects and designers. But they fail to view it from the perspective of the people who will be affected by the technology. New technology requires creating new steps or more complexity; therefore, new technology is more difficult to utilize than the old technology people are accustomed to and trained on.

Often the new visions based on a breakthrough or change in technology rarely live up to their potential because the service provider only changes the technology or provide new technology to the aspects of the service for which the provider is responsible. So the remaining organization can’t or won’t change; it’s left with the original interests and metrics, and it won’t readily change to accommodate the new structure.

Bottom line

Unfortunately, service providers’ salespersons attempt to beat competitors’ offers by oversimplifying the nature of the change the client will need to undergo.

To ensure client satisfaction and to ensure the technology lives up to its potential, providers selling a new vision and making promises must be far more realistic around the cost and time it takes to accomplish the change from implementing new technology.

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