The basic framework of all aspects of business, from soliciting customer and competing in the market to production and services,is getting redefined as more and more companies are becoming globally connected.Following best practices can help drive a successful business strategy, but understanding what the "worst" practices are is just as important. Here are five reasons strategy fails in small businesses, in midsize businesses, and in large enterprises
I've watched strategy being developed within companies, as well as those strategy created by individuals.In both cases I've seen it done well, and occasionally I've seen it done poorly.I've noticed that following the existing methods often doesn't yield success.It's not just the methodology. Here are five key reasons strategy fails in small businesses, in midsize businesses, and in large enterprises
The Blame Game
How many times have you seen a strategy move into execution, then fail? Typically, the postmortem involves blame. It was poor leadership. We didn't execute correctly. We had bad market data. Our customers decided they wanted something else. The timing was off. There are hundreds more, and you've heard many of them.
Underneath the failure is something deeper -- a strategy creation process that's gone off the rails. The problem isn't actually people, management, or other issues. It's what strategy is seen as being and how it's developed within an organization.
When there's a mismatch, people can be fearful and confused if they have information that contradicts the new strategy. When the strategy doesn't gibe with what employees know to be true, they may wonder if they're supposed to speak out or remain silent. Employees wonder if they'll get in trouble if they do, or even if they don't, say anything. They worry about being called "too tactical" or "insubordinate" because their reality-check doesn't match up with what the CEO wants enacted.
When a business reaches this point, the strategy has already failed. In the musical The Wiz, the wicked witch Evillene sings a song titled "Don't Nobody Bring Me No Bad News." If that's your tune, get rid of it. It's a sign of serious structural problems.
Lack of Team Involvement
Large companies often see strategy as an annual activity done by an elite group of people who sequester themselves in a conference room. In smaller organizations, it more often comes as an edict from on high delivered to the people on the ground who must enact it.
Strategy is tricky -- it's both a thing and an action.;As a thing, a vision, a direction, everyone in the company owns strategy. As an action, it requires specific people to carry it out within the organization. Lack of such involvement is one of the major predictors of strategy failure. When employees aren't invited -- or even given permission -- to question high-level strategy, watch out. A CEO may miss key questions such as "Is this strategy the best way to achieve our goal?" "Do we even know how to do this?" or "Have we researched this fully?" The team, even if given permission, may not have a formal place to discuss such questions, and organizations don't usually invite conversations of this type.
The solution? Get the conversation going on an internal blog with comments, through a discussion thread, or on a strategy wiki that involves everyone in the organization. You'll be surprised how many times an important piece of knowledge is contributed by someone you thought wouldn't be interested.
Here We Are -- But Where Are We?
How did this happen? How did we get here? We need to understand where today's strategy models came from and how they operate. This will show us why the lack of key structural elements can almost always predict failure.
The two basic forms of traditional strategy are predictive and emergent. Both are highly codified and well-documented. They're usually used at the CEO level.
Predictive strategy is top-down and sets a direction based on research predictions about what market conditions are expected to be. The work is quantitative, relying on data, analytics, and expert intelligence to build a picture of an evolving market. It offers tools to design strategies that will succeed in the market as depicted.
Emergent strategy is bottom up and takes a wait-and-see approach. The ideas that catch fire are added to resources that help the whole bear fruit. The focus is on the enablement of the organization to develop competing options that mirror the real-time competition going on in the market. It supports a portfolio approach to an organization's evolving itself into the future. The method you choose depends on the management structure of your organization, the industry the company is in, and the company culture -- among other variables. The emergent model is more flexible, where some might say the predictive model is old school. What causes failure in both is the failure to integrate feedback loops to enable adjustment on the fly.
Execution Popular media has focused on execution for the past five years. The logic was that the problem was that companies simply didn't know how to execute strategy. Titles such as The New Science of Strategy Execution: How Established Firms Become Fast, Sleek Wealth Creators and Execution: How to Break It Down and Get It Done support this notion. This points us in the direction of the results that have been missing, but still misses the mark by suggesting that a systematic approach will guarantee better results.
This is an incomplete idea -- even the idea of "flawless execution" assumes there's a target everyone is aiming toward. When is the last time you saw that level of alignment in any business, regardless of size?
Point being that a process reinforces the ability of people throughout an organization to synchronize, know what to adjust for, make good decisions, and know when to feed information back into the system for fine-tuning.
Tools are just tools. What's important is the way companies make decisions and choose which tools to use, as well as when and how to use them; that determines how effective the tools will be.
Decision-Making
In the United States, we're surrounded by overabundance and often don't recognize it. The same thing can happen inside a company regarding the plethora of decisions that need to be made. Poor decision-making can kill a strategy if people in the organization are unable to see it as a source of strategy failure.
Too many goals or conflicting imperatives create a situation where everything is a priority. In that scenario, nothing really gets accomplished. Business owners must know how to select and prioritize, edit, and delete. Given a situation in which you're developing a new line of business, decide how you want to help customers choose, and communicate it clearly within your team and to the company. Make the branding, packaging, sales, and channel shift clean and easy -- including the conversation about compensation and rewards.
Great decisions can be made by teams. But sometimes when decisions are made by teams without broader review, feedback is missed or fails to take into account cross-functional understanding. That person in sales may just hold the key as to how you can better engage the channel. Build in time for review, but make sure you're looking for targeted input. This isn't a consensus-building exercise.
Whether the decision is solo or team-based, it can be a challenge. Make it, move on, and make sure you have installed a process that will provide you with an early-warning signal if you need to revisit what you've decided. The one thing that's always constant in the market and in SMBs is change. It's a given that adjustments will need to be made -- develop the ability to adjust to change smoothly.
See ya soon!
Tuesday, September 21, 2010
The Key Reasons Why IT Strategies Fail
Understanding the 'worst' practices helps small businesses do better. For the sake of brevity, we cannot delve into all that issues affecting IT Strategy. So let us look at some key reasons why IT Strategies fail to, well, sizzle:
Show me the alignment?
IT Strategy and alignment are such very nebulous terms that most people have difficulty defining them in a manner that is actionable. It is fine to say that an IT Strategy is going to align IT with business but it is another matter that most people cannot prove this alignment. Most CIOs cannot say for sure if their IT is aligned with business.
Show me the value?
Another area of concern is whether an IT Strategy will create verifiable and sustainable results. One of the reasons for business leaders’ dissatisfaction with IT in general, and IT Strategy in particular, is that one cannot verify results. We know that IT Alignment creates shareholder value. However, if one cannot verify alignment itself, they cannot expect to be taken seriously, when they claim, that it resulted in shareholder value creation.
What is the ROI of NPV?
It is hard to argue with Peter Drucker, when he says, “If you cannot measure it, you cannot manage it”. However, is measurement is not restricted to financial measures such as NPV. It is not synonymous with “dollar-denominated”.
IT is different. Its value cannot be measured only through NPV or other financial measures. Its measure does not have to be dollar denominated. There are other, better, means of measuring IT Value.
How does this decision impact IT Value?
An IT Strategy is not an end in itself. Organizations’ need to keep it updated. For example, unanticipated events require a response that might not have been considered in the original strategy. It is critical to understand how these decisions, in response to these events, affect the IT Strategy. Also, how do they impact value creation originally identified?
How does this business decision impact IT?
Stuff happens. In a business, it happens frequently and, more often than not, without warning. Speed and agility of response, differentiate businesses that succeed. Quickly, one would like to know the impact of a business event on its IT. Also, how can IT help respond to them – efficiently and effectively.
IT Strategy framework must, seamlessly, traverse the business and IT boundaries to quickly assess the impact of an event across the entire organization. It should allow for quick decision making in response to these events – by assessing the impact on of each decision on shareholder value.
One big leap or baby steps?
Success, often, is a multi step process, especially, in uncharted territory. Our response to an initial stumble, determines if it is a minor glitch or a decisive blow. A good framework, process with a feedback loop and metrics help in this endeavor.
IT Strategy’s success is no different. Our first foray might result in some problems. We should be able to know when we have faltered; if it is a glitch or a blunder; quickly assess the reason for our stumble. We must also be able to quickly devise a response.
Can I learn from my experience?
The classic definition of insanity is: repeating the same steps expecting different results. Why do IT organizations behave insanely? Because most organizations do not spend the time to analyze, document, incorporate, disseminate or teach their “lessons learnt”. Best practices are not disseminated from one part of the organization to the other. Failures are hidden. New team members are not taught “what works” and “what doesn’t”. Processes are not modified to incorporate lessons learnt. Your “next” IT Strategy is bound to deliver the same results and this one - nothing less; nothing more.
Is this a steering committee or a team?
Often, IT Strategy is delegated to a steering committee comprised of participants from different functions. Each participant brings excellent, relevant and complementary skills to the table.
However, this is a great idea that fails during execution. A successful team must have clearly defined roles and responsibilities. Each member of the team must understand how the different pieces of the puzzle fit together. Each member must “deliver” something. Together, then, the team delivers results.
Steering committees result in the right people showing up for all the right meetings. However, they do not focus on role definition. They also fail to assign responsibility for deliverables. More often than not, these committees turn into debating societies where a lot of good stuff is discussed but very little, if anything, of value is ever delivered.
Who will lose their job if this fails?
Accountability is critical to the success of an IT Strategy. One can create a very “good” IT Strategy that either stays on the shelf or fails miserably when executed. Till success or failure is linked to executive compensation and/or career, such strategies and/or failures will continue to occur.
Are we in compliance?
IT standards are a critical enabler of IT Strategy because they help lower cost of operations. Organizations invest in standards teams that take great pains in defining standards. Often, IT Strategy process is not linked to a compliance process. Hence, projects that do not adhere to technical standards get implemented. Thus a great IT Strategy results in higher than desirable cost of operations. This is by no means an exhaustive list. However, addressing these will take us many steps closer to the solution.
See ya soon!
Show me the alignment?
IT Strategy and alignment are such very nebulous terms that most people have difficulty defining them in a manner that is actionable. It is fine to say that an IT Strategy is going to align IT with business but it is another matter that most people cannot prove this alignment. Most CIOs cannot say for sure if their IT is aligned with business.
Show me the value?
Another area of concern is whether an IT Strategy will create verifiable and sustainable results. One of the reasons for business leaders’ dissatisfaction with IT in general, and IT Strategy in particular, is that one cannot verify results. We know that IT Alignment creates shareholder value. However, if one cannot verify alignment itself, they cannot expect to be taken seriously, when they claim, that it resulted in shareholder value creation.
What is the ROI of NPV?
It is hard to argue with Peter Drucker, when he says, “If you cannot measure it, you cannot manage it”. However, is measurement is not restricted to financial measures such as NPV. It is not synonymous with “dollar-denominated”.
IT is different. Its value cannot be measured only through NPV or other financial measures. Its measure does not have to be dollar denominated. There are other, better, means of measuring IT Value.
How does this decision impact IT Value?
An IT Strategy is not an end in itself. Organizations’ need to keep it updated. For example, unanticipated events require a response that might not have been considered in the original strategy. It is critical to understand how these decisions, in response to these events, affect the IT Strategy. Also, how do they impact value creation originally identified?
How does this business decision impact IT?
Stuff happens. In a business, it happens frequently and, more often than not, without warning. Speed and agility of response, differentiate businesses that succeed. Quickly, one would like to know the impact of a business event on its IT. Also, how can IT help respond to them – efficiently and effectively.
IT Strategy framework must, seamlessly, traverse the business and IT boundaries to quickly assess the impact of an event across the entire organization. It should allow for quick decision making in response to these events – by assessing the impact on of each decision on shareholder value.
One big leap or baby steps?
Success, often, is a multi step process, especially, in uncharted territory. Our response to an initial stumble, determines if it is a minor glitch or a decisive blow. A good framework, process with a feedback loop and metrics help in this endeavor.
IT Strategy’s success is no different. Our first foray might result in some problems. We should be able to know when we have faltered; if it is a glitch or a blunder; quickly assess the reason for our stumble. We must also be able to quickly devise a response.
Can I learn from my experience?
The classic definition of insanity is: repeating the same steps expecting different results. Why do IT organizations behave insanely? Because most organizations do not spend the time to analyze, document, incorporate, disseminate or teach their “lessons learnt”. Best practices are not disseminated from one part of the organization to the other. Failures are hidden. New team members are not taught “what works” and “what doesn’t”. Processes are not modified to incorporate lessons learnt. Your “next” IT Strategy is bound to deliver the same results and this one - nothing less; nothing more.
Is this a steering committee or a team?
Often, IT Strategy is delegated to a steering committee comprised of participants from different functions. Each participant brings excellent, relevant and complementary skills to the table.
However, this is a great idea that fails during execution. A successful team must have clearly defined roles and responsibilities. Each member of the team must understand how the different pieces of the puzzle fit together. Each member must “deliver” something. Together, then, the team delivers results.
Steering committees result in the right people showing up for all the right meetings. However, they do not focus on role definition. They also fail to assign responsibility for deliverables. More often than not, these committees turn into debating societies where a lot of good stuff is discussed but very little, if anything, of value is ever delivered.
Who will lose their job if this fails?
Accountability is critical to the success of an IT Strategy. One can create a very “good” IT Strategy that either stays on the shelf or fails miserably when executed. Till success or failure is linked to executive compensation and/or career, such strategies and/or failures will continue to occur.
Are we in compliance?
IT standards are a critical enabler of IT Strategy because they help lower cost of operations. Organizations invest in standards teams that take great pains in defining standards. Often, IT Strategy process is not linked to a compliance process. Hence, projects that do not adhere to technical standards get implemented. Thus a great IT Strategy results in higher than desirable cost of operations. This is by no means an exhaustive list. However, addressing these will take us many steps closer to the solution.
See ya soon!
What's Wrong with IT Strategy?
The strength of an IT Strategy does not come from it being articulated. It lies along its entire lifecycle – from the vision to the underlying policies, framework, process design, including management and control mechanisms, and execution. Each of them must be carefully thought through and designed.
Vision, principles and policies set the direction for an IT Strategy. They are the first step to designing and defining an IT Strategy but, more importantly, they reflect the stakeholders’ beliefs. It is critical that the strategy evolve from these beliefs, otherwise execution will be “half hearted”. It is also absolutely essential to realize that “stakeholders” include both the designers and the executers of this strategy.
A framework provides structure to IT Strategy. It enables rapid, repeatable results by ensuring that we have a complete “picture” and made the key connections. Frameworks might not guarantee success, but they sure help sustain and repeat it. Sometime, they can also salvage a floundering effort by identifying root cause of failure. Without a framework success or failure are a black box. More often than not, success comes from tinkering with an initial failure. Frameworks are invaluable in this tinkering.
Sometimes we forget that IT Strategy is a process not a point in time event. Like any other process, IT Strategy process must also be designed and have an “owner”. It must also be integrated with other processes such as Budget, Portfolio Rationalization, Enterprise Architecture Planning and Systems Implementation. It must also be managed – monitored and controlled using clearly defined metrics and mechanisms.
Execution makes all the difference between success and failure of an IT Strategy. An IT Strategy might look good on paper. However, implementation is where the rubber meets the road and for the first time we know, for sure, if things are working as planned. As much as strategy drives execution, the reverse is also equally true. A good IT Strategy is one that is built factoring in “practical” considerations or execution “constraints”. Also, on an ongoing basis, real data from execution must be used to “fine tune” strategy.
See ya soon!
Monday, September 20, 2010
What is IT Strategy?
To begin with,the basic framework of all aspects of business, from soliciting customer and competing in the market to production and services,is getting redefined as more and more companies are becoming globally connected.
Today IT has become a strategic value creators and differentiators for most of the companies.Therefore it needs to be managed strategically,effectively and efficiently to optimize its benefits.This blog encapsulates the proven principles and practices of IT strategy and provides a holistic perspective of its planning,execution and management.
We are going to critically examine information technology as a strategic resource,the needs for strategic approach for its management,and the necessity of IT alignment with business strategy.Further we will examine how to prepare an effective plan for the implementation of in formation strategy. More so we will show you how to evaluate the impact of IT on organizations and their workforce,and to measure returns on IT investment.
We are going to critically examine information technology as a strategic resource,the needs for strategic approach for its management,and the necessity of IT alignment with business strategy.Further we will examine how to prepare an effective plan for the implementation of in formation strategy. More so we will show you how to evaluate the impact of IT on organizations and their workforce,and to measure returns on IT investment.
What is IT Strategy?
There are some terms that are used more than they are understood. IT Strategy is one of them. On the one hand, people mystify the term and use it with reverence. "IT Strategy" gets a great deal more respect than say "programming". On average, IT Strategists are paid more than programmers. So the mystique is maintained and feeds its own success. On the other, the term is thrown around as if it were a commodity. From programmers to CIOs, everyone is doing "IT Strategy"! Everyone has an opinion on IT Strategy. Everyone has a definition of IT Strategy. With so many definitions of IT Strategy, it is not clear what people are "saying" and what listeners are "hearing"!
The good news is that the definition of IT Strategy is not any one person's purview. No one owns the term. However, the bad news is that one needs a clear definition of the term to get some work done.
So, what is IT Strategy?
IT Strategy is an iterative process to align IT capability with business requirements:
There are some terms that are used more than they are understood. IT Strategy is one of them. On the one hand, people mystify the term and use it with reverence. "IT Strategy" gets a great deal more respect than say "programming". On average, IT Strategists are paid more than programmers. So the mystique is maintained and feeds its own success. On the other, the term is thrown around as if it were a commodity. From programmers to CIOs, everyone is doing "IT Strategy"! Everyone has an opinion on IT Strategy. Everyone has a definition of IT Strategy. With so many definitions of IT Strategy, it is not clear what people are "saying" and what listeners are "hearing"!
The good news is that the definition of IT Strategy is not any one person's purview. No one owns the term. However, the bad news is that one needs a clear definition of the term to get some work done.
So, what is IT Strategy?
IT Strategy is an iterative process to align IT capability with business requirements:
$.It is a process not a point in time event
$.It is iterative - success comes after multiple - do and learn - cycles
$.The key is the alignment of business and IT capability rather than designing IT to address business requirements
$.It is iterative - success comes after multiple - do and learn - cycles
$.The key is the alignment of business and IT capability rather than designing IT to address business requirements
Well,The former assumes that both capabilities drive each other
The latter assumes that business drives IT and not vice versa
IT Strategy sets direction for IT function in an organization
Ensures that maximum IT dollars are spent on value creation activities for the business
Ensures that these dollars create the maximum value
IT Strategy helps create shareholder value. In other words, it helps maximize the return on IT investments.
Thank ya!
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