Organizational Change
Observations of a burned out corporate soldier turned entrepreneur
As I reflect on the year 2009, my first full year at my new startup, I thought I would share my observations as I look back at the challenges that I used to deal with throughout my long corporate career.
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| From Enterprise Initiatives |
In November of 2008, I joined a startup called M-Dot Network as CTO and employee #1. I had spent the first 23 years of my professional career working for medium sized corporations with IT shops in the 100-300 person range (Note: I enjoyed working at all of these companies and learned valuable lessons). I started out as a programmer working on mainframe systems and eventually followed the market and developed on Unix and Microsoft based client server environments. In the late 90’s there was a manager position available in my group. I applied for it only because I was tired of working for managers who knew nothing about technology. What I found out is that I knew nothing about management and I really sucked at it. Being a competitive guy and one who does not like to suck at anything, I worked real hard at improving my management skills and eventually my leadership skills. Over time I worked my way up into senior IT leadership roles where my last corporate role was chief architect. Along this journey from programmer to manager to C-level, I learned a lot about people, cultures, and organizations. I also learned that many of the frustrations of corporate America are not unique to any one company or culture but are almost epidemic in our society. Here are some of my observations:
- As companies grow, the employees get further detached from the overall vision and mission. The overall mission becomes lost at the lower levels of an organization if the company does not continuously communicate the mission, actually deliver on the mission (not just words), and reward people for contributing to the mission.
- Layers are only good for onions. When you run out of fingers on one hand counting the reporting layers between the workers and the IT top dog, the company’s ability to innovate becomes crippled. I have seen a medium sized IT shop with 8 layers. A small group of corporate soldiers did a ton of work and the middle 6 layers spend a lot of time communicating up to the top layer what these people were doing. To make matters worse, they typically reported what the top wanted to hear because the non-worker bees had to justify their existence. How productive was that?
- The reward structure in most companies are the root cause of all evil. Companies tend reward the people who break shit and then fix it instead of rewarding people who deploy stuff that works. Working hard tends to pay better than working smart. It is all about perception which is the direct result of putting managers in charge who know nothing about the technologies that they manage.
- Companies tend to get too inbred. The downside of longevity is that people start to feel too secure in their jobs and feel like their job is a privilege, not something they must earn each day. When a company becomes too inbred, adopting technologies or methodologies that require organization change become extremely challenging. This point was one of my main reasons for exiting the corporate world. In an inbred culture, everybody knows what the problems are but nobody wants to lift a finger to help change it. That is what happens when people think of their job as a privilege instead of commitment to the people who deposit money into their bank account every two weeks.
- You are who you hire. “A” players hire “A” players, but “C” players hire “C” players. Put one “C” player in a leadership role for a couple of years and that area will be littered with “C” players over time. Some of them will get promoted into leadership roles and mediocrity will spread like a virus. This is one of the biggest culture killers. If enough “C” players get in power your “A” players leave.
- IT tends to forget why they are being paid. The whole business-IT alignment issue is just mind boggling to me. Growing up in a family owned business there was never any confusion that the goal was to provide value and satisfaction to the customer so that the business would prosper. It was easy to see who the customer was. In corporate IT, we tend to forget who the customer is. I have even seen some people who don’t think they have any customers! It shouldn’t be that hard. There are external customers (buyers of products and services) and internal customers (people who get external customers). At the end of the day IT must enable both of those groups. I have seen way too many IT resources spending way more energy serving everyone except the customers who pay the bills and the people who sell to them.
- Silos represent lack of overall leadership. Silos are corporate killers. Silos create broad inefficiencies from a technology standpoint, a business process standpoint, a customer service standpoint, an organizational agility standpoint, and so forth and so on. Silos are often the result of a company growing rapidly with no strategy or roadmap of what the company wants to be when it grows up. How many times have you seen a good company grow like crazy for a number of years and then hit a wall? When the dust clears from several years of rapid growth, many companies find themselves riddled with inefficiencies and sky rocketing expenses caused by organizational silos. Mini cultures start forming within these silos and even within departments. I have seen turf wars between groups within IT. Forget about business-IT alignment, we often need IT-IT alignment. This is a direct result of senior level management not keeping their eye on the ball. No matter how fast a company is growing, they should have a growth strategy and a plan to prevent “hitting the wall”. Growth is not only generated from products and services, it is driven by people.
- Many people hate their jobs but will never leave. This is like cancer. I have seen good hard working people turn into unproductive and even destructive employees. Sometimes this is caused by lack of opportunity, lack of acknowledgment of accomplishments, or just a direct result of the above mentioned bullets. I always go back to our family business where my dad had a small pharmacy with about 3 employees. If somebody hated their job, their performance sucked, thus causing a poor customer experience. That person would be gone in a heart beat. In the corporate world, these individuals can last forever and some even get rewarded for it!
- Politics get in the way of sound business decisions. It amazes me how political some organizations have become. My first thoughts are always about how we can increase revenue, decrease expenses, and help our customers. Unfortunately, many people let topics like career aspirations, vendor favoritism, and even religion factor into their decision making process.
I could go on but for those current and former corporate soldiers out there, you get the point. Now that I am in startup, I am completely free of all this nonsense. At the same time, I want to make sure as we build this company from 10 to say 100 people, that we don’t make the mistakes of the past and create another one of these political, silo-based, innovation-starved organizations. Life in this startup has been so energizing to me for the following reasons.
- Everything is earned. We raise money one angel investor at a time. We cannot fail. When I get in front of highly successful business people who are trusting part of their retirement in our hands, I have an obligation to do everything in my power to give those people a return on their investment. If they had not taken a chance on us, I would be back in a cube or corner office dealing with the pain and politics of corporate America. These investors have set me free and created a better quality of life for me and my family. We owe them our best effort every day!
- Business and IT is aligned at the hip – We cannot survive without business and IT alignment. IT builds the services and does everything in its power to provide the business with the tools it needs to sell and raise money. That is just good business. When the organization is less than 10 people that is a no-brainer. The challenge is to not lose sight of that by the time the company hits 100 people.
- No time for politics. In our environment, it is a first market mover opportunity. There are many players competing for this new piece of pie and the first one to grab the lion’s share will be very successful. The others may perish. So there is not time for power plays, position jockeying, brown nosing and all those games. If we don’t deliver we simply will cease to exist.
- Perform or leave. When you only have a handful of employees, everybody must bring their “A” game. In a 200 person IT shop, you can carry some dead weight. When the number of projects and clients exceeds the number of people in your organization, everybody must deliver every day.
- Everyone wins and loses together. In the corporate world, you can always tell when your company has a good quarter because the executives and top sales guys are driving yet another new Mercedes to work. Everyone else is still struggling to put food on the table. In most startups, the early employees usually sacrifice significant amount of salary in exchange for equity. This is great for two reasons. First, it keeps the burn rate down but more importantly, everybody is highly motivated because so much is at stake financially for everybody. If we fail, we all lose lots of money that we could have been earning in salary. But if we win, we can make way more money than we ever could have made as law abiding corporate soldiers.
- Agile is required. There are no wars about whether agile makes sense or not in the startup environment. Our motto is JEJIT – Just enough, just in time. When you take money from angel investors and VCs, they want results. When your paycheck is coming from 40-50 people that you know by name, you tend to not see your job as a privilege. You must show incremental progress in short increments so you can continue to raise money to allow you to progress towards that multi-year roadmap. Be quick or be dead!
Conclusion
I think my early days of working in my dad’s pharmacy trained me to be very customer focused and results oriented. Then I entered the corporate world. In the early days while I was in development, I was so energized by learning new technologies that many of the issues in the corporate world were foreign to me. When I entered management, I started to realize that corporations broke many rules of good business practices. The higher up I got, the more apparent it was and the more frustrating it became. Even though I was getting paid good money, I was actually happier when I was in my own little world solving problems with code. All along, I was trying to apply the mindset of an entrepreneur in organizations that were not able or willing to accept those principles. It is hard to create change when status quo is rewarded. So I bailed after 23 years, with no job. Now, 18 months later, the same philosophies that I tried as a law abiding corporate soldier are welcomed and necessary in the daily survival game in the world of a startup. My biggest challenge (besides making sure we succeed) is figuring out how to grow this company and keep the entrepreneurial spirit.
We have a joke around here….”When we have to hire a VP of Human Resources, it is time to sell”. It is a joke, but it just might be reality. When we have to dedicate people to managing people instead of delivering products and services, it is the first sign that the company is on the path to becoming corporate. When the business and IT leaders start talking about aligning, it is time for the next startup!
Podcast: SOA and Change
Back in September I shared with all of you the presentation I gave about SOA and Organization Change Management. Today I am happy to share the podcast from that discussion that took place at the quarterly SOA Consortium meeting in Orlando. Here are the slides.
And here is the podcast that goes with it.
The panel discussion at the tail end of the presentation is fantastic. There were a lot of great questions and many lessons learned shared from experts like Todd Biske, Brenda Michelson, Frank Bowen from IBM, and others. If you have the time, listen to this podcast. Failure to recognize and counteract the resistance to change is the number one cause of failure for all enterprise initiatives, not just SOA.
Managing Change in a Business Transformation Setting
I was invited to speak at a forum for IT executives in Detroit this week sponsored by Information Week. The purpose of the forum as described in the agenda goes like this…
This executive breakfast, specifically designed for senior business-technology executives, will explore why the pressure is on IT to help the business transform, and how it can meet those expectations. More than ever before, companies are demanding their CIOs to be strategic thinkers in helping them innovate and operate at peak performance – especially as businesses are under pressure from the poor state of the economy and the ever-faster pace of change in a global market. In this environment, you can’t miss this opportunity to gain insight into the tactics and strategy that will help you be on your best game.
I was specifically asked to talk about why transformational IT initiatives like BPM & SOA fail and what advice I would offer to prevent failures from happening. I put together the following presentation which is a combination of some of my previous presentations, Preparing for SOA and SOA & Change.
I wrote a very popular article on CIO.com a while back about the Top 10 reasons why SOA fails. I speak to each of these points in the presentation and present solutions for each. I also discuss using John Kotter’s 8-step process for managing change which I highlight in the presentation. Here are my keys for preventing failures.
- Plan for and manage organizational change
- Key drivers should be business focused not IT focused
- Evaluate internal skills and fill gaps. Do not try it without help!
- Don’t let the vendors drive your architecture. Do your homework.
- Grow your governance model over time
Speaking of governance, here is an analogy I like to use…
Implementing SOA without a solid governance model is the equivalent to having an airport without a control tower. Sure, there are some very good planes and talented pilots, but without the proper planning and timely information the end results would be disastrous. So make sure you build a control tower and hire some air traffic controllers!
If you would like me to create and present a custom presentation like this one, feel free to contact me
Plan for and manage change
I have mentioned several times in the past that the hardest part of implementing enterprise initiatives like SOA, governance, enterprise architecture, SDLC (software development lifecycle), etc. is not the technology but rather dealing with people and change. Below is a presentation I gave at the SOA Consortium in Orlando last week that discusses how to plan for and manage change. If you would like for me to discuss this presentation in detail with your organization, give me a shout. Enjoy!
Are you prepared to start a SOA initiative?
There is so much to consider when embarking on an enterprise SOA initiative. Many people focus solely on the technical aspects but don’t plan enough for the business and organizational aspects that need to be considered. Here is a presentation that I prepared for a client that discusses most of the major areas to focus on before investing heavily in SOA. Those that heed this advice will be in a much better position in the long haul!
The Missing Link in IT
To successfully lead an IT organization, one must excel in three key areas: Technology, Business, and People.
When attempting to implement enterprise initiatives, those leaders who do not excel in people skills will have some serious challenges. For whatever reason, many IT leaders neglect the “people side of change” (listen to my podcast with ZDNet’s Michael Krigsman) and do not address a critical need – Organizational Change Management.
I am a huge fan of Harvard’s leadership guru, John Kotter. Kotter has a proven 8-step methodology for leading through change. Here are the steps:
1. Create a Sense of Urgency
2. Pull Together the Guiding Team
3. Develop the Change Vision and Strategy
4. Communicate for Understanding and Buy In
5. Empower Others to Act
6. Produce Short-Term Wins
7. Don’t Let Up
8. Create a New Culture
For more on this topic I recommend his books “Leading Change” , “Our Iceberg is Melting“, and also “Change Management: the People Side of Change” by Jeffrey Hiatt and Timothy Creasey.
And remember, now matter how good you do with the technology and business side of the equation, if people resist change your project will more then likely fail.
