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How to align tech with the business: 3 steps for IT leaders

Niel Nickolaisen CTO and CIO, OC Tanner

A fundamental shift is happening in IT leadership that both thrills and frightens me, as a CIO, because it is redefining my IT leadership role.

For the first 50 or 60 years of enterprise computing, the capabilities of business processes and business rules outpaced the capabilities of technology, and IT was in a mostly supporting role. The organization evolved processes and approaches and defined its technology needs, then IT would design and deliver systems that aligned with those needs.

Now the situation has reversed: The capabilities of technology outstrip those of business processes and rules. Technology defines the organization. You create organizational and market possibilities through technology.

And as the relationship has switched, so has the IT leader's role. Rather than playing a supporting part, we are expected to lead product, service, and process innovation.

[ Special Coverage: Focus on IT Service Management at Pink18 ]

At the core of the so-called digital transformation is the revolution in how IT leaders do our jobs. As compute power becomes smaller and more ubiquitous, machines smarter, data more comprehensive, and technology more personal, IT becomes more visible and more critical to the organization's success.

How IT leaders' roles must change

There are several ramifications to this fundamental change in our roles, particularly in terms of strategy and alignment around strategy. In my long career, I have learned three things that set up IT leaders for success with strategy and alignment. You need to:

  • Focus your innovation and creativity only on what creates sustainable competitive advantage
  • Achieve operational agility and excellence through the adoption of best practices, simplification, and standardization
  • Create a workplace culture where people want to be, not have to be

Here's how each applies to your IT leadership role.

Focus on creating sustainable advantage

I divide my world into two general categories. First are those mission-critical things we do that create market differentiation. These are the things we do to win in the marketplace. They define our sustainable competitive advantage. They are the few things we must do better than anyone else. And they are the only things that deserve innovation and creativity.

Second are those mission-critical things we do that do not create market differentiation. These are the vast majority of our processes and activities. Because they are mission-critical, we must do them well. But because they do not create competitive advantage, there is no reason to do them better than anyone else.

We optimize value when we perform these processes as well as others. Since they do not deserve innovation, we can adopt the best practices invented by others and constantly simplify and standardize these activities. In fact, the more we simplify and standardize, the better our organizational agility (agility and complexity cannot coexist).

Some years ago I was hired as the turnaround CIO of an innovative, rapidly growing, nonprofit online university. This was a turnaround role because the IT I inherited was a bit of a train wreck. We were slow, unreliable, and expensive, and we had not, in recent memory, successfully delivered an IT project. 

Ask the right questions

Once I dug into our processes and systems, I understood why. The university had a unique approach to all of its processes. We had seven CRM systems (one for each department that served students). We had a highly customized ERP system. We had a homegrown enrollment system. We had a custom network design.

In other words, we had purchased and then broken many market-leading systems. We needed to change this, and change it fast. But how?

I started by asking the simple question, "What do we do better than anyone else?" At first, the answer was "everything," so I pressed more and asked, "What defines our sustainable competitive advantage? Why does someone choose our university over their myriad options—including doing nothing?"

Through my potentially irritating questioning, the university's executive team started to define the university's competitive advantage—that it was best at competency-based, self-paced higher education.

That was our thing, our superpower. And it was also the only thing that required our innovation. If competency-based, self-paced higher ed was our market differentiator, then we had better be constantly doing it better and better.

What did not deserve innovation? Everything else.

For example, did students select us, and did we do competency-based, self-paced better, because we had seven different CRM systems? No. Did students choose us because we had a homegrown enrollment system? No.

As an online university, our network had to be bulletproof. But were we the world experts in designing a network that never failed? No. Should we rely on the innovation of others and simply adopt their architecture and replace our unique design? Yes.

Adopt best practices, standardize, and simplify

Focusing our innovation on the few things that helped us be the best at competency-based, self-paced higher ed generated two invaluable results. First, the entire university could align around what we did better than anyone else. Second, the entire university could align around the opportunities we had to adopt best practices (as invented by others) while simplifying and standardizing everything else.

By taking this two-pronged approach over the next couple of years, we delivered compelling products and tools that helped us attract and retain the right students and improve graduation rates. We also cleaned up years of unnecessary complexity and significantly improved our agility and service levels.

We replaced the seven CRM systems with one system that had zero—yes zero—customizations. We re-implemented our ERP system with an out-of-the-box system; no student chose us, nor would graduation rates increase, because of our legacy customizations to our accounting system.

We replaced our enrollment system by leveraging our zero-customization CRM system, which also freed up four software engineers to work on other systems and projects—including some that improved competency-based, self-paced higher ed. Even better, IT went from organizational laggard to peer and the creator of future possibilities.

How you can do it

Intrigued? Want to give it a try? I have launched this approach at both the organizational and project levels.

With the organization, I typically start with the executive or leadership team by finding an opportunity to ask the questions: What do we do better than anyone else? What are the specific things we do to create competitive advantage? And why do customers choose us over the alternatives?

With a project, we can ask the same questions as we do the initial project planning. That way, we can align the project's design goal to how the organization creates competitive advantage or improves operational excellence agility.

This has worked when starting at both points. If you start at the organizational level, you then cascade the thinking down to the rest of the organization. If you start at the project level, you cascade it both up (to get validation of what creates competitive advantage) and down.

No matter the starting point, thinking this way delivers two critical elements of strategy: a focus on what creates competitive advantage, and dramatic improvements to delivery. Thinking this way has helped me and my team shift from a support role to a strategic role. And since all possibilities now come through technology, IT being strategic is essential for me, my team, and the entire organization.

Create a great workplace culture

Recently someone asked me what the primary role of leadership is. Here was my answer: To create a great culture. As a leader, I must ensure that the culture attracts and retains talent and that it produces everyone's best work.

As I ponder my best leadership experiences—the leaders whose vision I followed, for whom I did my best work, and who inspired and taught me the most—I can think of two primary characteristics of the cultures they created.

First, they operated with trust. They were personally trustworthy. They assumed everyone wanted to do their best work and so avoided command and control. They built me and my capabilities. They gave others credit. They were self-aware. They challenged me while also tolerating my mistakes.

Second, they asked me, in word and deed, to take ownership for outcomes. What mattered to them were results and not methods (unless I asked them to teach me methods that would improve my results). In other words, they focused on "why" and "what" but never "how."

Break out of a 'permission culture' 

At the online university, my predecessor was a bit of a micromanager. He was incredibly smart and delved into the "how" of most of the IT team’s work. And if team members were not doing it his way, he considered their approach incorrect and had them change what they were doing. Over time, this led to a permission culture—no one would act without asking for permission first.

Not only did this create a toxic culture, but the entire organization moved only as fast as he could grant permission. He became the bottleneck. This resulted in sub-optimal solutions (sometimes he did not know the best solution, design, or approach), a massive backlog of work that was waiting on his approval, and a wide range of broken processes that awaited his attention.

When I inherited the IT team, I worked on getting to a culture of trust and ownership. I got the entire IT team together, explained which work was most important to get done and why this work would make the lives of our students and staff better, and then asked them which projects they thought were the most important.

Next, I asked for volunteers to own each of the high-priority projects. I have found that people volunteer for what drives them and I wanted people with passion to own the high-priority projects.

Others volunteered to be on each of the project teams. These teams defined how they were going to deliver the expected results, and my only follow-up was a short, monthly meeting in which I asked if they were getting done what they had planned.

Have a light touch

My entire approach to project tracking was based on the assumption that the owner and team would deliver on their commitments, and so I needed only a very light touch to track their progress and help them resolve any barriers they were encountering.

When someone came to me with a problem I would, in a kind and gentle way, not give them a solution but instead guide them to discover their own approach.

There are at least two problems with providing solutions. First, it takes away their ownership. If I tell them what I would do, they feel obligated to do that. Second, my overarching goal is not to solve problems but to create problem solvers.

Another thing: I kept my commitments. I have learned that I cannot create a culture of trust if I am not trustworthy. If I said I would start my meeting at 2:00 pm, I had better be there to start the meeting at 2:00 pm. If I said I would contact someone on my team's behalf, I had better make doing so a priority. And so on.

Measure what matters

I revised our metrics so that they measured the two things that were the most important for us to own: our commitment-keeping and our customer service. All of our measures were process- or team-specific variants of these two metrics:

  • Do we keep our commitments?
  • Are we a pleasure to work with?

Neither of these measured the "how" of our work. All that mattered were our results, and so that is what we measured.

It took some time to turn the cultural corner, but making trust and ownership a priority improved results. I started my job at the university in September. At the time, the IT team was considered a black hole—projects went in but never came out. By the following May, the university president asked IT to slow down, since the rest of the university could not keep up with the pace at which we were delivering projects.

Deal with shadow IT

Even better, when my tenure started started, there was a decent amount of shadow IT spread throughout the university. Shadow IT is, of course, the IT talent and roles that the non-IT departments hire because they aren't getting the IT support they need or have requested from the IT department.

I have always considered shadow IT an indictment of IT services. My team should be the preferred provider of technology services—not because we exist, but because we are so good at keeping our commitments and being a joy to work with.

At the university I never made an attempt to acquire the shadow IT. Instead, I figured that if our culture were what it needed to be, all of the shadow IT would voluntarily join our team. And that is exactly what happened. Shadow IT melted away because we were the best place to work. 

Also, recruiting for IT got easier because when everyone loves their work, everyone is a great ambassador. There were fewer demands to match competing job offers—money is less of an issue if you love where you work and the work you are doing.

We replaced the permission culture with an accomplishment culture. We worked on the right things in the right way and got them done. It was a joy to experience and has become my personal benchmark for a team, department, and organizational culture.

Create a trust-based IT micro-culture

And I learned an important lesson. We created and sustained this great culture independent from the culture of the university. We had our own micro-culture. This same concept applies at the team and project levels—each has its own culture defined by its leader. As the overall leader, part of my job is to train everyone on the beauty and benefits of a trust/ownership culture so that all of the cultures are trust- and ownership-based.

As IT leaders make the transition from a support role to a strategic leadership role, they need to know which battles to fight. The only battles worth fighting are those that ensure that you focus your innovation only on what you do better than anyone else.

For everything else, leverage the innovation of others by adopting best practices, simplifying, and standardizing. And to get the most out of everyone in a positive, collaborative way, your primary role should be to create a great workplace culture that's built on trust and ownership.

For more hands-on advice on how to strategically align your IT organization with the business, come see my presentation at Pink18 in Orlando, starting on February 18.

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