A handy guide to systems thinking and organizational learning in IT. https://systemsthinkingit.blogspot.com.au

1. Sea of Systems
A Handy Guide to Organizational
Learning and Systems Thinking in IT
By James Wood FBCS CITP
2017

2. 2
If you want to build a ship, don't drum up people
together to collect wood and don't assign them
tasks and work, but rather teach them to long
for the endless immensity of the sea...
Antoine de Saint-Exupery
Gene Bellinger, founder of systems wiki and director of Systems Thinking World, summarizes Sea of Systems:
“I reviewed James's "Sea of Systems" and found it to be a very well-written introduction to systems thinking
tailored to Information Technology environments. The document is quite well structured and written though
what makes it most useful is that rather than trying to cover too much about systems thinking it focuses on a
few aspects and their explicit relevance to Information Technology environments. In this way the reader very
quickly gets a sense of the relevance of systems thinking without being inundated with a lot of material which
might overwhelm them and turn them off. For those in an Information Technology environment not familiar
with systems thinking the paper is well-worth the read. A point with which it is expected you will agree by the
end”.
That is the essence of what I have created, a guide that offers an introduction to systems thinking, which is
easily digested by any role in IT and useful without being too heavy.
The expanded edition of Sea of Systems builds on the 2011 edition with enhanced and expanded explanations
of Deming cycle, reflection, system archetypes, systemic mapping and systems thinking.

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Table of Contents
Intended Audience.....................................................................................................................6
Requisite Knowledge..................................................................................................................6
Acknowledgments......................................................................................................................6
Foreword ..................................................................................................................................7
Loving Life in the Sea of Systems ...............................................................................................10
1. Pitfalls .................................................................................................................................12
1.2. Moving Forward = Slowing Down ....................................................................................14
1.3. Developing Sustainability in IT.........................................................................................14
1.4. Developing a Learning Culture in IT..................................................................................16
1.4.1. Learning From Mistakes ...........................................................................................17
1.4.2. Understanding the Greater Holistic View ...................................................................18
1.4.3. Recognizing Patterns Throughout Systems.................................................................18
1.5 A Brief Introduction to the Systems Paradigm in IT.............................................................19
1.5.1. Context – New Back-up System.................................................................................20
1.5.2 What Does Systems Thinking Tell Us About the Upgrade?............................................20
1.5.3 Fit for Purpose Back-up System..................................................................................21
1.5.4 The Unanticipated Effect of Demand..........................................................................21
1.5.5 Intrinsic Organizational Complexity ............................................................................23
1.5.6 Lesson Learned.........................................................................................................23
1.6 A Brief Introduction to the System Archetypes ..................................................................24
1.6.1 The System Archetypes of IT......................................................................................25
1.7 Balancing Process with Delay ...........................................................................................26
1.8 Shifting the Burden .........................................................................................................26
1.8.1 Lesson Learned.........................................................................................................28
1.9 Fixes that Fail..................................................................................................................29
1.9.1 Lesson Learned.........................................................................................................32
1.9 A Better Approach ..........................................................................................................32
1.9.1 Mapping out systemic influences ...............................................................................33
1.9.2 Inside-out → Outside-in ............................................................................................34

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1.10 The Importance of the Systems Paradigm in Innovation ...................................................35
1.11 Reflection.....................................................................................................................35
2. Innovation ...........................................................................................................................38
2.1. The Changing Role of Management .................................................................................40
2.2 Transforming IT by Enabling Innovation ― a Case Study.....................................................42
2.2.1. Context...................................................................................................................42
2.2.2. Innovative Potential.................................................................................................43
2.2.3. Enabling by Participative Initiatives ...........................................................................44
2.2.4. Expected & Unexpected Benefits ..............................................................................46
2.2.5. Lesson Learned........................................................................................................46
2.2.6. Systems Thinking Exercise ........................................................................................47
2.3. Developing the Innovative IT Management Style ..............................................................49
2.3.1. Time to Rethink Innovation.......................................................................................49
2.3.2. Innovation the New Power of the People...................................................................50
2.3.3. Are Your IT Managers Enabling Innovation? ...............................................................51
2.3.4. The New Objective for Innovative IT Managers...........................................................51
3. Leverage..............................................................................................................................53
3.1. Sustained Competitive Advantage ...................................................................................55
3.2. Proverbial Foot Shooting (Limits to Growth).....................................................................56
3.3. The Learning & Living IT Organization ..............................................................................57
3.3.1. Team Learning.........................................................................................................59
3.3.2. Shared Visions.........................................................................................................60
3.3.3. Mental Models ........................................................................................................60
3.3.4. Personal Mastery.....................................................................................................61
3.3.5. Systems Thinking .....................................................................................................62
3.4 Understanding IBM's Three Roles for CIO Success..............................................................63
3.4.1. Driving Technology Innovation to Make it Reality .......................................................64
3.4.2 Raising the ROI in IT ..................................................................................................64
3.4.3. Expanding the Business Impact of IT..........................................................................65
3.5. How to Tackle IT?...........................................................................................................66
3.5.1 Kick-off ....................................................................................................................67
3.5.2 Personal Mastery = Personal Choice...........................................................................67
3.5.3 Engage Shared Visions...............................................................................................67
3.5.4 Focus on Team Learning............................................................................................68

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3.5.5 Upgrade Mental Models............................................................................................68
3.5.6 Understanding Interconnectedness............................................................................68
4. Outcome Through Orchestration ...........................................................................................70
4.1. Bringing it all Together ...................................................................................................71
4.1.1. The Big Picture ........................................................................................................73
4.1.2. How to Use PDCA Effectively ....................................................................................74
4.2. Organizational Learning and Systems Thinking ― Foundation............................................75
4.3. Change-Platform ― Change ............................................................................................75
4.4. Participative Initiatives ― Focus ......................................................................................77
4.5. IBM's Three Roles ― Balance ..........................................................................................77
5. Phased Approach .................................................................................................................79
5.1. Phase One ― Increasing Business Focus...........................................................................80
5.1.1. Responsive Indicators ..............................................................................................81
5.1.2. Responsive Symptoms..............................................................................................81
5.1.3. Phase one Focus on IBM's Key Roles..........................................................................82
5.2. Phase Two ― Increasing IT Value.....................................................................................83
5.2.1. Aligned Indicators....................................................................................................83
5.2.2. Aligned Symptoms ...................................................................................................84
5.2.3. Phase two Focus on IBM's Key Roles..........................................................................84
5.3. Phase Three ― Increasing Innovation ..............................................................................85
5.3.1 Enabled Indicators ....................................................................................................85
5.3.2. Enabled Symptoms ..................................................................................................86
5.3.3. Phase three Focus on IBM's Key Roles .......................................................................86
6. Building our Ship ..................................................................................................................88
Index ......................................................................................................................................90
Useful Links .............................................................................................................................94

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Intended Audience
Sea of Systems is aimed at the CIO, CTO and IT Executive level, as well as at
IT Managers and Professionals working within type I and II service
provider1
organizations or IT organizations that provide services to clients
within the same organization or group.
However the examples concepts and ideas expressed throughout the guide
may be used in a wide variety of organizations and situations and indeed
may benefit a far greater and larger audience than intended.
Requisite Knowledge
Sea of Systems assumes a minimum requisite knowledge of ITIL® V3,
PRINCE2® or PMBOK® Foundation, as a result not all terms and methods
are explained in detail.
Acknowledgments
Author / Editor
James Wood, Cairns Regional Council, Australia
Co-readers & Reviewers – 2013
Gene Bellinger, Systems Thinking World, USA
Co-readers & Reviewers – 2011
Alfredo Moscardini, The University of Sunderland, UK
Christopher Van Eenoo, Commonwealth Bank, Australia
Gene Bellinger, Systems Thinking World, USA
Gary Franks, Melbourne Water, Australia
Nicolas Stampf, BNP Paribas, France
Zdenek Kaplan, Ceska pojistovna, Czech Republic
Cairns, Queensland, Australia. July 22 2017.
1
Type I & II service provider refers to standard ITIL® V3 terms, where a type I service
provider provisions services within one Business unit or department and a type II service
provider provisions services to more than one Business unit within the same organization
or group (a shared service). Type III service providers are not featured in this guide, they
operate externally and provision services to multiple external customers.

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Foreword
In business and governance, the environment of the 21st century is
observably different to what it was even ten years ago. We are seeing the
beginnings of a true global economy where all parts of the economic
infrastructure are interconnected.
Small events in distant countries can affect events throughout the world.
Countries, even the most advanced Western nations, can no longer act in
isolation. In a chaotic world, the effect of minor events is no longer
confined to one nation or company.
Small events are just as likely to produce very large effects and even
threaten stability. A new perception of the world, its problems and
solutions, is needed to manage and govern a country or region or a
business efficiently.
Different skills and procedures are necessary to facilitate development in
this worldwide context. The urgency of the situation is highlighted by the
dependency of organizations on advisory bodies and consultancies. But the
same problems are endemic amongst consultants. All consultants work to
a paradigm–a set of shared beliefs.
There have been several major paradigms in the Western world over the
centuries. The work of Socrates, Plato and Aristotle was the basis for the
Greek paradigm, which was adopted by the Romans and when the Roman
Empire converted to Christianity, the Christian Church then spread
throughout Europe.
A paradigm shift occurred in the 17th century, which led to the classical or
scientific paradigm, which has lasted for almost four hundred years and is
still the dominant paradigm of today.
This paradigm rests on the work of two great scientists–Descartes and
Newton. The scientific method of Descartes introduced analytic thinking.
This proposed that to understand a problem, one could break it down to its
many components, each component could be solved independently and
the total solution can be obtained by combining each component solution.
This is often called reductionism.
Newton followed the work of Descartes with his study of motion and co-
invention of the calculus with Leibniz. He proposed laws, which were
thought to be universal and eternal. Thus Newton's ideas led to what was
called 'Determinism'.
What came to be known as the Classical, Scientific or Newtonian paradigm
was a deterministic, linear, reductionist view of the world, which believed

8. 8
in perfect harmony, equilibrium and eternal immutable laws. These laws
could be verified through repeated experiments by a neutral observer.
Although the paradigm was devised for the study of physics, it was adopted
by other disciplines including economics.
One consequence of this mechanistic, reductionist paradigm was the
separation of knowledge into separate disciplines which eventually led to
the concept of an 'expert' that has persisted for the last century.
Till now, the Scientific method has been the established approach for
problem solving. 'The scientific method is the process by which scientists,
collectively and over time, endeavor to construct an accurate (that is
reliable, consistent and non-arbitrary) representation of the world'.
The scientific method is relevant to business processes and practices and
can provide useful modeling techniques. However new types of problems
that are increasingly complex are evolving. They are problems that appear
to require a different approach using a different set of tools.
Systems thinking revolves around the idea of a system which can loosely be
described as a set of objects that have a common purpose. In many ways,
as will be seen, it is the antithesis to Scientific thinking although we believe
that both can co-exist.
Systems theory is also associated with Cybernetics, which can be defined as
the control and regulation in the animal and the machine―referring to the
interaction between brains and other kinds of systems.
Its central tenet is that the way an organization is organized will affect its
behavior. The principal aim of an organization is to survive, most often in a
hostile environment. To do this, it must be organized in a certain way. The
choice of which way is that of the Viable Systems Model.
The systems paradigm differs from the scientific paradigm in the sense that
it treats the system as a whole and does not rely on the analytic
procedures of the former. In this new paradigm, it is the connections
between the parts that take precedence over the parts themselves. The
behavior of the whole is certainly more than the sum of its parts.
Another critical variable is 'purpose.' The scientific paradigm was based on
the belief that parts of the system, whilst having their individual functions,
did not have independent purposes. This mechanistic view of systems
encouraged Leibniz in his definition of 'windowless monads'.
In contrast to this, the new systems paradigm is based on the premise that
each part of the system has its own purpose but this cannot be achieved
independently of the purpose of the whole.

9. 9
According to Ackoff, an entity is purposeful if it can produce:
1. The same outcome in different ways in the same environment
and
2. Different outcomes in the same or different environment
The systems paradigm has been defined in various ways but there are
certain key elements, which exist in various degrees of importance, in all
definitions including: interconnectedness, holism, homeostasis, feedback,
recursion, and variety.
The Sea of Systems guide to systems thinking in IT offers a practical guide
to the systems paradigm, which can be used to build a solid foundation for
future development of IT organizations. It also provides an introduction to
the new paradigm of organizational learning in the workplace as a way to
develop and sustain a competitive advantage in IT.
Professor Alfredo Moscardini
Sunderland, Great Britain, June 2011

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Getting better results with systems thinking
Thank you for downloading Sea of Systems! It allows me to share a
refreshingly different way to see the world, a way that is more natural,
more aligned and just downright more commonsense than what we have
been led to believe. Because when we want to find out how something
works we believe we must take it apart.
We do it all the time, it's second nature, starting back at high school, when
we learned how to dissect a frog to discover its inner workings. In the
office for instance, what do we do with big problems? We split them up
into smaller problems, making them easier to manage, analyze and keep
under control.
"Let's take this thing apart", "let's get to the bottom of it", "let's sort
ourselves out first before we tackle the rest", "let's take it a piece at a
time". All familiar sayings, I know I hear them almost every day, and I'm
sure you do too.
What's wrong with that you might ask? Makes sense, don't want to bite off
more than we can chew. Well it's not so much about throughput as it is
about perspective, because when we cut things up into manageable chunks
we lose their cohesive purpose and we lose their perspective in relation to
the whole.
We risk losing our perspective on the world, because everything has
become compartmentalized, we go to work and play a role, we come
home and play another role, now I'm doing this, now I'm doing something
else, this isn't the time or place for it, everything must be in its place,
where it belongs. Is it this or is it that? We pigeonhole and categorize just
about everything.
Of course the paradox is that today we are more connected than we ever
have been, and we know we can no longer act in isolation. Yet our existing
toolset is based on antiquated principles and thinking that is hundreds of
years old, I'm referring here to "modern" scientific thinking and
reductionism, which is our default method for dealing with just about
everything―take it apart and let's see.
Somewhere locked away deep inside us there's a belief that if we pull
things apart until we find their smallest little components, we will finally
come to understand how they work. The central tenet of systems thinking
tells us the opposite is closer to the truth, because in order to discover how

11. 11
something works we must understand how it interacts with its
environment. It's all connected, it's as simple as that.
You begin to see now that this is about changing our minds and changing
our behaviors, it is making the necessary shift in thinking to be able to act
consistently and appropriately with our environment and with the sea of
systems that surrounds us every day.
James Wood FBCS CITP
Cairns, Australia, July 2017

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1. Pitfalls

13. 13
There are many pitfalls when it comes to organizational learning. As Peter
M Senge explains in The Fifth Discipline, these pitfalls are called learning
disabilities and in particular those of IT are often too great to overcome
without a systemic and systematic approach.
Quite often we think of learning as something that happens to individuals.
As children we grow up attending schools to learn individually, as adults we
attend training courses to improve our knowledge and skills, again mostly
as individuals, sometimes it is our curriculum vitae that benefits the most.
Indeed, sometimes learning is used for individual advantage, and indeed
sometimes people withhold knowledge in order to benefit from it
personally. Let's face it knowledge kingdoms are rife in IT and where
knowledge equals power they will prevail.
To complicate matters we have invented terms like 'intellectual property'
and 'copyright', doing so we have inadvertently caught ourselves in a
knowledge struggle, which has its most stubborn entrenchment in IT.
It requires a systemic and systematic approach to organizational learning
to win that battle. How many IT organizations can boast such an approach
to organizational learning? Not many, at least from what I have seen, they
are usually far too busy in the trenches for that.
There are flavors of organizational learning in certain IT disciplines, for
instance, PRINCE2® or PMBOK® project management methodologies and
Agile Development benefit from organizational learning. But they fail to
address the systemic approach, because as we know these disciplines do
not encompass whole IT organizations.
We need learning gains in all areas of IT, not just in project delivery and
development silos moreover, nowadays these areas tend to be outsourced,
so how to extend the benefits of organizational learning throughout an IT
organization?
I would like to make it clear that the knowledge-driven workplace is not
about individual knowledge nor learning, it is about the 'collective
knowledge' of the organization―where the workplace becomes
empowered by the organizational learning environment that surrounds it.
The pitfalls of organizational learning are often exacerbated
by the subconscious mind and without applying a systemic
and systematic approach it can be difficult to achieve the
required mental-shift throughout an organization

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1.2. Moving Forward = Slowing Down
However much we all enjoy the dynamics of a fast-moving IT support
environment, and some environments are so fast that there simply isn't
time to think—we should acknowledge the fact that it is becoming more
and more important to slowdown.
We have achieved many things, resolved a lot of incidents, provided
services above and beyond the call of duty, but as Aristotle once said,
'the purpose of action is contemplation'.
To move forward we need to slowdown and we need to change the way
in which IT is working. I am not referring to revamping our ITIL® processes
nor kicking off a Six Sigma program, I am referring to the way we work
and learn together in IT.
It is when we slowdown and take time for reflection that we begin to
see systemic patterns of behavior throughout IT systems as opposed
to isolated strings of events that often lead to symptomatic or partial
problem resolution.
The complexity involved in today's organizations and business models
has reached a level of intrinsic interconnectedness that we have not
seen before.
There is no indication that this complexity will plateau or decrease in
coming years, so in IT we need to prepare by introducing a systems
thinking approach to help us orchestrate and manage the escalating
complexity. We must understand all the interrelationships and connections
between our systems and between our systems and the whole.
To move forward we must slowdown and develop a systems
thinking approach throughout IT as a foundation for future
development
1.3. Developing Sustainability in IT
No matter how good the service is and no matter how well the service
appears to be meeting demand, sooner or later the laws of system
dynamics will come into play and causal loop feedback will catch up
with us. Quite simply put: 'it can't last forever'.

15. 15
In the above services system model acceptable service quality is limited by
capacity, ultimately having an adverse effect on provisioning the service,
for instance, not being able to fulfill agreed service levels.
No matter how hard the service provider strives to fulfill their obligations,
sooner or later the services system model will grind to a halt. In a large
service organization that doesn’t benefit from an integrated demand
management system this kind of systemic problem can be very difficult to
pinpoint let alone resolve.
Before action can be taken to resolve the problem the client may well have
just moved on. That is the advantage of service on demand, the ability to
flex up and down as required. We need systems thinking to understand
and to provision with the flexibility that not only matches market demand
but leads it.
When we observe the world through the often intricate and subtle nuances
of systems we start to understand sustainability and just how tenuous the
world of service provisioning really is.
Another important aspect to consider is that the competitive edge gained
through good services may not be enough to sustain an IT organization.
Quite often the only solution is to outsource those services that appear to
be causing the most pain for the Business2
.
Good products, services and processes are portable, they can be provided
cheaper and often in higher quality by leveraging the scale of an IT
Outsourcer.
This may or may not be the right solution and no matter how good the IT
Outsourcer is they may only ever address the symptoms of the underlying
learning disabilities that hinder sustainability, thereby potentially becoming
2
Business in the context of this guide refers to the greater collective Business
organization including: HR, Risk, Compliance, Finance, Company Services, Organization
and other group or shared services apart from IT
Acceptable
Service Quality
Demand for
Service
Capacity
of Service
Provider
Balancing / Limiting Growing / Reinforcing

16. 16
negatively systemically reinforced in both organizations, customer and
service provider―a recipe for disaster.
Outsourcing may defer the cost and risk of providing IT services in-house,
but it doesn't address organizational learning nor systems thinking. On the
contrary it may have a detrimental impact with far-reaching consequences
for both organizations, which may continue to plague the value proposition
of IT far into the future.
The laws of system dynamics and a lack of systems thinking sometimes
lead to the downfall of IT organizations. The 'Four Ps' of the ITIL® service
management framework (People, Processes, Products, Partners), help IT
organizations to design new services aligned with Business requirements,
but they do not necessarily help IT organizations to develop sustainability.
With the ITIL® service management framework, just like PRINCE2® or
PMBOK® project management methodologies or Agile Development,
the intention is certainly there, but they fail to address the fundamental
learning disabilities that prevent organizational learning and systems
thinking from taking place and thus developing true sustainability.
If an IT organization cannot keep up with the rate of change it will fall
behind. In today's global economy, products, services, core and non-core IT
and Business processes can all be copied. Organizational Learning cannot.
It has become perfectly plausible that Organizational Learning is the only
way to create a truly sustained competitive advantage. Moreover, an IT
organization's ability to learn faster, smarter and better than its
competitors may be the only determining factor in its future success.
The ability to learn faster, smarter and better than the
competition must become a high priority for every CIO
and technology leader
1.4. Developing a Learning Culture in IT
As people we tend to pick up bad habits along the way, but when an IT
organization picks up bad habits it can be disastrous. The kinds of bad
habits that are particularly perilous are those influencing an IT
organization's ability to learn as a whole organization.

17. 17
Having an excellent grasp of organizational learning can only help,
especially if the IT organization has aspirations of providing a long-term
partnership with the Business based on sustainable IT service delivery.
Better to forge that partnership healthily and cleanly than to be faced with
a major clean-up or outsourcing project later on, or even worse―missing
out on Business opportunities through an organizational culture that does
not nurture and support their development.
Organizational culture in IT as in any other organization 'just happens'; it
can be a good culture, a bad culture, a fear culture, a blame culture, a
mediocre culture―but there will always be a culture. Culture can be
nurtured for the better for all involved if there is a concerted effort on
the part of those involved to do so.
Rather like belief - we all believe in something - if somebody's belief is good
and positive, then fine; but if that person stops believing in good and
positive things, then their belief will become dominated with negativity
and darkness, it will just happen that way.
For an IT organization that is developing it is important to
implant commendable and 'good' systemic habits into its
organizational culture, habits that support and nurture an
open approach to learning as a whole
1.4.1. Learning From Mistakes
Using mistakes as an opportunity to learn as a whole IT organization and
not as a means to punish, this is the basis for building a successful learning
culture in IT:
§ It is important to understand why mistakes are made and to quickly
and effectively elevate that knowledge to the whole IT organization
§ Open learning sessions should be used to disseminate that knowledge,
the goal is to institutionalize the open learning approach and to quickly
upgrade skills across IT to avoid a recurrence of the same mistakes
§ By learning from mistakes in this way we are able to support and
nurture an IT culture that is not averse to risk taking and therefore
more open to experimentation and developing innovation, whilst
taking appropriate measures to manage risk

18. 18
§ We also institutionalize a way to mitigate the risk of a further
recurrence of the same mistakes throughout the IT organization
1.4.2. Understanding the Greater Holistic View
Understanding the holistic view within the wider frame of the greater
Business organization should always be paramount:
§ We understand the concept of de-fragmentation and de-duplication of
data, yet we seldom understand the concept of systems thinking in IT
§ Business organizations consist of a complex set of systems that are
ultimately designed to serve one purpose (to survive)
§ IT organizations usually consist of a complex set of services designed
to serve the purposes of individual Business systems
§ What has happened here is that we have intrinsically introduced
fragmentation into the approach of IT
§ This limits an IT organization's ability to serve the one purpose of the
Business
§ Until we can achieve a true systems thinking approach at all levels in
the IT organization we cannot serve the Business
1.4.3. Recognizing Patterns Throughout Systems
Recognizing patterns of events that recur within whole systems as opposed
to isolated individual episodes is fundamental in making real progress:
§ Decisions made in Business organizations often have far-reaching
consequences that we rarely understand in IT
§ Given that a Business organization is like a living ecosystem we should
realize that its interconnecting complexity cannot be simply
fragmented into individual Business systems, without possessing a
'complete' and whole understanding of how the ecosystem thrives
§ To be truly effective IT organizations must start to recognize the
patterns of events that take place throughout Business organizations
§ This goes hand in hand with slowing down and understanding systems
thinking

19. 19
§ The aim is to help the greater Business organization to understand the
recurring negative systemic patterns and to eradicate them
permanently
If this sounds a little foreign to you: don't worry it will become much
clearer as we continue to explore the sea of systems.
The ultimate goal is to create an IT culture that is based on
understanding the intrinsic interconnectedness of the sea of
systems throughout the whole Business organization
1.5 A Brief Introduction to the Systems Paradigm in IT
Throughout the guide the terms systems paradigm and systems thinking
are referred to, the following Back-up System example helps in making the
mental-shift required for a good understanding.
The following example may be an over-simplification but it is effective and
can be applied to much more complicated and demanding systems
challenges.
Often in IT the intrinsic interconnectedness of the systems environment
and the greater Business organization is underestimated, the systems
paradigm helps to improve our broader holistic understanding by teaching
us:
1+1+1+1 = 4 9
Gene Bellinger, founder of Systems Wiki and Systems Thinking World,
goes further to say that 1+1+1+1 = Surprise! It is not until we map-out
the relevant systemic influences that we can begin to predict what effects
they might have on the system.

20. 20
1.5.1. Context – New Back-up System
Due to asset life-cycle renewal an existing Back-up System was upgraded to
the latest version of computer hardware (HW) and software (SW). As the
upgrade didn't involve any functional changes to business applications, a
systems analyst conducted the preliminary study and the upgrade was
carried out by the infrastructure support group. Business Users were
notified about the change and it was scheduled and successfully completed
within a normal weekend upgrade window.
1.5.2 What Does Systems Thinking Tell Us About the Upgrade?
At first sight there appear to be four components that comprise the new
Back-up System.
1 + 1 + 1 + 1 = 4
However, after considering a systems thinking approach we may draw the
picture again.
1 + 1 +1 +1 +1 +1 +1 +1 +1 = 9
Media
With systems thinking the interconnections between the
components of a system and between the system and other
systems become equally and in some cases more important
than the system's constituent components alone
Web
Application
Server
Database
Back-up
Application
Back-up
Media
Web
Application
Server
Database
Back-up
Application
Back-up
Media

21. 21
1.5.3 Fit for Purpose Back-up System
With the upgrade and testing completed successfully the new Back-up
System was declared fit for purpose and handed-over to operations. From
Tuesday through to Friday at 18:00 the Back-up Application produces an
incremental back-up of the Database. It takes 30 minutes to complete and
finishes before the approved end of day processing at 19:00.
The new Back-up System turned out to be twice as fast as the old one and
the new version of the SW introduced functionality that was not previously
available―as the upgrade was considered 'infrastructure' the uplifts in
performance and functionality were neither discussed with nor
communicated to the Business.
1.5.4 The Unanticipated Effect of Demand
After a few weeks of normal operation a group of Finance users discovered
that the new system provided an accurate source of intraday data when
they accessed the Web Application Server at 18:15, and by running a
complex set of queries were able to determine daily profit margins before
the approved end of day processing started, previously they would not
have had access to that data before the start of the next business day.
Word soon spread from Finance to Sales & Marketing and before long the
demand for intraday reports had escalated enough to affect the
performance of the new system impacting its Service Level Agreement
(SLA), utility and warranty3
3
In the ITIL® service management framework 'Utility' refers to the features of a service
and 'Warranty' refers to the conditions of its provisioning

22. 22
Using a different system model we can illustrate the impact of escalating
user demand on the SLA of the Back-up System, leading to performance
degradation that rendered the Back-up System unfit for purpose.
The performance of the new Back-up System together with the enhanced
functionality provided by the new SW, created an enhanced system utility,
which after time (delay), attracted Business Users and inadvertently led to
impacting the system's agreed SLA and warranty through performance
degradation.
Reports
Performance
of Back-up
System
Finance Reports
Sales &
Marketing
Benefit A
Benefit B
Gains
+
+
+
+
+
+
+
The system model illustrates a pattern of
behavior. Notice that all the interactions
in the pattern are positive.
This particular pattern is called 'tragedy
of the commons' and the tragedy comes
from the fact that every party involved in
the system is positive.
That is until the common resource, in this
case system performance, is completely
depleted.
New System
SLA
Meeting
The SLA
Business
Users
User Demand Performance

23. 23
1.5.5 Intrinsic Organizational Complexity
In terms of intrinsic organizational complexity the ramifications were much
farther reaching than just one or two Business units, Compliance and
Internal Audit were also involved.
Using an unofficial source of intraday data to calculate daily profit margins
violated financial management code and led to an infringement of
standard practice, which could have been construed as fraud if escalated
to a regulatory authority.
What started out to be an innocuous and above all 'successful'
infrastructure upgrade, proved to have far-reaching and hazardous
consequences.
The original business justification for the upgrade was never questioned
and although it was initially considered to be a success the additional cost
of post implementation scope-creep was estimated to be at least 40
people-days excluding Compliance and Internal Audit.
1.5.6 Lesson Learned
The events surrounding the post implementation phase of the Back-up
System upgrade stretched out over a period of two months and
preoccupied two external service providers and five Business units.
If a systems thinking approach had been used to map out the systemic
influences and organizational complexity of the upgrade at the outset,
considerable time and effort could have been averted, not to mention
operational and reputation risk.
The pattern of behavior within the system soon spread throughout the
organization and it most likely would have continued spreading if remained
unchecked. It would have led to many people becoming frustrated at the
apparent positive change that over time became much worse than the
original-status.
When there are multiple interdependencies and interfaces with other
systems throughout an organization it pays to map out all of the systemic
influences and model all possible impacts using a system model and well-
thought out scenarios.

24. 24
Quite often the good merits of our limited actions within a
complex systems environment can compromise systems'
integrity and due to intrinsic interconnectedness and
complexity it can be extremely difficult to correctly identify
root causes
1.6 A Brief Introduction to the System Archetypes
The systems paradigm and systems thinking provide a new way of
describing and communicating in the intrinsic interconnectedness of the
sea of systems. The more we begin to explore our world through systems
the more we come recognize the patterns of behavior and rules of those
systems.
Just as there are different cultures and patterns of behavior around
the world there are patterns of system archetypes that are prevalent
throughout our organizations.
How many times have you heard people say 'we make the same mistakes
over'? Why is that and why do we allow it happen? More often than not
an examination of the underlying behavior will reveal patterns that recur
throughout the organization. It is because the organization is governed by
the system archetypes that are at play.
With the 'Fit for Purpose Back-up System' example the pattern of behavior
or system archetype was 'tragedy of the commons', where the behavior led
to the inevitable depletion of the new system’s performance.
The first step in shedding any light on the situation must come from
understanding the intrinsic interconnectedness by mapping out the
relevant systemic influences that impact our systems. To further
complicate matters the systemic influences tend to have different
consequences over time.
It is rather like having good peripheral vision. In the past I have enjoyed
the sport of mountain biking, and as any mountain biker will know, there is
nothing like finding a beautiful winding single-track to explore. During fast
descents and longer grueling ascents sometimes the focus on getting either
down or up can make the goal so important that it becomes an all-
encompassing object.
Occasionally single-track leads into wooded areas and the trees get closer
knit, peripheral vision becomes more important so as not to get knocked-
off the bike by low hanging branches to the left or right. I can recall several

25. 25
'wipe-outs' occurring when I misjudged low hanging branches as the
gradient of the hill changed over time. What looked doable 10 yards away
suddenly became an impassable trap. It gave a whole new meaning to the
metaphor of 'seeing the forest'.
The archetype of 'determined mountain biker' occasionally cost me a few
cuts and bruises and new riding shorts in collateral damage for achieving
the objective. I was lucky, some mountain bikers are not so fortunate and
the price paid can be very high indeed.
1.6.1 The System Archetypes of IT
There are nine well-known system archetypes that have been defined by
systems thinkers the first five are featured in this guide:
§ Balancing process with delay – systems that experience sluggishness or
degradation after time
§ Limits to growth – systems that are limited by internal restrictions
§ Shifting the burden – it is what happens when management teams use
symptomatic problem solving
§ Tragedy of the commons – exploitation of a resource until it becomes
scarce or endangered
§ Fixes that fail – applied fixes have short-term benefits however regress
over the longer-term
§ Growth and underinvestment – an example is underfunded production
capacity or underinvestment into IT
§ Eroding goals – reducing standards in order to meet goals
§ Escalation – a defensive stance is taken to fend off a misperceived
aggressor
§ Success to successful – successful assets tend to be in demand, often at
the detriment of other assets
For the purposes of this guide I have restricted the further explanation of
the system archetypes to the first five, as they are used in specific
examples especially poignant for IT today.

26. 26
1.7 Balancing Process with Delay
In the 'Fit for Purpose Back-up System' example the other system
archetype at play was a 'balancing process with delay'. The new system had
an increased utility thanks to the upgrade, which after some time (delay),
started to attract users' attention, which inadvertently caused a balancing
loop, which eventually affected the system's warranty and impacted the
agreed SLA.
The effects to the system changed in time and eventually rendered the
system unfit for purpose. This happened in the space of several weeks,
many such system archetypes affect systems over many years.
1.8 Shifting the Burden
Another system archetype that is particularly prevalent in IT organizations
is 'shifting the burden'. It is what happens when management teams focus
on solving the symptoms of problems as opposed to working out the
fundamental solutions.
Agile development, which uses an iterative method for achieving rapid
development, may appear to support improving time-to-market. But it
doesn't necessarily solve the lack of business domain knowledge within the
role of Business Analyst, which leads to incomplete business requirements
and project 'scope-creep' that ultimately increases time-to-market.
In the following example, which is based on a real life situation, a financial
services organization struggled to launch new products in line with their
marketing commitments.
The head of the Project Management Office (PMO) was given a task by the
Executive Committee (ExCo) to 'fix' the problem, from a scorecard point of
view it was mainly in the project space, scope-creep and missing deadlines.
New System
SLA
Meeting
The SLA
Business
Users
User Demand Performance

27. 27
The PMO head was on a roll, he had just taken over the post and had
already made several improvements.
The ExCo mandate was to reduce time-to-market and after a brief analysis
a decision to go with Agile was made. In his previous job the PMO had
successfully implemented Agile, it was his crowning glory before he left to
take on the new role at the Bank.
Unfortunately he failed to meet the mandate. The fundamental problem
was that the role of business analyst was not able to adequately capture
business requirements. The PMO head was aware of this and indeed was
hoping that Agile would help, as it provides an iterative way to develop
applications and may be used to build on capturing business requirements
incrementally.
The organization suffered from technocratic management, where the
management team were technically aware and had a tendency to
implement a technical solution to solve problems, especially because they
had had past successes in doing so. But the truth was the solutions had
only partially worked, providing short-term benefits, before inertia pulled
them back.
Using a system model it can be seen that shifting the burden had a side
effect that compounded the problem, rolling out Agile used up the
available budget, so that upskilling the Business Analysts was no longer
an option.
They had 'shifted the burden' to something else. Not surprisingly before
the new PMO head joined, his predecessor had also tried a 'technical
solution', he had implemented a formal project management
methodology, after having some short-term benefits it ran into problems
with delivery over the longer term.
Time-to
-Market
Symptomatic
Solution
Fundamental
Solution
Side Effect =
No Available Budget
Rollout
Agile
Upskill
Business
Analysts

28. 28
Both managers were genuinely committed to solving the problem, they
had good logic and intentions, but they failed. The system archetype of
shifting the burden was so ingrained in the culture that failure to address
the fundamental solution was inevitable.
1.8.1 Lesson Learned
Systems and structure dictate behavior, the system archetypes at play
within an organization transcend people and management. They are so
pervasive that they endure for years, becoming further entrenched over
time.
We cannot hope to remedy recurring problems using the same patterns of
behavior or solution types as used in the past. What was it that Albert
Einstein once said? Insanity: doing the same thing over and over again and
expecting different results.
By increasing our awareness of the systems paradigm in IT we can begin
to support our greater Business organizations, in coming to terms with the
negatively impacting system archetypes that cause recurring problems. We
can also begin to recognize those system archetypes that are positive and
strengthening, building on success and reinforcing good systemic practices
throughout our organizations.
The most frustrating aspect to system challenges comes
from the positive contributions of all parties involved,
this is why the effects are often described as insidious,
everything looks fine however fundamentally things are
not quite as they seem

29. 29
1.9 Fixes that Fail
When an initial fix introduces unforeseen side-effects or consequences that
inevitably compound the original problem. Fixes that Fail are fundamental
to technology however they do not have to pertain to technology fixes
alone as the following example will illustrate.
We all know how pressure can affect our judgment and when we're under
the pump we don't always make the right decisions. Here are some of the
key factors that contribute to pressure:
1. Time constraints
2. Peer pressure
3. Perceived need
Time Constraints may be tangible and a very real limitation, Peer Pressure
is perceived or inferred it is intangible and Perceived Need is also
intangible. Simply by understanding the nature of the factors that
contribute to pressure we can relieve it and this might be the difference
between making the right decision or heading for disaster.
The system model above represents a balancing loop on the left side
there’s a need (cause) on the right side an action (effect), the action
counteracts the need―it is a positive action that has a negative effect on
the cause and thus balances the loop.
In this case an IT department was forced to reduce cost, the CIO earmarked
the server budget, due to its constant growth, and requested that
something be done.
'Wow, these servers are expensive, please do something.'
Need to Reduce
Cost in IT
Decommission
Servers
+
-

30. 30
The server team discovered that many of the current installed servers were
inactive, they had been used for testing or other temporary purposes and
remained switched on after the requirement had been fulfilled. As a result
IT was being billed for operating system instances (OSI) that were not being
used by applications and therefore could not be reallocated to Business
units.
After some time had passed (delay) the server team discovered that they
had a lack of servers. So they commissioned new servers to meet demand,
the commissioning took some time (delay) as new servers had to be
ordered and installed.
Need to Reduce
Cost in IT
Decommission
Servers
+
Not Enough
Servers
-
Need to Reduce
Cost in IT
Decommission
Servers
+
Commission
Servers
Not Enough
Servers
+
-

31. 31
After more time passed, and we're talking about several months now,
someone noticed that costs in IT servers were increasing.
A year later the situation was much worse than before, server costs had
continued to increase and as a result of the delay in commissioning new
servers the perception of IT was starting to suffer.
Need to Reduce
Cost in IT
Decommission
Servers
+
Commission
Servers
Not Enough
Servers
+
-
Need to Reduce
Cost in IT
Decommission
Servers
+
Commission
Servers
Not Enough
Servers
+
-
Lead times of
new servers
triggered poor
perception of IT
+

32. 32
'Not only is IT expensive it's slow, please do something.'
After one year of struggling with the escalating costs of server provisioning
pressure had begun to reach flash-point. We all know where this could
lead to, right? 'We need a new vendor' or 'we must outsource this', would
most likely be the conclusion. At this stage there wouldn't be another
chance to fix the situation, there wouldn't be any more time wasted, a
decision would be made and the case closed.
1.9.1 Lesson Learned
Not enough servers was a perceived need, in fact
server requirements were steady year to year and
matched the increase in applications that had been
in constant growth at around 25%.
Decommissioning and Commissioning new servers
actually increased the provisioning costs twice as
much, they paid once when the servers were
originally commissioned, then they were
decommissioned, and then they paid once again to
commission the new servers.
The lead times of new servers exacerbated the
situation and actually added by compounding the
original problem.
In order to make high-leverage interventions we must
thoroughly understand demand and how different effects
change after time
1.9 A Better Approach
'Plus ça change, plus c'est la même chose…' as the French say 'the more it
changes the more it remains the same'―one of the eternal challenges of
managing change and one very good reason to turn to system dynamics
and systems thinking as effective ways to understand and control the very
real and insidious threat.
Not Enough
Servers
Commission
Servers
Lead times of
new servers
triggered poor
perception of IT

33. 33
Insidious because the threat is often invisible and undetectable from within
the system of change. More often than not we throw more assets and
resources at it, with the attitude, 'look, we've made the decision, we all
agreed, now we'll bloody-well get on with it'.
Brave and true to the cause, but sometimes, we just need to admit failure,
accept failure and above all understand failure. It is in understanding
failure that system dynamics and systems thinking come into their own.
1.9.1 Mapping out systemic influences
The first step in change or intervention is mapping out the systemic
influences that could impact the system of change. When we talk about
systems we are using the definition of system provided by Professor
Moscardini in his foreword: 'a system which can loosely be described as a
set of objects that have a common purpose'.
We are surrounded by systems, not just technological systems but systems
of every kind, societal, political, ecosystems in nature. When we embark on
a change or intervention we are surrounded by the system of change.
In this context systemic refers to any influence that is, has or may
potentially impact the system, in any way whatsoever. You may be familiar
with structured change management methodologies, where an impact
assessment matrix is used to map-out impacts to business processes
according to roles and business units.
These impacts are normally limited to areas such as tooling and skilling,
however, when we conduct a systemic mapping analysis we must go much
further and deeper, as well as forward and backward in time.
In order to create a solid understanding of our interventions we must build
a multidimensional systems model that can be used to actually live-out
each scenario for change. It is therefore very important to slowdown using
reflective techniques and become aware of the system as it really is.
Without the noise and the pressure to change, we need a clear and
unwavering sense of clarity to be able to discern the reality of our systems.
'Take a BIG step backwards and take some DEEP breaths.'
Here are some of the systemic influences pertaining to server
decommissioning (thanks to Nicolas Stampf for suggesting this):

34. 34
§ Application strategy
§ Asset lifecycle plans
§ Business and IT strategies
§ Change, problem and incident
management history
§ Cloud computing and server
hosting
§ Datacenter strategy
§ Demand management
§ Facilities management
§ IT budget
§ License costs
§ Maintenance costs
§ Operations strategy
§ Outsourcing
§ Power consumption and
Green IT
§ Procurement policy
§ Project portfolio and
program management
§ Software as a Service (SaaS)
§ Technology roadmap
§ Vendor performance
management
It's not as simple as switching-off boxes or racks in the datacenter, it is a
complex decision with many variables and unknown factors that can
impact the end result.
1.9.2 Inside-out → Outside-in
When we are in the system of change it is sometimes very hard to take a
different perspective and all too easy to keeping forging ahead, absolutely
determined in our conviction to succeed. Sometimes however we simply
must take stock, and typically we look inwards, with the attitude 'right, let's
sort ourselves out'.
How many times have you heard people say 'we've got to fix ourselves first
before we start to fix the external environment'?
It's an honorable intention, but it isn't very likely, given the state we are in.
Remember: plus ça change, plus c'est la même chose―we must look from
the outside-in.
The key we often forget when we are under-fire is to divorce ourselves
from the system and to examine it from the outside-in and from every
conceivable perspective and dimension.
It is the interconnectedness of the system that is paramount and often we
find the interfaces and relationships between the objects of the system and
the objects of other systems to cause us pain, not the system itself but
rather the way in which the system interacts with the sea of systems
around it and vice versa.
It is when we have a complete understanding of these interrelationships
and interactions, especially in the dimension of time, that we can say with
any degree of certainty we are making high-leverage interventions. Then

35. 35
and only then can we begin to look at our own system to figure out how to
change it to accommodate what the greater world of systems expects from
it.
When the pressure's on and we’re under the pump it's
easy to take the easy way out―however it is always a
good idea to slowdown, never be forced to make fast
and inaccurate decisions based on pressure
1.10 The Importance of the Systems Paradigm in Innovation
If we genuinely want to innovate we must understand intrinsic
interconnectedness and how the system archetypes can easily thwart and
indeed support our efforts at innovation. If we do not then we run the risk
of our innovations being short-lived, which discourages people's interest
and more importantly turns-off possible sponsors and investors from
supporting our future endeavors.
We must take the time to slowdown in order to identify the system
archetypes and the myriad systemic influences and barriers that are
impacting the sea of systems surrounding us.
If we genuinely seek to foster an environment where
innovation can take hold and become a sustainable
approach to our development, then we must invest into
systems thinking
1.11 Reflection
Of all our skills reflection is probably the most underutilized and
unexplored. Reflection is what sets us apart as human beings and makes us
the people we are. It calms our minds and allows us to make impartial and
considered choices.
Reflection opens the door to genuine self-inquiry and ultimately self-
transformation. In the workplace it strengthens a team's intellectual
viability and obviates unnecessary conflict and struggles in understanding.
Reflection is the key to a more harmonious and fulfilling life.

36. 36
Reflection is the foundation skill for developing a better understanding of
systemic influences and impacts, by supporting systems thinking and
allowing a more thorough analysis of the complex events that take place
around us.
By three methods we may learn wisdom:
First, by reflection, which is noblest;
Second, by imitation, which is easiest and
third by experience, which is the bitterest.
Confucius.
One common form of reflection is the After-Action-Review (AAR); after a
meeting, get together with your team and inquire about: what happened,
what we expected to happen and what can we learn from the gap.
Practice the AAR after every meeting and encounter, take
ten minutes to grab a coffee, or as you are wandering back
from the meeting room, ask the three questions
Tip: Individual reflection is a powerful tool for self-clarification and
understanding our versions of the truth, sometimes it is good to reflect
individually before engaging a team in clarifying our own or the whole
team's perception. Commonly known as 'taking a step backwards',
individual reflection can help us to get our perception straight before we
take action that could be detrimental to the desired result.

37. 37
Becoming Open
In formal project management methodologies like PRINCE2® or PMBOK®
the concept of learning from mistakes is embedded into the method, at the
end of each project stage lessons to learn sessions are organized by the
project manager and the results are recorded for future reference.
When a new project is started the project manager checks recorded lessons
from previous projects to avoid making the same mistakes over. In IT we
are focused on delivering outcomes for our clients, we rarely spend time
understanding our failures, when mistakes are made sometimes they are
used to punish as opposed to learn. More often than not errors are simply
'swept under the rug'.
Becoming open requires a mental-shift in prevailing attitudes, people must
feel safe and comfortable coming to terms with their past and present
failures. This approach must be supported with dedicating time to discuss
failures at the team and organizational levels.
The objective is to develop a strong shared understanding and to
be open and receptive to failure across the whole IT organization

38. 38
2. Innovation

39. 39
It has to be said that IT management is both one of the most complex and
fascinating forms of management, particularly within the financial services
segment, where the enterprise back-bone is solely dependent on
technology.
Over the years I have been fortunate to experience numerous styles of IT
management, from savvy high-flying entrepreneurs, to old school bits and
bytes data center generals, and anything in between.
In today's business climate CEOs everywhere are asking more from IT
management: faster time-to-market, better data quality, improved
interoperability, better and faster innovation, on-demand just about
everything, and 99.99% availability―just to be sure.
So how to develop our capabilities amidst these increasing and escalating
demands? Especially when we are faced with ever increasingly complex
organizational models and the any-way flexibility required by more
demanding and choosy customers.
One thing is for sure, today IT is recognized as the major
enabler of Business though innovation
I want to briefly explore the definition of innovation in the context of an IT
services organization. For me innovation must meet three core criteria:
✔ It must improve client productivity
✔ It must be tried and tested
✔ It must support client strategic direction
If innovation can meet those criteria it has a purpose for the organization
and it contributes to its advancement. When innovation is deficient in the
criteria it runs into problems. For instance: improving productivity at the
detriment of strategic direction, which may lead to more longer-term
challenges.
That does not mean innovation cannot change the game, it can, but when
it does we must revisit strategy to ensure alignment.

40. 40
2.1. The Changing Role of Management
Before we turn our attention to enabling innovation I would like to broadly
explore the definition of management. I am interested in the changing
nature of the role of management as opposed to the textbook definition of
what the purpose of management is supposed to be, or indeed what we
were once taught in college or have learned in organizations.
I will share some of my views on today's management with a focus on
those factors I consider expedient to change. It is necessary to consider a
broader picture than just limiting our focus to the value-chain.
For me the value-chain is one of the causes of dysfunctional management,
along with ego. Much too much focus on 'creating value' and not enough
focus on creating 'compassionate' and 'rewarding' working environments.
Due to the systemic reinforcement that automatically takes place within
organizational cultures, the following list of 'bad habits' has reached plague
and in some cases pandemic proportions.
Fix it → Cure it
It is not so much a question of fixing problems, which has undoubtedly
been the priority for many managers over the past decade, it is more a
question of 'curing' those problems―so that they do not come back to
haunt our children.
Spotlight → Floodlight
Fire-fighting and symptomatic problem management together with
reacting quickly to fix business problems to address 'external market
pressure' or decreasing 'time-to-market' can lead to detracting from IT
management focus and achieving real results for the 'whole' organization.
Told to → Just do
Managers should be nurturing an environment that stimulates the shift
from 'Told to' to 'Just do', where a highly empowered and motivated
process team that takes pride in their work, team achievements and
performance without being told to.

41. 41
Lead & Manage → Inspire & Captivate
Let us wake-up to the idea of 'Inspiring' and 'Captivating' people as
opposed to 'Leading' and 'Managing' them. In some Eastern philosophies
there is the idea of the ruler that 'abdicates' his power and leaves the
people to just 'get on with it'. Rule by not ruling―he is the most successful
ruler, who in return receives love, admiration, devotion and commitment
from his people.
When people are happy and have a good sense of well-being and
appreciation they are also more productive.
Must do → Want to
Managers should be facilitating the shift from 'Must do' to 'Want to' in
terms of motivation and engagement. Nobody likes to be forced to do
anything, and quite frankly why should they be forced? People need a
shared vision of the future, which they can believe in and agree to before
they will genuinely want to commit.
Managing → Enabling
As a management team we must make the overarching shift from
'Managing' to Enabling'. This can be manifested in various ways, for
instance: 'manager as coach'. It is the role of the manager to 'Enable' not
to 'Manage'. This is what we must change and especially in IT as IT is all
about enablement.
We're a long way from achieving the modern knowledge-
driven workplace environment that is desirable for people in
organizations today and it is our collective responsibility to
enable it

42. 42
2.2 Transforming IT by Enabling Innovation ― a Case Study
2.2.1. Context
This particular case study comes from a personal experience where
I was very fortunate to have been involved in changing a prevailing
organizational culture and in introducing and enabling an innovative
environment between Business and IT.
The subject was an IT department functioning as an internal service unit
and type II service provider, that is to say an IT organization who provided
services to clients within the same organization or group, which was
suffering badly from a 'poor business perception'. Does it sound familiar?
The primary mode of working was 'keep-the-lights-on' and the unit was
experiencing staff retention problems, top IT specialists were leaving for
industry leaders like IBM and HP. The business perception of IT was at best
'reactive' and there were many complaints about 'lack of innovation' and
'poor business contribution'.
The IT unit was very much under scrutiny and in the line of fire, there were
rumors circulating about possible outsourcing and morale was low.
The previous IT management had been closed in the basement, quite
literally, and had focused mainly on operations. This was partly due to
underinvestment over a five year period, which preceded a merger with
another organization.
As a result there were significant systemic barriers that had been erected
over the years, which had led to serious communication and cooperation
breakdown between the IT engineering, IT operations and IT support
teams.
Another hitch that had manifested itself into the organizational culture,
was that IT was supposed to 'come up with all the ideas', and as a result
there were no ideas.
Business people were complaining about the innovative contribution of
IT and indeed were themselves coming up with ideas, but neither the
Business nor IT did anything with them. It was a kind of 'innovation
stalemate', innovation existed but it was not leveraged and mainly due
to the prevailing organizational culture.
It almost seemed like the harder people tried, the worse things became.
The result was that a lot of people had a feeling they were working flat-out
and yet nothing much was getting done.

43. 43
This situation plagues organizations everywhere, it is
unsustainable and will invariably lead to burn-out of certain
individuals whom are trying hard to contribute, but keep
hitting systemic barriers that prevent them from moving
forward
2.2.2. Innovative Potential
The first thing that struck me about the situation was that innovative ideas
were to be found everywhere throughout the Business and IT―they just
weren't being leveraged.
The IT people were either too proud or had their heads in the sand, quite
often a 'lack of resources' or 'security' were cited as the 'problem', and the
Business people were too busy complaining and pointing the finger at IT.
It was a vicious circle that had manifested itself over a number of years,
becoming strongly ingrained with emotions, misunderstandings and
incorrect assumptions.
We began by mapping out the many systemic barriers and influences that
existed, they seemed to be quite obvious to anyone who was observing the
situation from the outside in.
Realized Innovation
Organizational
Culture
Sources of Innovation
Systemic Barriers

44. 44
It is a curious thing the power of an organizational culture
and even though we quite often merely pointed out the
obvious many people were still unable to see
2.2.3. Enabling by Participative Initiatives
On completing the systemic picture it was possible to develop a number
of initiatives that specifically addressed each of the barriers that had been
inhibiting or preventing innovation from becoming reality.
When making real changes to
an organization always use the
Deming cycle
4
of Plan Do Check Act.
An annual cycle is ideal: Q1 = Plan,
Q2 = Do, Q3 = Check, Q4 = Act.
Get it embedded into the culture
it perfectly complements systems
thinking and introduces change
without the need for crisis.
It was important to focus on making real changes to the organizational
culture by introducing participative initiatives that 'bridged' the divide
between teams in IT and between IT and the Business. Some specific
examples of how we removed the barriers:
§ By facilitating an IT end-user forum to capture Business ideas and
introducing a governance model and cycle that allowed the Business to
prioritize the ideas for further working-out and potential fast-tracking
§ Bringing decentralized IT teams together with monthly meetings and
forming Communities of Practice
§ Holding regular off-site brainstorming and creative sessions for IT
management
§ Inaugurating an award ceremony for 'IT Professional' & 'Innovation of
the Year' (the prize was a laptop)
§ Introducing a 'team coach' to support senior IT management in
achieving a mental-shift in thinking
4
For a more detailed explanation of PDCA see section 4.1.2
P D
A C

45. 45
§ Promoting cross-functional 'thinking-events' in IT to improve lateral
thinking and cooperation along the lines of the world café5
§ Making it clear that it was safe to experiment by establishing a creative-
space6
on team meetings and by holding regular lessons-to-learn
sessions
§ Publicizing creative efforts and new innovations and openly rewarding
people for their contributions
These were simple steps and yet the results were incredible, after one year
it was a different organization and definitely out-of-the-basement for good.
With the systemic barriers removed the participative
initiatives acted as focal points for sources of innovation
throughout the organization, providing conduits through
which innovation was able to permeate and flow through
the organizational culture
5
Please see the call-out at the bottom of page 52 for a further explanation of the world
café
6
Please see the call-out at the bottom of page 73 for a further explanation of creative-
space
Focus Focus Focus
Realized Innovation
Organizational
Culture
Sources of Innovation
Participative
Initiatives

46. 46
2.2.4. Expected & Unexpected Benefits
Surprisingly, and of the pleasant variety, we discovered that many of the
benefits were unexpected. Another surprising aspect was that the benefits
strengthened over time, it showed us that the concepts we had introduced
were being used and internalized by the people and had indeed become
systemic and part of the culture.
We managed to create a successful system archetype to nurture and
reinforce innovation throughout the organization, not just in IT but in the
Business also. Here are some of the key benefits we harvested as a direct
result of our interventions:
§ Improved innovation & creativity leading to a significant engagement
improvement for internal-customers (Business)
§ Improved levels of cooperation, collaboration and interest throughout
IT
§ Improved leadership skills of IT managers and team leaders
(unexpected)
§ Reduced number of unresolved incidents (unexpected)
§ Reduced number of escalated issues (unexpected)
§ Improved IT employee retention and stabilization
§ A marked improvement in IT employee motivation and willingness to
contribute
§ Improved time-to-market capability due to product development
optimization (unexpected)
§ Increased productivity throughout IT (unexpected)
2.2.5. Lesson Learned
People are innovative, it is their nature to be, not all organizations and
organizational cultures are, so in order to leverage the innovative power
of our people we must change our organizations by making real changes
to the prevailing culture.

47. 47
2.2.6. Systems Thinking Exercise
Using the systems thinking approach we have learned so far, try to identify
each of the five system archetypes at play in the case study. Take a few
moments to quietly reflect on the case study, think about some of the
similarities that may be found in your current or in a past organization to
a lesser or greater degree.
System Archetypes
Balancing process with delay – systems
that experience sluggishness or
degradation after time
Limits to growth – systems that are
limited by internal restrictions
Shifting the burden – it is what happens
when management teams use
symptomatic problem solving
Fixes that fail – applied fixes have short-
term benefits however regress
over the longer-term
Growth and underinvestment – and
example is under funded
production capacity or under investment
into IT
Eroding goals – reducing standards in
order to meet goals
Escalation – a defensive stance is taken to
fend off a misperceived
aggressor
Success to successful – successful assets
tend to be in demand, often at
the detriment of other assets
Tragedy of the commons – exploitation of
a resource until it becomes
scarce or endangered

48. 48
World Café
Juanita Brown, the founder of Whole Systems Associates, collaborates as a
thinking partner and design advisor to create and host forums for
constructive dialogue on critical organizational and societal issues. With
her partner David Isaacs, Juanita is the co-originator of the world café,
an innovative approach to large group dialogue.
The world cafe concept is simple and effective, it involves setting out a large
room in cafe style, with small tables of four scattered around the room.
The rules can vary, but I prefer to have a facilitator on each table who holds
the context for the table's dialogue. The facilitator remains on the table and
keeps the context, whilst the participants cycle between each table
throughout the session participating in the dialogue on each topic.
It allows a great number of people to become familiar with several
topics, one for each table, and allows the facilitators to rapidly
understand broad views on the topics at hand

49. 49
2.3. Developing the Innovative IT Management Style
The sources of innovation have changed radically over the past two
decades, today innovation can appear from almost anywhere. In order to
take advantage of this huge potential our organizations and management
approaches must change.
Our organizations must become more receptive and the old and
sometimes very subtle negative systemic influences and hurdles must be
identified and removed.
We must find a way to make innovation flow, so identifying
and removing old and entrenched obstacles is a prerequisite
2.3.1. Time to Rethink Innovation
When we think of innovation we tend to think of the same old things, and
those are the same old things that quite often prevent innovation from
becoming reality.
For instance, how should we assess an IT manager's innovative leadership
potential? Many people would ask to see a vision, 'show me your vision for
innovation'. Followed by building an understanding of their ability to
explain the vision and its subsequent translation into strategic and
operational objectives.
This is a typical and traditional approach to assessing innovative potential.
But do vision and clearly defined objectives have anything to do with
innovative potential?
I do not believe they do and moreover, if anything vision is one of the
biggest inhibitors of innovation. Why would we want to predetermine
something that is intrinsically indeterminable?
Already we can begin to see the subtle systemic intricacies that can so
easily thwart our attempts to enable innovation.
Rather not confuse this notion with planning for innovation, it is necessary
to plan and to enable innovation, but that is different from predetermining
or outlining a particular vision or strategy for achieving it. 'Let it bubble-
up.'

50. 50
Planning for innovation is all about laying a foundation, removing negative
systemic influences and becoming receptive as a whole organization.
People tend to link vision with innovation, but that has
nothing to do with innovative leadership potential nor
ability. That is what we have been taught by our
organizational cultures but it isn't necessarily true
2.3.2. Innovation the New Power of the People
Today a successful 'innovative IT manager' is defined as someone who can
apply the appropriate leverage to innovation and nurture innovation for
the benefit of the greater good.
It does not mean that the IT manager is an 'innovator', and perhaps far
from it, it means that the person can identify and appropriately leverage
innovation - from wherever it originates - either within or external to his or
her IT organization.
We all know that the 'real' sources of innovation have changed, they are no
longer within the exclusive realm of special development teams, neither
innovative strategies, nor R&D. The age-old paradigm that the boss always
comes up with all the ideas is also history.
Innovation is something that belongs to People, so the best cutting-edge
innovative IT managers should also be the best leaders of People. Effective
IT leaders must be able to identify, nurture and apply appropriate leverage
to innovation.
They should no longer live with the misconception that they are in some
way 'leading' the innovative process, even less to implement special
strategies and visions to 'manage' innovation. After all what is innovation
really about, ego, or progress?
Innovation belongs to the People of our organizations, and
not just to management and specialist groups

51. 51
2.3.3. Are Your IT Managers Enabling Innovation?
The questions we can ask IT leaders to determine whether they might have
innovative leadership potential and abilities may include the following
themes:
§ Ability to identify, acknowledge and use innovation regardless of where
it originates
§ Ability to mentor and coach people in developing their Innovations
§ Ability to unambiguously position the value of innovation within the
frame of achieving operational and strategic objectives
§ Ability to clearly position innovation in terms of strategic, customer,
and financial contributions (productivity)
§ Ability to identify and remove negative systemic influences and
organizational barriers that often prevent innovation
§ Ability to support risk taking and encouraging experimentation
throughout the organization, both in Business and IT units
§ Ethos of not using failure as a means to punish, but as a means to learn
as a whole organization
§ Ability to share and publicize creative and innovative endeavors
throughout the organization
§ Ability to openly reward and encourage innovation for instance by
inaugurating and holding an award ceremony
2.3.4. The New Objective for Innovative IT Managers
The new-age IT manager's goal in applying leverage to innovation should
be to embed and strengthen innovation within the organizational culture
itself, to institutionalize innovation by making it clear to the organization
that this is the attitude expected.
The culture-shift must be facilitated carefully at all levels
and especially systemically in order for innovation to
become reality and this is what makes an IT manager truly a
great leader in innovation

52. 52
In this chapter on innovation we learned by means of the case study that
the most challenging issues faced by IT Management in delivering
innovation were enablement and leverage. That brings us to next step in
our journey―learning how to leverage our most precious assets.
The Innovation Challenge
Many organizations encourage innovation through innovation awards,
many societies and media groups publicly reward innovation through
innovation programs and award ceremonies. Despite these efforts many
organizations still struggle with innovation.
Innovation programs attract innovative people and groups that are quite
often strong enough to fight for their innovation. The Innovation challenge
is not about attracting innovative individuals nor isolated groups but rather
about embedding innovation 'openness' throughout the organization.
Therefore, the real challenge with innovation comes with sustaining it and
that is why organizational learning becomes fundamental as it provides a
sustainable foundation for learning and development of the whole
organization.
The goal is to increase the amount of innovation being realized
throughout an organization by achieving a culture-shift

53. 53
3. Leverage

54. 54
It is quite often said that a high percentage of new ideas fail, not because
they are bad ideas, but rather because their inventors cannot leverage
them.
Many great ideas fail because they cannot get off the ground; add to the
equation a busy IT support environment, budgetary constraints, resource
issues, deadlines, priorities and governance, and it is hardly surprising that
even the most brilliant of ideas quite often get shelved. Sometimes for
good, especially given our rapidly changing organizational environments.
If we also consider an organization's inability to learn, then it is surprising
that we manage to deliver any innovation at all. Quite often we are
struggling to keep our heads above water, in implementing somebody
else's innovation let alone bringing our own innovation to the table.
We have looked into some key ways how to enable and develop the
innovative management style, what we need to do next is find out how to
leverage the whole of IT in bringing the newfound innovation to fruition.
Moreover, to create leverage intelligently and efficiently we need to build a
central nervous system through which is channeled knowledge,
information and innovation.
A central nervous system that connects and unites the whole of IT, from
CIO to Data Center Operator, each member of the IT organization must be
connected to the same 'bus' concurrently in real-time. Often the central
nervous system only works when we feel pain―'get it fixed', 'restore
service', and when the lights return to green once again we become
disconnected.
In the human body the cervical vertebrae (neck bones) in the neck connect
the brain to the spinal cord and rest of the body, which enables the central
nervous system to function, any fracture or injury of the vertebrae can
result in loss of sensation, paralysis, or death.
How is the central nervous system in your IT organization? Does it suffer
from a momentary loss of sensation, is it partially or completely paralyzed
or has it already passed away to be resurrected by an IT Outsourcer?

55. 55
3.1. Sustained Competitive Advantage
There is a lot of talk about sustainability nowadays that is because the
ability to sustain has become a key driver behind today's culture and
environment, whether it is political or societal.
Sustainability is one of the key deciding factors in any organization's future
success, even more so for IT organizations. Moreover, the ability for an IT
organization to create a sustained competitive advantage has become
critical for its own survival and in some cases for the survival of the
Business it supports. If an IT organization cannot keep up with the rate of
change it will fall behind, becoming a source of pain that leads straight to
outsourcing.
The crux of the problem for IT organizations is this: Technologies,
Applications, Processes, Methodologies, Techniques, Standards, Principles,
Guidelines and even Management Styles are all portable. They can all be
copied, re-bundled and reused and with the economy of scale factors
leveraged by IT Outsourcers, many IT organizations do not stand much of a
chance.
When for instance SAP went large with Enterprise Resource Planning (ERP),
it gave the early adopters a competitive advantage, because their order
and fulfillment processes were all of a sudden much more efficient. Twenty
years later the market is saturated with ERP consultants and almost all
enterprises share the same competitive advantage.
Those PMOs that have implemented PRINCE2® or PMBOK® project
management methodologies properly, have a distinct competitive
advantage, because their projects will always have a continued business
justification and will realize healthy Business benefits according to the
agreed time, scope, budget, risk and quality. Invest in PRINCE2® or
PMBOK® and acquire some experienced practitioners and you too can
enjoy the same competitive advantage.
You can see where this is leading, right? A competitive advantage only
really counts if it can be sustained. Technology alone is not going to do
that, not anymore. Whatever an IT organization does today to create a
competitive advantage using technology or processes, there is a fair chance
it is already being done better and cheaper by their competitors.

56. 56
It has become entirely plausible that the only way to
develop and maintain a sustained competitive advantage is
through organizational learning. It must come from within, if
every conceivable advantage can be bought, then it must
originate from what cannot be bought―the amalgamation
of the collective intelligence that is produced when an
organization learns
3.2. Proverbial Foot Shooting (Limits to Growth)
As we have learned from our own experience with working in
organizations, organizational learning can be an elusive animal. Often
prevailing organizational cultures work against our attempts to introduce a
learning culture. There are many learning disabilities that prevent us from
making progress and those disabilities tend to be ingrained into
organizational cultures.
By nature many financial services organizations, such as Banks, are
conservative. They are risk averse and are driven by strict risk management
governance, which over the years has permeated their organizational
cultures and inadvertently become a major inhibitor of making progress in
a rapidly changing market.
Internet-based banks, which are considered by some to be 'riskier' than
traditional banks, are more efficient and they have incomparable Cost /
Income ratios that quite simply cannot be achieved by traditional bricks
and mortar retail banks. Therefore, they can offer better rates of interest
and reduced banking fees.
The values we trust and believe in the most are often the very same values
that restrict our progress. When those values become institutionalized they
become systemic, affecting whole divisions and indeed whole
organizations. They begin to govern the organization and actually
determine what the organization can and cannot achieve.
This is why many programs fail to deliver - even big-ticket programs with
high-visibility and solid management - even these programs regularly fail.
Annoyingly it is very difficult to find out why they fail, hard to put a finger
on it. Usually 'insufficient change management' or 'planning' are cited as
the 'reasons'.

57. 57
By applying a systems thinking approach it is possible to see that this
particular example was governed by the system archetype called 'limits to
growth', where the Bank's potential growth was limited by the risk averse
and conservative nature of its system.
In order to combat the system archetypes it is essential to
challenge the prevailing organizational culture. It is hard to
do this in whole organizations, it takes time and
commitment. However, in IT organizations it can be much
faster and the benefits can be pivotal to the whole
organization's future success
3.3. The Learning & Living IT Organization
As IT leaders we must set our sights on The Learning and Living IT
Organization. In the human body the central nervous system and the brain
manage this by receiving and processing impulses received through
sensory receptors throughout the body. It is a complex interconnected
system, which when working correctly constitutes an 'amazing learning
machine'.
That is what we must become in IT―an amazing learning machine. Our
approach needs to become institutionalized creating a self-governing and
living organism with its own sustainable sources of innovation and learning.
Often IT organizations go too far in one direction, they can become too
focused on the hard artefacts of IT. If we want to create a truly living IT
organization it is important to find an acceptable balance between
creativity and logic. In a similar way to the human brain, we need to cater
for the creative side as well as the logical side of our IT organizations.
Bank’s Risk
Appetite
Bank’s Growth
Potential
Risk
Averse
Culture
Restriction Opportunity

58. 58
Those IT organizations that are renowned for their
creativity, such as Apple, Google and HP have one thing in
common―they apply a consistent approach to
organizational learning
To embed organizational learning into our IT organizations we must first
familiarize ourselves with the five organizational learning disciplines that
comprise The Learning Organization, these learning disciplines help to
support the creative side of IT and act as a catalyst for the logical side―a
win / win outcome for the development of IT organizations.
The five disciplines of organizational learning are:
§ Team learning
§ Shared visions
§ Mental models
§ Personal mastery
§ Systems thinking
When we speak of discipline in the context of learning it often has negative
connotations, stirring childhood memories of the endless hours of
homework and swatting for examinations and the accompanying fear of
failure.
This is quite the opposite of what we really want to say with the word
discipline in the context of organizational learning. It is more akin to the
Latin root of the word, 'discipulus', which means student―a student of the
organization. But in order to be a successful student of the organization we
must come to terms with failure, without failure there is no learning and
this is especially important in the organizational environment.
Logical Systems
and Processes
Creative Inspiration
and Development
The Learning and
Living IT Organization

59. 59
Each of the disciplines supports each other by building an interlocking
framework that guides the collective learning experience, bound together
by systems thinking, which provides the holistic cohesion across all
disciplines and allows us to start to navigate the sea of systems.
3.3.1. Team Learning
Most important decisions are taken in groups. Teams, not individuals, are
the fundamental learning units of our organizations. Unless a team can
learn, the organization cannot learn―team learning focuses on the
learning ability of the group.
Adults learn best from each other, by reflecting on how they are addressing
problems, questioning assumptions, and receiving feedback from their
team and from their results. With team learning, the learning ability of the
group becomes greater than the learning ability of any individual in the
group.
Knowledge and competence can go the same way as information―they
translate to power and position within IT organizations. Many IT
organizations have the misconception that learning is something that
individual people do and that is how individual people accept training and
learning.
Learning often remains something that is inside individual minds, which
means that every update to that first version that was downloaded to the
individual mind―must also be made individually. It is inefficient to manage
knowledge and learning this way.
For learning and knowledge to be effective and to become an asset to an IT
organization they must become part of the IT organization itself. This is
what happens when learning and knowledge are 'popped' out of people's
minds and become the intellectual property of teams, groups or whole IT
organizations.
In team learning it is a must for the ability of a group of individuals to lay
down their personal assumptions about each other's opinions and engage
in real cooperation and dialogue. Team learning provides the backbone for
creating the central nervous system throughout our IT organizations.
When it comes to quickly upgrading skills, understanding
and capabilities across entire IT organizations―Team
learning is the fastest and most effective way forward