Pit and the Pendulum: Managing the Accelerating Pace of Technological Change

THE PIT & THE PENDULUM
MANAGING THE EVER ACCELERATING PACE OF TECHNOLOGY CHANGE

May 17, 2012

ALVAREZ & MARSAL IN ONE PAGE – FINANCE | OPERATIONS | IT

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Global Presence to Meet Client Needs Experience-Rich Teams

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2

THE PIT & THE PENDULUM
I. Background
II. The Challenge
III. Frameworks
IV. The Strategies

© Copyright 2011 Alvarez & Marsal Holdings, LLC. All rights reserved. ALVAREZ & MARSAL®,
® and A&M® are trademarks of Alvarez & Marsal Holdings, LLC.

POE’S CONUNDRUM (1842)

5

MY CAREER IS BOOK-ENDED WITH INNOVATION CHALLENGES

1985 2011
9

ACCELERATING TECHNOLOGY INNOVATIONS

Source: WSJ Study
13

PRODUCT LIFE CYCLE

Decline

Maturity

Growth

Introduction
Inception

14

… SHORTER… FASTER… OVERLAPPING INTEGRATED PRODUCTS…

Decline

Maturity

Growth

Introduction
Inception

15

YESTERDAY’S INNOVATIONS ARE NOW AN ALBATROSS

16

PERVASIVE CONTINUOUS BUSINESS INNOVATION

“Bookstores, record labels, “Sony could have created Napster
airlines, encyclopedias, hotel but it didn’t. Barnes & Noble could
chains, retail outlets, have created Amazon; AT&T could
newspapers, phonebook printers, have created Google; Britannica
travel agents, realtors and many could have created Wikipedia, or the
other business that were too slow Chicago Times could have created
to realize what was going on eBay or Craig’s List; but they
began to lose their customers didn’t.”
and their profits.”

17
Source: Re-Boot by Lisa Jasper and Jim Smelley

“CHANGE CONTROL” IS BECOMING AN OXYMORON

SaaS The IT Function owns
technology…
Cloud
… unless a business unit
ITO has the money and
AMO
BPO
decides to do it
themselves…
End-User Dev
… unless they decide IT
BYOD to should support it later

18

SLOW PROJECTS ARE #1

19

THE CATCH 22

Thorough
Urgency,
Planning,
Lack of
Little
Planning
Urgency
Failure

THE RISKS

Late Mover Early Mover

• Lacking current features • Missing features
• Disappearing skills • Emerging skills
• Difficult to retain staff • Difficult to retain staff
• Expensive contractors • Expensive contractors
• Limited vendor support • Over-extended or immature support
• Limited training options • Limited training
• Difficult to integrate; compatibility • Difficult to integrate; compatibility
issues issues
• Vendor financial stability • Vendor financial stability
• Lifetime warranty – yours or theirs? • Lifetime warranty – theirs may be even
shorter

• Security
• Scalability
• Support
• Interoperability
• Intuitive / usability
• True TCO?

21

WE’RE DOOMED!
THANK YOU FOR COMING

Luddite Cell Phone

WHAT IS THE ROLE OF IT IN THE ORGANIZATION?

Functional Enabling Contributing Differentiating Transformational
Level 1 Level 2 Level 3 Level 4 Level 5

IT collaborates with IT is a primary driver of
other disciplines to business model
IT is addresses explicit deliver new products / innovation.
business issues, its services.
IT is run like a business. contributions to
Outcomes are business performance
IT delivers a limited set measured against are well understood.
of core capabilities. IT performance
focuses on running the obligations. IT is leveraged to
business cost redefine markets and
effectively. rules of competition.
IT is a source of agility
and product / service
Technology strategy is innovation.
explicitly aligned to
business goals. IT
Business unit leaders service and solution
The Enterprise regards independently leverage capabilities are stable
IT as a commodity used IT as and when they and reliable.
for cost-effective consider it necessary
transaction processing

Adapted from Gartner ITScore model 24

ADOPTION OF INNOVATION: THE DIAMOND APPROACH

Technology

Super high-tech

High-tech

Assembly
Medium-tech

System
Array

Low-tech

Complexity Novelty

Assembly
Derivative

Platform
Regular

Fast/competitive

Time-critical

Blitz

Source: Aaron Shenhar & Dov Dvir 25

PARAMETERS OF INNOVATION

Better Magical Tectonic
Technology Innovation
What is possible?

Mousetrap Amulet Shift

Blind
Frankenstein
Date

Business Innovation

What is needed?
26

INNOVATION COMES IN MANY FLAVORS

Better Magical Tectonic
What is possible?


Blind
Frankenstein
Date

Business Innovation

What is needed?
27

ALL INNOVATION NOT CREATED EQUAL

Better Magic Tectonic
What is possible?


Dog Tricks Blind Date Frankenstein

Business Innovation

What is needed?
28

DOG TRICKS

1. Recognize that dated technology
may have a higher ROI than
replacement with new technology
 Migration costs
 Risk factors
2. Plan to be self supporting as the
DESCRIPTION “Sit and Stay” market and vendors leave you
SOA Back-ends behind
EXAMPLES Custom industry apps  Hiring and training
POS
 Spares
DISCOVERY NA

30

THE BETTER MOUSETRAP

1. Develop adoption evaluation
criteria – ROI, stability,
scalability, etc.
2. Develop a retirement evaluation
New technology which criteria – same factors
DESCRIPTION does existing tasks
3. Vendors as primary source of
cheaper, better, faster
ideas
VM
SAN
EXAMPLES
VOIP
Bandwidth
Vendors
DISCOVERY
Architects

31

THE BLIND DATE

1. Apples-to-Apples: compare with
“could be” versus “as is”
2. Recognize true commodity skills
versus valued knowledge
3. SLAs with Teeth
4. Maintain the ability to plan,
Known technologies and manage and evaluate
business needs performance
DESCRIPTION
supported by new 5. Transitions of service are
source greatest risk
Outsourcing
6. Penalties usually linked to fees,
EXAMPLES Offshoring
CLOUD
not impact
IT and / or
DISCOVERY
Business Functions

32

THE MAGIC AMULET

1. Build sandboxes; hedge
2. Look ahead

Breakthrough
3. Look outside your industry
technology where 4. Consider what it can do, not what
DESCRIPTION
application not yet it “is”
defined
5. Be willing to pull the plug
Any new apple product
Android
Mobile devices –
EXAMPLES Touch screen
Voice Recognition
Camera / Video
GPS
Skunk Works
DISCOVERY 33
External

FRANKENSTEIN

1. Think outside your box
2. Component integration is a big
risk
Proven technical
DESCRIPTION components combined 3. Standards may trump features
in a new way
Smart Grid
EXAMPLES Multi-cloud solutions
Best of Breed
DISCOVERY Business leadership

34

TECTONIC SHIFT

1. Skate to where the puck will be
 Forecast
 Sandbox
2. Full frontal collaboration
 “Skunk Works” works
3. Plan to be self supporting
“Game Change” built on
DESCRIPTION  Just like “Dog Tricks”
technology
 To a genius, support is a
Geico
Amazon > Kindle
waste of time
EXAMPLES iTunes 4. If you are behind, acquire
Online Travel  Buy the learning curve
NetFlix / Red Box
Executive Leadership
DISCOVERY
Technology Leadership

35

CLOSING THOUGHTS

• “Speed to Market” may trump “Perfection” – know when
• Don’t choose one approach… know when to hold ‘em, know when to
fold ‘em
• Failure IS often an option
• But.. don’t fold when you’re all in
• When innovating, have a Plan B when possible
• Bet the portfolio, not the project
• 10,000 hours is too long to wait
• Solid foundation / flexible delivery --- SOA & MDM
• RACI of innovation depends on type of innovation
• Discovery versus Adoption
• Technology versus Business Model
• Never stop reading; Blogs are more current than books

36

BIBLIOGRAPHY

• 37 Signals - Rework

• Christensen, Clayton M. - The Innovators Dilemma

• Collins, Jim - From Good to Great

• Collins, Jim - Built to Last

• Feld, Charlie - Blind Spot: A Leader's Guide To IT-Enabled Business Transformation

• Friedman, Thomas L. - The World is Flat

• Gladwell, Malcolm - Blink

• Gladwell, Malcolm - The Tipping Point

• Hammer, Michael and James Champy - Reengineering the Corporation

• Jasper, Lisa B. and Jim Smelley - Re-Boot

• Kidder, Tracy – The Soul of a New Machine

• Michalko, Michael - Thinkertoys: A Handbook of Creative Thinking Techniques

• Moore, Geoffrey Al - Crossing the Chasm

• Poe, Edgar Allen – The Pit and the Pendulum

• Shenhar, Aaron and Dov Dvir – Reinventing Project Management: The Diamond Approach
to Successful Growth & Innovation
37

Progress is the extinction of ideas that were
once excellent.

TOM PECK – CIO, LEVI STRAUSS

Too often, I've chosen an early-adopter
approach to new technologies. I've found the
risk more often than not outweighs the
potential benefits. I'm now more likely to be a
fast follower unless there's super-clear joint
accountability.

BACK COVER

Kevin Christ
Alvarez & Marsal Business Consulting
2100 Ross Avenue, 21st Floor | Dallas, TX 75201

kchrist@alvarezandmarsal.com
817.706.6974

Pit and the Pendulum: Managing the Accelerating Pace of Technological Change

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