The Leadership Bottleneck
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SpringOne Platform 2019 Title: The Leadership Bottleneck Speakers: Michael Coté, Director, Pivotal; Rick Clark, Field CTO, EMEA, Pivotal Youtube: https://youtu.be/QZL-fPb-W7Q
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The Leadership Bottleneck
- 1. Confronting the Business Bottleneck: Digital Strategy Beyond IT Rick Clark & Coté
- 2. Faster technology cycles drive faster business cycles 2
- 3. Product teams: independent, multi-role, fast feedback 3
- 4. 4Forrester interview with Prat Vemana, March, 2019. "How The Home Depot Became A Digital Powerhouse," Allen Bonde & Mike Chirokas, Forrester, July, 2019.
- 5. - "As of fiscal year 2018, The Home Depot customers pick up approximately 50% of all online orders in the store." - 28% growth in online sales. - From 130 cloud native apps in 2016, to 4,000 in 2019. Figures for second quarter of 2018, Suman Bhattacharyya, Digiday.com; number of apps from interview with Tony McCulley, June 2019. 5
- 6. 6 Source: Answers to the question "Which business processes are the focus of your firm's most recent digital transformation?" Data from "Kick-Start Your Digital Business Strategy," Forrester, June 2019
- 7. 7
- 9. 9Source: "The Shift to a New Digital Allianz Germany," Dr. Daniel Poelchau, Allianz, CF Summit EU, Oct 2016.
- 11. (3.) Mistrust 11Based on excerpts from Standish's 2009 study and 2015 study.
- 12. Leadership has three tools: 1. Vision & strategy 2. Finance & funding 3. Organization structure ...and only three tools! 12
Editor's Notes
- C&R: This is a webinar about… Coté introduces himself, we've been working on this concept of a business bottleneck across a podcast, a book I'm working on, and this webinar series. ...hands off to... Rick introduces himself.
- Coté leads: we're lucky to be living in a time when technology cycles are very fast. This, however, drives faster business model cycles: new ways of competing and providing good and services, new ways of running companies. Need a good pizza and burgers ordering apps - all food ordering! Businesses want to be more like tech companies. We think that digital transformation is slowing down, disabled even, because there are misalignments between business and IT. This creates a bottleneck. Rick: fills in missing things, adds comments, etc.
- Coté leads: explains basics of product team. Rick additional: You might be thinking to yourself, “we have teams that build products”. When we talk about product teams, we mean a cross discipline team containing, among others: Business Technology Operations Finance HR Where every member is: Accountable Empowered (with the authority to help the product succeed) Rewarded for the success of the product. As a technologist, in the past we couldn’t always see the results of our work, and were usually not rewarded for the success of the product that we built or operated, which can be demoralizing. In a balanced product team, technologists have more visibility and more accountability. Seeing the results of your work and being compensated for the products success is fulfilling.
- Coté leads: let's look a small, but highly telling example of how things are supposed to work. Product team at The Home Deport studies the appliance buying experience, working with actual people, customers. People want to search for washer, then go touch and feel and measure it. Often not in store, so the sale is lot. So team added ability to find store with washer. Also (if time): finding toilets. The point is, these teams work on fast, design-driven cycles and really take and have ownership of the business, not just their individual parts. First, let's look at a good outcome, case study: https://docs.google.com/document/d/1PpxPp5qhqBBJz7-D_pTmI4empjRNpEmQHahAlv1oZNc/edit#heading=h.adrzyuzbdpup Forrester report: https://content.pivotal.io/analyst-reports/how-the-home-depot-became-a-digital-powerhouse Washing machines: https://www.shutterstock.com/image-photo/home-depot-retail-store-appliances-department-1103787599?src=pZjCPqQGaRz0Ke94BsoGpw-1-0 Google search (Sep 30th, 2019): https://www.google.com/search?rlz=1C5CHFA_enUS834US834&biw=1309&bih=652&tbm=isch&sxsrf=ACYBGNQEW9LQOmxdBcxSMP5j21TEZVBK0g%3A1569834155736&sa=1&ei=q8SRXcrJLOeorgShtZHYAQ&q=home+depot+washing+machines+%22home+depot%22&oq=home+depot+washing+machines+%22home+depot%22&gs_l=img.3...5924.11913..12269...1.0..0.67.788.14......0....1..gws-wiz-img.......0j0i30j0i24.adLiz6_CgvU&ved=0ahUKEwiKy9X5l_jkAhVnlIsKHaFaBBsQ4dUDCAc&uact=5
- Coté leads: These are the kinds of results that The Home Depot is seeing… ...and they're good examples of what we're shooting for.
- Rick leads: Historically, IT has been a cost center. It ran backend systems, such as HR or accounting. Technology was not a primary communication channel with customers. IT was something that could be easily outsourced and it was often a target in cost reduction. Today things are radically different. Now companies know the value of technology. It is often a key product if not. It is probably already the primary channel for customer communication. A good example is going to a movie. I used to show up at a movie early to make sure I got a good seat. Success was hit or miss, since many others employed the same strategy. Today I would never go to the movies without buying my tickets and choosing my seats in their app. In the past, movie theatre companies did not need many, if any developers. Now it is imperative, if they want to compete and survive. Despite the major changes to the importance of technology, Most companies have not adjusted their culture or organization. They are misaligned. Pipes: https://www.shutterstock.com/image-photo/misalignment-347409440?src=MOQoDuA3jvx-Jw-v834Y3g-1-5
- Coté leads: The cycles are out of whack - 12 month in finance, versus 3 to 6 months for product teams. Mandated, blind budget cuts like "reduce by 10%" - you can't just cancel SAP, so you cancel new initiatives, slowing down innovation. Finance and strategy work on 12 month cycles, while product teams can work on weekly, if not daily cycles. does not get input from the product cycle (weekly releases). Less feedback and validation for finance. They mistrust that IT can do a good job so make them plan out things, and might even change budgets. R: Finance is often a 3rd pillar/silo separate from technology and business, reporting to the CFO. Finance is driven by artificial timeframes, that do not align with business and technology projects and product life-cycles. While we see this everywhere, it has become more pronounced in the United States, after Sarbanes-Oxley R. Culturally. Finance tends to view each financial cycle as new with little connection to the previous or future cycle Solution: 90 days cycles focusing on validating the investment with specific OKRs/metrics to try out. Gated funding. References: Forrester paper on Agile finance stuff. Strategy: 12 month cycle is a mis-match, strategy people are not gathering feedback from the product cycle (just reading McKinsey PDFs and airport business books), consensus-based strategy (e.g., pre-wiring) can be a problem when you're trying disruptive innovation (cf. Larman's Laws)...you end up with incremental strategy, not 10x different strategy. Picture: https://pixabay.com/photos/savings-budget-investment-money-2789137/
- Rick leads: We’ve already said that technology is now essential to the survival of most enterprises. However, most companies are still compensating technologists like they are not critical to the business. They should be becoming tech companies to survive. In tech companies, technologists are given equity (options, RSU’s.) directly tied to their effect on the business. In "regular" companies, not so much. And quite often, if they get equity, it is much less than their business counterparts at the same level. Technologists are the ones that create product now. And that needs to be recognized in how people are compensated. The business is rewarded if the product is financially successful - this (should mean) that the business wants to try new things and open new markets, until they get what works. They need to be fast enough to respond to competitive threats/changes. IT is traditionally rewarded for uptime, resiliency, and sometimes budget reduction - this means they'll do as little change as possible. These are opposing goals. Compensation drives behavior. Current compensation drives the wrong behavior and creates opposing goals. Inequities in compensation cause conflict during organizational transformation. Product teams are supposed to be one team, work together. Typical compensation and career management rewards individuals, not teams. Compensation is an interesting tool to use for cultural change: change the incentives to change the behavior. Solution: Don’t take compensation off the table. Don’t be guided by industry guidelines or the status quo. Picture: https://pixabay.com/illustrations/chasing-money-run-trying-catch-3744753/
- Coté leads: we're deep into a vicious cycle, from all this and other things. People don't trust IT to deliver or do a good job…. All of this is caused by, and keeps leading to mistrust of each other. It's a vicious cycle where IT is not able to do a good job, and the business is not able to work with IT, and on and on. Rick: adds any commentary, etc.
- Coté leads: These are the levers leadership usually has. Think of how to use them to reprogram your organization., Leadership need to do its own MVP of the organization. Try new things, fail to success.
- Part 02: https://content.pivotal.io/webinars/oct-16-breaking-the-business-bottleneck-fixing-the-problems-part-2-webinar-emea