How to Create a Culture of Success

Change Logic co-founder, Charles O’Reilly, offers some insights on how to create a culture of success, produced by the Stanford Graduate School of Business.

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Look Both Ways!

In his latest edition of the weekly “Economic Principles“, David Warsh addresses the controversy revolving around Jill Lepore’s criticism of Clay Christensen’s work in The New Yorker. He delivers some salient points and he gives a hat tip to our founders, Professors Charles O’Reilly and Michael Tushman, and their concept of the Ambidextrous Organization, as the way forward for larger, well-established businesses. Does Ambidexterity resonate with you, as it did with Warsh? 

8 Tips for CTOs to Create a Successful Requirements Process

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Elspeth Chasser, Principal
Follow @ElspethCL

CTO Digerati Wannabes, I love you but AND … the Requirements Process, c’mon!

Try this out. Grab a random person standing near you. Smile politely so they don’t become alarmed. Go on. Now, give them a piece of paper and pen and this instruction: “make an accurate drawing of a house based on my verbal description”. Now go ahead and describe your house. Ok. Stop. Pens down. Look at what they’ve done.

Is it anything like your house? Nope.

This rant blog is about the Requirements Process, the crucial set of activities that encompass:

1. Understanding a customer need

2. Translating that need into instructions for development engineers

3. Testing to see if the product works and meets the need

If you’re a CTO Digital Wannabe, i.e. a leader of a technology department in an established firm that is developing more digital products, it’s likely that your Requirements Process is a bit of a mess. It’s also likely that if you don’t fix it, even though you’re not responsible for half of it, you will continue to have failed projects, and you will never gain the business credibility you deserve. Albert Einstein said it best: “Crap in, crap out”.

Actually he didn’t say that, but he totally could have.

So, why is it so very, very difficult?

Part of the reason is often an ill-defined Requirements method with as many different templates as you have teams, but lest you think this can be fixed by a shiny new process, let’s go deeper.

Fundamental Attribution Error, or "Everyone Else is an Idiot"

Fundamental Attribution Error, or “Everyone Else is an Idiot”

There’s a pesky phenomenon called the Fundamental Attribution Error. We code our behaviors as rational, yet we blame others’ on their faulty personalities. We all do it. How does it show up in the Requirements Process? You get a set of requirements; you do your darnedest to develop them, but the line-of-business leader is not happy. Repeat this often enough and both sides start to infer (ungenerous) things about one another’s intelligence. A wall goes up between them (the business) and us (IT). It’s “silo mentality” and it gets in the way of the kind of collaboration you need to make a Requirements Process work. But lest you think that this can be fixed by a bit of team building, let’s go deeper.

The Requirements Process is a manifestation of one of the trickiest of human activities (and, no, it’s not stopping to sing “it’s a small world after all” once you’ve started, although, god knows that is hard): sense-making, my friends–getting what’s in your head into theirs. In other words, it’s trying to get someone else to draw a picture of your house. It is *hard*. In this case, we have to get the description of what the customer wants into the heads of the product managers, and then into the heads of the development teams and then the QA/ Release guys. Do you understand how difficult that is?

We all have heuristics (mental short cuts) to solve problems. That’s great because those shortcuts save us a lot of time, particularly if our goal is to escape a sudden threat (say a hungry tiger). But they also get in the way of understanding because bias (including the good ol’ Fundamental Attribution Error) pops into our heuristics; we jump to conclusions without fully understanding. For instance, when you’re talking, rather than really trying to understand you, I’m thinking “yup, gotcha, understood… god those [fill in the blank with a role] types do go on a bit, don’t they … his left eye looks a bit funny … what’s for dinner … ‘It’s a small world after all’… damn”.

And if this game of “Telephone” wasn’t difficult enough, we do it on conference calls and record the output with that tool well-known for capturing the richness of the human experience: Excel.

So,

Implement one consistent Requirements Process

  • Launch one consistent, simple process across your portfolio with one set of templates:
  • Ensure it can scale to the size/ complexity of the development but don’t allow exceptions
  • Have a clear “go live” date where you symbolically “turn off” the old practices

Clarify decision rights

Use your cross portfolio Governance meetings to deal with issues in partnership with the business (see CTO Digital Wannabes, get control of your pipeline)

Use storytelling & visualization techniques to immerse all teams in the customer’s “job to be done” and then in the product development

A picture tells a thousand words. Tell a story, draw pictures, spend a day at a customer sight, just observing. Once you’re in development, regularly share wireframes/ screen shots with the business, QA teams and hopefully your customers. Remember, they won’t really know what they want until they see it.

Make sure you have application, business model, experience and functional requirements

I know it sounds obvious, but only yesterday I was talking with a team that hadn’t built billing functionality “because the business didn’t include it in the Requirements”. It’s a tragic case of “common sense lobotomy”. Your new process has to include at least these four requirements types and a big picture “how is this actually going to work?”; no one can answer that better than an actual customer.

Hire Project Managers who are hounds, not bureaucrats

For this to work, you must have really proactive Project Managers. Detail-orientation is “right to play”. Much more important is their ability to hold people’s feet to the fire. And don’t get me started on running good meetings. That might have to be another blog – but how about at least capturing and communicating decisions?!

Name the elephants in the cubicles

The Fundamental Attribution Error is natural, but it gets diluted when we connect to each other as human beings. You might need to start by “naming the elephants in the room”; being honest about the frustrations. Better yet, get the teams to do this. Then, agree new trust-building working practices. One wonderful CIO I know will now only accept escalations that are created jointly between the Business and Development teams.

Honor the nerd!

Even if you have outsourced a lot of the coding work (see a later blog), make it a core capability. How about implementing something like Github so that engineers from different teams collaborate on building, re-using, and managing code? How about coding competitions anyone can work on?

Use the Requirements Process to implement your Technology Strategy

You have to balance responding to the Requirements of the Product Managers (e.g. our customers use PC technology) with the Requirements of your Technology Strategy (we need to also build for Tablets because Gartner says “at this rate, tablet shipments could surpass PC shipments in less than a year”. So, use your cross portfolio Governance meetings to ensure that the final Requirements list gets the balance right. (see CTO Digital Wannabes, get control of your pipeline)

Bless you. Future rants blog posts will include:

Agile vs Waterfall, blah, blah, shoot me now!

Talk to me like I’m 6 years old…is Service Oriented Architecture a bit like Lego?

How’s that outsourcing working for ya’, huh?

Leading Change and Organizational Renewal

Our founders, Michael Tushman and Charles O’Reilly recently fielded some questions from Harvard Business School Executive Education.  Below is an excerpt from their conversation:

EE: What do you see as being the greatest barriers to organizational change?

CO: I think that unquestionably it’s the tendency for many companies to develop a strong comfort level based on current success. They often become complacent, almost arrogant, about their success. They focus solely on doing what they now do better, rather than building the foundations for what they’ll need to be doing when the world around them has substantially changed.

MT: In Leading Change and Organizational Renewal, we begin by helping managers to recognize inertia within their own organizations, and to understand its root causes. But, we don’t stop there. We also give them a set of pragmatic tools and skills for managing change and creating the sort of ambidextrous organizations we described earlier.

EE: How is the program structured to facilitate learning and the acquisition of new skills?

MT: We employ a combination of approaches throughout the program to maximize learning effectivness. Each day is built around a carefully planned series of class discussions, lectures, and case analyses. A selection of written and video cases provides participants an opportunity to confront real-life situations in the safety of a classroom environment. Evening sessions are devoted to integrating the day’s learning and applying it to participants’ respective organizational situations. We also organize attendees into work groups for both case analyses and the evening integration sessions. This offers a different opportunity for interactive learning.

CO: The program is designed to both engage attendees and to prepare them to implement that learning when they return to their organizations.

EE: Who is likely to benefit most from the program, and should companies enroll more than one manager?

CO: Leading Change and Organizational Renewal has been developed primarily for those in general management, from the divisional level manager to the corporate officer who might manage a portfolio of businesses. However, it is also appropriate for the functional manager who clearly is on a general management track.

MT: Companies do gain by having multiple enrollments in a given session. This expedites learning by enabling individuals from a company to work together in problem solving and in applying newfound skills to the unique challenges facing their respective organizations. Consequently, firms may want to enroll several individuals, ideally from divergent backgrounds. The interaction that then develops is enriched by a broad range of perspectives. Let me also add that smaller corporations stand to benefit as much or more than their larger counterparts who likely have had some experience in managing change and organizational renewal.

As Professors Tushman and O’Reilly point out, leading an organization in an ongoing process of change and revitalization is necessarily complex. Pitfalls lie waiting where least expected. To avoid the cyclical trap of success-failure-rebirth, firms need to develop competency in simultaneously sustaining a dual management focus; one that concentrates on meeting the challenges of today’s marketplace, another with its eye firmly set on a very different world that lies beyond the bend. Leading Change and Organizational Renewal will help senior managers and executives to better comprehend the forces of change, and demonstrate how to better manage their own organizations for long-term viability and success.

LCOR starts June 3rd-June 8th at HBS and November 4th-9th at Stanford Business School.

Real Life Ambidexterity

Ambidexterity isn’t only about being able to use both hands equally well.  It’s also about exploiting your existing business while exploring new areas of opportunity, even if that “business” is really just an individual trying to thrive in the current economy.

A few days ago, we read about Gac Filipaj, an immigrant from the former Yugoslavia and a janitor at Columbia University.  Now, he’s also a Columbia graduate.  There are a lot of companies out there that could learn a little from Gac: “I think I’m going to stay at Columbia,” he told the Daily News. “If I can get a job better than cleaning, good. If not, there is nothing shameful about that work.”

Filipaj is maintaining his mature business (cleaning) while exploring new opportunities (going to school).  He’s hasn’t neglected his bread-and-butter for the sake of the future.  Yes, he’s maintaining his job while taking steps to ultimately destroy it (i.e. move on to something better), but he’s okay if his innovation doesn’t take-off because he can still survive.  It’s a good attitude to have.

The key is having a solid strategy.  The reason Filipaj took the janitorial position in the first place was so that he could attend English classes for free.  He got to a point where his English was at a level where he could apply to the College of General Studies.  Columbia’s tuition exemption benefit program from faculty and staff enabled him to do this (we’re going to address the funding issue in another post).

English skills weren’t Filipaj’s biggest hurdle, though. It was time management.  There were times that he didn’t go to sleep, especially when he had to write papers. In the same vein, the one of the biggest hurdles leaders in large organizations come up against is time management: when can we work on innovative strategies and tactics when we have to make sure the day-to-day is running smoothly?  Where’s the incentive for me to risk dropping the ball on my existing business when I’m getting paid to maintain that business? When do I get to go home and see my family?

How do you set aside time for innovation during your normal day?  Tell us in the comments.

Friendster: From Innovation to Obsolescence and Back Again

Lim Yung-Hui’s blog on Forbes, recently noted that Friendster, one of the first social networking platforms (founded in 2002)  has resurrected itself…in Southeast Asia.

The leaders of Friendster knew all too well that just because you’re the first in the market, it doesn’t mean you’re destined to be the leader over the long term.  What separates Friendster from so many other innovators? They managed to transform when they were on the brink of extinction. Once MySpace came into the social networking fold, Friendster turned into a punchline about obsolescence.  When Facebook overtook Myspace, the question evolved into “What’s Friendster?” (Think about it…15 year olds were five years old when Friendster emerged).  We have a new answer to that question: the premier gaming platform in Southeast Asia.

MOL Global, Asia’s largest e-payment provider bought Friendster for $39.5 million in 2009.  Clearly, they saw an opportunity to transform the former social networking giant that others missed.  It seems to have taken them a about three years to gain momentum, but apparently, they’ve succeeded.  MOL Global’s site says:

“Through its ownership of MOL and Friendster, MOL Global is Asia’s largest end-to-end content, distribution and commerce network, pairing MOL’s physical payment collection points and payment platforms with Friendster’s large online footprint, social network and user community in Asia.”

MOL Global saw that Friendster’s main assest was its millions of users.  They also saw the gap in the online gaming community and made the decision to transform Friendster into a social gaming network. With MOL Global’s ability to accept online payments easily and distribute content, they took their combined strengths and capitalized on them.

MOL Global saw that Friendster’s main assest was its millions of users.  They also saw the gap in the online gaming community and made the decision to transform Friendster into a social gaming network. With MOL Global’s ability to accept online payments easily, and distribute content, they took their combine strengths and ran with them.  Time will tell if they plan on expanding beyond Southeast Asia, but for now, the growth potential of online gaming in Asia is staggering; according to the latest estimate by Ovum, total online gamers in Asia will exceed 1 billion with industry valuing $30.3 billion by 2016.  That’s a fair chunk of change.

What other first-in-market companies that are near-death have the potential to transform into successful businesses?  Do you think other online payment platforms like PayPal will venture into similar market gaps? Do you think Yahoo could learn something from Friendster?

SONY: Missing the Boat and Fighting about It

Within the past few weeks, a whole host of tech giants have been stumbling: first we heard about Nokia, then it was Yahoo, and now, Sony is gasping for air.  To a certain extent, these declines were predictable– Yahoo self-admittedly missed the boat on the mobile market, Nokia is a hardware company that hasn’t been able to keep up with software, and Sony’s need to hold onto a dwindling TV business means they have’t posted a profit since 2008.  So the question is, why didn’t they take the necessary measures as soon as they realized that disruptive innovations would affect their business models?

For starters, when corporations are  at the top of their games, they don’t feel the need to change; they’re comfortable.  They’ve been fighting to get to the top, and the people who are in that company might like to rest for a minute.  The problem is that, at the top, everyone is coming after you.  It’s the time when your company has to be on its toes more than at any other point in the business’s history. They have to lead the change and keep their radars tuned in to spot new technologies that could transform the business.

Here’s the catch: transformation is hard. To adapt, you have to accept the fact that your core offerings could become obsolete.  In Sony’s case, TV and P2P consoles have less of a demand than multi-function mobile devices and apps.  Additionally, you need to make sure that in the event that you do manage to be the first to create a disruptive technology, you capitalize on it better and faster than your competitors.  Being the first doesn’t make you the best; if you don’t nurture the new business and give it the time and resources it needs to thrive, then its likelihood of survival will be scarce.  Your nimbler competitors will jump into the gap and surpass you.

In Sony’s case, this happened time and time again, but it also revealed a deeper problem within the organization: not only were they unable to adapt and move into markets that they *knew* would be emerging, but they also had a reputation for severe in-fighting.  When a team is tearing itself apart, the company will fail.  That’s all there is to it.

Kazuo Hirai, Sony’s new CEO, hasn’t mentioned anything about this key piece of the puzzle.  Maybe it’s because talking about business culture could be perceived as being too “soft”.  Or perhaps it’s not perceived as a problem by the senior management at all.  Instead, it’s possible that they believe that the only changes necessary are those that involve numbers.  In his attempt to increase his opportunities for profits, Mr. Hirai said Sony would seek growth in businesses in the medical field and was scouting for acquisitions and investments. Sony might be one possible buyer of the medical equipment maker Olympus (which, incidentally, has been in its own accounting fraud quagmire).  This acquisition (if it goes through) could be a catalyst in terms of changing its core business offerings, but do you think that it will solve Sony’s other, perhaps more pressing, problems?  Is it enough to steer the business clear of its seemingly inevitable demise?  Share your thoughts below.