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The metrics for business success -- and therefore, for CIOs -- have changed, said Jim Highsmith, the renowned software engineer. Companies, due in large part to their IT systems, have become adept at efficiency, he said, particularly since the recent recession.
Productivity and efficiency, while important, are primarily internal metrics. Both are critical components of the long-term strategic plans aimed at giving companies a "sustainable competitive advantage," Highsmith said. Today, however, thanks partly to technology, competitive advantages are fleeting. "They only last a little while and then we have to go on to the next one," he said. "We need to exploit short-lived opportunities."
Plus, many of the here-today, gone-tomorrow opportunities are less about whipping internal employees into shape than about delighting customers, which requires both new IT systems and ways of working. If CIOs wish to help their companies capitalize on these transient competitive advantages, Highsmith contends they must be able to do the following:
- Form a vision of what responsiveness means for their organizations.
- Deliver a continuous stream of value.
- Be an adaptive leader.
Efficiency vs. responsiveness
Co-author of the Agile Manifesto, Highsmith is one of the high priests of so-called lightweight software development methods. Agile and related methods such as Lean, promote iteration over long-term planning and emphasize self-organizing teams over top-down leadership. The aim is to get to a viable product as soon as possible, with the understanding that the definition of viability could change with every iteration. Above all, Agile development is adaptive. In recent years, the Agile approach for software development has been co-opted by business management gurus as an effective strategy for dealing with a rapidly evolving, unpredictable business environment.
"There are a lot more companies looking at agility from a business level, and they are really disrupting the marketplace by being more agile and adaptive and responsive," Highsmith said.
A case in point is Gap Inc., which recognized the benefits of the Agile methodology a few years ago when it acquired Athleta, an online-only women's athletic wear business, and wanted to give the brand a brick-and-mortar presence. When the company asked how much time it would take to build a prototype store, its real estate developers said from 12 to 14 months, Highsmith recounted. But the real estate folks were thinking about the Athleta store as the next in the Gap chain of 3000-plus stores, instead of as a new concept.
"Gap's online division has a CIO who said they could build it more quickly, because they had been doing Agile for quite some time," Highsmith said. The prototype went up in four months and the Athleta chain had 92 stores nationally at last count.
Value vs. the 'iron triangle of scope, schedule and cost'
Projects need to have bounds, to be sure, but Highsmith said CIOs traditionally have gone to their business partners with the wrong question, namely, 'Do you want more features or higher quality?'
"The problem is we have been asking them about a technical outcome," Highsmith said, noting that the question is not software quality versus new features -- business people don't understand technical debt.
Rather, the question for the business should be about cycle time. If the business wants to reduce cycle time on the project, some features will have to be cut, at least at the beginning, Highsmith said.
The more frequently the organization can deploy new features, generally the better, but it's not easy to move the needle, especially for companies with legacy systems, he said. Many companies are finding that they cannot take advantage of the new technologies, such as cloud and mobile, to deliver continuous innovation without revamping core business systems.
In any case, CIOs will have to rethink the "iron triangle of cost, schedule and scope," to reduce cycle times, Highsmith said. "I contend [these measures] are not objectives but actually constraints." The most important issue in any project is speed to value, not whether the team has finished all the requirements on time and on budget.
"The question I want to ask at the end of every iteration of development -- and the one I ask of business partners too -- is, 'What is keeping me from deploying this product now?'"
Highsmith relayed an anecdote of a Toronto-based CIO who was putting in a new CRM system for the sales and marketing team. Sales and marketing wanted 100 features. The CIO said, "Fine, we'll handle all 100, what are your top three?" They wanted all 100. He asked for their top three, and so it went until the IT team had implemented approximately 20 features. At that point, when sales and marketing was again asked for its next three features, they said they were OK with the 20 they had.
Opportunities abound, Highsmith said, but how can CIOs help their companies find and manage "this flow of opportunity?" Highsmith defines the opportunity lifecycle as having three phases: discovery, startup and scale. Companies need processes and practices that help their employees discover the opportunities out there. Earlier this year, Highsmith's company ThoughtWorks, a software development firm where he serves as an executive consultant, launched "100 days of hardware," a period of 100 days during which software engineers were encouraged to try out different hardware devices (robotics, sensors) to find out where the next opportunities were for ThoughtWorks.
The startup phase involves taking some of those opportunities and -- using Lean-type processes -- figuring out what's viable. "You may sprinkle $100,000 here and $200,000 there trying to do a number of different startup transitions," he said.
Scaling the new idea is the hardest of the three phases to get through. "A lot of problems happen here," he said, conjuring up Kodak in the 1990s when the head of the digital camera division must have come before the board with a pitch asking for, say $50 million, and promising that in three or four years, he could make this digital camera thing profitable. "Then the head of film comes in and says, 'Give me $50 million and I can give you a 30% return starting tomorrow,'" Highsmith said.
Walt Disney, Steve Jobs and Bill Gates as micromanagers
Investment management that results in innovation not self-immolation relies active and adaptive leadership, Highsmith said. This form of leadership is about "guide and bound," as opposed to command and control, he said, recounting the story how Walt Disney readied his animators for Snow White. The entertainment genius, a demanding sort, acted out the film from start to finish playing every part -- Grumpy, Dopey, the princess, the Wicked Witch.
"It took about four hours to walk them through the movie and imbue his staff with what he wanted," Highsmith said. He was guiding them. Then he set boundaries, giving them a hard deadline and a budget. Disney was a micromanager of the first order.
So was Bill Gates, whom Highsmith worked under in the 1990s, and so was Steve Jobs. Yet, it is out of fashion in business circles to be a micromanager. "The modern style of management says, 'Don't be a micromanager,'" Highsmith said. And yet, here was evidence that three of the most successful tech leaders of modern times were micromanagers.
"What I finally realized is that what Gates and Jobs and Walt Disney did was they micromanaged product. They didn't micromanage people and process. They were product owners," Highsmith said.
In the era of adapt or perish, he contends that CIOs will have to really understand more about product and customer experience if they hope to prepare their companies to succeed. That includes adding product designers to their IT organizations. CIOs also "have a penchant for planning and thinking about things way too much," Highsmith said. His advice for embracing adaptive leadership?
"Think big but start in small increments, learn as you go, adjust and move fast. You can't plan your way into solving uncertainty; you have to act your way into solving uncertainty," he said.
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