Today there continues to be a growing school of economists, joined by CEOs and CFOs, who remain unconvinced that the dollars poured into technology produce any significant improvements in corporate productivity. The pressure from these “skeptical IT investors” is placed on senior IT executives who in turn take great pains to develop and communicate IT to corporate alignment plans designed to drive business impacting benefits from IT investments.
Nevertheless, despite these efforts by IT executives, IT investments don’t seem to be having much of an effect on productivity in many companies. In fact, some reports from respected sources give evidence of a high percentage of misalignment and waste.
For example, one META Group survey reports that two out of three business deals are passed over by companies because the IT departments are not geared up to handle the business. Translation: The company’s IT team was not prepared and obviously missed the signals pointing them toward developing the capabilities the company needed to handle new business and add real value to the company. In other words, IT and the company objectives were misaligned.
Furthermore, Morgan Stanley reported that in the two years between 2000 and 2002, U.S. companies spent 130 billion dollars in software and hardware that they ultimately did not need to support their businesses. According to figures by Gartner, this number jumps to 540 billion dollars on a global scale. Again, all of this misaligned purchasing happened despite the understanding and communication of alignment by CIOs.
The good news is that there is much that HR can do to help IT executives to drive up their impact on the productivity charts. To see how HR can help, let’s take a closer look at what causes misalignment and how you can help IT executives to avoid pitfalls and drive more value.
How does alignment go off kilter?
Several years ago, as the head of an IT team, I sent out a short email inviting the team members to meet so we could get to know each other. The team consisted of a number of managers who were my direct reports and their staff members. In the note I asked them to reply to a few brief questions before our meeting. The questions included the following two:
- What are the top five things that you do that add value to the company?
- If you have people reporting to you, what are the top five things your people do that add value?
When I received the responses, I sorted them and batched together the responses by each team member with the responses given by that specific team’s manager. To my initial surprise, almost 90% of the items listed by the teams as their key objectives differed from the key objectives listed by their managers. What’s more the key objectives listed by the managers were different by almost the same margin from the key objectives I had been given by my new bosses.
I have, since that day, performed this survey several times with similar results. Recently I was told by a director of a large well known development organization that in their studies, where they used similar types of question, they found that on average even the better teams were still about 60% off in terms of having a correlation between what managers and their teams considered key objectives.
I puzzled over how this misalignment was happening. The people in my team regularly attended company and team meetings where presenters clearly talk about and outlined company objectives and goals. So what happened? How is it that IT teams, under the leadership of “alignment savvy IT executives,” who communicate alignment, become misaligned and end up contributing to the poor showing on the economic charts as well as outright waste of IT investment dollars? The answer, which points to the solution, is found by looking at what happens down through the layers of management.
The phenomenon that causes this erosion of alignment of purpose as we travel down through layers of an organization was the topic of book written in 1974 by Dr. George S. Odiorne, author of Management by Objectives, titled “Management and the Activity Trap.”
In the book Odiorne states “people tend to become so engrossed in activity that [they are doing that] they lose sight of purpose.” To this we can add, that we also tend to re-interpret our objectives to fit the activity we are engrossed in (as we can see from the survey experiment results). This happens even in environments where senior managers get together with staff and talk about company goals regularly.
The reason for this is that the managers, and people in the layers below, hear and understand what senior managers say about company objectives and goals, but don’t have a clear map of how they and their teams personally impact these “bigger” picture items. This means they tend to go back to work and focus on individual “tasks” at hand without further reference to the “big picture.”
They are listening and understanding the alignment message but can’t translate the messages into “so, here’s what I need to do to contribute.” They are caught inside their own day-to-day world—what Odiorne refers to as an “activity trap.”
As we move down the layers of organizations, there is clearly a deviation in focus and priorities of each layer due to lack of clarity as to how they can and should specifically contribute to the goals and objectives of the layer above them. So from the aligned CIO, we move to a slightly less aligned VP, to the less aligned Director to the even less aligned managers and supervisors who are guiding the purchase of resources and the actions of the staff –which at this point is about 60-90 percent off from the original objective.
The obvious question is how can you help IT executives to avoid this deviation of focus? The answer is you do it by helping them put in place a mechanism that enables every team member, at every layer of their team, to see and focus on how they contribute to the goals and objectives of the company. Here are three simple steps you can guide them through toward that end.
Step 1: Encourage IT to use and communicate a portfolio management vehicle as a means of categorizing IT investments and have each manager view themselves as “fund managers.”
The IT investment portfolio model developed by Dr. Howard A. Rubin, EVP and Board Member of META Group, teaches IT executives to look at IT dollars as part of an investment fund and to regard themselves as fund and portfolio managers. Their goal is to allocate investments in a manner that supports their company's overall business strategy.
The model is an excellent tool that enables the IT function to link and drive technology investment decisions to conform to the company's business strategy. It also provides a means of communicating down through the layers of the organization what their basic objectives are in the simple language of investment strategy.
If, for example, a manager is heading up a wireless research and development team that is classified as an IT venture capital fund, then she has a basic understanding that her role is to make wise, moderately risky investments and keep her finger on the pulse of the key technologies so that she can adjust investments and focus according to developments.
On the other hand, another manager may be heading up an IT team classified as part of the investments made to profitably grow the current business. He or she will constantly seek to bring the best ROI in technologies that improve the company’s ability to run it’s current operation as profitably as possible.
Communicating IT investments at each layer using an IT portfolio investment model to the entire IT management team provides a standard language for communicating investment objectives and the general rules governing the decisions around each type of investment.
Step 2: Guide every layer of the management team down to the team leader level through the creation of an alignment chart.
In its most basic form an alignment chart can consist of a one page document that outlines: The objectives of the company, the IT alignment objectives that support the company objectives, the objectives of a team that support the IT alignment objectives, what actions the team must take to meet the objectives and what the manager of the team must do to support the team’s success.
Step 3: Teach every layer of your IT management team down to the team leader to focus on objectives vs. focusing on activity and to be audible.
Encourage the senior IT management members to focus their teams on making good judgment calls based on the need to adjust a play (task) in order to meet the objectives rather than being “playbook” slaves (which is task focused).
By effectively guiding your senior IT managers through these simple steps, you will drive focused performance optimization through the entire team and thus greatly increase the overall production of business-impacting value!