Welcome to the last installment of Clarkston’s blog series on “The Bermuda Triangle of Growth.” If you have been following along, we‘ve been discussing the unique point in a company’s evolution where it is impossible to support or sustain growth, particularly if they don’t change the ways in which they operate. This is usually when a company reaches revenues of USD $100M and $500M, but can stretch into the billions depending on the industry and how the company has grown (i.e., organically or through acquisition).
We have talked about the phenomenon, and have highlighted key indicators that will help you self-diagnose your organization, people, and processes. We’ve also offered ideas and steps for companies in this stunted growth to safely navigate through this difficult, and often destructive, period. The purpose of this final post is to discuss information technology (IT) and the challenges faced by IT executives as they try to lead their companies out of the Bermuda Triangle.
It’s very academic to say that once you have your people, organization, and processes aligned, you can then implement systems to support your business. But unfortunately, as anyone with IT experience will tell you, reality doesn’t work that way. Business is a moving target, and for IT to be valuable, it needs to provide a stable platform that enables the business to evolve and react better, and more quickly, than the competition.
Because of where they are in their organizational evolution, Bermuda Triangle companies often exhibit the following IT traits:
- Silos proliferate across the organization, each division, region, and business function comprising its own. This has created redundancy, but no one wants to be the one to change. Also, non-IT personnel in these silos start building “edge systems” when their requests are not met by an overwhelmed IT group.
- Disjointed and inconsistent master data leads to an inability to recognize the basics of the business, causing inaccuracies and poor planning among divisions, and across the organization.
- IT governance is stifling or non-existent and implementing changes seems to take too long.
- Decisions regarding platforms and applications are made based on political power and opinions, rather than facts and expected return on investment.
- Leadership challenges the value of IT investment, even though IT investment is well below benchmarks.
Companies in the Bermuda Triangle have many issues they need to address and technology is generally one of them. If you are in an IT leadership position, here are a few items to consider as you aim to propel your organization to the next level.
- IT leads the way when breaking down silos. If you are trying to provide a common platform for growth across divisions, regions, or business units that have operated autonomously in the past, be prepared for a fight. If you are at the Bermuda Triangle stage, it is very likely that no other organization-wide “harmonization” initiative has ever been attempted. The key to success will be to get sponsorship – not just from the “top” of your company, but also from the division, region, and business unit heads with whom you’re working. They need to see and understand the value of creating a common platform to support growth. Yes, there needs to be a business case, but there should also be a shared vision and established goals to achieve it. In this regard, IT leadership needs to be knowledgeable about business issues and should make every effort to solve the most important ones directly. Skip the talk of features and functions and stay focused on solving problems, and on hitting the top and bottom lines. Such support will be critical as you try to pave the way for change.
- Don’t leave choices about platforms and applications solely in the hands of your legacy personnel. Empower outsiders, either through hiring or engaging with third parties, to bring in unbiased perspectives. Also, don’t make decisions solely within IT. Interview key business customers to get input about what they like and don’t like about current systems. And finally, definitely don’t take it at face value if your due diligence team says you can extend current applications for little cost; this is always an attractive answer. We see this often when certain stakeholders are trying to hold on to a legacy or tier two ERP system. Our experience is that this is usually recommended when someone wants to make an alternative look more attractive than it may truly be.
- If you are at the Bermuda Triangle stage, it is likely that your approach to IT governance will not scale up to take you to the next level. Until this point, it is also likely that you have everyone in the room, each needing to approve changes, with one or two people from IT that truly understand the implications of the change, and that can help guide “approvers” in the right direction. This is yet another example of relying on people rather than process. And for companies trying to get out of the Bermuda Triangle, this is no longer going to work. The answer to the IT governance challenge is an entire blog series in itself. Making the group too senior or too junior has specific ramifications for the soundness of decision making, and also for the speed at which changes can be implemented. Leading companies are actually turning the IT governance model on its head, using rapid decision making processes and technologies (yes, IT to govern IT) which gather input from across the organization to make faster, better decisions. Consider looking into these new, leading practices rather than just trying to make a larger version of what you do today.
- Fix your data first. This is going to sound odd to say, but before you embark on any kind of system design, consolidation, platform extension, etc., build your company an enterprise-wide data model. Sound too tactical? Well it’s not, particularly when you realize the implications of skipping this often overlooked step. Addressing data (i.e., what people call things) is just as important as addressing processes (i.e., how people do things). Oftentimes, companies begin implementing corporate applications and realize that they need to improvise (sometimes crudely) to support common reporting and decision making across the organization. And nothing will disenfranchise sponsors like impairing their reporting capabilities. To ensure that this doesn’t happen, start with an enterprise-wide data model – it really is a small price to pay in the scheme of things.
With this, we bring to rest Clarkston’s blog series on “The Bermuda Triangle of Growth.” We have covered how this phenomenon can affect the people, organization, process, and technology in a company, and ways to navigate ahead. If you have any questions, want to continue the discussion, or would like to learn about Clarkston’s workshop series, “Guiding Your Company out of the Bermuda Triangle of Organizational Growth,” please contact us.