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Effect of Culture on Management Roles: Involvement and Commitment
The potential effect of culture is highlighted in the extent of the roles managers
need to fulfill in the Strategy-to-Bottom-Line Value Chain. Exhibit 11.1 provides
a summary of the roles that the NIE practices need in order to produce the sig-
nificant deliverables, ranging from the business strategy to the annual plan.3
In NIE, three management groups4 play key roles: the senior leadership
team typically is comprised of the CEO and direct reports; the business leader-
ship team typically is made up of direct reports to the senior management team;
and the technology management team typically is the CIO and direct reports.
These management roles define the involvement and the commitment expected
from each management group. By involvement, we mean the expenditure of
time and energy to participate. By commitment, we mean not only involvement
but also an agreement that the process is important and, more importantly, that
the results of the process are important. Culture, of course, is a significant deter-
miner of each manager™s involvement and commitment, particularly for the
business management team.
The critical role that culture plays is dramatically demonstrated when we do
install an NIE practice, but subsequently the results do not affect other processes
of the Strategy-to-Bottom-Line Value Chain. For example, we recently worked
with a financial services organization to assist with the prioritization of projects,
as a part of the annual project planning cycle. Prioritization is mechanically easy
to do, but the business managers were very uneasy about their participation,
rejected the notion that they should understand something about projects not in
216 DEAL WITH CULTURE


EXHIBIT 11.1 Management Roles in the Strategy-to-Bottom-Line Value Chain
Deliverable Name Senior Leadership Business Leadership Technology Leadership
Team Team Team
1 Business Strategic Approve and weight Revise and review
Intentions strategic intentions strategic intentions
2 Assessed Portfolios Review Assess portfolios/ Contribute to portfolio
alignment, service, quality development
Strategic Planning Cycle




Assess portfolio/
technology
3 Strategic IT Agenda for Approve Develop IT agenda Participate in IT agenda
Use of IT process


4 Strategic IT Plan Review Review IT plan Develop IT plan
5 IT Strategic Review Develop requirements Participate in IT require-
Requirements ments process
Prioritization
Recommend decisions
6 Projects Review and approve Create project Form detailed projects and
large projects requirements and technical requirements
business cases


7 Annual Project Plan Make decisions or Prioritization Establish annual project
Annual/Tactical Planning Cycle




approve funding plan and schedules
Recommend funding
8 Annual Business Plan Approve Review IT plans Advise
Establish business unit
plans
9 Annual IT Plan Approve Review Develop IT plans
Establish budgets
10 Annual and Capital Approve Develop budgets Participate in budget
Projects Budgets planning
11 Annual Lights-On Review Review Develop budget
Budget Initiate plans
12 Performance Approve Establish business Establish IT performance
Measurement Metrics performance metrics metrics




their direct sphere of responsibility, and were especially uncomfortable about shar-
ing knowledge about their own area™s projects with other management groups.
We encountered another typical scenario in a consumer products company,
where midlevel managers throughout the company were simply unable to ren-
der judgments about IT projects without previously vetting their judgments with
their most senior managers. In this case, the company was such a heavily siloed
company, run with almost military precision, that midlevel managers were
accustomed to following the clear directions of their leaders and were unac-
customed to expressing their own business judgments.
Process change alone is not enough to close the gaps in the Strategy-to-
Bottom-Line Value Chain; the culture, represented by the willingness of individ-
ual managers to be involved and be committed to the results, is equally critical.

Management Culture Limits IT
Management culture can pigeonhole IT into a predetermined role that limits the
goals IT can accomplish and how IT can accomplish them.
217
Part 2: The Need for Culture Change


For example, in a consumer products company, the prevailing culture viewed
IT as a cost center. The culture limited IT management™s access to senior busi-
ness managers by not including IT in the company strategic planning process
and senior corporate retreats. Management simply never thought IT was strate-
gic enough for IT to participate. In a financial services company, on the other
hand, the prevailing culture saw IT as a central element of the company™s oper-
ational and competitive strategies, and IT was included as a full business part-
ner. Management culture in the first company strictly bounded the management
processes in which IT participated and clearly separated IT into a secondary, and
even unconnected, role in the company. IT people weren™t “company people”
in the culture. Management culture in the second company did not attach “not
really our business” labels to people; someone who worked in the IT area was
as much a company manager or professional as anyone else. Everyone was a
financial services person first, and only secondarily specifically connected to IT.
These are simple examples of management culture at work. Neither are good
or bad cultures per se (although the first example is less than ideal, from an IT
person™s perspective). The culture conflict arises when it inhibits the planning,
innovation, prioritization, alignment, and performance measurement processes
required for the company to fully exploit IT™s capabilities.
Culture™s importance is in the roles and responsibilities each manager car-
ries out, establishing expectations for outcomes and defining what is important
to the management teams. Culture, perhaps even more than strategy, can set the
basis for priorities and determine the level of attention given to prescribed roles
and responsibilities. When values, beliefs, principles, management practices, and
behaviors that make up culture limit IT, this prevents the company moving from
strategy to IT action to bottom-line results.


PART 2: THE NEED FOR CULTURE CHANGE
Our experience shows that, however successful and appealing the five manage-
ment practices may be, their success cannot be sustained or repeated year after
year unless the culture in both business and IT is compatible. In all cases, these
culture issues get in the way of the fundamental goal of NIE: enabling the com-
pany to move from Business Strategy to IT Action to Results.
Most managers do understand that “our management culture has to change”
in order to make the kind of progress that is possible with New Information
Economics. We encounter very little argument about the need for, or the value
of, the five practices we suggest; rather, we hear about the practical problems
in actually applying the practices due to existing attitudes among both senior
and midlevel managers directly affected by IT.
The biggest single impediment to any IT-enabled innovation is resistance
to change, when the underlying culture supports the old way and resists and
resents the new way of doing things. Here, the problem is even more severe,
because we are dealing with basic management processes of planning, prioriti-
zation, and so forth, directly changing the role managers play in those processes
218 DEAL WITH CULTURE


and changing the expectations managers have about the outcomes to be pro-
duced.
The five practices do affect the relationships between business and IT, and
change the existing roles and relationships between business and IT managers.
While the NIE solutions introduce effective management processes, they
require both IT and business managers to do new things, to play new roles. IT
and business managers have to change their views of their roles and responsi-
bilities with respect to IT and business.
But what if the company™s management culture, for some reason, is unsuited
for a manager playing the kind of role the NIE practice demands? Or what if
the business management culture is different in some substantial way from the
IT management culture and, accordingly, the requirement for them to work
together causes culture conflict. The answer, of course, is that the culture has
to change.
These problems arise from many sources, and their consequence is that the
kinds of processes represented by the NIE five practices will not succeed. More-
over, this issue is not limited to individual NIE practices; the problem is that
the idea of “Strategy to IT Action to Bottom-Line Results” demands new roles
and responsibilities. The problems are based on the inability of business man-
agers to carry out the roles or responsibilities, work together or with other busi-
ness and IT managers, or work with IT managers across their internal IT silos.
Culture strongly affects whether innovations in management process can
succeed. We talk in this book in terms of culture disconnects or conflicts, but
this may sound too mechanical or binary. What management teams believe about
IT™s role, about organizational relationships, and about processes that connect
IT and business, very much sets limits on what can be accomplished. Similarly,
what management does in its practices for managing business and IT itself helps
to establish or modify the culture.


PART 3: CLASSIFICATION OF BUSINESS/IT CULTURE
We make the case that management culture must accept the process changes and
management role changes required by New Information Economics, and this
may mean culture change. But what do we mean by “culture change?” As we
deal with the ideas and practicalities of change, we will benefit from an “as-is”
description and a “to-be” target. To help with this, we describe a classification
of different aspects of business/IT management culture. In Part 4, we describe
ways to obtain the “to-be”.
Culture shapes and colors management attitude and behavior, but it rarely
is dealt with directly by management action. Our objective is to identify attitudes
and behaviors that are indicators of the management culture at work. For clar-
ification, we offer a classification of these cultures in order to clarify their
sources and, ultimately, find the right kind of actions to deal with them.
These indicators of management culture about IT fall into three categories.
219
Part 3: Classification of Business/IT Culture


IT™s Business Role: Culture that defines IT™s business role and impact.
Business and IT Relationships: Culture that defines the organizational rela-
tionships between business and IT.
Business and IT Process: Culture that defines the way that IT and business
managers work together.

The boundaries between these categories are gray. Management attitude and
behavior about IT™s role and impact also influences the organization™s structure
and, consequently, the kinds of management processes that operate between
business and IT. Nevertheless, it is helpful to understand and diagnose the cul-
ture characteristics in these three categories.

Category 1: IT™s Business Role ” Culture Defines
IT™s Business Role and Impact
This category is about management beliefs, values, and principles pertaining to
the role and impact of IT. It deals with the underlying assumptions about how
IT contributes to the business. The management attitudes and behaviors get into
the differences between IT™s strategic and operational benefits, management
insistence on using ROI or other metrics to measure impact, and so forth. As
stated before, these characteristics are not black and white, and they overlap.
The question is whether we can recognize them in a particular company cir-
cumstance, and then do something in response.

IT™s Business Importance
This characteristic is the degree to which business management believes IT is
an important part of the business. A consequence is whether IT issues are man-
aged and planned as part of the business management and planning processes.
Sometimes people glibly talk about the integration of IT and business. The ques-
tion is, on the business side, does management “think IT” when it thinks of the


EXHIBIT 11.2 Culture and IT™s Role


Current FACTORY STRATEGIC
HIGH
Importance
of IT
Operations
to the TURNAROUND
SUPPORT
LOW
Enterprise

LOW HIGH
Future Competitive
Importance of IT in the
Industry
220 DEAL WITH CULTURE


business? Are IT considerations part of the planning process, included in the
considerations when business strategies are hashed out?

IT™s Cost versus IT™s Impact
This characteristic is the degree to which business management believes that IT
produces impact, rather than considering IT to be just a cost of doing business.
Does IT, in actual terms, add value? The answer can be ingrained in the man-
agement culture; it becomes the default assumption when any new IT invest-
ment is presented.

IT™s Justification
This characteristic is whether IT is justified solely on ROI or other hard meas-
urement, or whether justification also takes into account other business impact
measures. In the first case, the culture may expect methods such as ROI and
require an ROI-based business case as a part of IT planning and individual sys-
tems development. The second case addresses strategic and other business per-
formance effects.

IT™s Contribution to Business Innovation
The characteristic is management expectations for IT™s contribution to chang-
ing the business. Management expectations could range from operational sup-
port to strategic business innovation.
We mentioned in Chapter 4 that Warren McFarlan and others have devel-
oped a simple matrix that captures much of this cultural concept. Briefly, this
matrix characterizes the strategic importance and the operational importance of

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