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Management Scope: The bigger picture

An IT-service company with a focus on mission critical business processes, advocates eliminating silos, adjusting governance structures and saying goodbye to traditional HR views. Strange? IT outsourcing service provider Schuberg Philis has good reasons to do so. “In order to accelerate, you need more than a good engine.

Original article in Management Scope 8-2017. Text by Pim Berger, Jeroen Borst, Arthur van Schendel and Janot van Wegen. Read the full original text in Dutch in the PDF-viewer below.

We can all see the consequences of rapid technological developments in sectors such as banking, travel, energy and retail. For new entrants it is becoming easier to disrupt existing markets – and this can often be done very quickly. More and more of our economy is becoming increasingly sustainable and in addition attitudes to work and working relationships are changing. In a word, established companies that want to survive not only need to adapt but, above all, they need to strengthen their adaptability: for example, by increasing strategic agility, innovation capacity and speed.

Digital transformation – far-reaching automation and integration of processes in order to operate in a chain-based, customer-focused way – is part of that adaptation. This explains why digital transformation is often tackled from a technology perspective – after all it’s called ‘digital’. That’s a pitfall, just as seeing digital transformation as a one-off project that you can tackle from separate silos or by adopting specific new ways or working. Engaging in ‘agile’ ways of working, for example, is not a goal in itself, but a means to increase speed and agility or reduce time to market.

A digital transformation can only succeed if there is strong cohesion between processes, procedures, ways of working, mindset and governance. We see that not only among our customers, but it is also clear from our own experience as a successful IT company.

Looking for cohesion

Successful acceleration means changing the way you think about technology, governance, the way people work and dealing with business development and innovation. It makes no sense to introduce agile ways of working if you don’t adapt the assessment cycle as well as recruitment. You will also not succeed if you continue to budget in the traditional way. The first pitfall is that digital transformation remains an IT show if, for example, the CFO and CHRO are not involved. Up to now we have mainly sat down with CIOs, but more recently the CEO and COO have played a more prominent role. If our point of departure is the four elements technology, governance, the way people work, and the way we deal with business development and innovation, everyone agrees on the necessity for good synchronization between the business and IT.

But in practice we see a different picture. In the hype around digital transformation it’s often not realized that most parts of organizations don’t need to ‘transform’ at all, but must continue to carry on as usual. The business is continually searching for small, agile solutions and new functionality, but many CIOs are driven crazy by the IT industry: “you need big data platforms, you must go into the cloud, you have to get into real-time analytics and you must get rid of legacy approaches.” It is the task of the CIO – in addition to looking after IT – to examine closely which specific areas of the business can benefit from innovation. The CIO and COO will primarily focus on technology, but without involving the dedication of people and processes, technology will not deliver speed. This brings us to the second disconnect.

Thinking outside the box at HR

Which competences do we need to work more flexibly? Can our people easily cooperate with those engaged in other disciplines and with partners from an external ecosystem? Do we dare to make the change from working based on fixed functions to adopting changing roles, where people sometimes are in the lead and sometimes not? Are our assessment systems – with an evaluation twice a year, based on traditional competences – suitable for a working environment in which people are rewarded for experiments some of which we know will fail?

Many organizations have process managers, product owners, agile coaches, and scrum masters. The standard reflex is to locate these essential roles in functions in a clearly defined package of tasks, because then human capital fits the systems and processes of HR. This often leads to a split between process-related tasks and intrinsic knowledge, while we know that knowledge of the context is absolutely crucial to be able to operate successfully. In digital transformations it’s essential to have people with both deep domain knowledge and multiple competences – these people are known as T-shaped professionals. In short, while all kinds of essential elements of the underlying organization ought to change, the HR organization continues to think and act traditionally. So wanting to achieve acceleration means that you need to identify all kinds of obstacles in HR. And, for example, focus more strongly on behavior that leads to success by someone who is involved in a digital transformation and adapt your profile and recruitment to such characteristics.

How have we done this? Within our organization people regularly take on multiple roles. We have no HR managers, HR business partners or HR advisors walking around at Schuberg Philis, but many colleagues take on the role of coach – because there continues to be a need for HR-related activities. Our people are specialists, who are able to use their domain knowledge to work with our customers, also during sales activities. What’s more, they have a realistic mandate that helps achieve the desired speed in decision-making; this is somewhat different to maintaining, for example, standard procedures that define who is authorized to do what.

How service-oriented is governance?

If the business and IT want to get up to speed together, it doesn’t help if governance slows things down or the CFO thinks and acts exclusively in terms of quarterly periods and years. An agile organization – in addition to having a clear purpose and a dot on the horizon (think for example of a typical Board program such as ‘our organization in 2020’) – will increasingly need to work with short-term goals. Each quarter the Board of Management will also need to identify which initiatives and innovations should be given priority, or be cancelled because something doesn’t appear to have enough chance of success. That is easier to do if the roles and knowledge areas within the Board are also finely balanced.

Because in many organizations all kinds of processes have already been made ‘lean & mean’, it’s not necessary to reorganize the whole governance structure. But a change of emphasis is required in the form of a more service-oriented approach: what does the business need to be successful? This requires, for example, different financial planning approaches – think instead of just forecasting about backcasting as well (this involves defining a desirable future and then working backward to identify policies and programs that will deliver that future). Or think of greater involvement by controllers, who do not only look at figures.

In addition there is an enormous deceleration effect if the business works in a multidisciplinary way with short cycles, while governance exclusively works with a planning & control cycle that assumes there are silos (marketing, sales, IT…) and decision-making processes designed for the long term.

Digital transformation: both reorganization and culture change

It may sound a bit strange: an IT service provider that has become a market leader by managing IT infrastructure and is now actively providing technological support for mission-critical company processes, making pronouncements about breaking down silos, modifying governance structures and abandoning traditional HR ways of thinking. But if acceleration and more agility are truly seen as the means to increasing the chances of survival, then you need not only ensure good propulsion in the form of a good motor. You will also need to tackle the retarding factors, such as your air resistance and your gearbox. Within Schuberg we work with self-steering teams that are organized around the customer and that are optimally supported so that they can focus on what they’re good at. This has to do with service-oriented leadership or perhaps even being a service-oriented employer. If you make colleagues and teams responsible for meeting commitments they have themselves made with customers, you will also need to give them all the appropriate opportunities. And that’s exactly what today’s customers expect.

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