Pit and the Pendulum: Managing the Accelerating Pace of Technological Change

THE PIT & THE PENDULUM

MANAGING THE EVER ACCELERATING PACE OF TECHNOLOGY CHANGE

May 17, 2012

ALVAREZ & MARSAL IN ONE PAGE – FINANCE | OPERATIONS | IT

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THE PIT & THE PENDULUM I. Background

II. The Challenge

III. Frameworks

IV. The Strategies

BACKGROUND

POE’S CONUNDRUM (1842)

5

THE PENDULUM

6

THE PIT

7

MY CAREER IS BOOK-ENDED WITH INNOVATION CHALLENGES

1985 9

2011

THE CHALLENGE

ACCELERATING TECHNOLOGY INNOVATIONS

13 Source: WSJ Study

PRODUCT LIFE CYCLE

Decline

Maturity

Growth

Introduction

Inception

14

… SHORTER… FASTER… OVERLAPPING INTEGRATED PRODUCTS…

Decline

Maturity

Growth

Introduction

Inception

15

YESTERDAY’S INNOVATIONS ARE NOW AN ALBATROSS

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PERVASIVE CONTINUOUS BUSINESS INNOVATION

“Bookstores, record labels,

airlines, encyclopedias, hotel

chains, retail outlets,

newspapers, phonebook printers,

travel agents, realtors and many

other business that were too slow

to realize what was going on

began to lose their customers

and their profits.”

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“Sony could have created Napster

but it didn’t. Barnes & Noble could

have created Amazon; AT&T could

have created Google; Britannica

could have created Wikipedia, or the

Chicago Times could have created

eBay or Craig’s List; but they

didn’t.”

Source: Re-Boot by Lisa Jasper and Jim Smelley

“CHANGE CONTROL” IS BECOMING AN OXYMORON

SaaS

Cloud

ITO

AMO

BPO

End-User Dev

BYOD

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The IT Function owns

technology…

… unless a business unit

has the money and

decides to do it

themselves…

… unless they decide IT

to should support it later

SLOW PROJECTS ARE #1

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THE CATCH 22

Urgency,

Lack of

Planning

Thorough

Planning,

Little

Urgency

Failure

THE RISKS

Late Mover

• Lacking current features

• Disappearing skills

• Difficult to retain staff

• Expensive contractors

• Limited vendor support

• Limited training options

• Difficult to integrate; compatibility

issues

• Vendor financial stability

• Lifetime warranty – yours or theirs?

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Early Mover

• Missing features

• Emerging skills

• Difficult to retain staff

• Expensive contractors

• Over-extended or immature support

• Limited training

• Difficult to integrate; compatibility

issues

• Vendor financial stability

• Lifetime warranty – theirs may be even

shorter

• Security

• Scalability

• Support

• Interoperability

• Intuitive / usability

• True TCO?

WE’RE DOOMED! THANK YOU FOR COMING

Luddite Cell Phone

FRAMEWORKS

WHAT IS THE ROLE OF IT IN THE ORGANIZATION?

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Functional

Level 1

The Enterprise regards IT as a commodity used for cost-effective transaction processing

IT delivers a limited set of core capabilities. IT focuses on running the business cost effectively.

Transformational

Level 5

IT is a primary driver of business model innovation.

IT is leveraged to redefine markets and rules of competition.

Differentiating

Level 4

IT is a source of agility and product / service innovation.

IT collaborates with other disciplines to deliver new products / services.

Contributing

Level 3

IT is addresses explicit business issues, its contributions to business performance are well understood.

Technology strategy is explicitly aligned to business goals. IT service and solution capabilities are stable and reliable.

Enabling

Level 2

Business unit leaders independently leverage IT as and when they consider it necessary

IT is run like a business. Outcomes are measured against performance obligations.

Adapted from Gartner ITScore model

ADOPTION OF INNOVATION: THE DIAMOND APPROACH

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Technology

Complexity Novelty

Super high-tech

High-tech

Medium-tech

Low-tech

Regular

Fast/competitive

Time-critical

Blitz

Arr

ay

Syste

m

As

se

mb

ly

De

riv

ati

ve

Pla

tfo

rm

As

se

mb

ly

Source: Aaron Shenhar & Dov Dvir

PARAMETERS OF INNOVATION

Te

ch

no

log

y I

nn

ova

tio

n Better

Mousetrap

Magical

Amulet

Tectonic

Shift

Blind

Date Frankenstein

Business Innovation

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What is needed?

What

is

possib

le?

INNOVATION COMES IN MANY FLAVORS

Te

ch

no

log

y I

nn

ova

tio

n Better

Mousetrap

Magical

Amulet

Tectonic

Shift

Blind

Date Frankenstein

Business Innovation

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What is needed?

What

is

possib

le?

ALL INNOVATION NOT CREATED EQUAL

Te

ch

no

log

y I

nn

ova

tio

n Better

Mousetrap

Magic

Amulet

Tectonic

Shift

Dog Tricks Blind Date Frankenstein

Business Innovation

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What is needed?

What

is

possib

le?

THE STRATEGIES

DOG TRICKS

1. Recognize that dated technology

may have a higher ROI than

replacement with new technology

Migration costs

Risk factors 2. Plan to be self supporting as the

market and vendors leave you

behind

Hiring and training

Spares

DESCRIPTION “Sit and Stay”

EXAMPLES

SOA Back-ends

Custom industry apps

POS

DISCOVERY NA

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THE BETTER MOUSETRAP

1. Develop adoption evaluation

criteria – ROI, stability,

scalability, etc.

2. Develop a retirement evaluation

criteria – same factors

3. Vendors as primary source of

ideas

DESCRIPTION

New technology which

does existing tasks

cheaper, better, faster

EXAMPLES

VM

SAN

VOIP

Bandwidth

DISCOVERY Vendors

Architects

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THE BLIND DATE

1. Apples-to-Apples: compare with

“could be” versus “as is”

2. Recognize true commodity skills

versus valued knowledge

3. SLAs with Teeth

4. Maintain the ability to plan,

manage and evaluate

performance

5. Transitions of service are

greatest risk

6. Penalties usually linked to fees,

not impact

DESCRIPTION

Known technologies and

business needs

supported by new

source

EXAMPLES

Outsourcing

Offshoring

CLOUD

DISCOVERY IT and / or

Business Functions

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THE MAGIC AMULET

1. Build sandboxes; hedge

2. Look ahead

3. Look outside your industry

4. Consider what it can do, not what

it “is”

5. Be willing to pull the plug

DESCRIPTION

Breakthrough

technology where

application not yet

defined

EXAMPLES

Any new apple product

Android

Mobile devices –

Touch screen

Voice Recognition

Camera / Video

GPS

DISCOVERY Skunk Works

External 33

FRANKENSTEIN

1. Think outside your box

2. Component integration is a big

risk

3. Standards may trump features DESCRIPTION

Proven technical

components combined

in a new way

EXAMPLES

Smart Grid

Multi-cloud solutions

Best of Breed

DISCOVERY Business leadership

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TECTONIC SHIFT

1. Skate to where the puck will be

Forecast

Sandbox 2. Full frontal collaboration

“Skunk Works” works 3. Plan to be self supporting

Just like “Dog Tricks”

To a genius, support is a

waste of time 4. If you are behind, acquire

Buy the learning curve

DESCRIPTION “Game Change” built on

technology

EXAMPLES

Geico

Amazon > Kindle

iTunes

Online Travel

NetFlix / Red Box

DISCOVERY Executive Leadership

Technology Leadership

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CLOSING THOUGHTS

• “Speed to Market” may trump “Perfection” – know when

• Don’t choose one approach… know when to hold ‘em, know when to

fold ‘em

• Failure IS often an option

• But.. don’t fold when you’re all in

• When innovating, have a Plan B when possible

• Bet the portfolio, not the project

• 10,000 hours is too long to wait

• Solid foundation / flexible delivery --- SOA & MDM

• RACI of innovation depends on type of innovation

• Discovery versus Adoption

• Technology versus Business Model

• Never stop reading; Blogs are more current than books

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BIBLIOGRAPHY

• 37 Signals - Rework

• Christensen, Clayton M. - The Innovators Dilemma

• Collins, Jim - From Good to Great

• Collins, Jim - Built to Last

• Feld, Charlie - Blind Spot: A Leader's Guide To IT-Enabled Business Transformation

• Friedman, Thomas L. - The World is Flat

• Gladwell, Malcolm - Blink

• Gladwell, Malcolm - The Tipping Point

• Hammer, Michael and James Champy - Reengineering the Corporation

• Jasper, Lisa B. and Jim Smelley - Re-Boot

• Kidder, Tracy – The Soul of a New Machine

• Michalko, Michael - Thinkertoys: A Handbook of Creative Thinking Techniques

• Moore, Geoffrey Al - Crossing the Chasm

• Poe, Edgar Allen – The Pit and the Pendulum

• Shenhar, Aaron and Dov Dvir – Reinventing Project Management: The Diamond Approach

to Successful Growth & Innovation

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Progress is the extinction of ideas that were

once excellent.

TOM PECK – CIO, LEVI STRAUSS

Too often, I've chosen an early-adopter

approach to new technologies. I've found the

risk more often than not outweighs the

potential benefits. I'm now more likely to be a

fast follower unless there's super-clear joint

accountability.

BACK COVER

Kevin Christ

Alvarez & Marsal Business Consulting

2100 Ross Avenue, 21st Floor | Dallas, TX 75201

[email protected]

817.706.6974

Pit and the Pendulum: Managing the Accelerating Pace of Technological Change

Technology

Transcript of Pit and the Pendulum: Managing the Accelerating Pace of Technological Change