Wednesday, August 30, 2017
The news consumed the business world at large, ripples felt globally as they impacted a large set of employees, customers, shareholders and the industry. Allegations and insinuations bordered on libel with subjective views on leadership of the individual who had steered the drifting ship, stabilizing and setting course that (almost) everyone had welcomed. Everything appeared to be going well until the brown stuff hit the roof and suddenly the knight in shining armor was declared incompetent and unworthy of the position.
Grave matter it was since the allegations were cast by the person who had anointed the CEO to begin with. Pronouncements at the time of appointment lauded the decision as a bold move that will transform the company fortunes and bring them back to the forefront. The market loved the sure and swift measures taking the market capitalization beyond earlier peaks. Market analysts bullish on the company helped the momentum and things seem to be settling into place when the murmurs of a rift were heard.
A couple of years later when the market got tougher, some old-timers left the company and a set of acquisitions did not bring the value, it was a matter of time. Their styles of operation were divergent, the market perceptions different, the go-to-market and customer focus not where the company had started from. The new leadership sought independence by virtue of the numbers doing the talking, the founders wanted to retain control over the direction taken by the company, influence decisions and outcomes.
Thus the rift became a chasm with the founders prevailing over the professionals; markets were not kind to the events, valuation dropping sharply, trolls on social media made hay further damaging the now fragile reputation of the bellwether. Customers called for review wondering if there is a change in focus of the company; whether they were still relevant especially as the new team and brought in many new revenue streams which put the customers at risk should the teams be disbanded or left to drift to natural death.
This is not the first time such a war has broken out between the Promoters and Professionals hired to run the company; history will repeat itself ad infinitum. This is where the Board of Directors – an independent conscience keeper – is expected to moderate the decisions and outcomes. Companies pick Board members based on their agenda and if they desire real advice with someone willing to challenge and provide expertise, or an acquiescent collective that will endorse decisions of the majority shareholders (Founders).
One of the companies where I spent some time had gone through a similar turmoil, the end result damaging the company’s market position, profitability and high talent attrition. The Board played second fiddle while the company spiraled downward. Another much publicized case involved a large conglomerate and a non-family member who was hired after a global search lasting more than a year; the downfall was spectacular and all kinds of hypothesis and speculation floated to undermine the outgoing person.
Were these cases of bad hires ? Probably not considering that the due diligence done was extensive and involved many senior leaders within and outside the company. The appointments were put to trail by media akin to baptism by fire – the individuals came through unscathed. At the helm of the company the accountability is to the Board and shareholders, apart from customers and employees whose interests come later. So was it a case of lack of transparency or willful withholding of sensitive information to the Board ?
In most cases there is a fall guy or a set of people who are blamed for the fiasco; life takes a dip and then limps back to normalcy. The triggers: the Promoters and the new Management fight fierce public battles only to be forgotten; the actors change, situations probably are different and so could be geographies, the outcomes are however predictable with the Promoters prevailing over the hires. The Board in such cases is deemed ineffective, new members brought in with a hope to remedy the situation, and then …
Every episode has lessons for both the Promoters as well as the Managers; these are published, discussed, debated, converted to slides, and become case studies in management schools. Every incident adversely impacts company reputation, customers, employees and at times the industry; in almost all cases the management is the antagonist – probably unaligned to the original ethos – who gets the short end. Every time we hope that now people would have learned a lesson and then they surprise us again.
Wednesday, August 16, 2017
Recently came across an interesting article on “Why IT projects still fail ?” and the subject caught attention as it is still being discussed. It had references to some spectacular failures where the blame was squarely placed on the implementation partner; another one where business users at the bottom of the pyramid showed spirited resistance to the new way of working. Finally it quoted the most popular reference on IT projects with limited change in results over score of years with IT Business Alignment retaining high marks.
Reasons attributed to the dismal success record included inadequate resources, overly aggressive timelines, underestimated costs, overlooked requirements, unanticipated complications, poor governance and human mistakes such as bad code can all lead to project failure. Surprisingly a quote “the definition of success is evolving with traditional measures of scope, time, and cost no longer sufficient in today’s competitive environment. The ability of projects to deliver what they set out to do — the expected benefits — is just as important.”
Everything pointed the finger at IT; they are understaffed, overpromise, don’t know how to estimate costs or gather requirements and stick to them and finally are bad project managers. Also I am not sure about the world the respondents of this 2017 global report live in if they do not articulate the benefits in business terms. Okay, I take my words back, I do know of a few who still are unable to, but those are exceptions. Interestingly the article goes on to define formula for success without addressing the core.
So I dug a bit on the background of the author and found no evidence of having either run an IT shop or been at the receiving end. The article was an observation based on statistical evidence from various reports and the hypothesis that has lived for long: IT does not communicate, IT does not know the business, IT needs to sell the project to business, IT should prepare a business case and illustrate the benefits, IT should get the budgets sanctioned and then monitor time, cost, resources, success, failure, … really ?
Let’s for a moment shift focus from IT to the business folks; business models have undergone major upheavals and digital has been thrust upon the willing and unwilling alike. Majority of the incumbent leaders and giants have been slow to react – unwilling to accept reality brushing it off as irrelevant – and then finding someone (read IT) to blame for not delivering in (the constrained) time while the new players have eaten market share. They have treated the change like a technology project rather than technology enabled business transformation.
Success stories are all about the handful of enterprises who decided to create cross-functional teams to evaluate and respond to the upcoming opportunity. They did not hire consultants to give them a roadmap, or define waves of implementation, or hire from outside to lead the internal team; they were willing to change, explore, experiment, willing to take risks, and understood the limitations of pure technology over the collaborative success that they had co-created multiple times in the past along with IT.
The leaders do not hand off accountability, they find ways to induct others into their vision; they are always on the lookout for creating differentiation against competition. There are no IT projects, only business projects that use technology. Even mundane decisions like cloud evaluation or change in support vendors seek business impact and changed outcomes. IT responsibilities and KRAs are spelled out in business terms; this is the real world of pervasive IT today which has shed the technology skin of the past.
In such a world then why does “Why IT projects still fail ?” still find a headline and mention ? Such reports and publications continue to berate technology teams. They find it convenient to continue using the old scapegoat without looking elsewhere if the paradigm has shifted. So are these about the laggards and disconnected teams who have failed to stay current and relevant in the new normal with shrinking business and loss of customers ? This does not appear to be the universal truth but sensation sells better than reality.
Can business grow up and take responsibility for success or lack of it rather than live in a world of transferred responsibility especially when things don’t work out the way they were planned ? Can the technology teams stop being subservient and stand up to their professional achievement and pride ? Wherever the chasm still exists, can both start by acknowledging it and work towards building a sustainable bridge that will offer achievement of business objectives ? A necessary step to stay relevant internally and externally.
Finally let’s bury IT projects !
Thursday, August 03, 2017
The term unicorn has been bandied around a lot more in recent times than fairy tales of past; in some circles, unicorn spotting is a very profitable sport especially early on. The number of unicorns had grown rapidly a few years back but appears to be slowing down. Most of the earlier unicorns have scaled higher after they achieved the status ($1 billion valuation or market capitalization), the younger ones are happy to be acquired. Meeting young and not so young founders some interesting trends are emerging.
The startup ecosystem has been conducive for many budding entrepreneurs with path breaking as well me too ideas tweaked to local markets or different segment of the market; many of them reached a critical mass to sustain a set of customers and grow organically. The founders were focused on building real business offering products or services to their defined customers. They build sustainable costs and drove business with passion; as a result they also created new proposition and market where none existed.
Their growth was not exponential and neither was their market valuation; demonstrating patience they learnt from their mistakes, changed course when customers demanded a change, collected a team of passionate believers and sought money only when they wanted it for a specific purpose. Their perseverance paid off with founders, investors, employees and customers benefiting from the glory that was due to them. These unicorns get discussed in every conference on disrupting the market and innovation.
For every outlier that made it, there are thousands if not more who fell of the wayside, cast into oblivion, never to be heard of again; not that their ideas were not good or the founders not passionate enough, they somehow failed to execute and change course when required. In a few exceptional cases, the founders bounced back wiser from their learning of falling, nobody is tracking the rest. But that is not of significant interest except to historians, the focus at this time is on the ethics of startups seeking valuation to sell.
Recently in news one of the potential unicorns was accused of fudging data and questionable business practices and ethics. The whistleblowers were ex-employees whose conscience woke up when it did, probably when they discovered these or maybe because they did not get part of the spoils. Irrespective of the instigation for them to come out, the more interesting fact is the shock it created for the industry and the business; auditors descended with vengeance to scrutinize data, transactions and reports.
They had scaled well and zoomed past some of the earlier players with initial rigor that gave them a financial cushion courtesy of investors and venture capital. Their success was talked about with release of growing numbers that showed path to profitability and the fact that the scale made them larger than competitors. They were portrayed to become the first unicorn in their defined segment; within a year with increasing valuations they managed to hit the magic number and were formally classified as a unicorn.
Greed is a very big motivator; the founders and investors believed that they were onto something big and that it will surpass all expectations. Founding team tweaked numbers to show continuous exponential growth even when the market was not growing; investors believed the story. All the due diligence and rush to invest in the company was built on the first big round of funding and the credibility of the investor; future investors did look at the numbers and aberrations were explained by the founders to their satisfaction.
The reality hit the investors when allegations surfaced on everything not being as it appears to be fulfilling the idiom: if something is too good to be true, it probably isn’t. Auditors painstakingly poured over the records separating the truth and fiction; incriminating evidence pinned down some of the senior staff who worked at the behest of the founders. With operations curtailed and staff motivation down, the valuation went Deep South and customers came out with their own version of horror stories.
In hindsight it is evident that though the company was built on a real business opportunity, the love affair with valuations resulted in a change of strategy to build for valuation so that the business can be palmed off at the height of the hype. Greed again played a role in the exposure when some of the perpetrators discovered that they were not going to benefit to the extent they believed. And all fell down as the nursery rhyme goes, the investors turned their attention to check their other invested companies for similar ailments.
Those who got away thank their stars, the rest ? I wish them luck !