CIOs across all industries are facing unprecedented volatility, uncertainty, complexity and ambiguity, from forces such as cyber attacks, consumer technologies, and changing global privacy rules and industry regulations. Here are four strategies for coping.
Every time Stuart Kippelman's 10-year-old daughter gets into the car with her father, she insists the Bluetooth isn't working. It takes about 10 seconds to sync and power up the music, and to a preteen, 10 seconds equals broken.
Today's youth are, of course, tomorrow's customers. "They demand immediacy, which is driving what IT has to deal with," says Kippelman, who is CIO at Covanta Energy and a Computerworld blogger.
But the need for speed is just the tip of the iceberg. Across all industries, IT teams are up against unprecedented volatility, uncertainty, complexity and ambiguity, also known as VUCA. A term that originated in the military, VUCA aptly sums up what CIOs face every day in today's turbulent business environment.
"VUCA includes currency devaluation, natural disasters happening all over the place and, from an IT standpoint, a big proliferation in data and cyberattacks," says Linda Clement-Holmes, senior vice president of Global Business Services at Procter & Gamble. "We have to deal with all of these things."
The list goes on: Thanks to cheap and ultra-efficient technology, new competitors can come out of the woodwork; global privacy rules and industry regulations are continually changing; and users' expectations -- driven largely by their experiences with consumer technology -- are through the roof.
"In the old business model, big ate small," says John Sullivan, a professor of management at San Francisco State University and former chief talent officer at Agilent Technologies. But in the VUCA world, "fast eats slow," he says. "Facebook didn't exist six years ago, and now, a billion-dollar company is run by someone who didn't graduate college and wears a hoodie. Before, you always knew your competitor, but now, dominant players might come from any industry and come overnight."
Here's an IT survival guide for the age of VUCA.
1. Learn Flexibility
The only way to manage the chaos is to become super highly adaptable, IT leaders say. Throw out your five-year strategy; VUCA defies long-term planning. Also jettison multimillion-dollar project plans and technology investments. Strive instead to become "asset-light," relying on IT services you can quickly expand or unplug as business conditions blink. Perhaps most important (and most counterintuitive): You should simultaneously pursue competing goals.
In a VUCA world, "what used to work for five years might work for six months. Because you can't plan for a particular thing, you have to plan for a range of things," says Sullivan. "Moving in different directions at the same time must become the norm."
VUCA, CIOs say, impacts everything -- from the way you structure an IT organization and hire talent to how you cut costs, boost productivity, and launch new revenue-generating products and services. John Halamka, CIO at Beth Israel Deaconess Medical Center and Harvard Medical School, also says the rise of VUCA presents a golden opportunity for innovation.
2. Find Opportunity in Chaos
In healthcare, between the Affordable Care Act, privacy legislation and radical changes to the International Statistical Classifications of Diseases (ICD), an industry bible used to categorize virtually every diagnosis and medical procedure, "our business requirements have been utterly redefined," says Halamka, who is also a Computerworld columnist.
"Obamacare, for example, funds medical centers not on what operations they perform but on quality and wellness outcomes," he explains. "Hospitals know how to take care of people when they're sick but not how to take care of them when they're well. There's VUCA for you."
VUCA leads to opportunity because "no one in the industry has any idea how to do this right," Halamka argues.
"What an incredible opportunity for innovators and risk-takers," he says. Also a plus is the fact that "there's a whole new generation of tools and technologies, which now means we are able to do some of these business processes successfully," he adds.
Two years ago, it was unclear precisely how all of the various proposed rules and regulations would ultimately play out. So Halamka and his team made what he calls "an educated guess," and began aggregating all of the data across the sprawling Beth Israel Deaconess community into a central care management repository. Today, that repository is the foundation of the medical center's electronic health records system and information exchange.
Now, Beth Israel Deaconess is figuring out how to help physicians grapple with the more than 170,000 billing codes in the revised ICD, which takes effect in October 2014.
"Doctors will have to document entirely differently, so we're asking questions like 'Is a doctor able to remember 170,000 codes?' and 'How can we blow up the way it's done now and use things like natural language processing so the computers read what a doctor writes and suggest a code?'
"We've had to completely rethink in a natural way the approach to clinical documentation with a timeline of one year to have it go live," Halamka says.
To be successful in the escalating VUCA environment, two things are required, he says. The first is management that doesn't get frustrated by the need for agility, but instead gets empowered by it. The second is an "extremely resilient" senior team, which Halamka says he has.
"We've learned that every time a new project or new imperative comes up, you don't say, 'Woe is me, I'm a victim.' Instead, you study the possibilities and understand how it fits into the context of what you're doing. It requires almost daily reprioritization of activities."
The swift embrace of the bring-your-own-device movement at Beth Israel Deaconess is a prime example. "We support 7,000 iPhones and 2,000 iPads, and I didn't buy a single one," Halamka notes. "We've had to rapidly innovate layers of security that keep the balance between ease of use and confidentiality with regulatory compliance. That meant redoing the operating plan with extra dollars and staff focused on security issues. That wasn't in the [original] plan. That's something society inflicted on us."
IT in the Age of VUCA
Move Fast and Break Things
If Yodle stuck with its original business model eight years ago, it would have failed. But today, it's a $130 million marketing technology and services company that thrives on blowing things up to get them right.
"That was actually one of the driving forces behind setting up our systems and processes," says CTO John Merryman. "It's the case for many tech startups: You don't know what comes next." In other words, VUCA is just business as usual.
Groupon, for example, started as an idea for fundraising and turned into a business built on group coupons, Merryman points out. Facebook is still tweaking its revenue model. "Trying lots of things is how you end up with better answers," he says. "Doing the same things better won't solve the problem."
In a nutshell, Yodle is the digital world's answer to the old Yellow Pages. When the world went online, big companies could afford to build and run their own websites. Small local businesses couldn't. Enter Yodle, which has built a technology platform with which it can quickly provision websites for local businesses.
But first, Yodle set out to be an online business directory, launching a service called Yodle Local.
"Our idea was about having a direct consumer relationship and developing leads. We tried it and there were some promising signs, but then Google changed their algorithms in such a way that they tended to decrease the ranking of directories. It wasn't working nearly as well," Merryman says.
So the company quickly switched business gears. It also decentralized IT as a way to stay agile.
"As you scale a nimble organization, and every startup is nimble, there are certain inflection points at which you have to change," he says. "One thing we've done that I think is critical to agility is decentralize the process of building products and servicing business units."
To this end, IT at Yodle doesn't have "one big priority list."
"That leads to a whole lot of discussion about the relative priority of things that are incredibly hard to trade off, like achieving audit compliance versus building a new product feature that might make the company $100 million," Merryman says. "People spend their time arguing rather than getting work done."
Instead, IT at Yodle is divided into feature teams, each of which is responsible for a particular business constituency.
"The relative spending on business areas doesn't change much, but what does change is how [money] is spent. In the services marketing area, for example, there are all sorts of ideas that come up all the time, and because they have their own priority list, they're free to quickly shuffle priorities around," Merryman explains. "They're innately familiar with the business challenges in that area; the engineers know the customers because they're on calls. They get it."
In contrast, "with a centralized backlog, if your feature makes it to the top and you've won, you're incredibly demotivated to stop that development," he says. "It makes people less willing to change priorities. A features team approach reinforces that you should always use your resources for the ultimate business value."
The bottom line, Merryman says, is "we've been through a whole slew of iterations to get it right, to come up with the right price, the right product and to sell it in the right way. Setting ourselves up to quickly try things and learn what works and what doesn't is a big part of our success."
3. Be a Chameleon
Unable to completely control her environment, P&G's Clement-Holmes has embraced a management strategy based on what can be controlled.
"VUCA is a lot about what you don't know. What we want is for people to focus on what they do know and can control," she says. For example, rather than waiting to get 20 people together for a meeting, which could take as long as 12 months given conflicting schedules, "get the people you have now and trust those people to start working on the problem," she says.
"In VUCA, you're making things up as you go along. We tell people not to wait for everything to be 100% perfect and don't make the simple complex. Go with your gut and your best professional instinct," she adds.
As an IT leader in a VUCA world, Clement-Holmes says her totem is a chameleon, the lizard whose eyes can rotate and focus separately to observe two different objects simultaneously. This is because IT must pivot between long-term growth and short-term efficiency gains, "regardless of VUCA," she says.
"At P&G, we have to increase revenue by billions every single year, and we've had our share of headwinds like commodity costs, the global recession and economic instability in Europe. There are a lot of levels of uncertainty, and it will never go back to the way it was," she says. "The pace of change is also different. Before, the windows were wider and longer and you had more time."
At the same time, IT must aggressively drive cost savings and productivity improvement. That means much shorter planning cycles and a need to continually reinvent the IT organization.
"Predicting what the business will be five years out is not realistic," she says. "Five years is forever. IT years are like dog years."
Two years ago, P&G created an incubator organization called FLOW, which Clement-Holmes describes as "a kind of special forces to quickly address really wicked business problems with dedicated full-time staffers with the right skills."
In a FLOW initiative at the 2010 Winter Olympics in Vancouver, members of the team quickly set up a P&G-sponsored house where Olympians could visit with family members. "They needed to have it up and running in two weeks," she recalls. "With FLOW, we can staff a project with the right staff with the right skills in less than two days."
She likens the group to a medical triage unit. "They assess what you need and get you going out the door to the right place. But if they need to do surgery on the spot, they can do that, too." Every year, 20% of FLOW team members are transitioned out of the unit "so we have more people with a mindset of agility," she says.
IT in the Age of VUCA
CIO: It's a Lifestyle, Not a Job
John Halamka has absolutely no illusions that VUCA will abate anytime soon. In fact, he says, it will only get more intense.
"We live in a world of shrinking resources and growing demand. The pace at which we have to communicate is only getting faster," he says. In April, for example, after the Boston Marathon bombings, personnel at Beth Israel Deaconess were using Facebook, Twitter and other social media outlets to communicate with first responders at the scene.
So how is a CIO to stay grounded, sane, balanced?
"I spend my weekends hauling wood and shoveling manure," he says. "Spending 13 or 14 hours a day doing farm work lets me come in Monday fresh to talk about new projects, new budgets and new imperatives. I think of my role as CIO not as a job, but as a lifestyle, and you have to make sure that lifestyle includes ways to decompress and maintain equanimity."
4. Lighten Up
At Pearson PLC, a London-based company that offers education services worldwide, globalization and a seemingly insatiable consumer appetite for online learning are driving VUCA to new levels.
"One of the biggest shifts has been from a local to a global focus," says Pearson CTO Graham Calder. For example, with demand for English language training skyrocketing, particularly in Brazil and China, he says, "We're teaching English in a consistent way on a global scale."
The new and growing demand has prompted a seismic shift in IT strategy and technology investments, from on-premises enterprise systems to cloud-based and consumer technologies.
"We put consumer technology at the heart of our technology strategy and made the decision to embrace cloud knowing that it can mean compliance challenges," Calder says. This kind of "asset-light" computing infrastructure enables Pearson to expand quickly into new markets. An added benefit is the ability to "fail fast" and move on quickly, because the technologies are cheaper and easier to drop when something isn't working out.
In comparison, when there's a big financial investment that would have to be written off if a project were canceled, "it makes people continue longer down the path than they should," says Calder. The cloud, he says, "enables a fail-fast culture because it's asset-light. You can quickly figure out whether it has legs, and if it does, build it out."
While building a new messaging collaboration platform, for example, Calder's team made several midstream course changes.
"We lost maybe two to three weeks but didn't write off anything of significance. Often these kinds of things happen on a regular basis and don't get elevated to leadership," he says. "In some ways, that's a measure of success. A big decision can be made because the failure identified is relatively small and constrained and doesn't need a lot of executive support to authorize it."
But an asset-light strategy is a major mindset shift, especially for executive leadership. To be successful and agile, top management must stop viewing technology as a cost to be managed and instead see it as an opportunity to be exploited, he says. "When you start to view technology through that lens, you come to different decisions about how to govern it. As an IT leader, you have to trust your staff's knowledge and choices."
"CIOs used to talk about enterprise-grade technology. Now, it's all about consumer-grade," says Vince Campisi, CIO and Lean Leader at GE Intelligent Platforms in Charlottesville, Va. "It's all about whether technology can stand up in a consumer environment. Twitter and Facebook are how people are connecting, and it's really starting to change how industries operate," he says. "Now you have business leaders motivated and understanding and paranoid about how this stuff can disrupt their industry."
At Covanta, failing fast and delivering projects in chunks are both cornerstones of IT's strategy for delivering business value as quickly as possible in today's VUCA environment, says Kippelman.
Over the past two years, IT created and delivered more than two dozen applications using a tool called QlikView. Each of the applications took no more than two weeks to develop.
"I'd rather release something 10 times over seven or eight months than have one release in eight months," he says. "In a world where Facebook updates their software in some cases every day, I think business is coming around to understanding this. There's more support for it."
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