Start your project on Monday and ship it on Friday. It’s no longer that it’s going to take 9 months. — Andy Zitney, Allstate, at the time, and now McKesson
When you’re changing, you need to know what you’re changing to. It’s also handy to know how you’re going to change, and, equally, how you’re not going to change. In organizations, vision and strategy are the tools management uses to define why and how change happens.
Use vision to set your goals and inspiration
“Vision” can be a bit slippery. Often it means a concise phrase of hope that can actually happen, if only after a lot of work. Andy Zitney’s vision of starting on Monday and shipping on Friday is a classic example of vision. Vision statements are often more than a sentence, but they give the organization a goal and the inspiration needed to get there. Everyone wants to know “why I’m here,” which the vision should do, helping stave off any corporate malaise and complacency.
Kotter has an excellent description of vision, as ever divided into a list:
Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future. In a change process, a good vision serves three important purposes. First, by clarifying the general direction for change, by saying the corporate equivalent of “we need to be south of here in a few years instead of where we are today,” it simplifies hundreds or thousands of more detailed decisions. Second, it motivates people to take action in the right direction, even if the initial steps are personally painful. Third, it helps coordinate the actions of different people, even thousands and thousands of individuals, in a remarkably fast and efficient way.
Creating and describing this vision is one of the first tasks a leader, and then their team, needs to do. Otherwise, your staff will just keep muddling through yesterday’s success, unsure of what to change, let alone, why to change. In IT, a snappy vision also keeps people focused on the right things instead of focusing on IT for IT’s sake. “Our core competency is ‘fly, fight, win’ in air and space,” says the US Air Force’s Bill Marion, for example, “It is not to run email servers or configure desktop devices.”
The best visions are simple, even quippy sentences. “Live more, bank less” is a great example from DBS Bank. “[W]e believe that our biggest competitors are not the other banks,” DBS’s Siew Choo Soh says. Instead, she continues, competitive threats are coming new financial tech companies “who are increasingly coming into the payment space, as well as the loan space.”
DBS Bank’s leadership believes that focusing on the best customer experience in banking will fend off these competitors and, better, help DBS become one of the leading banks in the world. This isn’t just based on rainbow whimsey, but strategic data: in 2017, 63% of total income and a 72% of profits came from digital customers. Focusing on that customer set and spreading whatever magic brought in that much profit to the “analog customers” is clearly a profitable course of action.
“We believe that we need to reimagine banking to make banking simple, seamless, as well as invisible to allow our customers to live more bank less,” Soh says. A simple vision like that is just the tip the of the iceberg but it can easily be expanded into strategy and specific, detailed actions that will benefit DBS Bank for years to come. Indeedm DBS has already won several awards, including Global Finance Magazine’s best bank in the world for 2018.
Creating an actionable strategy
“Strategy” has many, adorably nuanced and debated definitions. Like enterprise architecture, it’s a term that at first seems easily knowable, but becomes more obtuse as you stare into the abyss. A corporate strategy defines how a company will create, maintain, and grow business value. At the highest level, the strategy is usually increasing investor returns, usually through increasing the company’s stock price (via revenue, profits, or investor’s hopes and dreams thereof), paying out dividends, or engineering the acquisition of the company at a premium. In not-for-profit organizations, “value” often means how effective and efficiently the organization can execute its mission, be that providing clean water, collecting taxes, or defending a country. The pragmatic part of strategy is cataloging the tools the organization has at its disposal to achieve, maintain, and grow that value. More than specifying which tools to use, strategy also says what the company will not do.
People often fail at writing down useful strategy and vision. They want to serve their customers, be the best in their industry, and other such thin bluster. I like to use the check cashing test to start defining an organization’s strategy. Your organization always want to make more money with good profits. Well, check cashing is a profit rich, easy business. You just need a pile of cash and good insurance for when you get robbed. Do you want to cash checks? No? OK, then we know at least one thing you don’t want to do…
The authors of Winning Through Innovation provide a more practical recipe for defining your strategy:
- Who are your customers and what are their needs?
- Which market segments are you targeting?
- How broad or narrow is your product or service offering?
- Why should customers prefer your product or service to a competitor’s?
- What are the competencies you possess that others can’t easily imitate?
- How do you make money in these segments?
Strategy should explain how to deliver on the vision with your organization’s capabilities, new capabilities enabled by technologies, customers needs and jobs to be done, your market, and your competitors. “This is where strategy plays an important role,” Kotter says, “Strategy provides both a logic and a first level of detail to show how a vision can be accomplished.”
There are endless tools for creating your strategy from hiring management consulting firms, focusing on cost or better mouse traps, eating nothing but ramen noodles, drawing on napkins, and playing the boardroom version of The Oregon Trail. If you don’t already have a strategy definition method, it doesn’t really matter which one you choose. They’re all equally terrible if you do nothing and lack an actionable strategy.
A strategy for the next 10 years of growth at Dick’s Sporting Goods
Dick’s Sporting Goods, the largest sporting good retailer in the US, provides a recent example of translating higher level vision and strategy. As described by Jason Williams, over the past 10 years Dick’s rapidly built out its e-commerce and omni-channel capabilities, an enviable feat for any retailer. As always, success created a new set of problems, esp. for IT. It’s worth reading William’s detailed explanation of these challenges:
With this rapid technological growth, we’ve created disconnects in our overall enterprise view. There were a significant number of store technologies that we’ve optimized or added on to support our e-commerce initiatives. We’ve created an overly complex technology landscape with pockets of technical debt, we’ve invested heavily in on premise hardware — in the case of e-commerce you have to plan for double peak, that’s a lot of hardware just for one or two days of peak volume. Naturally, this resulted in a number of redundant services and applications, specifically we have six address verification services that do the same thing. And not just technical issues, we often had individuals and groups that have driven for performance, but it doesn’t align to our corporate strategy. So why did we start this journey? Because of our disconnect in enterprise view, we lack that intense product orientation that a lot of our competitors already had.
These types of “disconnects” and “pockets of technical debt” are universal problems in enterprises. Just as with Dick’s, these problems are usually not the result of negligence and misfeasance, but of the actions needed to achieve and maintain rapid growth.
To clear the way for the next 10 years of success, Dick’s put a new IT strategy in place, represented by 4 pillars:
- Product architecture — creating an enterprise architecture based around the business, for example, pricing, catalog, inventory, and other business functions. This focus helps shift from a function and service centric mindset to product-centric mindset.
- Modern software development practices — using practices like test-driven development, pairing, CI/CD, lean design, and all the proven, agile best practices.
- Software architecture — using a microservices architecture, open source, following 12 factor principles to build cloud native applications on-top of Pivotal Cloud Foundry. This defines how software will be created, reducing the team’s toil so that they can focus on product design and development.
- Balanced teams — finally, as Williams describes it, having a unified, product-centric team is the “the most critical part” of Dick’s strategy. The preceding three provider the architectural and infrastructural girding to shift IT from service delivery over to product delivery.
Focusing on these four areas gives staff very clear goals which translate easily into next steps and day-to-day work. Nine months into executing this strategy, Dick’s has achieved tangible success: they’ve created 31 product teams, increased developer productivity by 25%, ramped their testing up to 70% coverage, and improved the customer experience by increasing page load time and delivering more features, more frequently.
Keep your strategy agile
Finally, keep your strategy agile. While your vision is likely to remain more stable year to year, how you implement it might need to change. External forces will put pressure on a perfectly sound strategy: new government regulations or laws could change your organization’s needs, Amazon might finally decide to bottom out your market. Figure out a strategy review cycle to check your assumptions and course correct your strategy as needed. That is, apply a small batch approach to strategy.
Organizations usually review and change strategy on an annual basis as part of corporate planning, which is usually little more than a well orchestrated fight between business units for budget. While this is an opportunity to review and adjust strategy, it’s at the whim of finance’s schedule and the mercurial tactics of other business units.
Annual planning is also an unhelpfully waterfall-centric process, as pointed out by Mark Schwartz in The Art of Business Value. “The investment decision is fixed,” he writes, but “the product owner or other decision-maker then works with that investment and takes advantage of learnings to make the best use possible of the investment within the scope of the program. We learn on the scale of single requirements, but make investment decisions on the scale of programs or investment themes — thus the impedance mismatch.”
A product approach doesn’t thrive in that annual, fixed mindset. Do at least an additional strategy review each year, and many more in the first few years as you’re learning about your customers and product with each release. Don’t let your strategy get hobbled by the fetters of the annual planning and budget cycle.