A business stall can hit a company / IT department at any time. There can be many reasons for what causes a stall including having a premium product or abandoning a good market segment too early as a company goes looking for greener grass. If that was all that could happen to a company, that would surly be enough. However, there is one more key contributor that can cause an otherwise successful company to lose forward momentum and go into a tailspin: they run out of talent.

In this day of IT layoffs and downsizings, it doesn't seem possible that a firm could run out of the IT talent that they need. However, it's having a lack of IT leaders and their associated staff who have the necessary IT capabilities and interpersonal skills that are so desperately needed in order to execute the company's strategy.

We're not talking about not having enough SQL knowledgeable programmers here. Rather what we are discussing is a lack of specific required capabilities that are needed by the firm. These capabilities can include such things as the ability to sell complex IT solutions, or perhaps some special skill in marketing IT solutions to a given market segment. This lack of talent becomes most glaring when it occurs at the executive level within the company.

How Do Talent Shortages Happen? It turns out that most internal shortfalls in skills are a result of a company's too strict adherance to a "promote from within" policy. What's interesting about this is that this situation is most often seen in company's that are lauded for their strong sense of corporate culture. This internal promotion policy serves the company poorly when the company's business environment presents it with a novel challenge or when their competition suddenly increases.

What Role Does Experience Play? A big one it turns out. Rapidly developing events in a company's market place require the company to quickly respond by modifying how it does business. Having a narrow set of experiences in the executive suite means that the company's ability to quickly respond to such changes can be severely limited.

So What's The Solution? Quick question - does your IT department have any program in place to formally monitor the balance between both company lifers vs. those who have been brought in from the outside both in the executive team and lower on down the management ladder? It's the outsiders who are going to bring in fresh approaches and perspectives. Even if the firm does bring in outsiders, does it incorporate them into the company? Studies show that between 35%-40% of senior executives don't make it past their first 18 months. The correct way to solve this problem is to set up a formal IT department policy that states that HR will work to ensure that there is a mix of management. A good suggestion for a mix ratio that seems to work is to ensure that there is between 10% - 30% of management that is from the outside.

Where does your IT department's management talent come from - inside or outside? Does your company actively hire from the outside? How long do new senior managers seem to last? Why do they leave? Leave a comment and let me know what you think.


Tags: business, leadership, CEO, CIO, leadership training

Businesses and IT departments can be going along just fine when all of a sudden, the business goes into what is called a "stall". Just like being in an airplane that goes into a stall, this is by no means a good thing! When a business goes into a stall, more often than not it won't recover. The most dangerous part about a stall is that you don't see them coming - everything is fine until it isn't. We've talked about some different causes of stalls including having a premium product; however, there's another reason and the IT department plays a big role in this one.

Most companies have a small set of products or markets that they currently serve. If the company is successful, then they are probably doing a good job. The IT department has probably become optimized to support both the products and the teams that are serving these markets. All is good. Then the "... grass is greener on the other side of the fence..." syndrome strikes senior management and they decide to take the company in a new direction in order to pursue more profitable markets. Of course what this means is that you need to abandon the core markets that are currently serving you so well. By doing this you won't be able to exploit any future growth that occurs in your existing markets.

Now lets be honest here, these kinds of right hand turns made by businesses rarely show up all that dramatically - at first. Instead they have a habit of sneaking in from the sides as purchases of other companies or top down mandated growth initiatives in brand new areas of business that seem to have nothing to do with the company's current customers, or products, or partners (can anyone say "Ebay buys Skype?").

If you are looking for proof that this kind of abandonment of successful markets still goes on in today's modern business environment, just open the paper and see all of the articles that are talking about public companies being bought out by private equity firms. Clearly something went terribly wrong and outsiders were able to step in. In almost every case when this kind of takeover happens, the new owners of the firm will implement a strategy for returning to what originally made the company successful and growing the core again.

Why do companies and their IT departments make these mistakes? There are two primary reasons. The first is that the company mistakenly believes that their core market(s) has become saturated. This belief is due in part to the information that the senior management is receiving from the IT department. It's the CIO's responsibility to evaluate the data that his/her department is producing and understand what it is saying. Just because it looks like a market is all tapped out, does not necessarily mean that it is so. Instead, this is when the CIO needs to work closely with the marketing team to find different ways to measure the market.

The second cause of a firm leaving a successful market is because they feel that there are operational impediments in their core business model. This happens when senior management just despairs of being able to solve business problems that are currently confronting the company. Instead of trying to solve them, they instead decide to move to other markets which won't have the same problems. Once again, the CIO and the IT department play a big role in this decision. There should be no business problems that the IT department can't help the rest of the company come to grips with. Whether it's tracking sales and who is buying products more closely or collecting data on how the competition is doing, the IT department can help to create solutions to almost any business problem.

Leaving a successful market is never a good idea. IT staff should be on the alert whenever they start to hear the word "mature" being used to describe the company's business situation. IT has a role to play in making sure that the company sticks with markets and customers that will serve it for a long time.

Have you ever worked for a firm that left it's successful market in search of greener pastures? How did this all turn out in the end? Has a IT department in which you worked ever been able to stop a company from making a bad business direction decision? Leave a comment and let me know what you think.


Tags: leadership, CIO, business, business opportunity, new profit

One of the worst things that can happen to a modern company is to for it to get sued. Here in the 21st Century more often than not, lawsuits require that the firm being sued produce electronic documents early on in the whole messy legal process. Good examples of how tricky this can get are the White house's attempt to retrieve firing emails, Intel's fight with AMD, and Morgan Stanley's issues with the SEC. As the Morgan Stanley case shows, if a firm can't produce the email and electronic records that are asked for it can end up costing the company a lot ($10M in the case of Morgan Stanley). What does all of this legal stuff have to do with a CIO?

Michael Lunch is the CEO of Autonomy Corp. and he does a good job of describing how the search for electronic documents is currently done:

"The old-fashioned way of doing this was having a lot of lawyers doing a lot of simple things, you would literally have lawyers reading though things saying 'there was chicken for lunch.' You don't need lawyers to know that it's a lunch menu."

Ouch - what kind of hourly rate does a firm have to pay to have lawyers read old email? This is exactly the type of situation that begs for the IT department to step in and lend a hand. Recognizing that this is an issue, the good folks at HP, Xerox, and IBM are getting ready to jump in and offer products and services.

This new reality of living in an electronic document lawsuit-happy world opens a unique door of opportunity for forward thinking CIOs. When a firm gets sued, everything has to shut down as it relates to documents while the requested material is searched for. If an enterprising CIO had already set up a system to track and categorize the firm's electronic records, email included, then a lawsuit's requests could be easily handled. Being able to produce the requested material the next day instead of weeks or months later and being able to do it for much less than a roomful of lawyers would cost would enhance the CIO's standing among the company's senior management.

Careful - there's a right way and a wrong way to go about doing this. The wrong way is the classic IT way: I don't need anyone else, I (and my department) can do this all by ourselves. Discovery of records as a part of a legal proceeding is really the domain of the company's legal department. This is clearly a case where the IT team needs to work WITH the legal department. Since any sort of automated search process will be taking cash out of the pockets of outside law firms who traditionally supply the human resources to do information searches, the CIO is going to need to have the full support of his in-house legal team. The moment the lawsuit is filed, the outside firms will be whispering into the CEO's ear that he/she really needs their pricey assistance. Without the support of the in-house legal team any IT created solution will be discarded in favor of going with a "sure thing".

Having a solution in place before it is needed is the key to ensuring that the IT team looks good. If a CIO is running around after the event trying to find a solution, then expensive mistakes are going to be made. Finally we have found one area where a CIO can once and for all show the company the true value of the IT department.

Have you ever worked at a company that got hit with a lawsuit that required electronic documents to be produced? How did it go - was it quickly and easily handled or was it an ongoing nightmare? Did this event have any lasting impact on how the firm handled and tracked its electronic documents? Leave a comment and let me know what you think...


Tags: CEO, CIO, business, it strategy, business alignment, lawsuit, document discovery

So what's a CIO or tech manager to do when they get plopped down in the middle of a battlefield? No matter if internal strife has caused different sides of the house to stop playing together or if a merger has physically brought together teams but not made them members of the same department, a new IT leader has his/her work cut out for them as they try to make the correct judgment calls and forge a single unified department before their time runs out and they are shown the door.

Nelson Mandela found himself in a similar situation in 1994 after South Africa held its first free elections. Mandela's party had won the election and he was now the president of South Africa. However, he had been elected by the black voters and this meant that the white voters felt alienated. This created a dangerous situation for South Africa because the whites retained both money and weapons and they could rise up and take down Mandela's fledgling new government if they felt threatened.

In his new book, "Playing The Enemy", John Carlin talks about what Mandela did to diffuse this volatile situation and I believe that it contains a number of lessons for IT managers who find themselves in the middle of a business civil war.

In Mandela's case, the game of rugby was a game of the white minority that blacks had pushed for the world to boycott while the previous government was in power. Now that Mandela was president, he reached out to the country's rugby establishment and offered to host the 1995 World Cup rugby games in South Africa. Mandela then worked to associate himself and his personal charisma to the game of rugby and by doing this he hoped to get all of South Africa excited about trying to win the world championship. It was in this way that Nelson Mandela was able to get both sides to take the first few tentative steps together away from chaos and towards unity.

It was Mandela who said "You don't address their brains, you address their hearts." IT managers can learn a great deal from all of this. When placed in a situation where there are multiple warring sides, a good manager needs to move quickly to diffuse the situation. Any time, energy, or effort spent on fighting an internal war will take away from the goal of the IT department which is to help the company move forward. The longer that the department spends battling within itself, the the greater the risk that the rest of the company will determine that it is more of a burden to the company than an asset.

So a great discussion so far, but what's an IT manager to do? Here are three suggestions for tackling a civil war situation head on and coming out a winner:

• Do It The Mandela Way: Identify which side is the weaker side (perhaps the purchased company's IT department). Then do some research and find out what unique event, process, or reward that department used to have which unified it before the civil war broke out. Finally, take that unique identifier and apply it to the entire department so that they can all share in it and come together as they do.
  
  
• Identify A Shared External Threat: Nothing forces teams to come together better than the perception that they are under assault from the outside. If you can identify and describe a valid external condition that could severely impact the IT department then the civil war activities will be forgotten as everyone mobilizes to fend off the threat. By working together to save the department, the civil war issues may be forgotten.
  
  
• Cross Populate: In order to resolve civil war situations, communication between the different sides needs to start. One way to ensure that this will happen is to switch managers: management from one side is placed in charge of workers from the other side and visa versa. Although this will cause a great deal of grumbling at first, over time everyone will settle into their new roles and the distinction between "us" and "them" will become blurred and eventually go away.

There you have it - civil wars can be avoided. Nelson Mandela lead South Africa through its most dangerous time and emerged victorious on the other side. IT managers who find themselves in volatile work environments can learn from Mr. Mandela and, hopefully, follow his lead.

Have you ever found yourself caught in a business civil war? What caused it? Did one side win or did Sr. management need to step in to solve the conflict? Leave a comment and let me know what you think.


Tags: Nelson Mandela, conflict resolution, CIO, CEO, rugby, World Cup

If revenue is what feeds a company, then it must also be what keeps an IT department alive. Growing companies need more and more revenue to stay alive - if growth stalls, then there's a good chance that the party may be over for everyone involved (including the IT department).

But what if everything is going great? What if your firm owns the market - you are the 900 lb gorilla? Do you really have anything to worry about? Well, the answer is yes and in fact history tells us that you are probably in a sinking boat even if you don't realize it right now.

The fancy term that is used to describe 900 lb market gorillas is "premium-position captivity". If you think about it, it makes sense. When you are making money hand over fist, you really don't want to do anything to rock the boat. This means that if a new, low-cost competitor shows up or if your customer suddenly changes how they value your product, you're not going to be able to react quickly enough to defend the firm. CIOs have a major role to play in this.

This situation is best described in the fantastic book "The Innovator's Dilemma" that if you haven't read, you really should. In the book, the hard drive business is examined and one of the points made is that 3.5" small hard drives originally had less capacity of larger hard drives so who would ever want them? Well, it turns out that small hard drives work perfectly for laptops and when that market exploded, the companies that made only the larger drives got left in the dust.

What's a CIO to do? If the senior management of a firm are unable to see impending doom, then how can a CIO possibly provide any value? The answer is simple: the CIO has access to tools and data that are not available to the rest of the firm. Awareness of the potential for a revenue stall and the will to keep a vigilant eye out for the signs can make the CIO an invaluable bellwether for the firm.

How can a CIO who works at a firm that has a dominate market position detect when a revenue stall is on the horizon? The key is for the IT department to collect and analyze market data. The data never lies. Rather, senior management who have grown accustom to seeing what they want to see discount the changes that will ultimately result in their downfall. Here is what the IT department needs to sift through the data to find:

1. Market Share Loss: The first warning signs will be pockets of rapid market share loss. These will generally be found in specific, narrow, customer segments. It will be followed by the emergence of resistance from well-established existing customers to paying premium prices for incremental enhancements to existing products.
   
   
2. Tracking The Wrong Metrics: More often than not, dominate firms like to track profit per customer. However, if they don't notice that customer acquisition costs have shot up, then they will end up being blindsided. Adjusting the metrics that are being tracked is key to uncovering new trends.
   
   
3. Internal Attitude: how is the company viewing start-up competition? Is it assumed that these new players will never be able to compete with the firm for it's customers? Are lower end parts of the market being turned over to them so that we can focus on the upper ends of the market with the assumption that they'll never challenge us for our part of the market?

The companies to watch today are SAP and Oracle. They are the 900 lb gorilla. Other firms such as Salesforce.com and SugarCRM have entered the market and may not be seen as a threat to the established players right now; however, time has shown that they may very well turn into tomorrow's gorillas. Let's hope that the CIOs at SAP and Oracle are already taking the correct next steps...

What do you think - once a gorilla, always a gorilla? Do you think that looking for economic stalls is part of the CIO's job? If not, then who should be doing it? Have you ever worked at a company that went from being dominate in its market to struggling? Leave a comment and let me know what you think.


Tags: profit margin, new profit, CIO, premium position, innovation

Just in case you haven't heard the news, Netflix has basically shut down due to some mysterious internal problem that has halted their ability to ship DVDs. This is fascinating news - it's similar to having FedEx announce that they had halted delivery of packages because they couldn't figure out where they were supposed to go. What's going on here?

Netflix has 8.5 million subscribers who pay a monthly fee to rent DVD movies. The movies that they select are delivered by mail and when they are returned by mail, then the next movie in the subscriber's queue is mailed to them. From an IT point of view, the heart of the company is their database(s). This truly is an information based company. I have been a happy subscriber for at least 5 years now and I've never had a problem with getting my movies. For Netflix to come out and admit that they are having a problem (I've even received an email from them) must mean that the problem has existed for several days and they now felt the need to tell the world before people stared wondering where their next movie was. Clearly this kind of outage is going to cost the company - Citi analyst Tony Wible is guessing that the tab will be $1.8 million to $3.6 million in revenue a day. Talk about a melt-down!

One possible source of Netflix's problems might be the simple fact that they don't appear to have a CIO! A quick search of both the company web site and Hoovers turned up no likely suspects. Hmm, perhaps this IT ship has nobody at the helm!

Back to the problem -- I have no secret insight into how Netflix runs their business. However, Tom Dillon, who had been serving as the company's COO as well as its CIO, gave some interviews and from these we can piece parts of the story together.

At the core of Netflix's operations is the ability to automate as much of the process of sending and receiving DVDs as possible. Since the solution that they have in place to automate these tasks is proprietary , it is of course a trade secret. However, we do have some information. When a DVD comes in, the first things that is done is to check it to make sure the right disk is in the right sleeve. Next, the the serial number on the jacket is scanned.

Now that Netflix's proprietary software knows what DVD it's dealing with, it can consider the company's total inventory of that title, the items on customers' wish lists of movies they want to see, and a host of other factors. At this time, the DVD will either get sent out again, placed in inventory or simply retired. When things are working correctly, Netflix says that it is able to check in a returned DVD and send out a new one within one day more than 90% of the time. The two challenges that Netflix has always been open about are scaling issues and bottlenecks. As Netflix has rapidly grown in the number of subscribers that it has to serve and the number of movies that it has in its inventory, IT challenges will occur. Additionally, bottlenecks in the DVD processing and delivery process can occur at any time. Dillon admitted that bottlenecks can't be predicted and basically just have to be dealt with as they show up. If Netflix stumbles, the problem will quickly go from bad to worse. The reason is that they receive over 100,000 new disks a day.

So what could have gone so terribly, terribly wrong here? I'm just taking a guess, but based on years of experience in IT I'm thinking that we're looking at a cascading problem that was started by a software upgrade. A good guess as to how this all started is that some relatively minor piece of Netflix's proprietary automation system got a routine update. Next, some sequence of events occurred that caused this updated software to fail or behave in some unexpected way. This problem then cascaded up and down the automated DVD processing line. Since Netflix is reporting that all of their distribution centers are impacted, this means that either a core system is down, or they performed the upgrade at each site at the same time.

As horrible as this must be for Netflix, it's not the first time we've seen this type of problem: AT&T has had its frame-relay network shut down due to software issues, XM Radio took a hit for two days, JetBlue's unromantic Valentine's Day outage, and of course, any Blackberry outage ends up being front page news. Netflix is reporting that they have their entire technical staff trying to fix this problem. This means that the original issue spread to multiple applications and may have damaged their corporate data.

Now that we're done pointing fingers, what could have Netflix done to prevent this from happening in the first place?

1. Have An "Undo" Button: Most IT shops keep a old version of each application in storage even after it has been replaced. If the updated software starts to cause problems, then the old version can be rolled back out and reinstalled.
   
   
2. Don't Put All Eggs In Single Basket: If indeed Netflix updated all of their distribution operations at the same time, then they were foolish indeed. Instead, upgrades should be done to a single site first in order to determine if there are any unknown issues. Dealing with a single site that is down is much easier than having all of your sites down.
   
   
3. In Case Of Emergency, Go Manual: Although I love automation as much as the next IT worker, it's always a good idea to know how to perform the automated tasks by hand just in case there is a day that this might be required. Since Netflix has reported that they are down, not just limping along, clearly they don't have a manual process to fall back on.
   

I'm confidant that Netflix will solve this problem (but nobody there gets to sleep until they do!); however, afterwords they are going to have to make some changes in their IT shop in order to ensure that this never happens again. Good luck!

Have you ever been caught in a major software outage? How big was your inconvenience - small, medium, or large? Will Netflix's glitch cause you to run to Blockbuster or are you willing to ride this one out? Leave a comment and let me know!


Tags: Netflix, outage, JetBlue, Blockbuster, ATT, CIO, Blackberry

Although working in IT can be a tough job at times, I must confess that working in the American car manufacturing industry sure seems like it is probably a much rougher place to work right now. I'm always interested in what's going on in the car biz because once upon a time I almost ended up going to the General Motors Institute (now known as Kettering University) and probably would have ended up going to work in the car industry.

We've talked before about what IT management can learn from the people who brought us the subprime mess. Now it's the good folks at Chrysler are starting to do some interesting things that have caught my attention and I think that they may now be in a position to teach us something. First, just a bit of background information for anyone who hasn't been keep up with current events. The private equity firm Cerberus Capital Management bought Chrysler for about $7.4B just about a year ago. What this means is that Chrysler is no longer a publicly traded company - Cerberus can do pretty much whatever they want and don't have to answer to anyone. Except the people who put up the $7.4B. Who want to see a return on their investment as quickly as possible.

So why did Cerberus buy Chrysler. In short, they think that they can do a better job of running Chrysler than the previous management did. If they are correct, then they can make the company profitable and take it public and make much more than $7.4B. The trick is to do this as quickly as possible. If they can't pull this off, then they could end up shutting Chrysler down and just walking away from their $7.4B investment. Got that? Ok, so now we move up to current time. Robert Nardelli is the CEO of Chrysler and he was brought in from after being the CEO of The Home Depot. What this means is that he's not a "car guy" and he's not limited in his thinking by how things have been done in the past.

Last week new stories started circulating about Chrysler having talks with Nissan about partnering to jointly produce midsize cars. This is a possible fundamental shift in how Chrysler makes and sells cars. Basically, Nissan would design, engineer, and manufacture the cars and then Chrysler would sell them under their own name. This could save Chrysler the billions of dollars that it takes to create a new car. Not content to put all of its eggs in one basket, Chrysler has also entered into a partnership with China's Cherry Automobile Co. who will be making small cars for them.

News reporters were quick to point out that this model has worked well for others such as Dell and Nike who really don't do engineering and manufacturing, but rather focus on marketing and selling. This approach has been tried in the auto industry before; however, these efforts have not panned out well for a number of ill defined reasons.

So what does this all mean for IT executives? Perhaps it's time to slay some of our sacred cows and stop doing software development and stop doing routine support activities. Instead, perhaps these activities should be completely outsourced and our IT shops should retool to focus on what we should be doing best: supporting the business. Specifically, if like Cerberus we would be motivated by the need to have the business turn a profit quickly, we could focus on working with the business units and try to understand what their issues are and how IT tools and technology can be used to solve these problems.

What would happen if Cerberus took over your IT shop? Just imagine if the job of an IT shop was to create very detailed product requirements and to perform testing on products that were created based on those requirements. Can you imagine just how close the IT shop could get to the business? The invisible wall between IT and the business side of the house would come crashing down. When old ways of doing business ("everything is invented here") are torn down and replaced with new ways ("we focus on only what we do best and outsource everything else") then that can truly transform the way IT does business.

Tell me what you think. Do you think that an American car company has lessons to teach IT shops? Is the concept of having a private equity firm run your IT shop something that fills your heart with joy or fear? Leave me a comment and let me know what you think.


Tags: Chrysler , Cerberus, outsource, business, strategy

Once upon a time in my career I had a chance to work on a fighter jet program. Talk about your ultimate IT project! During this time I learned a great deal about planes and how they work. I finally realized why during airshows a stunt airplane will often start going very fast and then pull up into a straight vertical climb - it turns out that this is very hard to do. If the pilot can't keep the plane going fast enough, then what you'll see is the plane start to shudder, come to a complete stop, and then the nose will pull to one side and the plane will start to hurtle towards the ground. This is all great stuff for an airshow; however, it can be disastrous for a company.

A revenue growth stall can cause even the strongest, most high flying company to come crashing down. A perfect example of this is the jeans company Levi Strauss & Company. Back in 1996 business was going gang-busters. Their sales had just popped over $7B and things were looking great. Then it stalled. By 2000 sales were only at $4.6B (down by 35%).

Not to pick on Levis Strauss. The same stall has hit Apple, Caterpillar, 3M, Toys "R" US, etc. Why should we care if we don't work for these companies? Ultimately IT needs to be the lookout that is in the crow's nest of the company and is able to detect a stall before it overtakes the company. If we are unable to do this critical job, then there is a good chance that we'll have confirmed that IT just doesn't matter any more.

Why are stalls so deadly to a company? Since things are going so very well just before a stall hits, many companies, just like an airplane in an air show, are actually accelerating as they enter a stall because all of the metrics that they normally use to tell them how things are going are telling them to spend, spend, spend. Senior management often never sees the stall coming.

How bad is a stall? Some very smart guys over at the Corporate Executive Board (Matthew Olson, Derek van Bever, and Seth Verry) have done some research and what they've uncovered is that companies lose about 74% of their market capitalization (measured against the S&P 500) in the 10 years after the stall. Of course, the CEO and his/her senior team are replaced (hear that CIOs?).

Why do companies stall? If stalls were unavoidable then there would be little for CIOs to do except to prepare defensive strategies. Research has shown that most stalls are a direct result of choices that a firm's senior management makes about either strategy or the design of the organization. What is even more damning is that 50% of the identified root causes fall into one of 4 categories:

1. Being held captive by a premium position.
2. A failure in the management of innovation within the company
3. Abandoning a core market or product too early.
4. Talent Management failures.

What's a CIO to do? We'll take a look at each of these four root causes and provide some suggestions on how the CIO and the IT department can make sure that the firm doesn't get stuck in a stall that all to quickly turns into a death spiral.

Have you every worked at a company where things switched from being great to being horrible overnight? Why did this happen? Did your IT department play a role in causing the problem or did they help the company restart its engine? Leave a comment and let me know.


Tags: business, strategy, growth, economic failure, stall, CIO, CEO

Way back in my young & foolish days I had the opportunity to work at a couple of startups. I came to them after having worked for very large firms such as Boeing, Siemens, and Alcatel. Needless to say the environment, attitude, and overall energy level at the startups was completely different from the large established firms.

One of my friends from those days, Charlie, has moved on and the startup that he's working for can no longer really be called a startup: they've got 800 employees and have been around for almost 10 years now. Thanks to LinkedIn we've reconnected and we got to talking about the "good 'ol days". What caught my attention is that Charlie told me that he's been put in charge of a project to rekindle the "startup spirit" within his company. When I asked him how he was going to go about doing that, he said that he had no good ideas.

Charlie's firm is struggling with the same issue that Microsoft is just starting to deal with: how can a large firm with lots of resources learn to operate like a smaller, more nimble firm? Everyone realizes that Google, Facebook, Salesforce.com, etc. weren't born inside of a large firm. Instead, they started life as a startup and because they had a great product and lots of employee energy, they got lucky and have become successful. Just about every large company would like to find a way to infuse itself with that kind of "startup energy" (a.k.a. innovation).

Janet Rae-Dupree wrote a piece dealing with this topic for the New York Times awhile back. Some interesting observations came out of this article. The first is that just about everyone agrees that when it comes to IT and innovation, bigger is not always better. Specifically, smaller teams that are made up of staff from different departments seem to be able to move much quicker than larger traditional organizations. Specifically decisions get made much faster and so the entire team is able to move on to the next-next-next thing. I can hear collective HR and Legal departments gasping at the thought right now!

I almost hate to say it, but the TV show Survivor has proved this point. When forced to, people can work together to solve complex problems in unique ways. Yeah, yeah - there will always be backstabbing and alliances formed; however, when the team's survival depends on its success this can overcome many of these personality issues.

As Charlie and I wrapped up our talk, I pointed out the Survivor analogy to him. He pushed back and said that he liked the small team idea but didn't want to be kicking employees off of an island each week. I told that he didn't need to do that, but what he could do is limit the resources available to a team (time, money, etc.) and tell them that they need to reach a milestone before one of their resources ran out. If they didn't then the team would be disbanded. Everyone works better under startup-like pressures.

So what do you think? Was my advice to Charlie any good or did I send him down the wrong path? Can the best parts of a startup (innovation, sense of ownership) be replicated within a large company or is this a fool's quest?


Tags: innovation, teams, Microsoft, startup, nimble

Q: What's wrong with IT departments today?

A: They don't look or act like any other department in the rest of the company.


One glaring example of this rears its ugly head when business users ask for company information and the IT team responds with a discussion about the technology that either interconnects it or simply collects it. It turns out that there is a big difference between information (a.k.a. knowledge) and data. IT departments do a great job of collecting a lot of data; however, that's not what anyone wants. What everyone wants is information - what you get when you process data. Somehow we need to come up with a way to get IT departments to shift their focus from gathering more data to providing more information services that will help the business do better.

Three professors, Arik Ragowsky, Paul Licker, and David Gefen have spent some time studying this issue and asking question such as what is the real job of a CIO? It turns out that a CIO should be spending his/her time managing the information that the company depends on in order to be successful in its business. What this means is that CIOs have to find a way to change their thinking and move away from worrying about how to deliver more data and start to think about how to provide more information services.

How did IT end up being a plumber and not an architect? Back in the old days (1960's), all computers were mainframes and business folks had no idea how they did what they did. However, they appreciated what the Information Systems (IS) department produced and were more than willing to pay for them to keep doing it. When PCs arrived in the early 80's, suddenly everyone knew more about how computers worked. IS was renamed to Information Technology (IT) and the IT folks started to focus more on the technology and less on the information that the technology was delivering. Vendors helped things along by starting to sell directly to end users. This is when things got all messed up!

Who's to blame for the current situation? Well, we IT departments have more than our fair share to bear. All too often we interact with business customers using technology terms. When we do this we are seen as the "geeks" that we really are instead of business partners. What we should be doing is talking business with the business folks and reserving our technology discussions for when we are back within the IT department and talking with our teammates.

Final thought: hide the technology and the data from the business customers. Instead, talk with them about information systems and the types of information that they need in order to help the company be successful.


Tags: data, information, technologies, CIO, business

Q: What do you call a business executive who doesn't get any respect?

A: CIO


Ok, so the joke is a little bit lame; however, the point is clear: all too often the CIO is a non-player when it comes to whose in charge in the executive suite. He/she will spend their time trying to put out IT fires only to discover that they don't have a seat at the strategic planning table.

The Digital IQ survey came out awhile ago from Diamond Management and it pretty much confirmed what we all know. Although 80% of the companies surveyed said that IT is strategic to their company, only 33% say that their CIOs are deeply involved in their strategic planning process. Why is this? In short, I believe that the IT department is viewed as being a collection of weirdos and outcasts that do a lot of things that have no bearing on helping the rest of the company to succeed. The CIO, as the leader of the IT department, is seen as a weirdo executive by proxy and since nobody really understands what he/she does, they don't invite the CIO to the strategy planning party.

So what do CIOs spend their time doing? The gut answer would be playing solitaire and shopping on eBay; however, I'm hoping that is incorrect. The survey says that CIO spend less than 10% of their time managing IT operations. Since CIOs aren't spending their time dealing with strategic issues, they end up spending it on tactical issues and then justifying their tactics. What a waste!

One of the reasons that the CIO is in such a bad situation is because the survey reports that in only about 66% of the companys did the CEO advocate IT as a strategic asset. Without this support, the IT department has no support at the strategic level of planning.

What is really interesting about this survey is what the financial firms have to say - they get it right. They involve both the CIO and their IT departments in the strategic planning process.Why you ask? It's simple: financial firms set themselves apart from their competition by the functionality and the quality of their IT tools. They are required to develop these tools themselves in order to stay ahead of the pack.

So where does this leave us? If CIOs want to start mattering to their firms and being invited to participate in the strategic planning part of the business, then they are going to have to change themselves and their departments. They are going to have to remake their department over in the image of the rest of the company. Instead of being viewed as a group of loaners, they need to be seen as a part of the process. The CIO needs to build an IT department that walks, talks, and looks like the rest of the business. Only by doing this will he/she finally be able to fully participate in the business planning process.


Tags: business strategy ,CEO, CIO, strategic planning

No holding back this time, I'm just going to let it all come out. I just got done reading my 1,000th article on how to improve an IT department and it was as worthless as most of the others that I've read. For way too long I've been listening to gurus, consultants, and other so-called smart people who have proposed band-aid after band-aid to stop the hemoraging that is going on in IT right now. As an industry we seem to be going through CIO-of-the-month scenarios, my friends and colleagues are burned out and fed up, and now we're learning that the next generation of kids don't want to have anything to do with IT.


What's Wrong With IT?
In a nutshell, we're too different. Yeah, yeah, I know that we treasure our late start times, all night work sessions, flip-flops at the office and multi-screen desktops that sit in front of our original Star Wars posters, but it's killing us. Foosball tables in the hallways, SQL command hierarchy charts on the wall, and action figures lined up on top of cube partitions don't do a good job of saying "we're part of this company". Instead, they say "we're different". That's the problem.

I'm not sure how this all started, but I blame air-conditioning. The early mainframe computers could only operate from within well air-conditioned rooms and so naturally the technicians who maintained and programmed them were placed in the same room or near by. This allowed them to be hidden from the rest of the company. Out of sight, out of mind. The action figures showed up, the dress code got thrown away, and the MIS team stopped trying to fit in.

Who Cares?
You do. Your career is going to be very short and you are going to be quite bitter when your IT job goes away. The company views you and your department as a cost not an asset and they are even now looking for ways to reduce the expense that is known as you.

The CIO cares because he/she just doesn't seem to understand why none of the other executives really want to play with them. The reason is simple, the IT department is weird and so by extension the CIO must be weird and who really want's to play with a weirdo?

What To Do?
In the immortal words of the hair removal lady in the movie The 40 Year-Old Virgin, "...this is going to hurt." What needs to be done is that IT needs to look, act, and talk like the other parts of the company. I'm going to go one step further and say that the role model that they need to follow is the finance department. "Ouch!" you say. Yep, put the long sleeve shirts back on, jettison the foosball table, take down the star wars posters, and let's all get back to moving the company forward.

The thinking behind this is simple: who do we like to work with? We like to work with people who are like us. That means that if the IT department really wants to align itself with the rest of the business, then it needs to start to look like, sound like, and act like the other departments. The finance department is generally well respected and has the ear of the senior management team so they are a great role model for the IT department. In fact, the IT department should try to be viewed as finance's "brother department" -- if you're talking to one, you should be talking to both.

What would this do for a CIO? First it would instantly boost his / her respectability. All of a sudden everyone would realize that the CIO and the IT department were really part of the company and that they were working to make a profit also. This would allow the CIO to start to take on different information management tasks that showed real value to the company. Finally! Alignment would be possible.

Don't get me wrong here, I like foosball as much as the next IT staffer. However, I believe that the "IT markings" need to be taken down so that we can blend in with the rest of the company. There should be some special place buried deep within the IT department that can be turned into a shrine for IT. This is the place where the IT employees can go to indulge in IT talk and, perhaps, play some foosball. However, once they leave this special palace, they should re-enter a workplace that looks like they are a part of the rest of the company.


Tags: IT, CIO, weird, jargon, finance, align

Most CIOs that say that their departments have become "a part of the company's strategic planning process" are just flat out lying. In reality, CIOs are struggling to change how they are viewed in the company and likewise how everyone who works for them is viewed. Sounds like we all need some guidance here. Current estimates are that only about 20% of firms are doing a good job of aligning their IT shop with the rest of the business.

Patrick Gray is an author and a consultant over at the consulting firm Prevoyance Group. In a recent interview that he had with CIO magazine, Patrick had a number of interesting things to say about the state of CIOs and their tech mangers right now:

• The Opportunity Is NOW!: Believe it or not, this is the time for companies to make IT into an asset instead of a cost center. Up until now, IT has been a fairly stagnant part of the company.
  
  
• It's All About Who You Know: The days of having a CIO that knows everything about every technology and who still likes to sit down and do some coding have officially come to an end. Going forward, it's going to be all about the relationships that a CIO has within the company -- he/she needs to have their finger on the pulse of the company. CIOs will need to be able to spot opportunities that no one else in the company can see and then use the technology and human resources that are available to them in order to capitalize on them.
  
  
• It's All About The Business: The key to making the CIO, the tech managers, and the whole IT department a strategic part of the business is to understand that IT is a part of the business that deals with a specific business area (technology) just like the rest of the business. This means that it needs not only the code jockeys but also the business heads to make the whole thing work.

It turns out that there is an old joke that says that "CIO" stands for "Career Is Over". In today's 21st Century business, nobody can afford to have that be reality any more.


Tags: CIO, business strategy, alignment, opportunity, relationships

Businesses today spent roughly 5% of their gross revenue on IT and end up with very little to show for it. A couple of very bright guys over at the Harvard Business School (David Upton and Bradley Staats) have come up with a new approach to Enterprise IT Projects. They started their research from Eric Raymond's (programmer / open source champion) point-of-view: most IT projects are built using the Cathedral Approach:

• they cost a lot,
  
• they take a really long time to create,
  
• and they only start to deliver any value after they are all done.

The Harvard guys believe that they have come up with a different approach that slashes costs while at the same time boosting the existing business and even making it easier to launch new ones. Sound interesting? Read on!

The new IT strategy is called the "path" approach. It assumes that there is no way that you can define all of a system's specifications at the start of a project and so instead you just focus on laying out a path for the system to be further developed over time.

As a proof that this approach works, they studied the Shinsei Bank which is a a Japanese bank. In 1998 Shinsei was in a bad spot: it had had gone bust and (due to bad loans -- sound familiar?) sold to the U.S. private equity firm Ripplewood Holdings. The very smart guys at Ripplewood got Masamoto Yashiro (former chairman of Citigroup Japan) to be the CEO of this struggling bank. Yashiro decided that Sinsei needed to compete based on a strong IT department. Here's how they used a path-based approach to do it:

1. Instead of implementing a new "big bang" set of business software, they took a different approach. They build a modular infrastructure that would allow them to put pieces in as needed.
   
   
2. They build new systems that mimicked the old existing systems that the bank was already using. This allowed them to switch folks over to the new system and then make gradual improvements without requiring extensive retraining.
   
   
3. They helped to ensure that the IT department was integrated with Sinsei's business strategy by having the CIO report directly to the CEO. Note that this is different from many U.S. firms where the CIO reports to the CFO and is effectively "hidden" from the CEO.
   
   
4. The Sinsei business unit heads spend a lot of time learning to "talk IT". This helps to break down internal communication barriers.
   
   
5. Sinsei IT application development projects start by focusing on the foreseeable business objectives -- not the existing business environment. In other words, they think about how they want things to work, not about how they can automate how things currently work. The IT strategy is then built to meet this forecasted future.
   
   
6. This is key: the Sinsei business folks tell IT what they need. IT creates prototypes and has the business side use them. This causes feedback and new possible solutions are identified.

Finally, the Harvard boys identified three characteristics of a path based IT solution that will allow it to succeed:

• Use a minimal set of standards: pick a few and stay with them. This will reduce costs and simplify the entire project.
  
  
• Create Simple Reusable Solutions: This can be as simple as taking each IT problem, breaking it down as far as it can possibly go, and then implementing solutions to those individual problems. When the low-level problems are connected together you'll have a flexible solution that can be easily adjusted if any component changes.
  
  
• Create Solutions With Modularity, Not Just Modules: Getting back to the original definition of modules, this simply means that you can tinker inside of one module without impacting any of the other modules that make up a complete solution. A good example of this is to create a solution that can be rolled out in phases. This limits your risk, allows users to get used to the new business software, and allows time for changes to be made.

The Harvard boys conclude their study with one final note of caution: if you want to build on what you've accomplished with an IT project, then you need to ensure that you have the committed involvement of your end-users. Otherwise you can expect to fail. In the end, the Shinsei bank is doing quite well due in part to its strong IT department. The realization that most large IT projects end up failing due to internal resistance instead of any technology issues, the path based approach to IT projects has allowed Shinsei to completely re-invent itself.

Tags: enterprise systems, IT, Shinsei Bank, modular software, CIO

As we can read in the papers and see on the news everyday, those folks over in the banking world got just a bit too greedy and they are paying the price for it now. If you used the Indymac bank for your deposits, I'm hoping that you had under $100,000 in your account now that the Government has had to step in and take the bank over.

As we drift along in our little Information Technology"bubble", it would be easy to look over at this rolling financial disaster and breath a sign of relief that this time it has nothing to do with us. But wait: that would be the wrong thing to think. This is the time for CIO's to show innovation and that that they still bring value to the company. CIO's and their IT team can, and indeed must, use this opportunity to quickly learn what went wrong here so that we don't fall into the same trap. Errors in judgment by our CFO brethren, the inability to properly manage risk, and the failure of existing stress tests have already resulted in global bank losses of over $265 billion. IT could easily make the same mistakes (and in fact we might be doing so right now).

IT by it's very nature has a great deal of risk associated with it. The subprime mess is a result of mismanagement of risk. The banks that have gotten walloped the hardest by the events of the past few months range from Merrill Lynch to Citigroup. Each of these firms shared what is called a siloed approach to risk and compounded this problem by having poor business information communication between their risk, finance, and operations groups. Is this really all that surprising? No -- attaching a high profile to risk management, whether it's in finance or IT has never been the trend.

How did this problem come about? One cause is that bankers play with investor money -- not their own. Since they are betting with the bank's capital, not their own, bankers don't feel as though they have a lot of "skin in the game". If a high risk IT project goes well, then everyone gets a promotion and a larger bonus. If it fails, then it's a vendor or another department's problem.

So why does IT have the same problem? For one thing, IT splits the analysis of a project's risk up between the development team and the support team. The two sets of risk are rarly evaluated together -- instead, the development issues are dealt with by one team and the operations issues by another team. Additionally, if the CIO gets behind a project, then speaking up and talking about project risk can often be a career limiting move.

So out of all of the chaos, who has handled the subprime situation correctly? Goldman so far is the clear winner. In December of 2006 they noticed that they were starting to see mortgage related losses. They called a meeting that included all parties involved in the mortgage business, reviewed the situation, and then Goldman started to hedge and reduce its exposure to mortgages. They still ended up taking a hit to the tune of $1.5 billion; however, they are doing a lot better than their competition.

What can CIO's and IT learn from both the subprime mess and Goldman's actions? First, that IT project and operations risk needs to be seen in its totality -- bits and pieces can't hid in multiple departments. Secondly, don't allow the CIO to scare staff into not speaking up. Forget open door, the email system has to be wide open so that all comments and thoughts on various IT risk can be collected. Finally, when the risk of a project or operation changes, the IT department needs to come together as a whole, evaluate the changed situation, and make the correct long term decision.

The news is a bit old by now; however, it's still a big deal that Steve Ballmer has finally taken full control of Microsoft now that Bill Gates has officially stepped down. I believe that Microsoft employs over 100,000 staff and so Steve has got his hands full trying to find a way (or ways) to once again make Microsoft more agile. Hopefully Steve will be able to sort out what path he wants the company to follow: strategy, quality, or innovation.

What would you do if you were in Steve's IT shoes? Microsoft has a fundamental dilemma: are they one huge company (a la Wal-Mart) or are they a loosely connected set of business units (a la GE)? The key point to remember here is that Microsoft is neither a Wal-Mart nor a GE so whatever path they take, they will need to create their own unique structure.

In terms of major projects, the next release of the Windows operating system cannot happen quickly enough. No matter what you think of Vista, the public perception of it is that it is undesirable. Steve can put his best people on it and see if he can turn this perception around or he can simply quickly release the next version and consider Vista a horrible learning experience.

Next Microsoft still seems to be interested in getting into the mobile phone market. I'm not sure if this is simply a case of "We can do whatever Apple can do..." or if they really see it as a key pillar of their growth. No matter what, they need to put some creative talent onto this one. They've got a powerful lever in the Exchange email tool -- if they can build on that, they could have a leg to stand on.

Finally, Steve has got to realize that the Internet is all about search. Right now it looks like he's still maneuvering to get a piece of Yahoo's search business. Perhaps what he really should be doing is looking further out and finding out where Google is NOT the dominate search engine and spend some of those Microsoft R&D dollars to attack Google from the outside instead of going head-to-head with them.

No matter what, Steve will be kept quite busy for the foreseeable future. Since I use products made by his company, I hope that he makes some good decisions. Buy or sell your Microsoft stock based on how you think he's going to do!


Tags: Bill Gates, Microsoft, Steve Ballmer, strategy

Current industry wisdom estimates that companies end up spending 5% - 10% of their gross revenue on all things related to Information Technology. Ouch! That means for every $1M in revenue, the IT cost could reach up to $100,000. You do the math!

In a recent article in Baseline magazine, Cary Westmark who is the VP of Technology for golf course management firm Troon Golf talked about what he's done to make IT a key part of his company's success. I liked one of his points about simply changing the vocabulary used withing the IT organization. How many times this week have you heard the phrases "cost savings", "expense avoidance", "improving the bottom line" used in your department? If you haven't, then perhaps it's time to start using them.

Cary realizes that IT spending is sorta like trying to run up the down escalator: it will get you further ahead for awhile; however, your advantage will dissipate as your competitors adopt the same technology that you are using. However, the steady and continuous application of IT to real business problems can result in reductions in operating costs and can improve efficiencies. Cary goes on to revel his top 6 suggestions for making IT a vital part of the way a company does business:

1. TCO - Live It, Love It, Learn It: the rest of the company is always talking about Total Cost of Ownership (TCO) and IT should be doing the same. Within IT we realize that the cost of a server is not just its purchase price. Rather it's the purchase price + operating system maintenance + electricity + cooling + 3rd party software costs + etc. Some studies say that the cost of just powering a server are 3x the initial purchase price over the life of the server. An IT device's life expectancy is roughly 3 years -- after that everything starts getting much more expensive (Windows 95 support anyone?). Having an IT plan to refresh your IT assets is key to managing these costs.
   
   
2. Standards Rule!: How did Southwest airlines get to be such a successful airline? One of their main secrets is that they fly only one type of airplane -- Boeing 737s. This simplifies pilot training, maintenance, ticket sales, etc. The more standardized you can keep your IT environment, the easier it becomes to manage. Standardizing also allows you to (1) reduce costs and (2) buy hardware/software in bulk and get bigger discounts. Once again, industry wisdom is that by standardizing you'll need only 1/5 the support staff that you would need to be paying for otherwise.
   
   
3. Pull It Over Buddy - Software License Management: This is an issue that nobody likes to talk about because we all suspect that we are probably using software that we don't have a license for. The flip side of this is that we are probably paying for licenses that we aren't using. Getting this issue under control and presenting it to the rest of the company as a cost savings program helps IT to better align with the rest of the company.
   
   
4. To Outsource Or Not: Welcome to the 21st Century where everyone needs to be considering how much of their IT operations they should outsource. Cary uses the following metrics to make project by project outsourcing decisions. If a job will last at least 12 months and will require more than 700 hours of effort, he hires an employee to do it. If the role is part of a strategic project (e.g. custom development) he once again uses employees to do it. Everything else is up for outsourcing consideration.
   
   
5. Custom vs. COTS: Developing a customized application to support a part of your business is very much like having a baby -- it signs you up for a lifetime of responsibility. Implementing large enterprise applications can be difficult and they are constantly undergoing changes. Here's a different way of looking at things: use commercial off the shelf (COTS) products and instead of changing them to fit your business, change you business to fit the products. Every time that you can do this, the savings in development and support will make the effort well worth the pain of change.
   
   
6. Data Center or Closet?: Where should you put your precious servers? The instinctive IT answer is to co-locate them in a data center. However, if you only have a few servers, then perhaps creating an on site computer room will allow you to save roughly 50% what co-location would cost. Please remember: if you use a computer room, you will need to have a very good off site data backup plan.
   
   

There you have it. Six simple tips on how IT can adapt and become more of an integral part of how your company operates. Consider these just the starting point on your road to alignment success!


Tags: revenue, success, IT, business advantage, TCO

With all of the changes that are once again starting to happen in IT, can you imagine how the big boys at SAP/Oracle/etc. (the traditional CRM vendors) are starting to feel? There is starting to be more and more talk about cloud computing and folks are even starting to play around with it -- a clear sign of a potential disruptive influence if ever there was one. The arrival of this type of web-based computing threatens to change their business model. We can learn a lot from taking a moment to study their situation.

We've talked about the fact that most firms don't seem to get the biggest bang for the buck from their expensive implementations of CRM systems. As time marches on the IT department is going to get hit with another change when folks start thinking about moving these big applications out to the cloud. In a recent interview with the Wall Street Journal, Henning Kagermann (CEO of SAP) said that he doesn't see IT departments making this kind of move anytime soon because they are too conservative. The difference between "traditional" CRM and "web-based" CRM is that the web-based solution is designed to make it easier for the sales folks, purchasing folks, etc. Henning points out that traditional CRM solutions are really designed to be used by the management team -- not the front line workers. These workers value system security and reliability over everything else and so he anticipates no significant changes soon.

Henning is a bright guy and I'd tend to agree with his view of the world if it were not for three things:

1. Options: New firms will no longer HAVE to deploy CRM applications on their own servers -- they can use a cloud. If any of these firms turns into the next Google, then there will be a mad rush to be more like them and that could cause a quick change,
   
   
2. Pricing: if because of competition between Amazon, Google, and IBM it suddenly becomes so cheap to deploy an application in "the cloud" everything could move out almost overnight.
   
   
3. CIO Innovations: ultimately a CRM system is only as good as the date that is entered into it. If CIOs take the lead and assume ownership of the quality (and quantity) of data that is entered into the CRM system, then suddenly the value of the system goes though the roof. In order to make this happen, CIOs will need to make the application easy to get to and easy to use -- both characteristics are features of web-based applications.
   
   

Nothing ever seems to happen overnight; however, a great deal can happen in just a single business quarter. Henning is betting that IT won't see any of these three events happen before SAP has time to create a web version of their product. Let's see how things go...


Tags: cloud computing, CRM, decisions, SAP

Warren Bennis is a smart guy (professor of business administration and chairman of the leadership Institute at the University of Southern California). He's cranked out a book called Judgment: How Winning Leaders Make Great Calls and it has a few ideas that really relate to today's IT leadership environment.

It turns out that the ability to make good judgment calls when you are a CIO or tech manager is very important (surprise!) because of the impact on others that all of your decisions make. When do these IT leaders get called on to make judgment calls? Warrne identified of the most common three areas: people, strategy, and what to do in a crises. We see the impacts of people judgments around us at work every day. Technically gifted folks who get put into a management role for which they are poorly suited, great team leaders who get bumped up and become Directors, etc. The successes in choosing the right people for the right job get reflected on the company's bottom line. The mistakes can cause lots of damage and are expensive to replace and to repair.

Strategy judgments are the big ones that can make or break a career. In today's hyperactive IT environment speed is often prized over accuracy. Warren brings up a great IT example in his book: Intel. Many folks don't realize this, but Intel got its start in manufacturing and selling memory chips. When the prices in this market started eroding and the Japanese manufacturers started coming on strong, Intel had to make a judgment call: stay in the memory chip business or move on to something else? Gordon Moore and Andy Grove made the decision to move on (to CPUs) and the rest, as they say, is history. Good judgment call.

Finally, the ability to make good judgment calls in in middle of a crisis. Once again Intel serves as a good IT example. Back in 1994, as Intel was releasing the latest version of their x86 chip line it was discovered that under certain circumstances it would return the incorrect answer from a math operation. Initially Intel took the IT road in its response: it did some math and stated that the average user would only see an error once every 27,000 years. However, that didn't sit well with most of their customers and eventually Intel had to offer to refund/replace the defective chips. This initial response was a very, very poor judgment call on Intel's part.

So what can IT leaders do to make better judgment calls? Warren suggests that we work on improving four areas of our knowledge that are critical to making good judgment calls: self-knowledge, social-network knowledge, organizational knowledge, and stakeholder knowledge. Hmm, sure sounds like aligning the IT organization with the rest of the business would go a long way to making this a reality!


Tags: business strategy, crisis, Intel, judgment call, people