A few weeks ago I attended the MIT Sloan CIO Symposium. The theme of this year’s Symposium was Piloting the Untethered Enterprise: “In today's world of mobile, big data and the cloud, how does a CIO successfully pilot his organization towards its goals?”
After listening to a number of talks and panels throughout the day, I came away with a few key impressions. Pretty much everyone agrees that we are in transition from the tethered, connected world of PCs, browsers and classic data centers to the untethered, hyperconnected world of smart mobile devices and cloud computing. The emergence of the untethered enterprise will have major implications for IT, for business and for society in general. But lots of questions remain as to what those implications might be. This is to be expected in the early stages of such a major transition.
Two back-to-back panels explored what it takes to successfully transition to the untethered enterprise, one consisting of academics, and one of CIOs. Not surprisingly, each of these panels viewed the opportunities and challenges through somewhat different lenses.
The academic panel talked about the need to be entrepreneurial and move quickly to try out new ideas in the marketplace. Agility beats strategy every time. Marketplace experimentation is very important, and it is the right way to make decisions as to what works and what does not. Top down strategy plans take too long to formulate and generally don’t work so well because technologies and markets are changing so fast. With digital platforms, cloud and other such capabilities, the cost of experimentation is much lower than in the past, whereas the cost of missed opportunities is very high. Companies need to embrace this culture of agility.
The CIO panel was more guarded. While they agreed that agility and experimentation were very important, they viewed them more as aspirational objectives that were not always practical given existing investments and commitments. Unlike the academic panel, the CIOs emphasized the need for ROI analysis and careful planning, especially when considering big technology bets. Stitching together the overall infrastructure to support a variety of cloud services and mobile devices requires discipline, otherwise things will not work or there might be serious security and quality breakdowns.
A recurring theme across the two panels was the impact of legacy infrastructures on the evolution toward the untethered enterprise. There is little question that the maintenance of legacy IT systems and and applications consumes a great deal of time and expense in most organizations, which is why startups can often move so much faster to embrace disruptive innovations. On the other hand, legacy infrastructures are generally one of the key assets of a company, enabling it to deliver products and services to clients around the world. There is bad-legacy, which costs too much to support and constrains innovation. But, there is also good-legacy, which is a valuable competitive advantage enabling companies to scale both the volumes and sophistication of their offerings.
Each panel looked at business strategy from a different point of view. Not surprisingly, the more research oriented academic panel emphasized agility, the need to bring new disruptive innovations to market and quickly figure out what works and what does not through market experimentation. This is the world of entrepreneurs and startups.
The entrepreneur identifies a market opportunity based on an innovative new idea, starts a company in order to bring the new innovation to market, and over time, gains competitive advantage and market share from the established leaders in that segment of the market. The key objective of a startup is to bring their new innovation to market as quickly as possible. It is fighting hard to make it, and hopefully to be the discoverer of The Next Big Thing that will propel it to fame and riches. Their mortality rate is quite high, but good entrepreneurs just pick themselves up and go on to the next new company and dream.
But for those who make it, especially those who make it big, the situation begins to change after a while. The company now has products, services, business partners, an installed base, a reputable brand, and loyal customer relationships to protect and grow. If it is a public company, it has investors, a stock price and financial expectations to meet - quarter after quarter after quarter. It has employees, assets, an established organization and a corporate culture. It has now become a more mature company, perhaps a leader in its industry, complete with fairly extensive legacy infrastructures.
Successful companies - especially market leaders being chased by small and large competitors - must achieve a delicate balance between carefully managing their existing operations, and embracing the disruptive innovations that will propel them into the future. Operational excellence entails improving the existing products and services of the company with a string of incremental innovations that will add new features, lower cost and improve quality. It means nurturing employees, business partners and customers, so they will all be happy to be associated with the company. And it requires a strong focus on meeting the quarterly revenue, profit and cash expectations of their investors and the financial community.
But operational excellence is not enough. In his seminal book, The Innovator’s Dilemma, Clay Christensen succinctly wrote about the challenges that successful companies face: “They pour resources into their core business. They listen to their best customers. And in doing so, industry leaders get blindsided by disruptive innovation - new products, services, or business models that initially target small, seemingly unprofitable customer segments, but eventually evolve to take over the marketplace. This is the innovator’s dilemma - and no company or industry is immune.”
This delicate balance between operational excellence and disruptive innovation calls for innovation in the very organizational style of the company. Operational excellence requires detailed analysis of technologies, quality, processes, competitors, customer satisfaction and market segments, and as such, is well suited to a more hierarchic style of management.
But managing an emergent business, especially one based on new, disruptive innovations, requires a very different style. It cannot be based on rigorous information analysis, because in its early stages, there is little information to analyze. There are lots of unknowns because, early on, it is not clear how the market for a new product or service will develop. This calls for a more entrepreneurial, flexible organizational style.
The emergence of increasingly smart, ubiquitous mobile devices is one of the major forces driving enterprises to integrate new innovations with existing infrastructures. In the past, employees could only access the company’s IT services and applications through their company provided and supported PCs and mobile devices. But, as mobility has become such an integral part of our personal lives, a large number of employees now have two devices at work: “One is the device we gave them, the other is the one they actually work on,” said a member of the CIO panel.
Sunday-night/Monday-morning syndrome is what one panelist called this tension between employees and their IT organization. People are increasingly frustrated that, at home on Sunday night, they have access to the latest devices and applications, purchased on their own, that have become such an indispensable part of their daily lives. But, when they show up at work the following morning, they have to use the more primitive and limiting devices and applications supported by their IT departments.
As a result, an increasing number of companies are instituting BYOD (Bring-Your-Own-Device) policies. The push for an effective BYOD and mobility strategy is coming from all sides. Senior executives want to use the latest technologies in their work. Younger employees that have grown up in this hyperconnected world cannot begin to imagine being at work without their various devices, apps and social media services. And, just about everyone needs their smartphones to keep track of their busy lives.
Is it possible to combine agility with scale? Can a mature company leverage its good-legacy to help it integrated and scale the disruptive innovations all around it? The answer is both: yes - it has no choice; and this is very difficult. The pressures to evolve and adapt are coming from all sides: the academics and entrepreneurs with their fanciful disruptive innovations; the company’s own employees suffering from Sunday-night/Monday-morning syndrome; and the unforgiving, fast changing, competitive marketplace. In the end, this is what becoming an untethered enterprise is all about.