Forcing functions and rapidly shifting market conditions (COVID-19, geopolitics, employee expectations, climate change, etc.), by nature, require conscious attention by an organization to address, and thus deliberately disrupt the mindless or automatic processes that came before. And over the last few years, these disruptions have vastly accelerated. We have reached a tipping point where a confluence of external factors are forcing businesses to rethink traditional, even foundational, business practices in order to accommodate continuous market changes.
For our latest CIO Insight call yesterday morning, we invited Abigail Kramer, Partner & Co-Founder at Samudra Group, to moderate a discussion with:
- Andi Le, CIO, Electronics & Industrials and VP Enterprise Tech Solutions, DuPont
- Marcy Klevorn, Former CIO, Ford and BoD at Humana and Northern Trust
- Kate Brown, VP Culture & Engagement, S&P Global
Our goal was to really dive into this topic and explore how the c-suite is able to thrive amidst unexpected change while still solving for long-term results. Our panelists offered a BoD perspective on how strategy is adapting, how tech and innovation are adapting, and how workforce management is adapting to a VUCA world. New “resiliency leadership” skills are more important today than ever before.
So, what are the levers of change businesses are using to stay agile and sustainably adapt to unexpected market conditions?
Samudra Group has been compiling research on the space and has boiled these levers down to six major categories:
- Organization – Will there be permanent organizational structural changes driven by innovations such as blockchain and a permanent move towards more decentralized organizations? Or is this just a 10-year pendulum swing between central and de-centralized organizational models (in the direction of the de-centralized org)? Samudra’s preliminary findings seem to indicate that both central and de-centralized models of organization will play a role, the future is going to look more like aligned autonomy between the two
- Strategy, Planning and Budgeting – How is planning and budgeting becoming more agile and catching up to the rest of the org at large? CFOs are going to need to become the new champion of change. Businesses will still need a north-star purpose or vision that gives them direction, but at the same time, their planning and budgeting process will need to become far more fluid
- Workforce – Agile allocation of talent is crucial. New career paths are needed, wider talent pools, new forms of leveraging total workforce capacity (contract, automated, etc.), plus new approaches to reskilling
- Sourcing and Partnerships – Many companies are re-reviewing the 1990s core competency model where anything that is not a core competency should be outsourced – but of course – the tech landscape has vastly changed, and IT roles that may once have been excluded from the “core” are now crucial to the product and product delivery of the modern day org
- Technology and Data – The imperative of keeping the tech footprint current is non-negotiable. Being able to roll out new channels or digital services while relying on outdated infrastructure is very painful if not impossible
- Leadership – Every organization should be investing way more time into training their leaders, as an entirely new set of expectations have arisen around the way we work today. There will be way more emphasis on team development moving forward. In the past, so much of the focus was on developing the leaders/senior managers. But now, it’s about helping those people work with their teams – what are the new norms? How can people work better together?
What are some broad lessons around change and resilience?
- Anything is possible – The past few years have proven that anything is possible given the right conditions (managers thought employees couldn’t work from home for two days, let alone two years)
- Focus on all your stakeholders around the virtual table – Think about the customer, the community, the social stakeholders, the employees, the government, etc.
Unexpected changes are taking place – Companies are doing things they thought they would never do around attracting and retaining employees - The “unsexy” tech is the new emerging conversation – Networking, cables, 5G, data – these are the emerging conversation, and the new strategic drivers. And speaking of data, operational data is just as important as customer data – today’s Chief Data Officers need a federated view across the company
- The pace will never be this slow again – Leadership must bring their employees along with them by helping them understand their high-level rationale. Helping employees understand where they are going, and why, allows them to move more quickly
- Reconnect to the company’s purpose – It’s easy to get focused on a task or wedded to a plan, but when dealing with change, the ground can shift quickly. Employees and management must be able to reconnect to their purpose – what is this organization? What does it stand for? As things move, that is what helps people hold on
Innovation and collaboration are critical in an in-person environment – how do you sustain this productivity gain? Marissa Meyer famously said that engineering jobs became “transactional” and that’s why she brought people back into the office. Many people at the time characterized her mandate as an extreme reaction, or overreaction, but perhaps her thought process had some merit. So, as an employer, how can a balance be achieved there?
Much of the data seems to show that social and cultural ties between immediate team members have actually strengthened through COVID-19 remote work (immediate team communication has gone up). Additionally, many at-home teams have reported higher rates of feeling “included” – for example, introverts were given a chance to speak up, amongst other factors. However, soft ties across functions and silos have degraded rapidly – so this is a major concern. People still need a connection to the firm and a connection to one another.
RTO strategies must keep this in mind and focus on presence with a purpose – company leaders don’t want to just bring people in for the purpose of having them in, and then watch them sit in their office on Zoom calls. This leads to employee dissatisfaction and attrition, particularly in today’s environment. People need a social or work purpose to come into the office and interact with one other. They want to come in for the value prop and not the mandate. This is adaptation in action – and offices are still figuring out how to do it right.
Are we learning anything from companies that had international/remote workers for a long time, pre-COVID?
One of the best things about COVID is that companies are starting to better appreciate the role of teams in getting stuff done. How can orgs better optimize teams? What can be done better?
Many activities that emphasize cross-team relationships in remote environments can help, as does keeping folks in similar time zones, and there is more and more tech trying to help companies do exactly that via knowledge management, remote collaboration, smart processes, etc. Consider though, that just a decade in the past, it was totally okay to get a team together and communicate over the phone! So much has already changed. Companies are definitely trying to learn from remote and distributed organizations and have become more deliberate about their purpose: What are the right tools and culture? What is the right level of social engagement? There is much more deliberate thought and design going on right now than ever before.
In some functions (like product, for instance) unless you have everything mapped out completely, collaboration becomes a problem unless you’re in the same time zone. But the other constraining factor is: there’s a whole generation of middle managers now that could never afford a house in the Bay Area, so they moved out somewhere cheaper. Will there be a hub and spoke model where employees get hired in a specific zone (e.g. PT or MT zone) and once a month everyone gets together to brainstorm? Is that something that’s currently becoming popularized?
Yes, this is certainly happening, but perhaps without super regimented planning. Customized approaches are happening by company, by team, by culture, and by job function. A big topic of discussion has of course been recruiting and retaining talent – and many of those key hires want to avoid the “hub.”
So, some companies are leveraging their regional offices differently. Instead of having people go in day to day as in the past, they bring people together regionally for social reasons but also for brainstorming, hackathons, innovation, etc. This brings teams closer together and allows for some of that team-oriented creativity to come back into play.
How can a company move from long-term strategic plans to 1-month plans and a really rapid environment? Can the board actually operationalize at that speed? Will there be growing tech debt? Are companies moving too fast and not sitting down to think about what’s important? How can speed be rationalized?
Most industries have recognized the need to additionally participate in a longer-term kind of strategy. As the pace of change moves faster and faster, the two may seem in conflict, but actually aren’t. If things are changing faster and faster – and a board hasn’t considered any long-term implications, they’re going to be left at the starting gate the first time the market hits a speed bump.
Additionally, long-term planning and strategy + shorter term operations works really well with the agile model. Companies need a north star that they can clearly articulate, and then they need to be able to zig and zag as the ground shifts. It’s not a tension – it’s a healthy way to manage an organization. It’s okay to zig and zag, companies must, and that’s where agile can really help.
How do you create these long-term plans? Are employees involved? They obviously need to be created through the lens of the leader, but should represent how employees really feel. How can companies move beyond “this is the work and this is the pay” and get to the heart of mission-driven people (and make sure there is more to their employment than the transaction)?
Not everyone has to be involved in creating a company’s purpose and values – that is senior-leader driven. Leadership has to really sit down and think about the culture they want to create. But once that piece is down, employees do need to get involved. What are their expectations? And your expectations of them? What do you give, and what do you get? Engagement surveys, focus groups, ambassador programs, open conversations, etc. all contribute to this.
This is also an important piece of the recruiting cycle. Prospective candidates can more easily self-select into or out of a new company if they better understand culture and expectations. So, this should all be baked into this process: How managers talk about jobs, requirements, etc. Prospective candidates want to know if they can do it and have what it takes, before choosing to work there
How has exponential growth in technology impacted large organizations?
The tech debt conversation is possibly one of the foremost that large companies are having at present (especially legacy companies). On one side, everyone is trying to be nimble and have ML models and better operations, but on the other side, they might have a 30 year old ERP solution they’re working through. There has to be a balance between figuring out that debt, and also trying to expand on infrastructure of the future around data, cyber, etc.
And the workforce is a key piece of that conversation: How are key skills being sourced? Is it part of a company’s IT strategy to outsource, or no? How can single points of failure be avoided? How is your strategy around employee retention and management supportive of your hiring goals?
Are we moving too fast and creating cyber issues?
These two ideas don’t have to be in conflict – because usually legacy platforms that companies seek to move on from have some of the biggest security threat. Additionally, most threats are external – so that’s kind of a whole separate bucket. And the pace of tech can help there too – driving constant tech change creates a landscape they have less influence over.
How is leadership keeping up with this newer/faster model?
These days, companies are putting in new software – not printing presses. Tech isn’t a set-it and forget-it anymore, that was the mentality for many many years. Often, companies can get so focused on product that they forget that how the business is being operated can be just as important. Leaders need to ensure that they continue to drive that conversation.
And one piece of that is: Don’t underestimate the power of storytelling. One example would be Netflix. Everyone thinks they ate their own lunch, got rid of DVDs, went to streaming, etc. Netflix was the first mover but underestimated the issues occurring with shared accounts, couldn’t monetize them, lost subs to Russia, etc. It ties into the discussion around strategy, but also, every business is a technology business – you have to tie your customers and products to that ebb and flow. Can customers access it? What experience are they looking for? Find examples in storytelling that you can share.
Another good one is that when Howard Schultz came back to Starbucks he mandated that they refresh their new tech every two years, because they were so handicapped and outdated at the time (didn’t have mobile ordering).
Leadership has to understand that in this new world – it may not even be two years, it might be two months. How do you make things happen in a weekend? How do you keep up with that pace of change and accept it as normal, not as a negative?
The CFO needs to become the agent of change. Can you unpack that?
CIOs and CDOs have been at the vanguard for a while – they are quite experienced at championing change, but this wave of change is moving beyond IT and across the org more broadly. And if companies are moving to an agile ops model, and the CFO is not on board, there will be a lot of pain and problems there. The CFO is at the heart of it all. You have to think about agile budgeting and planning, or else where will be a huge anchor at the heart of the org.
This is part of the idea that companies and leadership have to learn to lean into the resistance. Where is the resistance? Figure out how to work with people and you can build some unexpected partners.
Alongside the CFO, the Chief People Officer will be another key champion. What managers do in an agile environment is completely different from what was expected historically. You need them to think about that as well, and enable them to succeed.
Are there any best practices any of you have honed in on to become an effective leader from the HR perspective?
One key piece is thinking about critical skills. Where do you source some of those critical capabilities? What are those staffing strategies? Just hire-in isn’t always the best – consider contract-to-hire and outsourcing for certain roles, or even freelancers. It’s hard to interview in places like data science – and if you get it wrong, it’s a terrible hire to fire situation. You want to test run people to see if it can be a long term fit.
There are a lot of reasons to think about holistic workforce capability – gig and contract work is going to be a bigger piece of that. But companies have to keep learning how to treat these contractors like regular employees, and manage them that way as well. This changes tremendously in different countries and geographies.
When do we have time to work on tech when we’re doing all this HR stuff?
Simplify the process, for one. Take a hard look at activities, especially around performance, and really try and simplify things. Can we do this process faster, but maintain our connection with people?
One way companies can make managers more scalable is making career coaching more available for all their employees. Managers need to be coaches too, but they can’t always do everything, and are not infinitely scalable.