Follow mission with IT investments

An organization’s mission drives the organization’s investment in IT. Or at least it should. You had better know what the mission is.

Amounts spent on IT are investments. IT pay, hardware outlays, and software costs are expenditures. Its no different than spending for inventory, buildings, labor and staff, and marketing.

All organizations need basic IT services. The basic services enable:

taking and fulfilling orders,
invoicing and collecting from customers, and
paying employees, suppliers and government entitles.

The IT infrastructure that enables those services must be stable and secure. Beyond the basic, where do organizations direct their IT investments? The next level IT purpose: move an organization from good outcomes to great performance.

In ‘Good to Great’, Jim Collins summarizes the Flywheel concept. It applies to all investments that move an organization from good to great. He says,

‘Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing on a giant, heavy flywheel, it take a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough.’

Prospering organizations leverage this flywheel process, sometimes not even consciously. IT investment, small or large, needs to reinforce the steady changes that are applied in a consistent direction. The consistent direction is mission. The challenge for IT is to discern the mission so that actions and investments in IT move consistently with it.

Good to Great Debt

I admit that what I describe is deeply rooted in work done by Jim Collins and his teams. I’ve found that the results and concepts he describes are well grounded in comprehensive research. What he describes in Built to Last and Good to Great match other studies I’ve read and what I’ve experienced. The unique contribution in these works are clear, actionable statements. My contribution in this critical review is applying them providing IT for an organization.

Good to Great used elaborate criteria to determine what constituted ‘great’ and was not an anomaly. The core method surveyed companies with exceptional financial performance. A ‘good’ company had returns of 1.25 times the general market. To be included in the study, a company had to sustain the ‘good’ returns for at least fifteen years.. To be a ‘great’ company, the company had to sustain a significantly higher return for at least five years.

The result was a company group of consistently exceptionally performing organizations. Jim Collin’s team surveyed what they did to excel and how they made the change from ‘good’ to ‘great’. They compared the companies to others in the same market sector who were ‘good’. The comparison discerned differences in practices.

This is a high level summary of a detailed and carefully researched work. From the work comes the key principles which the IT person must understand. The most significant is understanding how their organizations uses the hedgehog concept and the flywheel. Both are needed to determine mission.

But I Have a Mission Statement

Some companies have a mission statement. Mission statements are usually succinct statements of why a company does what it does. They usually imply how they do it. Let’s say you’re the new IT guy or gal. You’re handed the company mission statement as part of your orientation. Is the mission now determined and you can start doing your work in alignment with the statement?

Maybe.

Mission statements are succinct. By their brevity, they may be too general for use. To make it timeless, the authors make them vague.

Mission statements age. Their intent was to capture of very fiber that holds an organization together and propels it. Often it captures the vision of the statement authors. The challenges reflected in the statement may no longer be relevant. Not many documents are the US Constitution. Even that is amended.

Mission statements are statements of good intent. The typical New Year’s resolution, like ‘I will exercise three times a week’ is a low level statement of good intent. Hopefully mission statements are more than that. Like the New Year’s resolution, the proof is in the actions.

Mission statements can be good starting points. Despite having ‘mission’ in the name, the statement usually needs additional detail to be actionable.

I’m a Contractor

A contractor or consultant can be considered outside the organizational circle of trust. If you’re just the ‘new guy/gal’. you may find yourself offered information about what a company does on a need-to-know basis. When you start to understand the organizational mission, you’ll learn a lot about the level of organizational paranoia. Or at least the level of paranoia of your co-workers.

Applying the hedgehog concept and determining the organizational flywheel doesn’t require attaining an invasive detail level. You don’t need financial results or operations manual. Yes, it’s more detail than a mission statement. No, it’s not the specific recipe for doing what a company does. It is a grasp of what the organization holds as important as reflected in what they do.

Good: The Hedgehog Concept

Collins defines the Hedgehog Concept as ‘a simple, crystalline concept that flows from deep understanding about the intersection of three circle … that guide their efforts.’

The three circles are:

What you can be the best in the world at (and what you cannot be the best in the world at)
What drives your economic engine
What are you deeply passionate about

An organization doesn’t have to be the best in the world at what they do. It is the possibility of being the best in the world. This may not be what the organization is doing. The search for what the organization can be the best in the world at will lead you to what the organization believes they do best.

The search provides a question which isn’t threatening: ‘what service (or product) do we do the best job of providing our customers?’ People will often respond with what brings organization the most money. That points to the economic engine.

To direct back to the determining could be best, a follow-on question is: ‘is there another service (or product) which could take-off if we could put more resources toward it?’ You may hear about another service. To discern the difference if this line might be the possible best in the world candidate, ask: ‘would it make sense to take resources away from the first service (or product)?’ Many people may have never thought about this. Many have a sense of it, though.

The purpose is not to determine whether the service or product IS what the organization can be the best in the world at. The purpose is to determine what the organization believes it can be the best at. The activity or product is reflected in where the company puts its attention and how the service or product is perceived internally.

You can ask about whether the organization leadership is passionate about the product or service. Depending on the organization size, no one may know. Sometimes, however, it is well-known.

If you have all three, then you can make determine a possible intersection point. That intersection is the mission – the directing principles. Even if you have limited information, you can better make a determination. Let’s assume there is no discernable passion. You can still determine what is valued in the pursuit of being the best. You’ll discern what management and the organization is committed to do and values.

Remember – the purpose is to discern the Hedgehog Concept mission. The purpose is NOT to determine whether it will work. The Hedgehog Concept provides a tool. The tool drives your effort in making the improvements consistent with the mission.

“‘No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment.'” Jim Collins

Better: Determining the Organization Flywheel

Having a fully actionable mission requires understanding the consistent actions that build what the organization does. This goes beyond the processes to deliver services or products. It is where the organization invests to enable doing more with the same resources. It is the process of how the fundamental processes for services and products evolve. Being part of the improvement initiatives is the natural home for IT investment.

Determining the organizational flywheel may take longer than discerning the Hedgehog Concept. Developing understanding of the organizational flywheel improves the effectiveness of the Hedgehog Concept. You don’t need to determine the organizational flywheel, but it helps.

The organizational flywheel is different than the flywheel IT has for delivering services to the organization. The organizational flywheel focuses on the customers who are paying the bills. IT may be part of the organizational flywheel. Usually the organizational flywheel is what everyone else who is not IT does.

I’ve talked about the IT flywheel. The discussion shows how IT can achieve momentum through a process that scales the service level with the same resources. I refer to that example how the actions needed to claim the improved performance.

So how do you discern the organizational flywheel? Knowing the Hedgehog Concept is the first step. The actions that are implemented by applying the organizational flywheel need to be consistent with the Hedgehog Concept.

In 2019 Jim Collins provided a monograph focused on figuring out the organizational flywheel. The 40 page update looks at the specifics of creating a definition. For examples and the details necessary, I refer to the monograph rather than copying it here. I will include some details which helped me.

The approach Collins describes involves reviewing significant replicable successes. He suggests collecting disappointments and failures. The steps used, or ignored, in those actions point to what the organization does to create success. The disappointments highlight what didn’t work. The failures most likely highlight what was inconsistent with what has worked and with the Hedgehog concept.

In forming the concept, you can ask within an organization about what some of the greatest successes were. Listen for the ‘how we did it’. Usually you don’t have to ask about failures. You’ll hear about them and the why behind them. These help form up the flywheel process.

Great: Mission Pay-off

The pay-offs are:

A clear Hedgehog Concept focuses on what to do (and not do) to make an impact where it matters
An effective flywheel is momentum in consistently making changes that advance the organization services and products

IT must support the basic technology needs of a business. Beyond that, what IT contributes to an organization are changes that support making better what an organization does. The investment needs to be in alignment with the mission to have the greatest pay-off.

To summarize this with a Jim Collins quote:

“Good-to-great transformations often look like dramatic, revolutionary events to those observing from the outside, but they feel like organic, cumulative processes to people on the inside. The confusion of end outcomes (dramatic results) with process (organic and cumulative) skews our perception of what really works over the long haul.”

Communicate what IT is doing

What is a destination?