Selling an IT StrategyBy CIOinsight | Posted 06-07-2007
Selling an IT Strategy
It was hardly a new idea. The concept of "the balanced scorecard" had been around since Robert Kaplan and David Norton first wrote about it in the Harvard Business Review back in 1992. And the duo's follow-up book, The Strategy-Focused Organization, had been on the shelves since 2000. It was a well-known management concept that showed companies how to measure performance by mapping every activity to a single, overarching strategic vision. It introduced the now overused buzzwords "alignment," "key performance indicators" and "digital dashboards" to a whole generation of business leaders. And it had long since been in vogue.
But none of that mattered to Ed Meehan, vice president of operations at Lockheed Martin Enterprise Information Systems. Meehan had other things on his mind during the 1990s, like the very tactical integration of the hundreds of systems from the famous 1995 Lockheed and Martin Marietta "merger of equals," the megadeal that formed what is today a $40 billion defense contracting behemoth. He didn't have time to worry about strategy. And he certainly didn't have time to read business books. He barely had time to breathe. But after his colleagues' countless attempts to persuade him to read The Strategy-Focused Organization, Meehan finally found some time in 2004 to crack the cover. It was like a bolt from the blue.
"I was on a long flight to Arizona and finally had a chance to read the book, and the lightbulb went off," recalls Meehan. "It just made a lot of sense to me."
What struck Meehan hardest was not so much the concept of focusing on strategy, but the fact that Lockheed Martin's information technology divisiona 4,000-person organization known as Enterprise Information Systems that services the company's 140,000 full-time employeeshad neither strategy nor focus. EIS had been in full-on tactical mode for nearly 10 years, feverishly integrating and consolidating systems since the merger. During that time Meehan and his staff had consolidated 75 databases into one, and 25 e-mail systems into one. But by 2004, that work was complete, and they were no longer sure what to focus on. "It was 'Been there, done that, saved $2 billion now what?'" Meehan says.
The "now what" Meehan was looking for was a strategy. And to have a strategy, you need a goal. But what kind of goal should an internal IT department develop to make it more strategic within the overall company? Like most IT organizations, EIS doesn't have typical measures of profit and loss, so it can't follow a classic business strategy. In fact, to most in the greater Lockheed Martin organization, IT was seen purely as a cost center: As long as the proverbial lights stayed on, EIS was doing a good job.
So when Meehan and his crew finally came up for air after years of consolidation work, they were faced with three tremendous challenges: identify their new goal, define a strategy to attain that goal and sell that vision to an IT organization that had no concept of strategy. Piece of cake.
Mapping Out a Plan
Mapping Out a Plan
To define the goal and strategy EIS would pursue, Meehan called a meeting with his direct reports in late 2004. Sticking with the business book motif, he took the cover off three books that espoused different business strategy goals: product leader, low-cost leader and complete customer solution. It didn't take long before everyone in the room agreed that EIS needed to focus on the complete customer solution (the customers in this case being Lockheed Martin's internal employees).
"We needed a burning platform," says Meehan. "We had been very successful and exceeded expectations for ten years in a row. We were the best data center consolidation company in the world. But now we needed to recreate ourselves, and the team naturally coalesced around this idea of the complete customer solution. In some ways, that was the easy part."
The hard part, as it turned out, was mapping everything EIS would do with that strategy, and persuading the entire IT staff to get on board. That's where EIS Strategic Planning Senior Manager Pamela Santiago came in. Santiago headed an eight-member team charged with mapping the new strategy and communicating the vision to the rest of the EIS staff. "Because we are such a large virtual organization, we really never had any kind of alignment with corporate strategy," says Santiago. "We were very sporadic; we really didn't have a focus."
So Santiago created a strategy map, in keeping with "balanced scorecard" methodology. Just as the scorecard is designed to measure how a company is performing against a single goal, the strategy map illustrates how each part of the company will be measured against that goal. Lockheed Martin's strategy map is designed to ensure that every action the EIS staff takes will somehow tie back to the division's overall strategy of serving the customer.
"We needed to start running EIS like a business," says Santiago.
To kick off the process, Santiago's team asked each of Lockheed Martin's business units to design its own strategy map, so EIS could construct its own map to align with theirs. But this too was a struggle. The business departments didn't see the value of adding strategy to the IT department's operations, and were reluctant to participate.
"We were no different than any other internal IT organization," says Santiago. "The idea of us just being a support group comes from what the business area lays on youthose biases and preconceived notions. It's the utility factor: They think, 'Just support me, keep the e-mails coming, and protect the network. Other than that, what value are you bringing me?' "
Through dogged pursuit, and some help from Meehan, Santiago ultimately managed to extract strategy maps from each of the business units, which she then used to construct the elaborate beast now known as EIS Strategy: Complete Customer Solutions. The document has gone through many iterations, but it is essentially the bible of Lockheed Martin's IT organization.
Sell, Sell, Sell
Sell, Sell, Sell
The next step was getting all members of the IT staff to buy into the vision and apply it to their everyday work lives, no matter how trivial the task. This, Santiago is not afraid to admit, was monumental.
"Of course, we weren't about to go out of business or anything, because the truth is that we're an internal cost center," says Santiago, who struggled early to create a sense of urgency. "But we were telling folks they could easily be outsourced and they needed to start running things like a profit organization."
It wasn't working. Getting EIS executive staff members energized about the new strategy was relatively easy, but the managerial level presented a major challenge. There, Santiago ran into what she calls the "This Too Shall Pass" syndrome. Middle managers who'd seen waves of such "rah rah" corporate initiatives come and go resisted for at least a year. E-mails went unreturned. Feet were dragged. There was a general lack of enthusiasm for the new concept. People seemed to feel if they paid the idea lip service it would go away eventually.
So what was the key to getting buy-in from the nonbelievers? Perseverance, plain and simple. Santiago's crew was relentless in messaging the new strategy, which they branded SFO (strategy focused organization). They launched nothing short of a massive advertising effort, and didn't let up for two and a half years. They plastered posters all over the IT offices. "Got Strategy?" became a mantra. Newsletters and online communications filled the in-boxes of every EIS employee. They brought in guest speakers from major Lockheed Martin clients, like Colonel Robert Carrington from the Department of the Army, to discuss the U.S. Army's balanced scorecard implementation. They urged the staff to "Make Strategy Part of Everyone's Job." They created an intranet to provide updates on the initiatives and praise managers who did a good job adopting the methodology. And they did it all simultaneously.
"It was the perseverance and energy and passion of eight people," says Santiago of her team. "We did not let up one iota. We produced more memos, more documents than they had ever seen. We went out and personally trained 4,000 employees face to face. We could have asked middle managers to pass along the training and messaging, but we knew if we did not do it ourselves, the message would be skewed. And we needed the passion. We were selling Tupperware, but we did it with all the passion in the world. It was a testament to the tenacity and energy of a small team."
The training consisted of first changing the mindset of every IT employee, from senior managers down to administrative assistants and service desk analysts. This was achieved through the elaborate branding and communications plan. But there was also training on how to read the strategy map. Santiago's team used a phased approach to avoid overwhelming people. But essentially the training came down to spending one-on-one time with each and every employee, and following up regularly.
"There's no training material on how an organization should be trained on something like this," Meehan says. "So we went ahead and filed a patent on our process." In fact, Robert Mueller, director of the Federal Bureau of Investigation, approached Lockheed Martin CEO Bob Stevens and asked for a white paper on how to implement a balanced scorecard. (Part of Lockheed Martin's motivation to adopt the balanced scorecard approach was that many of the company's biggest government clients were also looking to implement the methodology.)
It also didn't hurt that throughout the effort to implement the strategy map, Meehan, a 30-year company veteran, never wavered in his support. Santiago is the first to acknowledge that without Meehan's active support, the SFO program would not have succeeded. Meehan is more deferential. "Part of it is just positional power, I suppose," says Meehan. "I report to the CIO, so that bully pulpit gives you some license. Being a finance guy helps too, in terms of holding the purse strings." Meehan also created videos and participated in other activities to promote the new strategy.
That's not to say Meehan didn't have his own, private doubts about the program. "In the early going there were some sessions that took a long time and I realized this was going to be a lot harder than I thought it was going to be," says Meehan. "So I did have some doubts that leadership was going to be able to continue the efforts." But Meehan kept his doubts to himself, knowing that even the slightest sign of capitulation would give managers an excuse to quit the program.
Over the course of the project, which ran from the end of 2004 until just recently, other programs were introduced within Lockheed Martin, which meant the strategic priorities Santiago's team was setting were at risk of becoming outdated. To guard against that possibility, Santiago worked closely with Meehan to constantly tweak the EIS strategy map to mirror new corporate initiatives.
At one point, for example, CEO Stevens rolled out a corporate program called Full Spectrum Leadership, designed to stress the importance of ethics and accountability throughout the company. The program was about respecting others and accepting diversity of opinion. Meehan and Santiago managed to fold it into the EIS strategy map, and kept the SFO program fresh as a result. "As soon as we heard something was coming down the pipe we would assign someone to learn everything they could, and tie it together with our change efforts," says Santiago. "We would literally lift the verbiage out of the corporate campaigns and roll it in, so you wouldn't get the feeling that our campaign was just the flavor of the month."
Meehan says it took a year to get the EIS program off the ground, another year to train the staff, and the company is just now starting to reap significant rewards. Lockheed Martin saw an immediate morale boost after creating the strategy map, a phenomenon Meehan attributes to just giving employees a clear goal. But there have been more tangible results as well. For instance, now that EIS strategies have been mapped to business unit strategies, internal customers rate alignment between divisions 4.2 out of a possible 5 rather than the 2.6 they had rated it previously.
Lockheed Martin has seen other improvements in alignment, as well. It achieved a 5 percent reduction in nonessential IT initiatives through its alignment with the business, and a 15 percent reduction in nonessential products and services. There were also significant productivity increases among the EIS teams, and cost savings from bringing previously outsourced jobs back in house. (See box at left).
"IT organizations as a rule always have trouble describing how they add value," says Meehan. "But we've had some time to measure the results of these efforts, and the benefits are starting to add up."
Making IT departments strategic has been a goal of many corporations over the past ten years. But as Lockheed Martin's experience illustrates, it is far more difficult to accomplish than most imagine. All the balanced scorecards and strategy maps in the world don't mean anything if IT staffers don't buy into the corporate vision. Which makes the role of Santiago and her team, and Meehan's stewardship of the SFO program, vital. Meehan says he has "a passion for building this corporation." Without that kind of leadership, any alignment initiative is bound to fail.
The Benefits of Strategy
: By The Numbers">The Benefits of Strategy: By The Numbers
Through its Balanced Scorecard efforts, Lockheed Martin saw significant saving in three different parts of the business. A look at some of the gains.
1. IT Service Delivery
- Service Level Management/Automation. 15% productivity savings through better teaming and alignment of objectives to customer needs eliminating wasted efforts and confusion factors. SLA automation is also critical to realizing much of these savings.
- Standardized SLA Performance Reporting. 10% productivity improvement in reporting through the implementation of a standard process and tools.
- Regular Communications. 5% productivity improvement due to more effective communications.
2. IT to Business Alignment
- Business Strategy Maps. 5% cut in the number of non-essential IT initiatives through effective alignment of Enterprise Information Systems objectives to Lockheed Martin and EIS strategic vision.
- Value Propositions. 15% reduction in non essential IT products and services and associated work through effective alignment of EIS offerings to customer needs.
- Integrated Teams. 10% productivity improvement through standard teaming method that ensure alignment with EIS Strategic Maps and Business Area Visions.
- Service Offering Optimization. 10% customer productivity savings from increased use of EIS products and services.
3. Business Growth
Estimate 10% increase in Lockheed Martin business due do greater program knowledge and involvement to win/keep sold.