Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
When Justin Yaros left 20th Century Fox to become the CIO of Sony Pictures Entertainment in December 2000, his first look at Sony's IT department convinced him that a major reorganization was in order. Like most Hollywood studios, Sony is split into lines of business with considerably different IT needs: television, motion pictures and home video. But the IT department Yaros found was set up as a single, monolithic unit. A vice president of IT headed up a group that handled both application development and application support, and collectively served each line of business. To obtain the strongest possible IT support, Yaros was convinced, each division needed its own dedicated IT group.
But insisting on a change that would affect not only his own department, but every division of the company, was no small matter. And Yaros' boss, Bedi Singh, the studio's CFO, wasn't convinced that a reorganization was necessary. To build his case, Yaros set out to determine if his staff would support his ideas and was capable of carrying them out. For several weeks, he conducted one-on-one interviews with both IT and business staff. "I started off with an initial observation: IT did not seem to be aligned with business," recalls Yaros, "and that was the jumping-off point for our conversations."
What Yaros discovered was that IT staffers were frustrated and, in fact, eager for a change. Even the vice president, who stood to lose his dominion, felt his charter was impossible to fulfill. Confident that the move would work, Yaros argued that the staff was willing to embrace change and capable of meeting the challenge. Singh was convinced, and the changes were initiated.
Many CIOs, academics and consultants believe that the need to assess change readiness has become more important than ever. The days of three-year technology deployments, whether ERP, supply-chain or CRM applications, are over. As IT becomes more closely aligned with business, CIOs have been forced to adjust to the speed of business. As a result, CIOs are looking at breaking down projects into three- to six-month iterative chunks, with roller coaster-fast feedback loops. "You've gone from an era of contiguous change, with space between projects, to one of continuous change," says Daryl Conner, founder and CEO of ODR Inc., a change management consultancy in Atlanta. "Today, business is operating in a state of perpetual unrest."
Meanwhile, technology has become so intertwined with business practices that virtually every strategic shift requires the involvement of IT. Considering an organization's readiness for change, says Ranjay Gulati, research director of the Center for Technology, Innovation and E-commerce at the Kellogg Graduate School of Management at Northwestern University, "is becoming even more important today as IT solutions such as CRM and supply-chain-management technologies come closer to a firm's fundamental sources of competitive advantage."
Do your people have the stuff it takes to thrive during a shift to a new technology platform, or a new way of doing e-business? Are the necessary resources, attitudes and skills present within your organization? How might your corporation's history or culture adversely affect the outcome of a change? To answer these questions, you need a snapshot of your IT organization. Is it ready for changedoes it have the resources, time, money, staff and attention to do the job? Is it willingare your people committed to the project? Is it abledo your people have the skills and talents required?
There is a school of thought that stresses communication and building motivationnot assessmentin the early stages of a change effort. Indeed, assessing change readiness can be counterproductive, notes M. Lynne Markus, a professor at Claremont Graduate University who is currently visiting the City University of Hong Kong, because it "types" people.
"Change-readiness assessment usually involves giving people feedback on where they are," Markus says, "and this process can create a self-fulfilling prophecy: 'Oh, I guess we're not very ready for change, so let's not try anything very radical here.' You need to assume that people can and will change. The goal is to get them to move rather than spending a lot of time and money figuring out where they are now."
But Gulati, for one, believes that skipping the assessment step is a major reason strategic IT and e-business initiatives fail. Be it an IT group or a function affected by an IT initiative, "the implementation of an IT solution becomes a hit-or-miss scenario" if leaders don't know whether the organization is ready for the change, he says.
Consultants concur. "You get a lot of leverage from early upfront work," says Jeffrey Herriman, a principal in A.T. Kearney's enterprise transformation practice. It's almost a domino effect, because what you find out during assessment affects planning, and planning naturally affects implementation. "The assessment gets everything to go a lot more smoothly," says Herriman.
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