TBM: Running your Practice, Part 3 -- Risk of Stasis
"The Hare darted almost out of sight at once, but soon stopped and, to show his contempt for the Tortoise, lay down to have a nap."
We grew up and learned the adage, "Slow and steady wins the race.'' But in our digital environment we can't be slow. Was the lesson an anachronism?
There's something deeper, at the heart of the fable -- beware overconfidence; don't lie down. Never be arrogant. That is time expended when it should be invested in reflective innovation.
In many analyses, we've seen the warning signs. Teams are pleased with their success; that's a good thing. But not recklessly good. Just standing pat is deadly for drivers of value -- the IT team.
Self-satisfaction with your current state loses every race.
In previous thoughts we recognized the value of compartmentalizing our disciplines and objectively measuring the strength of our operational execution and business orientation.
Management is art when disassembling and then reassembling; it is advancing;/coaching constituent contributors, in the weeds; then stepping back to evaluate the holism.
Value realization is in both bottom line efficiency and the top line investment, advanced by operational execution and business collaboration, respectively.
Both angles need optimizing.
There are standard business risks we have faced in all enterprises.
With some variation they include: Reputational, Operational, Financial, Strategic. These four areas require risk management excellence, understanding where seepage (waste) occurs. As you assess where you are (on the maturity scale), assess the proximate risks that are still extant.
Competition isn't lying down. In this environment if you're not advancing then you're regressing.
In Part 1 of our TBM thoughts, we spoke of developing taxonomies , which intersect with cost control and financial management. Say you’re a product manager. You're accountable for innumerable decisions. But to manage your space you structured your domain -- you framed your accountability into performance disciplines.
Then in Part 2 we discussed the approach to maturity analysis.
Once we find where we are, there’s a tendency in some circles to remain in stasis. Even if the history of the firm was lightning speed -- hare vs. the tortoise.
Why keep pushing, we ask?
We are so far ahead, right?
Don't we manage well enough?
Won't we face diminishing returns?
Be vigilant. In the fourth industrial revolution, you're not ahead for long.
In Part 3, we embed our current state into a risk management framework.
But this isn’t simple risk avoidance by standing still. This is identifying the risk of not jumping ahead. This is the risk of doing the same ol’, same ol’. Your mandate and your responsibility is innovation, to make the IT value chain better, faster, and stronger than it is today.
How do we quantity the possible improvement?
Apply a risk assessment view that identifies the top line limitations and the bottom line cash seepage -- the negative result of remaining content and not decomposing the resource-driven cost entities.
For a manager or executive honing her skills in the TBM mindset – a framework that is heavy on the cost and pricing of IT – knowing the cost drivers, the allocation of costs and the consumption of services is paramount. You are managing a practice. Your accountability is as mini CEO, overseeing your own domain, your own business.
In the TBM world, think of resources – assets, supplier service costs, human capital costs, and intangible assets such as applications, particularly those that reside in the cloud. Know their associations to each other and to the services you provide to the clients (internal and external). Associate and allocate the resources against your services that you deliver.
Become more technology business oriented; i.e., service-orienting the IT costs and specifying those costs in a granular manner.
Specify costs according to business processes in the company, not just blanket capabilities assigned to one across-the-board, generic account code.
If you forego that perspective, and not recognize means to measure service consumption, then you really can’t get hold of the costs, nor identify the waste.
Let’s continue with our example of a Product Management domain.
For the sake of example, we've truncated the factors that impact the domain.
For our company, the Current Maturity level (which is only at Level 1 for the Roadmap Execution Management discipline) poses risks all across the row, within the figure below. The higher your maturity level, the fewer are the risks. However, even at the formidable level of 4, there are shortcomings in your operation.
Story-tell those risks; specify the scenarios in your company that illustrate dysfunction.
There are gaps and misses because we have not advanced to the next level. At a summary view, the low levels equate to helter-skelter action, and lack of rigor.
Low levels of maturity mean no associations and dependencies identified against your resources. To be a better product manager, to own better product management, don't we need thoroughness in our environment? Don't we need to understand all the levers and resources in our environment in order to do our job?
Get hold of your IT environment at the foundation.
Without a foundational understanding of how our environment is integrated, we can't see what the true costs are for new roadmap investments.
The requirement of a well-managed and rigorous CMDB is paramount. With no exceptions.
When you encounter an omission in the CMDB, immediately address the why. Nip the process gap in the bud.
The tell-tale signs of dysfunction are those where we don't really know what we have in-house. The risk cells in the figure above cite ambiguity and fluidity and waste.
Subsequently, smart product advancement becomes constrained and dysfunctional.
As you develop the stories of lost opportunities, captured in the cells above, you expose the resources that seemed so valuable at one time. This is the approach to quantifying your proximate risk (within an ambiguous environment).
Shift our view to the business orientation axis (Enterprise Collaboration) where our fictional company is at a slightly higher Level 2. There, failures in optimal roadmap integration provoke misunderstood expectations, and misalignment with stakeholders. If the product development isn't married to a stakeholder ownership with constant review, the strategic business units are hindered from active competitive analysis.
Product roadmap execution is about meeting needs of customers and bettering delivery of competitors, IT and business all on the same page, and the same plan. Is everyone aware of the roadmap?
From a story perspective, understand what is hindered and what is wasted -- focus on IT and Company impact. The consequences are related to both cost inefficiencies (overspend), as well as lost opportunities (Revenue reduction).
Information Technology isn't simply about running social media and keeping CRM operational. Rather, IT is the innovation machine, the ability to devise new product and outward facing value. And devising new product sub-optimally, results in falling behind.
Organizational confusion, lack of discipline and oversights in speedy delivery, are not just expense issues. They are negative forces on the top line.
Technology Business Management isn't simply about better and wiser spending. It is about better and wiser allocation of resources -- especially toward revenue generating development.
Identify the clusters of activity that represent either overspend, wasted spend; then see the opportunity costs. Where do we want our staff working?
In rote behavior, or rather in innovative new offerings?
In our brief example table, we recognize that costs are seeping out, and resources are wasted on projects that were not endorsed by all stakeholders -- all because we had no formality in our stakeholder engagement.
So correct. Identify the waste in terms of monies; in terms of time (which is also monies).
Waste is hyper-critical in our digital age in terms of competitive lag. Time expended in the wrong place is time wasted, like the hare who took the nap, allowing his seemingly slow competitor the opportunity to move ahead.
Some of the waste is reflected in the table below -- overspend (wayward expenses) and revenue reduction (missed delivery).
The rigorous CMDB is mandatory. As you develop the stories of lost opportunities, you examine the resources that are consuming spend.
Are applications obsolete?
Are vendor subscriptions helping with decision making?
Everything is connected.
Automating resource capture -- the components in your technology portfolio -- limits the gaps, and omissions.
Associating your resources to business processes and services, with full understanding of consumption allows you to parse and calculate the true cost of your technology, and the cost of running the practice.
TBM solutions will implicitly demand that your house is in order, and that you can account for all the purchases throughout the enterprise.
That is a prerequisite.
And providers of TBM solutions will also be happy to assure that the foundation (and CMDB) is optimally deployed.
So be prepared. Without comprehensive inventory associations, then your maturity level has miles to go on the race course, and your risks of standing pat are daunting.
In calculating risks of stasis, be expert in your processes and the action levers in your firm. Story-tell the risk.
Story-telling brings the daily operation to life and makes it tangible, seeable, exposing all the resource areas that are effected.
Shouldn't we have full insight into the inventory and rationale of our assets, suppliers, subscriptions, people, projects, priorities...?
Can we articulate why low levels of maturity waste money, in operational execution? Can we state why low levels of business collaboration hinder the top line?
That is the means to TBM risk analysis and mitigation.
Otherwise, your story may be too reminiscent of Aesop's.