Discover PerformanceHP Software's community for IT leaders // January 2014
Cloud success: It’s about the people
Organizational culture counts in successful cloud deployments—and a top cloud consultant talks about changing the culture to drive that success.
Game-changing IT innovations such as cloud computing require not just a solid technology strategy; they also require a change in organizational culture within IT. It’s not that your culture should be designed with just cloud in mind. A healthy culture allows you to adopt whatever new innovation makes sense for your business.
An innovation-oriented culture is entrepreneurial, continually looking for opportunities to improve its value to the business. Essentially, an IT organization that embraces innovation is run as a business within a business.
To understand how to become such an organization, Discover Performance spoke with Dean Meyer, president of NDMA, a consulting firm specializing in organizational transformations. Meyer has coached executives and facilitated organizational transformations with systemic change (structure, culture, resource-governance processes)—all based on the business-within-a-business paradigm. We asked Meyer how best to create an IT organization that’s entrepreneurial and customer-focused—and how to maintain it.
Q: When you go into an engagement, what is the typical company culture that you encounter?
Dean Meyer: In so many organizations, people think their job is to manage the resources and processes they’ve been given. They’re given a certain amount of budget and headcount. And they think their job is to make good use of that, and to make sure their money’s all spent by the end of the year so they get more in the following year.
In these traditional organizations, your status, political clout, and even your title and paycheck depend on how big your budget is and how many people you manage. If that’s what drives you, cloud—in particular external cloud—is a threat, because it reduces the size of your empire. This is an organization designed to resist innovations like the cloud.
Q: Where does innovation come from?
DM: In that traditional organization, driving innovation is not part of people’s jobs. They’ll improve what they have on the margin, but transformative innovations like cloud won’t be on their radar. So that means in order to bring in any significant innovation like cloud, it’s going to have to be an edict from on high. The CIO might assign to one of his or her senior leaders the pursuit of cloud. Now we’ve got one leader whose job is to reduce the empire of his or her peers. That’s an organization destined for terrible political battles, and not likely to make a whole lot of progress.
Q: What should the ideal organizational culture look like?
DM: A healthy organization is entrepreneurial. Every manager, right on down to each first-line manager, runs a small business within a business. Every manager is funded not to pay his or her costs, but rather to produce products and services for customers, whether those customers are within IT or the clients in the business, or most typically, a combination of the two.
In a business-within-a-business organization, your job is to satisfy your customers and to earn the position of vendor of choice. You’re measured not on the size of your empire, but on the value you produce, on your customer satisfaction, and on your ability to earn market share. So you continually look at “make vs. buy” options. If buying a cloud service allows you to offer a better service at a lower cost, you’d be the first to suggest it.
Q: How do you get staff to behave that way?
DM: What we’re talking about is a systemic change in the “organizational ecosystem.” This ecosystem sends signals to people that drive their daily decision making and behavior.
For the last 35 years, I’ve been on a hunt for where these signals are coming from—signals that drive people’s behaviors. I’ve found five organizational systems (three major and two minor) that, taken together, characterize organizations and explain most of their behavior: Culture, structure, and the “internal economy” (financial and resource-governance processes) determine the character of the organization. The final two—methods and tools (like ITIL), and metrics (like executive scorecards) and rewards—are for institutionalizing and fine-tuning the new organization.
Great leaders focus on organizational strategies right up there alongside business and technology strategies, and these five systems are the programming language they use to build high-performance organizations.
Q: You said that culture is the first of the big three. How do you change the culture of a bureaucratic organization?
DM: Contrary to popular opinion, culture is the easiest thing to change. Culture is made up of two sides. On the one hand, you’ve got values and attitudes, feelings that are deep inside people. On the other, you’ve got behaviors. Values drive behaviors, but the converse is also true: behaviors drive values. You could say, “We value teamwork,” and the answer might be: “Yeah, right boss. Now can we get back to reality?” On the other hand, if you get people to behave in a way that makes teamwork work, they’ll learn to value teamwork over time.
I don’t know that it’s appropriate for a leader to try to control how people feel, but as a leader you have every right to say, “If you want to succeed around here, this is what you do.” The approach we take, called Culture in Action, is to define a set of clear behavioral principles. It adds up to 20 or 25 pages of detailed principles, sorted into categories like entrepreneurship, customer focus, integrity, and teamwork. And through that behavioral approach and a meticulous rollout process, we’ve been able to dramatically change culture in large organizations in less than a year.
Q: How will we know if we’re successful?
DM: I think success means that 80 percent of your staff are following 80 percent of the behavioral principles 80 percent of the time. Beyond that, with a successful implementation, people actually use the behavioral principles to solve real-life problems. After that, it’ll take on a life of its own and get better and better over time.
Of course, the real sign of success is when you’re seeing the benefits—staff who behave as customer-focused, team-oriented entrepreneurs who are passionate about growing successful businesses within the business, not about building empires.
Q: How can changed companies maintain the success?
DM: Investing in your organizational ecosystem delivers benefits year after year—it’s self-sustaining. It’s not an initiative now for cloud, and an initiative next year for something else. It’s designing an organization that continually looks for better ways to be the enterprise’s vendor of choice. This entrepreneurial spirit manifests in every IT function, be it an internal support service only seen by IT, such as infrastructure engineering, or highly visible services like applications engineering, and infrastructure services such as hosting.
In every corner of IT, you’ve got entrepreneurs continually improving their skills, processes, and technologies in order to maintain their position as vendor of choice. This kind of organization will adopt cloud and whatever’s next as part of the job, not as a special one-time initiative. Entrepreneurs never stand still!
Meyer discusses how organizational structure can drive (and improve) culture in part two of this discussion. Learn more about changing your organizational culture within IT at the NDMA website. For more on the technology behind cloud success, visit HP.com/go/cloud.
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