Chapter 10: Modern CEO’s adopt 1Faat

What is DevOps?

What is DevOps?

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Atlassian Fastrack

This is a Summary of the tenth chapter of a book titled 1Faat (one feature at a time). The book encapsulates the collective experiences of our consultants as they guide clients through digital transformation initiatives.

The way technology is delivered has a direct influence on an organization’s strategy, as the process of achieving a vision can transform that vision. This concept has often been misunderstood by more established businesses. In the past, senior executives have delegated the “how” to technologists. However, today’s leaders must recognize that the final goal can evolve incrementally as customer value is delivered one feature at a time (1FaaT).

Is your C-suite prepared for the challenge?

For many executives, change—especially when driven by technology—is a source of discomfort. The 1FaaT approach introduces a completely different method of implementing change, embracing shifting market conditions and rising customer expectations.

Technology has evolved from being merely a support function to becoming a critical competitive advantage, enabling continuous change at the necessary pace. This idea may seem counterintuitive to those who view technology as a barrier to change. In the past, technologists were focused on maintaining stability, often by minimizing change. Modern technology and the 1FaaT mindset challenge this notion, demonstrating that more change can be achieved while increasing stability and reducing risk. This point bears repeating: more change can be achieved while increasing stability and reducing risk. This capability for rapid change facilitates the ongoing assessment of customer value, a strategy successfully employed by companies like bookings.com.

Financial services professionals might argue that regulatory compliance, internal governance, and security reviews hinder rapid and frequent change. However, this is not true. Established financial institutions such as DBS Singapore and Standard Bank have successfully navigated regulatory and security challenges while staying within acceptable risk parameters. The belief that your organization is uniquely constrained is a misconception. This is not a technology issue—it is a leadership issue.

Ignoring the significance of technology as an enabler is akin to business suicide. Just look at traditional businesses being displaced by their born-digital competitors. In chapter 4, we’ve clearly explained how to deeply understand your digital competitors’ competencies. Board meetings must include discussions about exploring customer value.

A crucial question for the Board is whether your organization is the hunter or the prey. Is change being forced upon you, or are you driving change against your competitors? You should always aim to be the hunter, even if you are the market leader. All the major tech giants operate this way, yet it’s possible that one of them will no longer exist by 2025. Jeff Bezos at Amazon emphasises the concept of “Day 1” to avoid the pitfalls that led to the downfall of once-successful organizations. This mindset promotes continuous experimentation, innovation, iteration, and even failure, ensuring Amazon’s longevity.

For B2C organizations that weren’t born digital, the C-suite will often articulates a future end state, which can be problematic. Defining an end state should be an ongoing process, not a final destination. There should be a vision, but treating the achievement of a set of digital services as ‘job done’ misses the point about the need for continuous change in a digital market.

How can you instill a change mindset as a standard practice among your CxOs? Today, the C-suite can engage with customers directly through modern feedback tools such as Twitter and Facebook. However, engaging customers on specific value propositions and obtaining their feedback in the form of ‘sale or no sale’ represents a deeper level of customer engagement that traditional businesses and their C-suites often miss.

Why does this happen? In one word fiefdoms. Organizations are often divided into silos. When these silos operate as fiefdoms without a shared purpose, it becomes easy to lose sight of who is paying the bills – the customer. In this environment, business conversations tend to focus on internal politics rather than customer needs.

The Reluctant CEO

Is your CEO prepared for change? If the answer is yes, the next question is the extent of appetite for the change technology brings. If the answer is no, the challenge is to help them realize that only an ever-changing business can survive and thrive.

In his book The Age of Paradox, Charles Handy discusses the different generations of business management teams. He notes that the first generation often struggles to recognize or time necessary changes, especially when the business is performing well. Research consistently shows that this is precisely the moment to reinvent. As Handy aptly puts it, “Complacency is the enemy of curiosity.”

There are various approaches to achieving this, but in chapters three and four, peer and competitor analyses are recommended as a good starting point. Ultimately, you need to align the CEO’s agenda with the changes impacting your organization’s future. CxO’s must come together to find the best way to help the CEO understand that change is essential for survival. This realization must be genuine, not forced.

One effective tool for a conservative CEO is a retrospective look at your industry from 20 years ago, combined with predictions for the next five years, to demonstrate the acceleration of change. Often, past changes are forgotten or seen as isolated events. Presenting them as part of a continuum from the past to the near future can make a CEO more receptive. For maximum impact, consider having the ‘next generation’ of managers create these forward projections.

For example, retail banking introduced self-service kiosks between 2010 and 2015. These kiosks have since been made redundant by mobile apps, and the next evolution may render branch structures increasingly unnecessary. In 2017, Barclays’ busiest branch was an 8 a.m. train service from Reading to London, based on transactions per hour. Looking ahead, banks’ proprietary apps might be replaced by peer-to-peer value transfers without any bank fees. Whether or not blockchain succeeds is less important than recognizing it as one of many potential existential threats to the future of retail banking.

The approach should be tailored to the CEO’s style. Some CEOs prefer to lead from the front and originate all key ideas. The role of the supporting team is to help the CEO discover the need for change so that they feel empowered and motivated.

Other CEOs are more passive and team-oriented, focusing on achieving consensus and getting the best from the C-suite. In this case, the C-suite must align and agree on what and how to implement change while adhering to the CEO’s key objectives.

Threat or Opportunity?

The unknown can easily be intimidating, and technology is often perceived as more of a threat than an opportunity. In financial services, poorly managed organizations are tired of hearing about competitors like Revolut, N26, or Starling Bank. However, well-managed organizations learn from these threats and turn them into opportunities, as evidenced by the digital offerings introduced by the UK’s main street banks in recent years.

Outsource

Without a framework like 1FaaT, technobabble can make simple concepts overly complex, leading many organizations to outsource IT. Outsourcing might seem more costly, but it guarantees IT service delivery on a contractual basis, right? Actually, this is a common misconception. When an organization outsources its IT, it doesn’t outsource the responsibility of delivering services to its customers.

Moreover, if an organization unknowingly outsources its Intellectual Property (IP), it essentially commissions a third party to deliver its competitive advantage. In this scenario, the Board faces the challenge of demonstrating the business’s value to its shareholders. From the perspective of the outsourcer, the customer becomes entirely captive.

“Outsourcing is effective when an organization retains its brain and heart, and outsources its muscle.

– C-1 Executive at Retail Bank”

Confusing Customers and the Customer

B2C organizations typically aggregate data about “categories of customers” over “previous periods of time.” While this has some value, it should not be confused with real-time data on how customers currently on the website react to a new offer. Larger, more traditional organizations often become disconnected from “the customer,” although they can provide extensive information about “customers” and their interactions with products from previous months, years, or decades. Failing to distinguish between the margin earned on old versus new products is a recipe for complacency.

A Prisoner of Your Past?

The average CxO might be unaware of the potential offered by technology, often due to past IT projects that failed to deliver as promised. There is frequently a belief that the people who deliver these systems are indispensable. The existing systems may be unstable, carry a high risk of failure with changes, or be vulnerable to hackers. This undermines an organization’s ability to envision a better digital future. If I had a euro for every time I heard, “That won’t work here because we have legacy systems,” I would be a rich man. And if I had a euro for every executive who feels captive to a small number of “jailers,” I would be even richer!

How Do We Fix It?

The biggest challenge is politics, which can only be overcome by aligning the company’s interests with individual goals and remuneration. This may seem obvious, but the CEO must take it a step further by making their reports responsible for overcoming the lethargy caused by fiefdoms. Whether fiefdom behavior is at the C level or below is irrelevant. The CEO should form a C-suite subgroup tasked with resolving cross-fiefdom disputes related to digital transformation. The CEO must make it clear that if this subgroup cannot resolve the issues, the CEO will make the decision him/her self.

Start Again

Some organizations build a new digital competence at a separate physical location from their existing IT organization or purchase a competing company with the necessary technology.

Organize for Product

Customer value streams, as discussed in Chapter 5, should be viewed as product lines. The CEO must collaborate with their direct reports to restructure the organization into product groupings staffed by delivery teams. Supporting functions such as HR, Finance, or Operations should transfer, rather than assign, staff to these product lines. This approach will break down existing silos and political barriers that hinder change. Think of this restructuring as a way to address cultural debt.

Overcoming Fears

Fear often stems from a lack of subject matter expertise. CEOs don’t need to be software development experts, but they should have enough knowledge to understand its potential and be competent enough to challenge entrenched practices. They must grasp 1FaaT as a process and articulate how it will impact future offerings.

As Wendell Wilkie said, “Education is the mother of leadership.”

The Role of the CTO

A CTO who is up-to-date with best practices and can effectively communicate is essential within the C-suite. Without such a figure, the C-suite is unlikely to understand what excellence looks like in terms of technology and how to achieve it. However, the CTO cannot work alone. The entire C-suite must share an understanding of the business potential technology offers and be able to push the CTO to continuously improve the organization’s ability to deliver 1FaaT. A competent CTO will welcome colleagues who seek to innovate within the framework of 1FaaT and should actively collaborate with the C-suite to bring forward ideas and suggestions.

Encouraging Innovation

A good CEO will encourage the C-suite to identify the frustrations hindering their teams’ success and support small groups experimenting in low-risk ways. Chapter 6 delves deeper into this topic. Additionally, it’s beneficial to persuade the C-suite to become customers of your competitors, as discussed in Chapter 4 titled “Look at Who Is Winning.”

Create fertile ground to nurture pockets of excellence. For instance, organize a hackathon in a “Dragons Den” style, where winners receive investment and a team retreat. Involve selected customers to engage with teams. Consider incorporating the views of staff members’ children, especially if they belong to the target customer demographic.

Leveraging Existing Excellence

There are likely “pockets of goodness” already existing within your organization. Technical teams often discover ways to automate tasks or work innovatively independently. Identify these pockets and bring them together, amplifying their successes and supporting them through challenges. Remember, there’s no such thing as failure—only abandoned paths.

Understanding the Current Context

When considering future changes, it’s crucial to glean valuable insights from the past. While I’ve refrained from discussing the recession triggered by COVID thus far, every C-suite can benefit from studying how other organizations thrived in previous post-recessionary periods.

Harvard Business School conducted research on 4,700 public companies over three recessions: 1980, 1990, and 2001. Their findings revealed that in the three years following a recession, only 9% of these companies experienced significant growth in both top and bottom lines, while 17% fared worse.

Not surprisingly, organizations that were able to make careful cuts and strategic investments were among the 9% that thrived. Subsequent research, conducted after the 2008 recession, highlighted digital transformation as one of the key areas for successful investment, alongside R&D, marketing, and capital assets.

Based on Harvard’s findings, CEOs should challenge their leadership teams to do more with less. Self-funded transformation projects aimed at improving efficiency during a downturn are particularly effective for thriving post-recession.

The research also revealed that overly aggressive or timid strategies did not fare well. Progressive companies that balanced prudent cuts with strategic investments, maintained a creative mindset, and embraced a fail-fast attitude were the winners.

Lessons from the Past

Much of the insight provided in this chapter stems from firsthand experience. However, every organization is unique, and what works in one context may not succeed in another. Therefore, I refrain from offering specific case studies, as they can be misleading. Our company, Daysha DevOps, offers services to find suitable case studies and arrange site visits tailored to individual organizational needs.

Summary

CEOs must replace their C-suite’s fear of technology with a belief in its opportunities. Organizations should dismantle fiefdoms and implement product structures. The C-suite should discuss the value of engaging customers in continuous experimentation and understand that delivering technology through IFaaT (Incremental Feature at a Time) is as crucial as the end result.

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