Horizontal KPI's and Do The Right Thing
Tuesday evening, 1800, rain, large room, 30 seats, the start of a workshop in digital transformation. Always great to start a workshop in the evening. Workshops after regular working hours means having people that really want to be there. Personal drive, wanting to learn, personal investment at it best. The workshop is focussed on the How of digital transformation. Plenty of workshops focus on what great future you can have with any of the new Tech out there.
Cloud, Blockchain, AI, Machine Learning or any of the other Tech, fill in the buzzwords yourself. This workshop is the one right after the introduction of the new shiny point B. It answers the question: and How do we get there, How do we get from A to B, what is the first step we need to take starting tomorrow. New Tech in a greenfield is nice, but most of our customers are companies that have been around for a long time. Digital Transformation in an existing company, the need to change the business model, with existing IT transformation from cost centre to crucial for the new value chain as key enabler, A to B, first step, that is this workshop about. Great fun, love it.
While the 25+ group were doing the exercises (“This is a workshop, meaning you do the work..”) they have to reflect on their past experiences with transformation. Experiences with real-life customers, with real-life problems. And while I coach them through the workshop and let them experience and learn the How of transformation, a common theme starts to pop up. They all express in one way or another that their customers, the people they work with, actually already know what they can do today to improve the outcome of their work. They already know how the influence the outcome for their customer, the internal business customer. And for all sort of reasons they don’t act on that knowledge, are not able to act, are not allowed to act, don’t feel empowered to act. No improvement is made.
Know and (not) act
Out of all the underlying reasons they discover in the workshop 2 are worth mentioning. After years of transformation after transformation, they are tired of even hearing the word transformation. Transformation Fatigue. “This one will blow over as well” is the basic attitude. Ignoring that transformation fatigue is a great way to again fail with transformation. That is why digital transformation means new digital options driven by people changing. Digital transformation is about people transformation.
The other reason for this ‘know and not act’ problem they discover in the workshop is what I call vertical key performance indicators, vertical KPI’s. The traditional org charts reflect all sort of vertical departmental structures, each focused on KPI’s only reflecting their internal processes within that single department. None of those vertical KPI’s reflects what is really important to the internal business customer, let alone the external customer.
In the IT landscape, you will find plenty of those, like utilization of storage for the storage team, or max utilization of FTEs in the IT department. Great KPI’s, usefully if you consider IT to be a cost centre with a fixed budget, not really helpful to become Customer Centric and part of the value chain in the new business model. Part of the digital transformation is introducing horizontal KPI’s. Horizontal KPI’s that reflect directly what is really important to the customer. The introduction of horizontal KPI’s starts with the key question: and who is your customer, and what do they want. Not always clear to IT teams…
One of the better ways to find and improve horizontal KPI’s is using the pragmatic version of a Kaizen approach called value stream mapping (VSM). Start with the customer on the right side and work towards the left, right to left, map the process steps in the value stream, find all the types of waste, with time as the key waste type. Assume the one closest to the customer knows best. VSM and horizontal KPI’s: key ingredients of the How of digital transformation.
Later that week I was invited to listen to a presentation and review content and delivery of a powerpoint presentation with lots of text-based slides. As presentation and storytelling coaching has been part of my work for the last 15+ years some of the people I coached will refer friends and colleagues to me. This guy asked me to listen in and help him improve his story. He had been working for a large corporate for over 20 years, got so frustrated with the lack of progress and innovation over the years, the getting behind in their core market, that he quit his job and started a new career focusing on what he truly believed could be done better.
Some of the best work starts out of personal frustration (the reason I do the presentation and storytelling coaching was the quality, or lack of, corporate presentations I had to watch for hours each day…) “There must be a better way” was this guy starting point. He had a great story, slides were getting there, great start. And while we worked on improving his story and made great progress in aligning slides to the story, the core theme of his work was interesting to me as well.
Change through KPIs?
Organizational structures in software development. Scrum teams with a high level of autonomy. KPI’s being defined on the business relevance of the development output, continuous improvement every day. The transformation of rigid hierarchical structures in software development towards more autonomic structures with built-in flexibility was detailed in a great way. A privilege to help this story get better. One of the open items on his transformation list was KPI’s. I told him my story of the workshop where I introduced vertical and horizontal KPI’s as key to becoming customer focused. I helped to add the KPI element in the narrative. He still worried if horizontal KPI’s would be flexible enough. Horizontal KPI’s reflect the customer focus but would it again become too rigid over time?
Great question and the story that came to mind was really something I witnessed last week during the funeral of my neighbour Leo. 83, great life, his death a really sad situation. His mind fading over the last couple of years. The memories of his actions before that were what was the importance of his lasting legacy. My neighbour was in the military and very religious as well. He worked all his life in the military hierarchy and after retirement continued as a volunteer in dozens of community activities. He always had the same mindset. Take the rulebook as is, the military code, the Bible, whatever is relevant in a given situation and master it to the max. Then throw in what is the real reason what you do for your customer, client, the people you work for and be flexible.
Do The Right Thing
The goal is leading, not the process, “the most flexible wins” mindset, why over how. There were some great stories during his funeral where his people-centric approach greatly differed from the official rules, and then again really made sense. The story of the good Samaritan applied in a life of 83 years. Very moving ceremony and some great learnings as well. Learn the rules, become customer obsessed and then be flexible about it. Do The Right Thing (DTRT) as key mantra. And allow the people in your company to do the right thing. Change the management style to allow for DTRT. Even if it is not always convenient, not always the “normal” way of doing things.
We changed the story by adding the learnings from my neighbour. Vertical KPI’s to horizontal KPI’s. Customer-obsessed processes that allow for flexibility by adding the Do The Right Thing. A new management style that starts with the idea people will do the right thing by default if you just let them. Mission, vision and strategy applied in customer relevant processes. The one closest to the customer knows best. Governance enabling DTRT. Do the right thing as the crucial ingredient for digital transformation.