The High Cost of Business Inaction

The consequences for inaction are increasing. In “Beyond Digital,” Paul Leinwand and Mahadeva Matt Mani put it this way: “the future belongs to companies that are willing to shed past belief systems and define new, much bolder value propositions.”  

Organizations can no longer survive simply by trying to swim against the tide of change. The cost for inaction is too high as the basis of competitive advantage increasingly is found in things other than physical products. The company’s today with a “right to win” attitude are focused on accelerating change rather than trying to stop it. This includes generating new business models and differentiating on what they do and how they operate. Since CIOs are in the middle of this change, what do they think? How do they grade where enterprises are today?

Is Leadership Still Swimming Against the Tide of Change?

How do people justify inaction? Sometimes, it’s a job preservation strategy. Other times changing the status quo is seen as too risky. Inaction can also be the result of the inability to agree on what direction to go forward. And since culture eats strategy for breakfast, culture can be the source of an immune system to change. Here, culture works to prevent shifts in strategy that hurt current successful operations. This clearly was the case at Kodak, which failed to invest in the digital photography trend even though it invented digital photography.

Inaction represents a decision. Here, leaders deliberately or unwittingly elect to do nothing. This sends a message — the status quo is the decision. Sometimes, in these organization leaders try to wait out a change.

But inaction carries with it increasing risk. Inaction in some cases can result in the end of organization as people know it, with bankruptcy, liquidation or acquisition as the result. This happened to one my former employers, Adaptec. They went from a $2 billion company to selling with a paltry $35 million in revenue. One of my professors in graduate school used to say that one of the roots of business failure is prior success. Think of Polaroid, BlackBerry and Blockbuster. In “Zone to Win,” Geoffrey Moore provides an even more exhaustive list of companies blinded by their own success.

Meanwhile, a “wait it out” strategy can often lead to missing the opportunity to act when an organization has more resources and ability to act. Fortunately, most leaders see the risk. Today CIOs say business leaders understand that driving coherent change is more urgent than ever.

Part of the reason for this is the acknowledgement that resisting change doesn’t really work. Clearly leadership is needed that can see the opportunity around the corner and change proactively. Leaders are needed who recognize that ever-faster change is just business as usual. Educational CIO David Seidl said, “I’m fortunate to work for a change agent who was hired to be just that. Higher education is an industry with a lot of inertia to overcome. As I look around at my peers, I see people who are committed to change — particularly some of the most important changes around DEI and positive social change. I also see folks who understand that it’s a process.”

Related Article: Technology Leaders Lead Innovation By Seeing Around Corners

Ensure Fact Gathering Doesn’t Become an Endless Process

CIOs are very familiar with analysis paralysis. They suggest leaders come to grips with the fact that there is no perfect analysis. Everyone involved in planning needs to be comfortable with the quality of analysis that is possible. They also need to understand that fact gathering is an ongoing process, and that any plans in play should be adjusted as new facts are determined.

The action-oriented CIOs of today support their businesses’ need for speed. Corporate culture needs to therefore recognize the need for speed and reward successful transformation. It is critical that rational decisions made when limited the data is available aren’t penalized. As part of this, all parties must reach an agreement on deadlines, which includes time boxing the analysis to ensure it gets completed. Leaders therefore must decide up front how much time will be spent on fact gathering and stick to the timeline.

Establishing a timeline for when a decision must be reached also needs to be established up front. To do this, organizations need to assign target timelines and prioritize the information and analysis needed. But CIOs also see the need for agile approaches as a front-end of deciding. The lessons of agile is that analysis paralysis is best countered through rapid iterations. As analyst Dion Hinchcliffe put it, “there is a tension between those who operate the business today, who are invested in continuity and consistency, and the innovators who can see the future and want to create it. This clash can be huge and end up blocking of change.” Clearly Derek Abell was right when he assert that leaders need to manage dual strategy — today and the future.

Related Article: Don’t Wait for the Innovation Lottery: A Deliberate Approach to Ideation

How Soon Should CIOs Get Involved in Planning?

I asked CIOs when they typically get involved in planning. Is it formulating the mess (the system of threats and opportunities)? Planning for the ends to be pursued? Planning the means to deliver the ends? Or implementing the change design? The answers were all different. Many said they are at times involved from the start, and other times they are only brought into the plan when someone wants to connect something, or something does not work. 

Ideally, CIOs involvement should start early. In fact, CIOs say the earlier the better. Part of the fix here involves making CIOs a full member of the executive leadership team. The best results come through partnership and inclusion. Additionally, CIOs have an important role to play in establishing a culture of innovation.

“CIOs need to be involved in strategic planning from the beginning or at least be brought into the conversation on the earlier side from a strategic standpoint. Once the strategy is set, the IT organization can serve as great problem solver and help work through the order of innovation,” said Deb Gildersleeve. CIO David Seidl added, “In the best case, we are part of the ideation phase, or engaged as soon as someone says hey, I want to do something …. Clearly, this varies across organizations and leaders and relationships. I think being engaged early is a good metric for a being successful CIO.”

Related Article: How the CIO and CHRO Will Rethink Employee Experience Together

The State of the Corporate Planning Process

Planning has historically been led by CEOs — and this should continue as CEOs oversee the execution of strategy on behalf of the board. However CIOs believe CEOs need to realize the many people who can help move the needle — whether other members of the C-Suite, lines of business or influencers, regardless of title. CIO Cathleen Curley said it is critical that the “CEO be the grand sponsor with vision and support for the results of proactive, participatory planning process. The rest of the C-Suite must take initiative to execute and lead operations this way.”

At the same time, CIOs indicate that if the process is not already proactive and participative, it represents a business and cultural problem. To establish an effective planning process, CIOs should have a strategic seat at the planning table. They don’t necessarily have to be responsible for corporate strategy, but they should have a say in what happens.

CIOs stress that corporate strategy should increasingly be a cross-functional process. As a part of this, organizations need to realize that they are facing an environment of exponential change. For this reason, planning really needs to involve the whole leadership team.

Today’s CIOs have an unique opportunity to more closely partner with CEOs and to act as an agent of change, one who promotes a more proactive and participative planning approach. CTO Stephen diFilipo suggested “there is a need for a term or phrase that is akin to planning but accounts for the acceleration and agile requirements. Planning implies time to consider.” Organizations clearly need to move to a proactive, participative, planning approach that isn’t top down. According to analyst Jack Gold, “In the digital age, corporate strategy requires a matrix organization with many contributing. No one part of the organization can do it all or do it right alone. It’s less important who planning ultimately reports to whom, as long as they are visionaries.”

No Time to Stand Still

Organizations today cannot stand still if they ever could. There is a need for CEO and CIO leadership. In fact, CEOs and CIOs need to become business partners in digital strategy. I’ll give Gold the final word: “How can a company move forward on planning the future without knowing what technology will be available to support it? The CIOI and IT are an inherent component of any organizations planning and execution game plan and needs to be involved at the start.”