IT and business units at Novartis weren’t talking to one another — until they started speaking a common language of leadership.
In the northern summer of 2002, the accounts payable department at Novartis Pharmaceuticals faced a full-fledged financial crisis. Somewhere in the computerized disbursement system, between invoices and cheques, payments were being held up and a backlog of overdue bills was building. A few vendors even put a credit hold on Novartis Pharmaceuticals, which is the US arm of Novartis AG, the $US23 billion Swiss pharmaceutical giant.
The accounts payable and strategic sourcing departments impugned IT — more specifically, a recent SAP upgrade to the R/3 financial modules. The message the business departments felt they were hearing from IT was: SAP is the Novartis global standard, like it or lump it. Frustrated, accounts payable and strategic sourcing began meeting — without the IT group — to figure out a way to re-engineer their requisition-to-pay process and perhaps even scrap the new SAP modules that didn’t meet their needs.
On the other side of the corporate campus., IT executives knew the unpaid invoices were not completely the fault of the SAP upgrade. The existing process for invoices was inefficient, requiring manual approvals by too many managers. The IT group had recently launched an effort to improve its alignment with business partners by appointing business information managers (BIMs) to clarify and support business goals. Nonetheless, the finance BIM felt frozen out of the meetings held by the fed-up business community to settle on a new solution.
It’s an age-old story: An IT project starts out with high expectations and involvement from the business. But as the project progresses, it becomes clear that the two sides have different needs and constraints. Under the strain of time lines and tight budgets, communication is inadequate. Business units blame the IT department, and IT feels insulted and misunderstood. Both factions grow increasingly suspicious and self-protective. Project tanks.
And that’s how the situation at Novartis probably would have played out. “It was a train wreck waiting to happen,” says Jose Ramirez, Novartis’s vice president of IT for finance and supply chain. “We would have continued to have political problems, along with a proposal by the business that didn’t have buy-in from IT. It would have come to a head at some point.”
Instead, Ray Pawlicki, Novartis’s vice president for IT and CIO, effected an intervention: He invited all parties involved to a six-month program to create a joint leadership approach. It was a long shot, but it worked. And it helped answer the looming question at Novartis, and among many business and technology units everywhere: Why can’t we all just get along?
When the IT Solution Is Part of the Problem
The billing problem was actually straightforward. “There wasn’t a true requisition-to-pay process,” says David Galbraith, director of business process design, who was brought in to help solve the problem. “The company was structured in silos. No one knew what was going on.”
The IT department thought it had a solution in the SAP R/3 implementation. “The mantra was: Let’s put everything we can in SAP so we have fewer interfaces,” says Pawlicki. “People within IT were saying to the business: ‘Yeah, we know what you want to do, and this is where we’ll stick it in SAP.’ And the business was saying: But, but, but . . . ’And there was the rub” Because of the tight time line and budget of the financial modules implementation, IT scrimped on training and all but ignored the new system’s impact on business process, says Ramirez.
But when the IT group got wind that accounts payable and strategic sourcing were meeting privately to re-examine the req-to-pay process and the IT system to support it, they grew very resentful. Other IT finance projects took on the same bitter flavour, says Ramirez, and IT morale suffered. Senior managers from IT and the business departments met or talked weekly to try to bring the estranged departments back together, but it didn’t work.
A potential solution came from an unexpected source. The head of accounts payable, while serving as a liaison to IT in a previous role, had participated in a training program called the Language of Leadership. Pawlicki had previously used this program solely for IT staffers. But when the accounts payable chief encouraged Pawlicki to apply the Language of Leadership to breaking the barrier between IT and the business units, the CIO invited all employees involved to a joint program.
The Ontology of IT
A philosopher, a psychologist and a businessman walk into a conference room . . . It sounds like the beginning of a joke, but actually it’s how the six-month Language of Leadership sessions kick off.
Pawlicki had previously offered this training, led by trainers from SDI Communications, to his top 50 IT leaders as a way to improve their listening and collaboration skills. This time was different. “We decided to try something new and help these individuals not only evolve as leaders but also to agree on a strategic outcome: to have this project be the best project ever undertaken within Novartis,” he says. A lofty goal, to be sure, but it was what the Language of Leadership concept was all about — creating leaders who could commit to meeting grand, strategic outcomes.
Initially, though, attendees weren’t buying it. The sessions included ontological discussions on how individuals could improve their leadership not by changing what they did but by changing their fundamental “way of being”. “I thought: These people are from a different planet,” says Ramirez. “They’re talking about a different way of being. I was confused.”
“We were sceptical,” agrees Galbraith, the business process design director. “We thought our own project methodology was sound and were afraid to say there might be another way to go about things. Besides, it sounded a little too soft.” Could the metaphysical have any place in the management of a multidepartmental corporate project?
During the first two-day sessions (out of a total of four over several months), the program trainers asked the business professionals what they thought of IT, and vice versa. On the first go-round, the answers were pretty polite. But “[the trainers] were grinding,” says Galbraith. “They didn’t let us get away with that.” By the third round of the same question, people got brutally honest. The business said about IT: They’re too bureaucratic, they don’t care about the business, they only care about standards. IT said of the business: They don’t trust us, they’re secretive, they have no understanding of what it takes to get things done.
At the end of the session, Ramirez found it hard to look his business counterparts in the eye when leaving the room. “We got a load off our chests, but it was awkward,” he says.
Over time, this clearing of the air had the desired effect: People from both sides began really listening to each other and, eventually, sympathizing. The trainers had them practise taking a stand for the other side’s concerns. “The focus was on being committed. Compliance was not tolerated,” says Pawlicki. “And that had been the sense with the req-to-pay project: Some parties were just being compliant — not committed to making it a huge success.”
Ultimately the Language of Leadership participants were able to commit to two strategic outcomes that went beyond their preconceived notions of each other and what was possible. One was general: Create a new way for IT, accounts payable and strategic sourcing to work together that would enable rapid business transformation. The other attacked the problem at hand: Improve the buying experience for Novartis departments so that they would no longer make independent purchases, and instead would channel all their requisitions through Strategic Sourcing. This centralization of purchases would increase Strategic Sourcing’s leverage in buying to the tune of $US4 million to $US5 million in annual savings.
We Can All Get Along
The Language for Leadership training had a surprising effect on the req-to-pay process problem. The finance BIM (“Our new best friend,” says Galbraith) and other IT folks, galvanized by a deeper appreciation of the business requirements and how those matched up with SAP and other providers, ultimately agreed on what accounts payable and strategic sourcing had wanted all along: a best-of-breed solution. In May 2003, IT signed off on an upgrade to an old Ariba system that would automatically reconcile sourcing and accounts payable, reducing late payments.
Along with a couple of other changes implemented by IT and the business groups, the Ariba upgrade improved the internal buying process so much that the planned savings of $US4 million to $US5 million annually was within sight six months into the project.
It was a long way to travel to end up where the req-to-pay team initially started, but participants say the project would have never succeeded without the leadership sessions. It was not only IT that had a change of heart. The accounts payable and strategic sourcing staffers made a concerted effort to understand how the SAP team would hear their argument. “We had to present [the Ariba proposal] in a way that showed we understood where they were coming from, validating their very real concerns,” Galbraith explains.
Novartis’s experience with the Language of Leadership gives hope for changing the typical dynamic between IT and business units. “On a scale of one to 10, this project was probably headed for a six. There would have been rumblings, and eventually they would have worked things through,” Pawlicki says. “This time they were all committed to making this a success.”
Rx for Painless Change
How to avoid repetitive change syndrome
By Meg Mitchell Moore
Repetitive change syndrome: that sinking feeling afflicting your employees when you or other members of the executive team announce yet another audacious change initiative. According to Eric Abrahamson, a professor at Columbia Business School, repetitive change syndrome runs rampant in organizations.
Abrahamson is the author of Change Without Pain: How Managers Can Overcome Initiative Overload, Organizational Chaos, and Employee Burnout (Harvard Business School Press, 2004). His point is that companies need change in order to thrive, but too much change without enough forethought can send an organization spiralling into turmoil. In organizations suffering from repetitive change syndrome, he writes, “so many waves of initiatives have washed through the organization that hardly anyone knows which change they’re implementing or why.” The result is frustrated, burned-out employees who resist change rather than embrace it.
The problem stems in part from managers’ eagerness to buy into an approach called creative destruction, which encourages organizations to institute large-scale, disruptive changes — essentially breaking down the company in order to build it up again. While Abrahamson admits that creative destruction has its place in certain settings, he suggests that it’s time-consuming, expensive and stressful, and that too many companies blindly pursue it to their detriment.
Instead, he suggests something he calls creative recombination, which involves customizing and reusing resources — people, processes, even computer networks — that an organization already has. As an example, he points to Westland Helicopters, a division of GKN, which, in moving from a military market to a civilian market, nearly drowned in waves of creative destruction. When executives discovered how to recombine existing resources, by reusing product development models and siphoning some knowledge from employees from other divisions, the company was able to achieve the economies of scale it was seeking.
But creative recombination on its own isn’t enough, Abrahamson warns. Even companies that practise it judiciously will not be successful if they don’t understand pacing — when and how often to initiate change. Here he makes an example of Sears, which began to falter in the late 80s and early 90s because of competition from stores such as Wal-Mart and Kmart. When Sears’s new management instituted a turnaround, the rapid pace of change ended up inflicting greater damage than the competitors. Sears lost the balance between change and stability — and somewhere in that balance is where effective organizational transformation lives.
Charm School for CIOs
Why being nice is your foremost task
By SUSAN CRAMM
The first part of the year is a natural time for implementing organizational changes, and so a lot of CIOs are transitioning now to new positions. Some are switching companies; others are moving between divisions or into newly created divisional CIO roles. Regardless, the challenges revolve around how to make a good first impression and set the course for the future.
If you are transitioning to a new position, you may feel like a 12-year-old going to your first school dance — everyone seems to be watching you, and you just want to fit in. The good news is that fewer are watching than you think; the other executives are too wrapped up in themselves to give you more than a passing glance. The bad news is that it’s not enough to just fit in. New executives are brought in to make things happen. You have only a few months to assess the current situation, get your game plan together and signal what you care about to the rest of the organization.
New CIOs need to keep this mantra top of mind: First be charming, then be tough. Before you dismiss charm as irrelevant to your role as an executive, remember that if your ultimate goal is influence, then job number one is to build relationships. Meanwhile, you can assess the situation for IT and formulate your plan of attack.
New CIOs are often greeted with closed arms. Breaking through requires emphasizing people over tasks — that is, charm. Spend time with your direct reports, influential executives and their staffs, intensive users of IT services, and the front line (employees who deal directly with customers).
Discuss their agendas, objectives, concerns and suggestions. During these sessions, ask questions and take visible action to deliver short-term wins (for instance, resolve a service issue or ensure that a performance appraisal is written).
These face-to-face meetings accomplish more than building relationships and credibility. They also provide the information necessary to define your IT game plan — as long as you ask the right questions. Make sure that during your conversations with others, you are probing for insights in the following three areas:
- Where should IT investments occur?
- Is the organization capable of capitalizing on the potential of IT?
- Will the installed technical infrastructure stand in the way?
Investment opportunities are theoretically derived from an understanding of the industry, company financials, business strategy (explicit or inferred) and competitor positioning. But real-world IT investment opportunities are found at the intersection of business value and motivation. Practical investment requires filtering the theoretical opportunities through the motivation of the executives who are running the business and will be accountable for realizing value.
Determining whether the organization can capitalize on IT’s potential requires understanding the track record of success (and root causes of failure), appropriateness of current investment levels, and ability to manage resources and projects. You must assess the strategic alignment, riskiness and health of current initiatives. Evaluating the technical infrastructure entails a review of the current technology footprint, operating costs, standards, and platform stability and scalability. You have to assess the infrastructure’s fit with business needs, from both operating and strategic perspectives.
Your recommendations most likely will include changes to projects, technology, processes, resources and funding. Remember to define and stage your game plan to be consistent with the maturity of your IT capability and your organization’s appetite for change. For example, it’s impossible for IT to gain strategic positioning if core transaction systems are missing, data is fragmented and of poor quality, and the infrastructure is unstable. Remembering the “first be charming, then be tough” mantra, gain support for your game plan by soliciting input from critical stakeholders and presenting the concepts in a way that clearly demonstrates you are keeping their interests — and the enterprise’s — on centre stage.
Finally, as your tenure increases, change your mantra to “be charming and tough”. The triple whammy of lack of time, resource constraints and rising expectations creates a mental pressure cooker that often results in CIOs behaving badly. This is usually manifested in decisions made without adequate information and communicated using formal rather than informal channels. Charmless CIOs who rely solely on positional power and expert authority for their influence are the ones left without dance partners as they try to forward their agendas.
Susan Cramm answers questions on “Charm School for CIOs”
Q: How do I recognize the point when my mantra should change to “be charming and tough”?
A: First of all, let’s define tough. Tough means making sure decisions are made in a win-win fashion. If you are getting pushed around, it means deploying the Getting to Yes techniques. Tough means asking questions that make people’s principles surface, and getting beyond the typical requests that start with a preconceived solution.
As to the issue of timing, you can begin finding out about someone’s principles only when you come to know the person and he knows you. Test yourself on what you know about people — their backgrounds, kids’ names, hobbies, proudest accomplishments. Making sure they know you is easy — have a few informal meetings, demonstrate effort in getting to know their organization, and take care of them or their organization in some way.
Q: How can I handle a verbally abusive CEO, especially when the outbreaks occur in front of my IT staff and others?
A: If you are ready to stand up for your principles, talk with him in private. Don’t take exception with the content of his comments, just the forum in which they are delivered. I have had to do this a couple of times myself. In both cases, the discussion went well because it was private and the people could tell it was a make-or-break issue for me. If you aren’t ready to go that far, then limit the CEO’s exposure to your staff if possible.
Q: As a new CIO, I was once given a review in which my boss’s big gripe about me was that I was too nice. He said people had to fear me and that I needed to execute (that is, fire) people who did not obey my every order. His management handbook was The Art of War. How do you respond to that mentality and way of thinking?
A: The fact that he referred to the The Art of War isn’t necessarily a problem; that book has a lot of valid points about how to approach difficult challenges and competitive situations. Unfortunately, your former boss interpreted the book as a treatise on how to do it to them before they do it to you.
If someone wants you to toughen up, you need to do three things. First, think about whether there’s anything you really can learn from the feedback. Next, examine your language to make sure you are expressing yourself in a way that will be heard by your boss. Compare these phrasings, for example: “Before I manage him out, I will coach him to focus on developing the following skills”, and “Before I get rid of him, I will hold his feet to the fire.” Finally, at the end of the day, you must lead in a manner consistent with your values and personality. If your values and approaches are not consistent with those of your organization or superior, at some point your paths will part. Here’s hoping that you take the high road!
Susan Cramm is president of Valuedance, a California-based executive coaching firm
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