Posted by Alex Cullen on January 27, 2009
IT organizations focus on the business needs they understand, not on the ones that matter to business.
When we ask business execs and IT execs the same questions around the importance of technology to business goals, and how well IT does supporting those business goals, we get interesting results. First, business and IT see technology’s value differently: to business, the greatest value is in products and services, and in competitive differentiation, whereas to IT, the greatest value is in improving operational efficiency. But the second result is more interesting: both business and IT believe IT doesn’t do well supporting the business goals around products and services, or differentiation – but IT believes they do much worse than business believes they do.
Is this modesty, high expectations by IT, or something else? I believe the answer is that this difference in perceptions is because IT doesn’t know what business is seeking or expecting for these two goals. This is combined with low expectations from business leaders: ‘IT doesn’t do much in this area, so we don’t expect them to do much and are more-or-less OK with what they do.’
I’d like to propose a new term that embodies a new relationship between IT and the business it is part of: ‘business intimacy.’ 'This term is derived from the concept of ‘Value Discipline’ as described by Michael Tracey and Fred Wiersema in their book “The Discipline of Market Leaders.” They define three ‘Value Disciplines’: Product Leadership, Operational Excellence, and Customer Intimacy. Operational Excellence is about streamlining operations through process, and managing supply to efficiently meet demand. Low cost is a hallmark. Customer Intimacy is about understanding needs, delivering customized products to meet the needs, and thinking about how to materially improve the client’s business. ‘Business intimacy’ is this concept of customer intimacy, but turned to how IT works to identify opportunities for improving the business.
IT doesn’t follow a ‘business intimacy’ strategy today, but rather one of operational excellence. Where IT organizations try for business intimacy, such as with Relationship Managers, they subvert these functions by making them the interface into their operationally efficient processes, rather than a customer-centric function delivering customized solutions which materially benefit their businesses. And there is good reason for this: Tracey and Wiersema point out that an organization can’t be more than one value discipline without becoming mediocre at them.
An obvious conclusion from this is that if a CIO wishes to pursue a strategy of business intimacy, they can’t have their current operational excellence organization do this. They have to create a new organization, with new goals and a different culture to do this. This organization must have the ability to source ‘complete solutions’ to business needs – it’s more than just relationship managers. This organization may become the new “Business Technology” organization.
What do you think? Is Business Intimacy a useful way to think about this? Can both Operational excellence and Business Intimacy exist in the same organization? How would you build this Business Intimacy?