計
Chapter 3
Position
When I ran global IT infrastructure functions, I would often say to my staff, “By the time the business asks us for something, it's already too late.” What I had in mind is that it's unrealistic to expect business leaders to consider or even recognize the extent to which their strategies and initiatives will rely on infrastructure. When they're strategizing new global business models, for instance, nobody at the table is talking about network connectivity, response time, or security architecture. Nor should they be. Yet these essential services must be in place to support the execution of that business strategy. Infrastructure leaders can't wait to be told what the requirements are; we need to anticipate and prepare for them. And that requires us to understand the direction of the business, match it to advances in technology, and create a roadmap that is agile and flexible to support the business growth.
A Roadmap for Change
All innovation leaders need roadmaps that allow them to achieve their goals and realize their vision. Roadmaps are strategies that plot our course from where we are to where we want to be.
My leader and mentor, Sam Palmisano, told me,
The core responsibility of leadership is to understand when it's time to change—the organization and yourself—and what not to change, what must endure. Getting those right is hard—especially today, since so much is changing, and at such velocity, and in such unpredictable ways. Whether you lead a business or a government, there is tremendous pressure to deliver short-term results and quick fixes. To thrive in such an environment, it's important to manage for the long term. At IBM, we've thought about this a lot—about what enables an enterprise or institution to survive and thrive through decades, much less a century.
What I find most encouraging is that the forward-thinking leaders we work with around the world are not just achieving measurable success in the short term; they are innovating in ways that will create virtuous cycles for a generation or more. They are building systems.
One of the ways that innovation leaders manage this is by leveraging the discipline that I call Position, the subject of this chapter. Positioning is the process by which we identify where we want to be, how we plan to get there, and what milestones and deliverables we will achieve along the way. Positioning also includes trying to anticipate and responding to the twists and turns we will encounter along the path. Positioning can be thought of as a game of chess. When we first learn to play the game, our focus is very immediate. We scan the board to identify pieces in immediate jeopardy, protecting our own or capturing our opponent's. The object of the game, of course, is to capture our opponent's king. We don't get points for capturing other pieces; however, we hope to weaken our opponent's position and draw closer to striking distance of the king. As we gain skills and experience, we can think a few steps ahead. We intentionally target valuable pieces and set up a series of moves to achieve our goal. However, we're still just inching forward. Our eye is on the king, but our plan is many steps behind. Finally, as we become more advanced players, the focus shifts. Now we can play the game in accordance with a master plan. We still develop and execute interim strategies, but they are part of a deliberate and orchestrated effort to achieve our ultimate goal—capturing the opponent's king. That orchestrated strategy is our roadmap.
As in chess, where the position of the pieces change throughout the game, our roadmap won't be much use if it assumes the environment around us will stay static as we proceed. Effective positioning requires us to anticipate how the future will unfold and to develop our roadmap accordingly. In some cases, we can recognize changes that are already underway, forecast what will happen with fairly good certainty, and draw our roadmap to account for them. In other cases, we might be able to anticipate likely scenarios, yet not know which of these will actually come to pass. That requires us to develop our roadmap in such a way that it can respond quickly and effectively to each of those likely scenarios. Of course, there are always cases where we will be confronted with the completely unpredictable and unexpected. Our roadmap must be developed with those in mind as well. We do that by staying as agile and flexible as possible, avoiding backing ourselves into a corner with unnecessary assumptions.
計 ji, falling tone, belongs to the radical or root group 言 yen, for words or speech, which is itself comprised on the left of the ideograph for transgression over the pictograph 口 kou for “mouth.” On the right is the ideograph 十 shi for “ten,” which the Chinese consider a perfect number, representing fullness. 計 can mean “to strategize, to scheme, to calculate, to calibrate, to seek a plan, to arrange,” or “to evolve a plan.” Leaders, worldwide, have multiple plans. Many times stakes are high, and when Plan A is in progress, a resourceful leader would have Plans B and C ready in case Plan A encounters an obstacle which may delay it or too time-consuming to overcome, or the factor may have shifted, so that Plans B and C could be immediately implemented. There were many legendary Chinese leaders who possessed this ability in their leadership.
Positioning is certainly more of an art than a science, and one that we get better and better at with experience. We can also learn a great deal from the experiences of others. Many of the innovators I interviewed for this book had quite intriguing stories to recount.
Positioning Our Sights
As we discussed in the prior chapter, having a vision for the future is an essential attribute of great leaders and innovators, as there is no roadmap without a clear vision of the future. In this section, we look at several examples of innovative business positioning.
John Thompson, CEO of Virtual Instruments, has a natural ability to position effectively. I asked him to talk to me about his time as CEO of Symantec, and have included the transcript of his answer as follows:
Symantec was originally created through the consolidation of two small PC tool companies. The strategy that had evolved during the PC era was all about the yellow boxes dominating the shelves of retail stores around the world. And, sure enough, if you were to go into a Staples or Best Buy, you'd be overwhelmed by a sea of yellow boxes. And the company did very well, going from essentially nothing to $632 million in 1999.
But then the Internet revolution arrived and the market was giving far more value to true Internet companies than to more traditional software companies. It became clear to board members that the company did not have “an Internet strategy,” since despite $632 million in revenue, the company had a market cap of only $1.3 billion. By contrast, many of the Internet companies of that era that had gone public barely had any revenues, yet had multiple billions of dollars of market cap. So it was clear that our strategy was not appealing enough to investors to the point where they were willing to invest in the company. And that's what prompted the board make the change in the leadership.
I arrived in April of 1999 after 27 years and nine months at IBM. And I remember, as I was considering the job, I called this friend of mine whose board I served on to ask his opinion on whether I should take on the role of chairman as well as president & CEO. His advice to me was, “You're going to have to do all the work, anyway so you might as well have all the titles.” But then he also said, “You know it's important for you to think about what you are going to do when you get there. But don't preordain the answer now. Take time, listen to the team. Don't be bashful about sharing your opinion, but use your ears and mouth proportionately. Listen more than you talk for at least the first 100 days.”
And that's what I did. I focused first on understanding why the company was doing what it was doing and why we weren't doing some of the things that other more market-successful companies were. So, by the time those first 100 days were over, I'd settled on the strategy, which was to become the leader in securing the web. During my first analyst meeting as CEO, I said we were going to refocus our company on securing the Internet and becoming a leader in that space. We had a very prominent position with Norton Antivirus, and we would put far more energy and effort around security than anything else. I also indicated that, to the extent we could, we would get out of those businesses that weren't relevant or important to securing the Internet. And we did.
And so the first business that we got out of was the ACT! business, which was a personal contact management database. It was the best in the market, but it had missed the CRM space and so there was no reason for us to hold on to it. We sold that back to the original founders and then embarked on trying to sell Visual Café. That was also a market leading tool, but not relevant to what we were trying to do, and quite frankly, other than the distribution strategy that Symantec had, it had no relevance to anything else in the portfolio.
We did keep PC Tools, because it had a very, very strong revenue base. The growth was not overwhelming, but it was highly profitable and we felt we could use the proceeds from that to invest in the security business. There was no clear leader in the security business at that point in time. Many people would say that McAfee was a leader in the corporate space and that we were the leader in the consumer space, at least around antivirus. But there was no clear security leader because the security category was evolving as the Internet evolved. So, the end result was that we picked our strategy after listening and put a stake in the ground that publically said we intended to become a leader in the security space. Within one year of making that declaration, we changed our nomenclature to becoming the leader, which was yet another signal to the marketplace that we were going to be more and more aggressive.
Soon after the announcement, we bought a little company in Virginia called URLabs that had a relatively new, early piece of technology around URL filtering. Back in those days, large corporate users were concerned that the Internet was going to become a distraction to their employees and it could create liabilities for them. And so they needed to filter more of the places that people would go on the web, particularly if they were using corporate assets. So we thought that this would be a good step for us, moving more toward the corporate market, not just the consumer space. And it would fit within the cash budget that we had. We executed one or two other small deals and then we did the big deal, AXENT Technologies, which had very, very strong leadership in enterprise security management. And that was, yet again, a very, very, clear signal to the marketplace that we were targeting not just the consumer franchise that we had, but the enterprise as well. And we were targeting it in a way that was very, very meaningful, because we spent $600+ million for AXENT, which was probably 30 to 35 percent of the market cap of the company at that point in time.
Not long after, in 2001, the Nimda attack occurred. In under half an hour, it became the most widespread Internet virus in history, and our business just exploded. We split the stock three times over the next three years. The market cap of the company I think peaked at roughly $25 billion, up from that $1.3 billion when I joined. So we were feeling pretty good about ourselves. I had only planned to be there five years, and I was ready to retire. But then we decided that the world was changing. Because of the web, more data was being produced every day than companies could effectively secure and manage. And the nature of the threats was evolving in such a way that if you couldn't block the attack, you could at least recover the information. The market leader in backup and recovery then was Veritas, which had gone through a pretty difficult time with a number of market misses, and the stock had been hammered pretty badly. And so our vision evolved to the point where we thought we should be in the security and information management business, not just the security business.
And that led to the acquisition of Veritas, one of the biggest deals ever announced and executed in the tech space. I will say it was the toughest deal that I ever did in my time at Symantec. It didn't turn out quite like I had hoped for the company. But we were committed to continue to evolve our business and meet what we thought were the changing needs of the marketplace, which were not just to secure the content people were creating, but to evolve our business to keep up with customer needs.
John's story is filled with fascinating insights into how he repositioned Symantec and developed and executed a roadmap to achieve his goal. Notice, too, that he spent a great deal of time listening, the subject of Chapter 1, when he first arrived at the company. Later in our conversation, John went on to explain why he invested in and now leads Virtual Instruments, again positioning himself and his company for the future:
I think infrastructure performance management is going to become the critical issue, now that we have virtualized everything in the IT space. My belief is that at every inflection point in this industry's history, a new problem emerges that people have never thought about. And with each new problem, new leaders evolve. When the world became client/server enabled, distributed systems management became a huge, huge issue. Solutions like Tivoli and CA and HP OpenView all evolved, and that's now a $15 billion business annually. When the world became web-enabled, security became a big issue. Antivirus technology existed before web enablement, but it was the advent of the web that really, really catapulted that business to the forefront and expanded what people's definition of security was. And I think now as we move to a more virtualized or cloud-based environment, there is another likely shift. The old systems management tools were architected twenty years ago. And so it's more likely that a new company will emerge to focus on something that is unique to the new environment.
This market shift that John describes was echoed in comments made by State Street Executive Vice President Jim Phalen, when he spoke about the fact that what was once a relatively small Boston bank, around for hundreds of years, is now one of the most systemically important financial institutions in the world.
We had a major turning point in the 1970s when we moved from being a traditional commercial bank to becoming a custody bank and asset manager. At the time, State Street was the fourth of the big commercial banks in Boston, behind Bank of Boston, Shawmut, and Bank of New England. It was a very bold decision at the time to take a nontraditional path and become an investment services organization. But State Street thought the industry had a big future, and it did with mutual funds, then master trust and the pension market developing quickly. So this bold decision put us on an entirely different path. Back then, nobody would have anticipated that State Street would be the only one of those four organizations remaining as an independent firm, much less be recognized as one of the world's most systemically important banking organizations. So we made a transition from a traditional bank to a custody bank and then we became more of a global organization, and then we became an information organization as opposed to just a transaction kind of organization. Now we are moving to the point where what we deliver is a fully automated service, where technology isn't simply the tool anymore, it's the product.
Developing Our Roadmap
When I joined State Street in 2001, the business areas were in the midst of dramatic change, including global expansion and the move toward information delivery that Jim Phalen described. The technology infrastructure, however, had not changed in years.
In fact, since infrastructure managers had been told to minimize spending, many of our technology assets were quite old and past the end of their expected life cycle. As a result, the infrastructure staff spent most of their time trying to keep everything up and running instead of implementing new technologies. Also, a highly decentralized organizational structure left teams without a clear sense of ultimate accountability and ownership. This sometimes created barriers and resentment. When problems arose, people often felt they had to protect their own interests and find others at fault, rather than simply fix the problem.
After my first round of interviews inside State Street, I knew we needed a major infrastructure renovation. The existing platform and service model were barely meeting today's business needs. I was certain that they would not support globalization, business process transformation, or any of the other business strategies that were in the works.
I assembled my management team. After a number of meetings, our vision for the company's future technology infrastructure services took shape, and we drew up our strategic plan. We had several goals. First and foremost, we wanted a high-performing, resilient, and agile global IT infrastructure. Second, we wanted to deliver the highest quality service, something we called “global seamless service delivery.” Third, we wanted to operate with optimal efficiency and cost-effectiveness, providing quality service at the lowest reasonable price. And finally, we wanted to stay abreast of emerging technologies in order to improve performance, reliability, productivity, and cost-effectiveness.
As is the case with any business undertaking, one of the earliest decisions we had to make was determining how to fund it. We employed several strategies. A major component of the strategy was an Efficiency program that identified opportunities to reduce expenses so that we could reinvest some of the resulting savings in projects that would advance our plan. We did not reinvest everything. In fact, as the next chapter on Promote explains, we wanted to ensure that the business areas could see the results of our hard work. So, every year we gave back budgeted expense savings to the organization, often totaling in the tens of millions of dollars annually. However, through activities such as consolidation, contract renegotiation, and many more, we knew we could self-fund a considerable number of initiatives. We also decided to leverage the technology asset Life Cycle Management, an approach to renewing capital assets without increasing expenses that I explain in the next chapter. And we developed an approach called Global Strategy, Local Execution, in which we would meet short-term needs in local offices in a way that would drive progress toward our longer-term global vision.
Once our objective, goals, and funding strategy were clear, we immediately began putting the various programs into place. At the core was a Business and Financial Management program that brought a data-driven business value perspective to everything we did, with consistency across all functions and locations. This included many elements: a metrics program, cost transparency, business and communications processes, training and templates for business case development, vendor and asset management practices, and other techniques designed to bring solid and consistent business management practices into everyday infrastructure operations.
The second program, Technology Management, addressed our strategy for advancing the infrastructure itself. It had two major components. The first was a Technology Infrastructure Blueprint that defined our three-year technology strategy for every IT infrastructure function. We outlined our common objectives, such as performance, security, continuous availability, virtualization, agility, green computing, and more. Then each of my functional teams—network, server, storage, end-user computing, security, operations, and middleware—developed individual plans to achieve these goals. These were submitted to an integration team and then presented to an IT leadership committee that included all of our major IT partners. We also created an Innovation Lab for testing new technologies and innovative products so that our Blueprint could stay constantly up-to-date. The second major component of our Technology Management program was our Global Data Center Strategy. This strategy outlined a multiyear effort to consolidate and eliminate local server rooms and implement state-of-the-art enterprise and regional data centers. These new data centers would offer the state-of-the-art security, resiliency, regulatory compliance, green standards, and other critical capabilities that we knew would become increasingly necessary for global competitiveness.
We also initiated a third program, People Management, which initially focused on integrating historically distinct functional areas into a single core infrastructure team. As we advanced, our organizational model changed as well, and this program soon became known as Global Virtual Teams. When organizations have highly decentralized and disparate infrastructure environments, as State Street had, local teams have very different processes and tools. To bring consistency across all locations, we formed a Global Virtual Team for each major infrastructure function that united functional staff across the globe. These teams worked together to implement the programs and initiatives described earlier, leveraging the approach of Global Strategy, Local Execution. They also focused on implementing global process management standards and practices, including ITIL (information technology infrastructure library) and Lean, that could quickly create consistency and improve effectiveness and efficiency. Since we recognized that creating a global culture would require a different mind-set in many respects, we also implemented incentive programs, awards, and training to speed progress.
Together, these three major programs formed the multiyear roadmap that led to the design and implementation of our award-winning 21st Century Technology Infrastructure. This solution has seamlessly supported State Street's unprecedented business growth, acquisition, and transformation while also establishing an early foundation for State Street's move to cloud computing, real-time data warehousing and analytics. Innovators in every industry and role can develop a roadmap for themselves, their teams, or their organizations, plotting the course from where they are now to where they want to be.
Gerald Chertavian, founder and CEO of Year Up, provides another example. The whole mission of Year Up is to position young urban men and women for success. In addition, he has implemented a unique roadmap for aligning his organization to the needs of his customers.
We're structured so that we'll actually go bankrupt if we don't adequately prepare our students to be successful at the companies they are placed in during their internship. We are tightly aligned with the sponsor—the companies—who contribute more than 50 percent of every dollar we raise to have access to the talent. This structure is not typical for nonprofits, which have traditionally been set up so the funder is a third party, such as the government, and the client is unrelated to the funder. This structure can result in misaligned economic incentives and potentially harm efficiency and quality. At Year Up, we have a self-regulating mechanism—if we don't perform well, we go out of business in six months. Because of this economic incentive, we must quickly recalibrate, learn, innovate, and change in order to stay relevant and hold ourselves accountable to providing a high-quality program.
Positioning for Change
Dr. Eugene Chan, founder of DNA Medicine Institute and several other startup companies, knows how to position himself and his work for the future of medicine and health care, just as our Technology Blueprint did for our business and technology goals. Here he provides another great example of the principles and the application of position:
I am focused on making changes to the future course of medicine. It's a matter of identifying a key need and asking a bold question: “How can we do this better?” I try to look maybe five years down the road to answer that question. I don't look much further than that because I want tangible things to tackle. So I ask, “What's the world going to be like in five years, and what can we do to address this need in that time span?”
One night I was doing my rounds in the hospital around three o'clock in the morning and thinking how antiquated and slow the process is from when blood is drawn to the time the physician actually gets the diagnostics. And I thought, “Hey wouldn't it be great if I had a little device in my pocket that took the place of this huge hospital laboratory the size of two basketball courts?” And as I thought about it some more, I realized there's no reason that consumers shouldn't have access to this type of information too, if it helps them take better care of themselves. People can buy a glucometer to check their own blood glucose, or get a machine that tells them their cholesterol. But these are all discrete pieces of information. As a physician, you've got a different diagnostic power in your hands when you get 20 or 30 lab values back. That's why when you're not feeling well, your doctor tells you to come into the office or go to the emergency room—it's so they can get access to all that information. Right now, we depend on this centuries-old patient‑doctor interaction for testing, but many of these visits can be avoided if the person runs the test themselves and the software provides an intelligent diagnosis. Also, people who are proactive about their healthcare are going to use this diagnostic information to take better care of themselves. They can measure their blood and watch cholesterol go up and down on a daily basis rather than annually, for example. Technology like this empowers people and lowers costs. This is what I'm focused on now.
Another great example of positioning for change is the concept of business continuity planning. This ensures that companies are prepared to maintain critical operations in the event of any unexpected situation that may interrupt normal business processes. Possible threats span a very wide range, including natural disasters and weather-related situations, widespread influenza outbreaks, political or social unrest, and more.
State Street's business continuity management strategy won several industry awards for its innovative end-to-end planning model. Since work can flow across multiple business areas, functions, systems, and locations, true business continuity requires the comprehensive identification of all dependencies between and across each of these elements. This focus on workflow dependencies is incorporated into every component of State Street's program, enabling the timely identification, support, and resolution of any incident with a potential business impact, including market-, counterparty-, technology-, facilities-, and personnel-related events. This approach positions State Street to manage any incident with potential business impact, regardless of its reach, locale, or nature.
All of us, as well, need to make sure we are positioned to be ready and to be as effective as we possibly can. Here, then, are the levels of effectiveness for the Position discipline. I invite readers to read and recognize themselves in one of these levels, and, if necessary, use the takeaways in this chapter to help move up to the next level.
Position: Levels of Effectiveness
Level One: Reactive
At Level One we have little sense of where we are and where we want to be. It's all about firefighting rather than planning for the future. We are frequently blindsided by change.
Level Two: Responsive
At Level Two we have a vision for the future and a plan for achieving it. We actively seek information on what's around the bend, and we respond quickly to change.
Level Three: Strategic
At Level Three we anticipate trends and prepare ourselves and our teams in advance. We develop a global, integrated roadmap to achieve our company's long-term vision. We are good at achieving the long-term vision by way of executing short-term steps that bring immediate benefit to the organization.
Personal Positioning
Just as we must constantly strive to position our organization for success, innovative employees can position their careers as well. I didn't really understand the American corporate culture when I started my career. I had no idea about how much work each of us was supposed to deliver to be considered a good worker. So I always worked extra hours but never recorded any overtime, even though I knew that we could be paid for extra hours of work. I thought management might surmise that I worked extra hours because I was incompetent.
As a result, I always delivered my results before the scheduled target date and with measurable high quality. Little did I realize at the time that I was positioning myself for advancement. Sure enough, opportunity arose, and I was assigned as a project manager very early in my career.
Whenever my managers had offered me a management position, I always declined because I loved my own technical work. I personally excelled by consistently delivering high-quality work well ahead of schedule. So, my performance record still allowed me to remain highly qualified for future advancement.
However, one lucky year, when I was six months pregnant with my daughter, I accepted my first managerial position as information systems manager for IBM Stockholder Relations in New York City. So, in a single year, we were able to celebrate two blessed events.
Thereafter, for the next decade or so, IBM included me in their Executive Resource Program and I was able to move through a broad range of assignments in technology. One Friday, my manager asked me to have lunch with him in the IBM cafeteria. We each bought a sandwich and sat down in a quiet place to eat. I had barely picked up my sandwich when he told me that I was being offered a job as the site information systems and telecommunications manager for IBM in Boulder, Colorado. This was a major promotion, and everything I had done at IBM made me ready for the assignment. They planned to make the announcement the following Tuesday, and I would have to fly out in three days!
The opportunity was very attractive. My responsibilities involved overseeing all IT functions for six IBM divisions located at the Boulder site at that time and were fundamentally equivalent to those of the CIO (Chief Information Officer). Yet, my mind was racing a thousand miles a minute about the perspective personal issues this move would create. However, I also realized that this unexpected reassignment was potentially pivotal to my future career—the ultimate positioning. It could provide an excellent foundation for any executive job, especially as a future CIO.
As confident as I was to accept the challenge, my 13-year-old daughter, Michele, brought up her own issues. She was in the eighth grade, and she had friends in Scarsdale, New York, where we lived, that she didn't want to leave behind. My husband, Werner was also concerned. He had an excellent job, and he was the only child of his elderly parents, who both had serious health issues, so he could not move. We made a family decision: I would move to Boulder by myself, and they would stay in Scarsdale.
The job was a challenging, risky assignment, but it worked out and was a success. The personal sacrifice was significant, as I missed my family, but I flew home as often as I could to be with my husband and daughter.
As hard as it was, my Boulder assignment proved to be the most important job for my future career. I believe that it was the definitive experience that Merrill Lynch and State Street both looked for before offering me their technology executive jobs. I had positioned myself for opportunity with the right work experience and the right credentials. I was ready for the future.
Position—Concrete Steps for Putting This Discipline into Action
Individual
As innovators, we need to crystallize our vision for the future and develop a strategic, step-by-step roadmap for achieving it, identifying the key milestones and deliverables along the way. We need to anticipate and incorporate expected changes and be flexible enough to respond to the unexpected. Positioning applies to our careers as well. We need to strive to beat deadlines and exceed goals. We should position ourselves for the future, new opportunities, and the next advancement with the right work experience and the right credentials.
Team and Organization
Teams and organizations must manage for the long term while delivering in the short term. Leaders must clearly define and communicate their vision and strategy and by doing so provide their teams with a future goal that can drive innovation throughout the organization. The creation of strategic business value is first and foremost.
The organization and its teams must be able to focus on the future, anticipating how it will unfold and developing plans accordingly. In some cases, we can forecast what will happen with some accuracy and draw our roadmap to account for them. In other cases, we can anticipate several likely scenarios without knowing what will really happen. In still others, something completely unpredictable and even game changing can happen. Agility and flexibility are the keys.