Culture Eats Strategy for Breakfast: Friedkin’s Journey Toward XOIT & High-Multiple Cultures

Earlier this week I kicked off a series on Culture Eats Strategy for Breakfast, and have been pleasantly surprised by the engagement it’s generated (particularly via comments/likes on LinkedIn) so far. Turns out, cultural transformation is a popular topic, and there seems to be a strong appetite for more stories on this topic.

I have long since felt that the role of the CIO and central IT is moving away from command and control, and toward line-of-business enablement. I’m also seeing some organizations, like Amazon, who have taken this one step further in a move toward complete decentralization, where culture and best practice serves as the forcing function that allows teams to operate independently. This trend — trading off consistency for time-to-market — will be the topic of one of my next posts in this series.

In the meantime, I have been engaged in a fascinating discussion with Natty Gur, the CIO of The Friedkin Group, about their cultural transformation. Natty’s background in fighting terrorism has given him some interesting, and from my perspective unique, perspective on this trend, which he graciously agreed to offer below….

(Note: these best practices, and a number of others, are now available in my book Ahead in the Cloud: Best Practices for Navigating the Future of Enterprise IT).

One of the main reasons for public cloud transformation is to be more agile, and as a business to provide faster and more reliable services for your customer. But is that enough? Is it just technological transformation that is needed or do you need to transform your culture as a business as well?

In a previous life I found myself providing IT services to one of the leading counter-terrorism organizations in the world. Just as I began my work with this organization, they began experiencing a wave of suicide bombers which they couldn’t stop, or even minimize. It took this organization considerable time before it realized the reason for their failure was a change within their enemy; their enemy’s structure had changed from a single centralized group to thousands of unconnected terror cells, each with the same purpose: Destroy the organization’s country. Once this was understood, they made a unique decision: adopt the same structure and operation of their rivals; break the classical organizational silos down into small hybrid groups, each with the needed expertise from the old structure, in order to reach a clear purpose. These groups were also created to run with complete autonomy and full authorization to do what needs to be done in order to reach the whole group’s purpose. This change proved successful and the organization won the war, and while I was there, I learned a very important lesson.

Silos are IT’s worst enemy. I have seen it while working for IT organizations as well as working as an Enterprise Architecture consultant to organizations all over the world. No one will argue that silos prevent IT groups from reaching their full potential and fully contributing to their companies.

Today, most large companies’ main competitors are the thousands of unconnected start-ups who all share the same purpose of disrupting and taking over an industry. So if countries, when faced with this problem, can change the way their defense organizations are structured to help win the war, why are companies are not changing the way their IT organizations are structured and how they operate?

While terror cells and startups are obviously very different, they do share in some fundamental organizational characteristics. For instance, as small groups with limited resources, they tend to push their members to take responsibility for many aspects within the group, and are empowering group members to manage themselves. Another similarity between those two groups is the environment of trust between members. Members can make mistakes or bring crazy ideas with the knowledge that no one is going to penalized them. While you may feel that this thinking is too extreme, but empowerment and trust are the two main principles behind the “Toyota Production System” which has had such profound influence worldwide.

The world is in a constant flux of change, with new generations entering the work place. Each new generation has a different expectations for work, and are each driven by different values from the previous generations. As leaders, it is our responsibility to ensure that our organization is attractive to the next generation in order to sustain continued success. To that end, have you given thought to your current organization’s structure, and asked whether it is attractive to the next generation?

It was the success of hybrid teams, and the fact that IT silos are actually damaging to organizations, along with the understanding that trust and empowerment and finally the need to attract new generations, all these factors pushed me to look for a new way to structure and organize our IT group.

It was clear to me early in that Scientific Management and hierarchies are not going to work for us, however it took me a lot of time, and some embarrassing mistakes, to formulate an alternative. The breakthrough was the discovery of Holacracy. Yet, while this management philosophy held a lot of potential and could lead us down the right path, there were too many aspects that simply wouldn’t fit within our corporate culture. Therefore, we made significant adjustments to Holacracy and developed what we call XOIT (Exponentially growing IT).

What follows are the main principles that has helped XOIT be successful for us:

First, we broke down the silos by defining a clear IT purpose. Then we thought about the main functions needed to reach our purpose. From there we turned each function into a group by defining the group’s purpose, the group’s domains (what the group owns) and the group’s accountabilities. The next step was to break each group into sub-groups and roles which are needed to reach that group’s purpose. For every sub-group and role we defined their purpose, domains and accountabilities, and so on. When we finished we had a clustering of groups containing all roles needed to reach our IT purpose. Once the structure was in place, we assigned all of our associates to roles based on their knowledge, experience and preferences. In XOIT we have one golden rule: each role and each group that has accountability or is responsible for a domain must have full autonomy and authority to decide how it will reach its purpose (whether group or role).

To ensure each group has full autonomy and authority, we have taken the classical manager role and broken it down into three distinct roles filled by three different associates. The first role is responsible for the day-to-day operations of the group. This role is filled by an associate designated by the lead of the super-group. The second role is responsible for the way the group is structured and operates. In other words, this role defines the group’s other roles, its purpose, its domains and its accountabilities within the group, as well as establishes group policies. This role is elected by all team members. The third role is responsible for all the administrative personnel that would typically fall onto a classical manager.

While self-management is at the core of this philosophy, it is important that that the groups and roles maintain accountability. Therefore each group has simple and measurable metrics defined for it, which give a clear indication to anyone whether the group is moving forward, backward or standing still.

Finally, we have adopted a process which enables any associate to bring new proposals of how the group should operate and be organized based on tensions the associate felt as they filled roles within the group. A core tenet of these proposals is that unless group member can prove that the proposal will take the group backward they must be tested in reality. This encourages a spirit of experimentation.

Our metrics, customer and stake holder feedback, even our associate engagement surveys all point to a positive, significant change in IT. It’s not that we are perfect, there is still a long way to go and we are in a beginning of long journey, but the evidence shows that this new way to organize and operate is yielding positive results.

For additional information and tracking XOIT feel free to click the following link:

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Tales of AWS in the Enterprise

Stephen Orban

Written by

Husband to Meghan, father to Harper and Finley. GM of something new @AWSCloud (formerly Head of Enterprise Strategy for AWS). Author of “Ahead in the Cloud”.

AWS Enterprise Collection

Tales of AWS in the Enterprise