If you don’t have time to read this post please flick through the slides:
The CEO of ACME Entertainment & Leisure stared out at the dark clouds that covered the London sky that Tuesday morning, looking desperately for a glimmer of the sun. But there was none for Sarah Brown to find. It was a reflection of how gloomy she felt her about her business – figures were falling fast and her strategies for driving growth were failing. It was as if everything she tried was useless in the face of the new breed of competition – a competition that lives in the Cloud and does not own bricks-and-mortar.
A voice in her head said, “You have to get above the clouds to see the Sun”.
At that moment she made a decision, she had to understand everything about this cloud-based business model. She rang her Chief Information Officer and talked to him about her cloud fears. He didn’t seem to share her worries.
Sarah picked up the phone and called the head of HR. “Hi, this is Sarah, can you get me a new CIO please?”
This story is about the differences between traditional versus Cloud-native firms; Traditional firms are “Horses” and the Cloud-natives “Unicorns”.
ACME Entertainment & Leisure is a “Horse” with decades of history in bricks-and-mortar stores and face-to-face customer interaction. For those of you following the boom in cloud-natives, you’ll be familiar with the term “Unicorn” to refer to those new breed firms that are valued upward of US$1B.
Not all “Unicorns” are cloud-focused business, but significant proportions are. Digital disruptors like; Uber, Airbnb and Snapchat are among the leaders. It’s also of note that Chinese firms accounted for upwards of 20% of the Unicorn List.
Traditional companies are now looking at adopting the unicorn’s way-of-working; culture, structure, architecture and practices.
The CIO’s First Day.
The new CIO, Mr Black, entered a room full of C-levels; a veritable “dragons den” of powerful egos! He first looked at the CEO expectantly. She, in turn, glanced over the silvery rim of her spectacles.
“Welcome to my parlour!” She said, smiling to herself at the hackneyed spidery reference.
“Mr Black, as I’m sure you’re aware, you have joined the leader in our market, and we have ambitious growth plans. We plan to buy our largest competitor by the year. We’ve acquired a business in the past and have suffered from too many IT headaches for years afterwards. I need one I.T. solution for the merged business, and I want it up-and-running within 8 months of the merger.
She glanced at the CFO sitting on her left.
“Your predecessor failed to sort out the weedy tangle of I.T. systems. A top priority will be to significantly reduce IT running costs.” The CFO responded with a look of grim determination.
The CEO turned towards ACME’s Head of Retail. He smiled with enthusiasm at Mr Black.
“And on top of that, we need your help to modernise our retail stores and make much better use of I.T. to enhance the customer experience. My team have some great ideas on where we want to go, but we need your team’s help to make it happen!”
“Our customers need one great experience – in-store, on the web or mobile. We want them to have, what I believe consultants call an ‘Omni-Channel Experience’. I prefer to call it simply “One Customer, One Experience”. Explained the CEO, exploring his face for a reaction.
Meanwhile, from the end of the table, the Head of Legal casually raised his arm adding:
“We’re facing some regulatory changes that will impact many aspects of our business. We must keep our regulator happy, and that means comprehensive audit trails of all our customer activities. Many of our processes and I.T. systems will need to change quickly to keep pace and make sure we’re aligned with the law”.
Suffice to say, our CIO left the meeting with his head full. But he had a hunch he needed to be bold and radical to meet the business demands.
“After all, they’d hired him on the strength of his last Digital Transformation programme; where he’d proved that a traditional firm could learn from the Cloud –native Unicorns. It won’t be easy, but I think I can take a similar approach here.” He said to himself as he walked back to his office.
The CIO had taken the time to understand how the Unicorns were using Cloud technologies and Agile practices to build significant advantages. They weren’t simply layering-over cloud on top of legacy systems. Instead, they built new application ecosystems from the ground-up – and at a blistering pace.
The CIO understood how Cloud-native organisations were taking advantage of open source software, new applications architectures (such as microservices) and development & deployment practices (such as and DevOps). And those businesses were seeing major benefits in doing so – ranging from increased agility and efficiency to higher reliability and innovation. All of this adds up to healthy revenues and massive growth, over very short time spans: they are able to take full advantage of volumes of fine-grained data gathered to predict next moves, and tailor marketing efforts to individual customers. And at staggering scale.
Armed, with this information, the CIO adopted a “what-would-a-unicorn-do?” approach to his digital transformation strategy. Interestingly, the first pilot project wasn’t in the mobile or online space, rather it was focused on upgrading the customer and staff experience in their 3,000+ high street stores.
To cut the story short (maybe a later post will fill in the gap), 90 days after kicking-off the ‘Retail Store’ pilot, its success fuelled Unicorn practice in several other projects. ‘What-would-a-unicorn-do’ became the mantra of their IT-led business transformation. There have been a fair number of successes and failures over the180 days since.
Here are just a few of the lessons learned:
- It is possible for traditional Horses to adopt the practices of the Unicorns, BUT it requires top-down buy-in from the whole business. There’s little advantage in creating an “agile” IT function when the rest of the business changes at the speed of an oil tanker.
- This requires a whole-of-business: People, Process & Technology transformation. And this isn’t without significant risk. The risks, however, can be managed by taking a fresh look at business-visible IT governance in parallel with the adoption of cloud-native practices and tools.
- For ACME E&L, the advantages outweighed the risks. They could see the writing-on-the-wall written largely by the digital disruptors in their industry, and so, non-action wasn’t an option.
Future posts will explore how ACME E&L progressed, specifically how they:
- Switched from traditional email and office tools to a SaaS platform – within a few weeks of the merger
- Started their journey towards Microservices and DevOps
- Developed a common view of their customer data across four distinct fiefdoms, and multiple geographies
- Experimented, failed, learnt and embraced emergent design
- Approached multi-modal I.T.; governance, standards and “Just-Enough-Architecture” – principles, patterns and practices.
- Kept the C-suite happy; how the CIO met their challenges and managed risk.
This story was first told to the British Chamber in Hong Kong, July 2016. It’s about a real business that wishes to remain anonymous. It is just a short teaser that begs questions and much more discussion, however, it did generate lively Q&A on the day. Apart from the ACME E&L story, there are questions I’d like to explore and discuss:
- How does the business assess how much Unicorn ways-of-working to adopt (If any).
- What are the basic foundations of a Horse to Unicorn transformation?
- Very few firms will want to kill all the Horse-systems that run their business today; Is it possible to go just a bit Unicorn, what would be the advantages and drawbacks?
- When is it best to stay a Horse (maybe a faster one?)?
- How many Horses will succeed? And what is the cost of failure?
- As the Unicorns grow and become more established, do they find themselves behaving like Horses? (My friend at Google would say they do!).
- What are the Horse practices that should be kept or dumped?
- How much of this is about technology versus people; structure, culture & motivation?
- Cloud-natives design, build and deliver IT in a way that’s radically different from most traditional organisations, what are the major challenges and opportunities for the trad-co. CIO in the adoption of Unicorn ways-of-working?
- Will China overtake Silicon Valley on the Unicorns List, and if so when, and what are the implications?
Please find the British Chamber sides here.
A special word of thanks to Padraig Hyland and Colin Beverage for their help shaping this story.