The “Business and IT” conundrum

Have you ever used the term “the Business” in your organization? Or “We are waiting for a reply from the Business”? Or rather, “This is tech’s job based on requirements from the Business”?

I remember a really charismatic CEO once wondered out loud in an all-hands “who is this Business anyway?”. And he was right, “the Business” is a part of the organization, is not just some remote entity that exists under its own terms. Read on my take on demystifying where this Business and IT segregation might be coming from and ideas on how to tackle it.

A very frequent setup in large organizations is the segregation of its units or clusters. Usually, the core software part comprises three units: technology, business or product, and design. Each unit typically has its own agenda, priorities, and hierarchy, but it is also called to work with its lateral units in order to deliver the company’s products or services. There is nothing fundamentally wrong with this setup, and I would argue that any setup, as long as it satisfies the customers’ needs when the final product gets delivered, is good enough for the respective organization. However, things go wrong when these units diverge continuously, to the point that power plays and differences on a personal level start to emerge. This segregation is one of the most prevalent sticky points in large organizations. Worse, it sometimes reaches the point that it is considered the norm. Carry on reading and I am sure you will nod your head in accordance soon.

Let’s consider the following scenario: each unit acts as a separate entity i.e. technology, product or business, and design (sometimes including UX, UI, or both as a combined unit). Each unit usually has a “Head of” or “Lead”, according to its internal hierarchy. Here’s the interesting part: each Head of, reports to a manager above, perhaps a Director or a VP; the different units’ reporting lines don’t converge under a single person. Going one level up more, and maybe the three functions merge under one person who is ultimately responsible for all three units (Director, VP), but what’s worse, maybe they don’t! Maybe they continue segregated all the way up to C-level, and yet, they keep being separated at CTO (technology), CDO (design), and CEO (product or business).

Is this segregation that bad? My answer is, if it doesn’t impede your products’ performance and releases, and it doesn’t frustrate your employees or harm your culture, then no, it is not.

But let’s zoom in a bit more at the situation below the “Head of” level in the hierarchy, at the “people on the ground”, At this level, there is high interconnectivity amongst the different business units. At this level, employees are called to deliver products or services that need people from all of the units to work together, tech, product/business, and design. The tech guys need input from the business and the designers to help them with what this product or service will look like. Similarly, the design needs help and guidance from the business, and some back-and-forth communication to ensure that they are designing the right product. So, despite the distance in priorities and agenda in the higher levels, the further down we go in the hierarchy, the closer collaboration is needed.

From start-up to hierarchical

A company needs leaders in order to succeed, and managers to maintain success. Both roles are needed, and they don’t necessarily need to overlap. Leaders ensure vision, pace and added value are in place, whereas managers look after project execution and delivery.

Let’s rewind a big organization’s timeline, and bring it to its infancy, back when it was a start-up. As you can imagine, a start-up has limited resources, and it’s natural for everyone to do a little bit of everything, for example, one of the company’s founding partners has product responsibilities and a view on how the design will look like. Even ideas on how to market it!

Slowly, the company grows in size and products, and some individuals become responsible (fathers) for the whole of these products; we don’t see business segregation yet. Fast forward some time, and the need for a “product manager”, or a “tech lead” arises, in order to dive into the area in more detail, and cope with the area’s problems more meticulously.

And that’s the tipping point; when we start focusing too much into the area’s specific tasks, and start missing the bigger picture e.g. Who is the product for? Is our customer satisfied? How do we measure success? The meetings start becoming more specific, and the product value becomes more distant. Politics start to emerge and individual PD (Personal Development) goals have higher priority than company success. The managers or leads start caring more about making “their area” tick like a clock, so that “their” results look stellar in the end of the year. It becomes a game of “I” versus “us”.

What problems is segregation causing?

Typically, we see companies that exhibit business and IT segregation, wanting to shift to more Agile methodologies, and thus seeking to embrace the Agile mindset. So, there must be something that doesn’t work for them in their current setup. It’s also very common for an Agile Coach (and I say this from my professional experience) to hear about this from the employees themselves, that this organizational separation is causing a lot of pain and is dysfunctional as it is.

Primarily, the problem with segregation is that it creates distance between teams, units, and people. This causes delays, misunderstandings, and ultimately leads to an “us and them” culture. So, in effect, anyone who believes that the unit segregation has created a cultural gap, most likely is right, since this is indeed one of the segregation’s direct consequences.

Why is this bad? Because the more we focus inside a particular unit’s problems, the more we miss the bigger picture which is offering a great product to our customer, either it being an internal customer (the company itself) or external. And that’s why we see the segregation problem manifesting in areas like technical user stories that can’t focus on the high level, or imposed deadlines by the business without prior agreement with the technology and design teams. These and more indicate that the company is missing the opportunity to collaborate in order to offer true value to its customer.

On the cultural side of things, unit segregation may lead to increased distance amongst people, to the point that employees from one side don’t even talk to the other side. Also, this can happen with the boss’ blessings and bleeds all the way down to his direct reports and area’s employees.

Common goals

It is natural for each business unit to have its own distinct priorities (e.g. systems migration, technical debt, market analysis, business development, client proposals etc). My question is: To what extent does each business unit has its own priorities, and if all units share common priorities what’s their strategy to fulfill them? Usually none.

The extent to which each business unit prioritizes its own unique agenda, determines the available bandwidth for collaboration with its lateral units.

Consider an alternative

Another approach to tackle the hierarchical complexity, would be to create a flatter structure, and ensure that there is convergence early enough in the organization’s hierarchy, so that there is one single person responsible for all units: technology, product and design. Also, this single person would be responsible for the whole of the product, thereby focusing on metrics such as, lead times, time to market, customer feedback etc and drive his combined teams towards a common goal. In this way, the organizational structure favours product value, instead of management hierarchy. Thus, a more fluid organization focuses on “what needs to be done in order to deliver our product”, and steers away from power plays and personal interests.

That doesn’t mean that the company needs to go headfirst into reorganization, and the crude reality is that most of the companies out there have a [heavy] hierarchy. However, thinking towards that direction and considering ways to reduce the communication gap and delays, is a great start to tackle the business and IT segregation topic. Various tools such as Value Stream Mapping or Process Mapping can be handy to point out inefficiencies that the business and IT segregation might be causing.

So, we see that business unit segregation is the natural evolution of a company if everything remains in auto-pilot. It is normal and will happen at some point as it favors sector specialization, and it facilitates the augmentation of the different sectors of the organization. We said that leaders ensure success and managers ensure maintenance and execution. So, whether the natural evolution of the organization is successful, is mostly down to leadership. And leadership should ensure that any proliferation in company size, employees and product count alike, should not be left uncontrolled and without a purpose or a solid strategy.