Spend Must Be Intentional

Reading time: 4.8 minutes

For most companies, there is no room for projects built on hope and wonderment -- every dollar matters. Today's marketplace is unforgiving. Shrinking markets, opportunities, and budgets are forcing difficult decisions. Many companies have already struggled with the choices to furlough, layoff, or otherwise change company spend. Now is the perfect (and expected) time to analyze spend and understand what investments are intentional, and what investments are designed to bring value to the company. It is also the ideal time to cull projects/spend that seem appealing but have no discernible value in today's marketplace.

Let's look at a simple example.

Your IT budget is USD10MM. Said budget spans typical OPEX and CAPEX subjects, including people, benefits, hardware, software, office miscellaneous, travel, and training. The number of corporate strategic objectives for the year requires more project capacity than your headcount. Each of the lines of business (LOB) want their needs addressed, each of them vying for priority over the other. Some of us call this a typical Thursday.

A few folks on your team have ideas that may potentially transform your IT operation, enabling quicker response times, more straightforward systems changes, and the flexibility to adapt to the changing winds of the business happening now and in the anticipated future. It appears the idea may simplify operations and lower long-term spend. While everyone else is fielding daily lights-on operations, handling one to many (1:N) projects, participating in meetings, and performing hands-on-keyboard technical things in fits and starts, you green light your lieutenant (Lt.) to explore new ideas looking forward to the future.

Across the next days and weeks, the exploration project updates happen in hallways, at lunch, over a few coffees, and dinner one night. The updates are exciting, new tool possibilities pretty cool, and the potential for a modern architecture changing the operation for the better are enlightening.

As weeks turn into months, the excitement builds as new programming languages, tools and ecosystems coalesce into a working prototype of things promising an upgraded tomorrow. Your Lt. asks for permission to bring a couple of other folks on board the exploration project to increase velocity. You approve. They've privately named their project,?Rocket Man, to illustrate the value of this project promising to propel them into new territory. Meanwhile, your role as CTO continues to require constant progress on Line Of Business (LOB) projects, executive meetings, prioritization activities, capacity challenges, attrition, and budget revisits due to market shifts.

Nine months elapse. Seven people are now full-time dedicated to the informal, doesn't formally exist yet project, which has consumed 15% of your annual budget, and you need answers. Finance is asking why seven folks are logging time against overhead time codes, LOB leaders are knocking down your door for solutions, and your CEO is hearing some hallway chatter making her curious how you're doing. At one point, a peer jokingly asks about?your kids and their toy-box project, but you smile, brush it off, and redirect the conversation. Post-haste, you ask your Lt. to provide a purposeful briefing to understand money spent, time elapsed, people, responsibilities, progress, and definition of done. You privately wonder how this effort made it so far down the road.

The team presents a sharp, polished presentation deck complete with video clips explaining tool chains, sharply drawn architectural diagrams, a few technical cartoons, code snippets in new programming languages not used in today's operations, and a component architecture status report showing percentages of things done, in progress and not started. They smile with the pride of success, turn off the presentation, turn to you, expect validation, encouragement, and continued support. They feel they have worked hard and performed admirably.

CTO: "How do you know when you'll be done?"

Lt.: "We're working to decide on the final programming languages, tools, and solidify the architectural direction. We will have answers in the next couple of weeks."

CTO: "When will this be ready for production?"

Lt.: "We don't know yet. We're still working out the plan."

CTO: "We've spent USD1.5MM to date. This spend is now on the radar of the larger company. How much money do you need to finish the prototype?"

Lt.: "We'll come back to you with a number."

At this point, the CTO knows a bunch of money is spent, doesn't know what he has, when he will have something usable, or when he will be done spending money. At the same time, he is behind on LOB prioritized and funded projects, is still fixing financial spend details with the CFO, and needs to manage the message with his boss, the CEO.

The options appear to be:

1. Formalize it, publicly communicate and fund it
2. Kill it, shelf it for later, and tag it as "R&D" with Finance
3. Let it go on for a while longer until the answer reveals itself

What did the CTO do well, and what must the CTO change?

What the CTO Did Well

1. Encouraged innovation
2. Trusted and supported his team
3. Gave people latitude to learn, grow, and become more
4. Invested in the future proactively

What the CTO Must Change

1. Trust people while additionally setting up engagement parameters
2. Define desired outcomes in advance of engagement
3. Set and manage "Keep Going / Let's Stop" triggers
4. Set, manage and communicate expectations laterally and upline

For additional suggestions on ensuring people are empowered to grow, learn, and care about successful outcomes within a premeditated framework read Leadership in Absentia.

10 Recommendations Enabling Exploration and Discovery

1. Encourage new ideas, approaches, and solutions at any time, from any person, on any subject. Permit people to explore.
2. Have a single repository?for all new ideas to be logged, explored, collaborated, prioritized, and developed.
3. Consider designating time per week or month?for people to explore, discover, prove, or disprove ideas and assert priority.
4. Consider having regular?lunch and learns or spontaneous blitzkrieg?meetings?whereby authors present and explore their problem statements and innovations collaboratively.
5. Have teams create and review value propositions?to receive formal funding.
6. Use "Go/No-Go" decision milestones?during the funding period.
7. Encourage folks to explore their ideas on their own time or designate hours per week or month where folks are free to experiment with their ideas.
8. Define funding parameters?within which each effort must exist to manage time, risk, security, and spend.
9. Know when to say when.
10. Set and manage expectations?with your uplines and peers.

We are all required to change, adapt, and evolve regularly. Exploratory thinking and testing is an enabler. The CTO did the right thing investing in the future and trusting his people. And the Lt. did the right thing working to discover options for the future. They were both intentional.

However, desired outcomes, operational parameters of the engagement, and go/no-go decision points need to be articulated and agreed upon in advance. Outcomes, spend, and activities must also be intentional. Else, it will only look like a toy box project leaving everyone wondering what value they are receiving for the spend.

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I drink a lot of caffeinated coffee and tea. And I used to be on airplanes a lot. I'm taking a pause from planes, trains, automobiles, hotels, and speaking engagements at the moment. My commitment to write more articles in 2020 and be increasingly helpful to others remains unchanged.

The material I publish is content we discuss every day within Trility teams and with our clients. If you’d like to keep informed, and even interact, please connect or follow me on LinkedIn. Or we can?send you an email. And if you'd like to talk, bounce some ideas off me and explore opportunities and options for your company, teams, and projects, holler. I'm happy to talk any time by mobile, chat, or Zoom.

Unchanged in today's circumstances -- we are always looking?for system thinkers to join us – those who can see the broader landscape and do the work as well. If this resembles you,?email us.