This article was co-authored by Duke Dyksterhouse, an Associate at Metis Strategy.
After transforming their organization’s business model, realigning teams with products rather than projects, CIOs we consult are left with an unavoidable question, “Now what?” Of the many possible answers, some of our customers choose to continue the transformation by dividing their employees into two groups: those responsible for activities and those responsible for innovation†
Through activities, we mean work that restores or tightens the processes and tools already used in an organization. You may know it by one of its aliases: persist† keep the lights on† run the businessor support† Through innovation we mean transformation work, the construction of new processes and products, often of the kind that generate revenue, improve experiences, or run the business.
In many organizations, the same group, team, or even an individual has both responsibilities, which is fine. But by assigning these responsibilities to: different resources, some organizations can drive focus, sharpen capacity calculations and simplify strategic planning, especially amid a product-driven business model, which can make such a division more attractive for several reasons.
First, it’s a straightforward proposal whose final state is relatively easy to imagine and measure, making it a nice seasoning for those still wrapping their heads around the broader operating model shift. Second, because product teams are permanent, as opposed to temporary project teams, product-driven business models are more prone to a more methodical and long-term division of responsibility. And finally, separating the two roles within product teams can give individuals greater clarity and focus, primarily by reducing multitasking.
However, splitting these responsibilities without a clear vision and careful plan can spell disaster and reverse the progress achieved through a new business model. If you are considering separating operational and innovation responsibilities in your own organization, consider the following tradeoffs before making a decision. And as you proceed with the split, be guided by the principles below.
Focus: Improved focus is perhaps the greatest benefit teams can derive from a division of responsibilities. That focus can streamline operations and bring much-needed structure to the time spent exploring new ideas, which are essential to a company’s long-term success. Employees responsible for both innovation and operations are too often forced (usually by their own managers and technology leaders) to sacrifice the former in favor of the latter. Dividing work by type of work helps to guard against this.
Streamlined capacity management and resource planning: Capacity management becomes easier when broken down into smaller chunks, especially when the split is by type of work. In the event of a fire, operations always take precedence over innovation. The problem is, there is always a problem: a server to fix, a computer to fix, a security flaw to patch. If the resources responsible for running the business are the same as those responsible for transforming the company, it is likely that the company’s innovative activities will stagnate and capacity calculations will be an unreliable input for the company’s business. strategy and budget. For those considering outsourcing or offshoring key IT functions, the split could shed light on which capabilities are commoditized and which are distinctive.
Clearer strategic planning: Splitting operations and innovation doesn’t remove each other’s dependencies, but the split can make those dependencies easier to coordinate, in part because of the clarity gained through streamlined capacity management and budgeting. Roadmaps and transformations also become easier as each group can do the work that has the most impact on its assigned success metrics. When operations and innovation activities fall under the same umbrella, those metrics can be at odds, such as measurements of reliability and stability versus those of experimentation.
Navigating the Gorge: The main drawback of segregating responsibilities is that it introduces an explicit separation that teams and their leaders must navigate. Failure to do so can create work silos and dilute responsibility. Once they’ve developed a viable product, innovation teams must resist the temptation to “throw their work over the wall” at the ops team. That temptation runs counter to the spirit of today’s best product-oriented business models, and by giving in to it, the organization is going back to square one. Setting standards that specify how long a new product will be owned by innovation, what performance metrics must be met before it’s transitioned, and the process of knowledge transfer is critical to organizations successfully bridging the gap.
Relationship management: In product teams where there is no formal division of responsibilities, teammates often come to a tacit agreement about who is responsible for what. In part, this is because they are held accountable as a team. But where there is a formal split, that agreement can dissolve and thus introduce a need for conscious coordination. If that need exists, address it. Appoint a manager who oversees both parties. Or set procedures or cadence that keep them aligned. Whatever the solution, it must make it unequivocally clear who is responsible for what.
Operations Burnout: While many enjoy focusing on surgery, there will be others who despise it and see it as a career-limiting move. Have conversations with your teams. See which moves make sense for individuals’ career aspirations. Consider the idea of rotation programs to provide the opportunity or requirement to work in different domains to develop a “full stack” of skills.
Key Principles and Considerations
Dividing responsibilities should not be taken lightly. Doing so could negate the gains made in shifting to a product-centric business model, with ramifications spilling over into every part of the organization. If you decide to draw the line, keep these principles in mind to ensure the split maintains momentum and delivers value.
Create a “One IT” mindset: Splitting responsibilities shouldn’t equate to splitting the team, at least not in spirit. A sports analogy might be in order here. Although the players of a sports team have different responsibilities, they play as a single unit. Likewise, an ops-innovation divided team must play as a single unit, pursuing the same goals, attending the same strategic meetings, and anticipating the consequences of each other’s moves.
Determine the correct level for the split: You don’t have to divide the responsibilities of all teams equally; often they can be broken down into multiple levels in a business model. Consider a model in which product teams are loosely grouped by links in the value chain. For one link, for example Marketing & Sales, you might decide it is appropriate to distribute operations and innovation at the broadest level of that link, and to share the operational resources across all product teams that make up Marketing & Sales. But for another link, such as Corporate Financials, you could divide responsibilities at a more granular level, perhaps by individual product teams. In that case, the operational resources are not shared via the link, but allocated to a specific team. The consideration here is the same as any trade-off between centralization and decentralization: standardization versus customization.
Take the time to clearly define operations versus innovation work: Define exactly what qualifies as activities and what if? innovation† ambiguity will lead to chaos and tension. One of our healthcare clients worked closely with his engineers to classify work by ticket type.
Stay focused on agility and business value: The goals and pace of the two groups will vary, but that’s no excuse for operating in isolation. Teams must be coordinated in their movements. Two effective ways to achieve that coordination are: First, align teams with the same business goals. If the teams’ work doesn’t ultimately translate into customer value, then it’s debatable. And two, if the teams follow different Agile methodologies, they align their key elements: their release schedules, their PI planning, maybe even their retrospectives. These ceremonies are like the beats in a song; they will keep teams in sync even if they dance to different tunes.
Have impeccable ITSM: If you divide responsibilities and one side of the division struggles, the other side will take the burden and you lose the benefits of the division, while still incurring the costs. So, before you break things up, improve ITSM. Hire resources with the right skills, arm them with the right tools, and lay out tight escalation paths for them to follow when they actually need help from the innovation teams.
Embrace APIs and Microservices: After splitting activities and innovation, there will be a constant and ever-changing need to align the systems and processes that control the two groups. A robust catalog of APIs and microservices can alleviate much of this pressure by allowing teams to navigate this split on their own, rather than having coordination handed over to them from above.
Allocating resources among the type of work for which they are responsible, activities versus innovation, can amplify the benefits of a product-oriented model. But it’s a move that requires precision. Explaining what qualifies for each type of work, distributing at the appropriate level of the operation model, coordinating teams to move as a unit—these are just a few of the variables that can suppress the benefits of an operation model when handled casually. Also, sharing responsibilities isn’t necessarily better, even when done right. Whether such a split is stupid or wise depends on the idiosyncrasies of the organization. If your gut urges you to keep teams together, listen to them. We’ve laid out the advice that we should simply say: if you decide to split things, share them the way you mean it.