Change is hard, Business case for survival is hard – screw it let’s cut costs

BA still can’t get operational IT right. The 4th Industrial Revolution has been delayed due to myopic business cases. I suspect BA as a large encumbant in a stagnating industry suffers from this. Fighting climate change will change the calculus and global enforcement of new laws, and what is viewed as acceptable behaviour will require a rethink on spread-sheet optimisation.

When my focus was solely on the digitalisation aspects of the 4th industrial revolution, I wrote a story about BA in 2017 [link], and then again in 2018 [link]. On both occasions I highlighted both how fundamental “Operational Information Technology” was to the heart of the business (rather than a support function) and how “business-case” led decisions had led to bad outcomes.

My friend Krzysztof [link] talks about technical debt  and how, like fast food, it’s occasionally acceptable – but in the long-term will kill you. He speaks of this in the context of software development, but I think it could equally be applied to deferred and missed modernisation opportunities for operational systems.

I thought BA had got the message, and then this:

Change is hard

BA said they would change, and I assume they tried. Just goes to show, change is harder to achieve than it looks. The first step is for leadership to acknowledge that change is required, but implementing that change can be difficult, especially if most of the reason for bad outcomes is their own inability to admit to blind spots. Add to that some bad decision making processes (and possibly some autocratic opinoins) and this is what happens.

Diversity is often talked about but not always understood. Building “Cognitive Diversity” into leadership decisions is challenging, especially when – in order to reach new decisions – the fundamental value decision frameworks need to be challenged. My friend Csaba over at ICQ Global [link] works extensively in this area. If anyone has a line into BA’s management, they might pass on his number.

This is the digitalisation problem. It comes down two factors:              

  • cost justification cases for the SURVIVAL of companies cannot be made due to an inability to demonstrate a return on investment. (daft when you think about it)
  • cases for cutting flexibility and reducing performance on the grounds of cost saving are quickly approved and implemented.

The result is, no digitalisation, no change and a crash course in crisis management. I think this all stems from most “business case” and ROI calculations assuming that the business environment will remain static and everyone will wait around until you can educate senior management and make sense of their digital investment opportunities.

Innovation will be driven by decarbonisation

With the race to decarbonise the atmosphere well and truly on – goals such as electrification and energy transition will impact whole swathes of supply chains.

Digitalisation and the wider adoption of 4th Industrial Revolution technologies will be a prerequisite for survival. The purpose will no longer be to boost short-term profit, but to achieve outcomes that enable companies to survive. It will be interesting to watch how myopic business cases will be overcome.

Perhaps there is a case for saying that financial returns are a hygiene factor and should have a target optimal. Maximisation – for this phase of the transition – should perahaps be focussed elsewhere.

How are you going to hire, train, incentivise and manage the performance of the leaders we now need in place?

Published by

Gareth Davies

Innovation Expert with 30+ years of experience living and working across the world. I apply an engineering approach to helping companies innovate and achieve commercial success.