BEC #2: Outcompeting tech giants for talent
In this week's edition of the Building Extraordinary Companies newsletter, I am tackling a challenge that many companies face.
How to deliver on ever-increasing technology needs within companies that face ever more competitive environments concerning technology talent.
I will propose a model to design a cost-effective IT department that remains commercially aligned, technologically up-to-date and flexible over time as commercial needs and opportunities change.
BACKGROUND
These days, most companies rely increasingly heavily on technology. This poses a real challenge - a company whose core business isn't within technology will be hard-pressed to defend a technology team much larger than 5% of the total headcount.
In turn, the situation leads to further challenges:
The operational budget will not allow for attracting top talent
Finding the combination of talent that is sufficiently skilled, can work reasonably independently and takes an interest in the company's specific sector will be difficult.
A small, fragile team will experience significant talent churn as the team members look for an environment that supports, challenges and nurtures them over time.
A common additional obstacle is technology representation in the leadership team. Unable to afford a seasoned professional, there's often no obvious leadership team candidate within the tech team.
Without technology representation, commercial efforts will be underserved and misunderstood as the tech team takes them over. Obstacles and challenges will often be communicated back in IT-specific lingo, where business impact goes missing in translation or is overlooked.
The lack of a senior leader often leads to placing the IT team inside another department, often led by the CFO. Placing control functions and innovation and experimentation inside the same accountability area is risky at the best of times.
The main problem is how the two functions serve the rest of the company differently. For example, where technology often becomes part of the product and delivery, the financial team rarely needs to take a similar approach to deliver their services.
So how do you get this right? The model I am about to present is based on a couple of insights:
The company is unlikely to need full-time strategic technology leadership
Technology requirements will change faster than the company will be able to re-skill the technology department
As translated from commercial requirements, the knowledge and ownership of the company's technology needs must sit firmly inside the fence.
PART-TIME TECHNOLOGY LEADER
Having a senior, experienced technology leader in-house could be a waste of precious resources when your company isn't primarily a technology company. A good chunk of your requirements is likely to be operational capacity.
Experienced, strategic, and commercially minded technology leaders are unlikely to be the strongest in up-to-date, tactical IT - so you will be paying well over the odds for the required strategic oversight while being hampered by a mediocre day-to-day IT operator.
This is where part-time tech leaders come into play. Instead of replacing the incumbent line manager, they would function as a strategic "architect" of the IT department and its deliverables. Their assignment would start with an audit and a workshop with the existing management team to understand their vision and current mission. They would then design a strategic plan to build and operate the required technological resources.
Their responsibilities would be the following:
Take ownership of your technology stack's architecture and make sure it is future-proof and aligns with your commercial vision.
Develop plans for capacity and competence requirements over the coming years.
Define and follow up quarterly tactical plans
Provide coaching to the line manager on how to lead and manage a domain within which they have little competence
Provide mentoring and feedback to the operational team
Coaching and mentoring skills and team work will be critical on this level. The fractional leader needs to be able to deliver the plan without being there in person.
PRODUCT-FOCUSED ORCHESTRATORS
A critical part of this team structure is the internal technology team. Instead of building it out to try and cover every type of capacity and competence needs, the internal team would be specifically designed to act as facilitators and orchestrators.
The profile of the internal team would be adjusted away from primarily tactical operators to more project and supplier management. At the same time, operational experience within IT is critical at this layer, as they will be responsible for the solution that delivers on the strategic requirements that have been set.
The internal team's responsibilities would be:
To own the operational responsibility for the execution of the plan in liaison with the line manager and the fractional technology leader
To source and manage chosen outsourcing partners
To remain focused on the company's needs and make sure that all requirements are evaluated from a commercial perspective
Your internal team is the stable layer. Make sure that you invest in them for the long term.
OUTSOURCED CAPACITY AND COMPETENCE
Technology trends and requirements will ebb and flow as the company and its marketplace evolve. In a traditional departmental model, re-skilling and replacing employees as the requirements change can put enormous strain on the company's culture - which is why these small teams are very hard to keep stable.
A carefully constructed approach to outsourcing moves the culture barrier outside the company. Technology specialists may work within a team environment that ensures they are happy and up-to-date in terms of skills while serving their customers. Once their specific capacity or competence is no longer required, severing the relationship between customer and supplier will not have as prominent an effect on the teams on their respective sides of the fence.
To successfully outsource this layer,
requirements and outcomes must be clearly defined
internal project management must be strong
Retaining competence about why and what technology choices have been made is critical
Being a competent customer is critical on this layer.
TL;DR
Only some companies can afford to attract and retain top-level technology talent. A hybrid model of fractional leadership, product-minded orchestrators and outsourced capacity and competence can solve this problem.
The main points to keep in mind are:
Vision and mission will be critical - these will be the alignment factors between internal and external contributors
Choose a fractional technology leader with strong coaching and mentoring skills, not just tech acumen and experience
Invest specifically in the orchestrators as project managers and company domain experts
Plan for suppliers to come and go - make sure that solutions knowledge is retained within the company