Here is a synopsis of Bennett’s activities:
2. In terms of leadership, Bennett also believes a collaborative culture is critical. For Bennett, successful organizations are those that compel leaders at all levels make decisions that are best for the “whole” rather than for “one person or a business unit.”
3. Bennett moves Intuit to a highly collaborative organization in two ways. First, he establishes an organization-wide process by which individual goals are set and people are held accountable for attaining them. Secondly, he fosters cross-unit collaboration and integration by establishing an organizational structure where individual teams require contributions from other teams in order to succeed.
4. Specifically, Bennett’s transformational process is as follows:
- Bennett increased the CEO’s span of control from 8 direct reports to 20. He called this “delayering” the organization. In doing this, Bennett wrote job descriptions and performance standards for all of his direct reports, emphasizing being goal-driven.
- Bennett brought a top-down planning process to Intuit. He also instilled “nonnegotiable budgets.” Regarding the top-down planning approach, Bennett implemented a basic corporate planning model, namely corporate goals are set, then unit goals are set to support corporate goals, and finally individual employee goals are set to support unit goals.
- Bennett instituted measurable performance reviews. He tied bonuses to individual goals and helped to develop more objective measurements. All of this resulted in fewer higher rated employees and a trend more to the “bell curve” of managing overall performance.
- Bennett proceeded with monthly operational reviews. Here, he used metrics to measure each function and business unit’s contribution. Bennett used these meetings to re-focus his team on critical goals, reaffirm ownership of goals, and to generate ideas.
- Bennett’s changes resulted in high turnover within the senior management level ranks.
5. Bennett develops a “leadership success profile” which he uses to define success for Intuit leaders. The “profile” becomes Bennett’s method of communicating company-wide leadership expectations. This helped to develop a common language within Intuit’s leadership ranks. Also, the concept of a common language was used throughout Intuit, as senior management began to use phrases from Bennett in their meetings with their own groups.
6. Intuit leaders also adopted a spirit of shared vision from Bennett. Again, a common language practice was used at the end of meeting, and for example, “does everyone have shared vision o that?” This too was used as a means to build collaboration.
7. Collaboration was built into performance reviews as higher performance ratings were given to those who achieved goals through collaborative methods. Additionally, the use of 360 degree performance reviews provided managers with input to their development plan.
8. Bennett also developed cross-functional metrics as a means to emphasize the absolute need for collaboration.
9. Bennett also bulked-up corporate functions as these functions seemed weaker than the decentralized business units. Bennett increased corporate budgets and also the number of corporate functions.
What is interesting to note is how Bennett went about building a collaborative organization – in a very un-collaborative manner. He adds functions that directly report to him and in doing so refers to this as “delayering.” While this makes the organization more horizontal, it increases the number of functions which in turn creates more formal silos. Also, his top-down planning approach is anything but collaborative as compared to a bottom-up approach. And, Bennett uses financial incentives through a re-vamped performance review system as a means to reinforce collaboration, rather than developing collaboration as a value so that it occurs in an intrinsic manner. Finally, Bennett bulks-up a corporate structure rather than allowing the strength of a decentralized structure to emerge.
Simply put, Bennett creates systems that force accountability and collaboration instead of building it from within and nurturing it. He does so with both carrot and stick.
Yet, for all his hard work and effort there are conflicts and polarities within his new culture. First, there is tension between the need to attain individual goals and the need to attain/give cross-unit collaboration. Another conflict or polarity evolves as the organization attempts to enhance collaboration, namely centralization versus decentralization. And, in establishing his goal-centered organization, Bennett raises the bar by setting aggressive goals. This only serves to heighten the tensions and polarities, and in particular within IT.
In IT, difficulties arise when the CIO, facing an ever-increasing complex IT infrastructure and previous decentralized mindset, goes about attempting to decide on a specific IT architecture and standards. Senior management is looking for increased technological standardization, yet business units want a decentralized approach that allows them flexibility. The choice seems to be between a centralized or decentralized approach. Regardless, how will the decision align with Bennett’s new culture?
To better understand the CIO’s dilemma, let’s review the concepts of centralization and decentralization within the context of IT. I am fortunate enough to have IT as part of my function. In an IT context, centralization refers to organizing all IT-related services into a single functional unit that then provides services to the entire company. A non-IT example would be Human Resources and how many companies handle this particular function. For most organizations all HR activities are centralized through a main corporate office. Ancillary units would receive HR-related services as required through requests to the central office. This type of organization make things run more efficiently and standards are more easily maintained through one unit versus several hundred.
On the other hand, decentralization gives individual functions or units responsibility for control over their own IT resources. Here, there is little consideration of other units or the company as a whole. There is value to this approach in that functions or units have the ability to make their own decisions and do what they believe is in their best interests for them to succeed. A major drawback may be interconnectivity between systems and the company and support cost structures.
In a nutshell, you have to view this dilemma as a contrast of the control, efficiency, and economy of centralization versus the flexibility and also efficiency that decentralization brings in meeting a function or unit’s goals.
In this case study the CIO must examine the alignment between IT centralization and the need for information sharing in the organization. In my view, the best solution is a shared internal services model, or hybrid between centralization and decentralization. The hybrid model captures the efficiencies of a centralized organization while keeping the support functions focused on the functions or units. Here, the central IT function would establish rudimentary standards to ensure data portability and effective communications between the functions or units, while allowing application and support flexibility within each function or unit. Each function or unit would have it’s own IT presences, reporting directly to the function or unit’s head. There would be no dotted-line to corporate IT, but rather periodic communication on technological issues where collaboration was needed to resolve issues of data portability and communication.
