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In a recent presentation to their founders about adapting to the current market environment, Sequoia’s team quoted Charles Darwin as saying, “It is not the strongest of the species that survives, nor the most intelligent, but the one that is most responsive to change.” The people of Sequoia called this “survival of the fastest,” going so far as to call “speed” one of “the best business strategies.”
While many agree with this advice, the mindset of “going faster,” specifically in terms of doing business tasks, isn’t always particularly helpful. Many venture capital-funded companies are now in a race against time. Investors ultimately want to see returns, which usually means an IPO or takeover. Between the IPO volume falling 46% year over year, the IPO market does not expect it picking up any time soon and M&A activity down 20% and slowing down, leaders must figure out how to keep the lights on before the money runs out.
Tackling complexity, inefficiency and indecision
In such a climate, the real question becomes: what exactly should business leaders do faster?
The answer is deceptively simple: Companies as a whole need to change faster.
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For venture capital-funded companies and companies in highly competitive and volatile markets, rapid change is a core business activity, and if your company is adaptable and has the ability to change as a whole, greater efficiency will be seen. To support this, leaders need to focus their business on rapid change. Frankly, this is the only way to turn speed into a business strategy.
To design the business for speed, and thus accelerate any transformation, three major obstacles must be tackled: complexity, inefficiency and indecision. Complexity is addressed by focusing on simplifying the customer and employee experience. Inefficiency issues are addressed by optimizing the technology you use. Indecision is overcome by providing actionable insights to the people who need it. Here’s how.
Simplifying the customer experience
Over the past decade, startups and scale-ups have focused on growth, particularly at a time of “capital abundance.” However, we have now entered an era in which: the technical financial market is essentially frozen. As a result, one change that companies must go through is a shift toward profitability.
Reducing costs is a lever to improve profitability. Acquiring and retaining more customers is another. Creating a business architecture focused on customers means rethinking how companies invest in technology. More specifically, this represents a shift from the traditional IT focus. While a common approach requires IT to invest primarily in infrastructure and existing product capabilities, an approach that focuses on accelerating change invests much more in developing new capabilities.
When customer needs change, as they are changing now, companies must respond quickly. This is not possible if you have to reorganize the company to meet new requirements. However, it can be done if the company has created processes that continuously collect customer insights and quickly convert those insights into new customer-centric capabilities.
Supporting this capability requires simplification of internal operations, especially when it comes to optimizing the value of the flow from customer insight to development.
Optimizing Technology Usage
Ensuring that customer value drives technology architecture and investment is one way to optimize the use of technology. Another way is to ensure that an organization gets the most out of the investments it has already made. Inefficiency in every aspect of using technology is a drag on companies’ ability to change quickly.
According to Forrester’s “The State of EA 2022” study, 67% of enterprise architecture (EA) leaders have significantly increased their focus on technology strategy. While enterprise architects (EAs) play a pivotal role in identifying opportunities for this type of technology optimization, they have an even greater role to play when it comes to optimizing the entire IT landscape. A ‘business capacity’ perspective makes this possible.
When EAs focus on business opportunity and transformation, the discussion changes from “my favorite technology is x” to “we need to fill these specific business opportunity gaps”. Focusing on business opportunities creates a common language that unites business and IT leaders and empowers you to think differently about how to support those opportunities.
Make better decisions faster
Efficiency does not improve on its own. The company must decide to improve it. However, making those decisions is not always easy. As mentioned, relying on business capabilities to evaluate technology needs is one way to simplify the decision-making process. The other is visibility.
Business leaders can’t make decisions if they don’t see the problem. In business architecture, EA’s leaders guide the decisions they make by showing them business capability maps, data-rich process diagrams, and dashboards that highlight the connection between architecture issues and business value.
When it comes to cutting costs, it’s critical that leaders understand where money is being spent and whether it is being spent wisely. An overview of the entire application portfolio shows where money is spent. By linking applications to business opportunities, you show where they drive business value. Identifying opportunities to consolidate (as in the common services model), replace, improve performance (e.g. move to the cloud), or retire shows where you can get more for your money.
Visibility is a must for business transformation
However, there are some areas where there is a lack of clarity. For example, it is estimated that: over 30% of SaaS spend is wasted. At a time when companies need to control costs and optimize technical expenditure, managing this waste is becoming a high priority. Addressing this problem requires insight, first into how much SaaS you are currently paying, and second into whether someone is actually using it.
Visibility first requires smart ways to expose expenses, such as mining expense systems to find SaaS payments that don’t go through IT. This helps to boost SaaS discovery.
Visibility on the second front means closely monitoring usage. This helps with license management in two important ways.
First, it can reveal discrepancies between the number of licenses the organization owns and the number actually used. Second, it can indicate whether the organization needs licenses at all. For example, if you’re paying for full Zoom licenses, but most Zoom calls are under 30 minutes (which you can get for free), there’s an opportunity for license fees that can translate into real savings. (Of course, monitoring licenses can also help you curb automatic renewals on SaaS that no one is using.)
Business Transformation: Is Your Business Built for Speed?
In a rapidly changing environment, adaptation calls for speed. With global IT spend expected to total $4.4 trillion by 2022, up 4% from 2021, if your organization isn’t built for speed yet, that’s a problem. For this reason, leaders should see speed as a critical business opportunity and build it into the organization as quickly as possible.
Therefore, following these principles can work in your favor. Focus on your customer first, as this forces you to be adaptive and responsive. Second, emphasize optimization. This ensures efficient use of your technology. Finally, continuously generate actionable insights. So when it comes time to make quick decisions, it is possible.
While we cannot predict in advance what changes will come and what we need to do to respond, it is imperative to focus on designing an organization that is able to change as the need arises, driving the business transformation. really accelerated.
André Christ is the co-founder and CEO of LeanIX.
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