Turning OFF negative behaviors transforms IT culture and enables a 35% cost reduction 

Gerry Imhoff, CIO and Senior VP of IT Services at Maritz shares part 2 of his team’s IT culture transformation—moving from an internally-focused, captive IT shared service to a trusted business partner. This fun and informative series illustrates the focus on IT culture, approach, and people, NOT technology, that enabled Maritz’ IT Services department to become an organization truly valued by its customers.

If you’re just tuning in, here’s a quick link to Gerry’s first installation in this series: We Have to Do What? How Maritz Transformed IT Services to Become a Trusted Business Partner. Gerry’s path to technology business management (TBM), including his realization about what it will take for his team to deliver amazing customer experiences, continues here. 

The Machine

The Machine

“The Machine” exists in your organization. It’s not a conspiracy theory, and it’s not subversive or even conscious. It’s the unwritten fabric of an organization, manifested in silos and expressed in silent acceptance of off-putting behavior, unwitting bottlenecks, and the tendency to either sugarcoat things or make mountains out of molehills. It’s red tape that has outlived its original good intent. It's showing up today and doing the exact same thing you did yesterday without thinking or without the motivation to question it. It’s where good ideas and good people go to die. They just get sucked into The Machine.

If you don’t recognize The Machine, you can spend months coming up with your perfectly-crafted Mission, Vision, and Strategy statements, and proudly place that beautiful poster on the wall. You can bolster your position with your credo about valuing your people and your commitment to their development. You can clearly list and masterfully describe the other characteristics your organization values–empowerment, integrity, communication. Then (this is it, this is your moment!) you can hire the perfect candidate for your team. Truly, this person is a point-by-point match to that poster on the wall. 

But three months later, your perfect employee is nowhere to be found. Oh, the same body is still warming the chair, but what happened to that unbridled potential? Where did the enthusiasm and all those great ideas you heard in the interview go? You didn’t forget to provide that mousepad printed with your organization’s values, did you? What the heck happened?  THE MACHINE. That perfect hire got sucked into The Machine. 

Finding the OFF switch

If you don’t expose The Machine, it’s impossible to effectively change your team culture, which is the single most important component of any organizational improvement journey. It was certainly central to our journey to become a viable, valued, customer-centric IT services provider. 

We came up with our poster four or five years ago. Six months after unveiling it, nothing had changed. Naturally, we assumed the words on the poster must be wrong, so we sought professional help, hiring a consultant who specializes in that stuff. A few focus groups, flip charts, and “Start, Stop, Continue” exercises later, we changed seven words on the poster–really important words, because using ‘you’ will drive a message home better than ‘us’ ever could.

The consultant’s “Start, Stop, Continue” session also helped us come up with a big list of other crap we needed to change in order to eliminate our dysfunction and effectively deliver IT services. An awesome, different list than the one we came up with two years before, and the one five years before that (please don’t let the sarcasm poke you in the eye). But really, we were serious this time. 

The thing is, you CAN’T be serious until you acknowledge The Machine and figure out how to shut it down. Our poster really was perfect. And the list of crap we needed to change was spot-on (just as the previous lists were).

What we eventually realized, of course, was that we weren’t doing nearly enough to change the behavior and (when that didn't work) the people we employ on our team. Once we understood where the OFF switch was, we could start to do something about it. Warning: OFF switches that control The Machine are very difficult to get un-stuck from the ON position. 

It’s not about posters and matching mousepads

100% of our Maritz IT Services management team were in their positions because at one point they were the top technical wizards on their team. Unfortunately, technical prowess has nothing whatsoever to do with a manager’s ability to coach people about their approach and the perception (experience) it creates with others. Even with the best, most convincing poster on the wall and matching mousepads.

We realized that to be successful in changing our IT culture, our transformation had to start with the management team, as they have the most influence and regular interaction with their teams. We probably tried 50 different approaches to spread what my direct reports and I were starting to understand about culture change and people management to the broader management team. Most attempts crashed and burned. But over time, we developed the ability to admit an approach wasn't working (or not working fast enough) and to respond by coming up with some other wild scheme that did. 

What does The Machine have to do with a 3-year, 35% cost reduction mandate?

For those of you who showed up to hear about cost reduction, you may be wondering what The Machine has to do with achieving a significant cost reduction mandate. Here’s the thing: it’s all related. When you get a critical mass of IT culture leaders in place who coach the right way about the right things, give them visibility into their areas' financials and consumption patterns (can you say “Apptio”?), empower them, and hold them accountable for results, good things happen. Like exceeding a 35% cost reduction mandate. 

Cost reduction isn’t rocket science, though we were assigned a science-driven person whose role included tracking our progress with spreadsheets, pivot tables, and colorful graphs that would put Van Gogh to shame. And there were science-driven meetings to go over the things we were tracking to track the things we needed to track for the tracking to be tracked. But ultimately, it was shutting down the Machine that exposed and eliminated practices that were preventing us from achieving an amazing transformation.

Those things that needed tracking…

5 buckets

In my first post, I noted we were doing technology business management (TBM) before TBM was cool. That’s because we’d figured out that tracking detailed expenses was important to understanding and translating costs; i.e. running IT more like a business rather than a legacy shared service. (The what is one thing, the how is another. This is before we ever heard of Apptio; today, the how is a much easier proposition.)

Anyway, we were tracking expenses in our spreadsheet-based cost transparency model, and had divided them into 5 buckets:

  1. Infrastructure Rationalization (a consultant named that one; you and I would just refer to it as “Only keep the hosting stuff you need”)
  2. Network and Telecom
  3. End User
  4. Service Delivery (That consultant again – you and I would call it “Other”)
  5. Enterprise Applications 

Subsequent complex calculations performed by the consultants determined that to achieve an overall 35% cost reduction across these diverse buckets of technology and services, we should use the following reduction targets by bucket. Wait for it:

  1.      35%
  2.      35%
  3.      35%
  4.      35%
  5.      35%

Admittedly, that’s not a completely accurate description of the spread, but it’s in the ballpark. (If there’s anything Dilbert has taught the business world, it's that poking fun at consultants is fair game.)

The takeaway is that we assigned targets, because without a goal, you just run around all day with nothing to shoot at.

(Maybe that’s why the Chicago Blackhawks folded like a cheap suit against the Nashville Predators in the first round of the 2017 NHL playoffs. Hey, I gave the Cubs their due last time. While the St. Louis Blues will have to wait at least one more year to lift Lord Stanley’s Cup, at least we were competitive against the Preds.)

4 key cost reduction strategies

With targets in place, we rolled up our sleeves and put some key strategies into play. It’s tough to summarize three years of work, but here are four of our more material steps: 

1. We addressed management layers and span of control

This one was really hard.  Don’t look for veiled humor here: it was freaking hard. I, and of course others, had to say goodbye to direct reports and teammates who were our friends.  Even today, over four years later, it still sucks and I’m certain it always will. Some of this was driven by pure cost reduction related to span of control, but we had also recognized The Machine at this point. Flipping the OFF switch required us to ensure our team was stacked with people whose focus was the customer experience, not solely the technology or the unconscious preservation of said Machine.

2. We teamed with customers

To elicit ideas, we held several workshops with the IT leaders, architects, and operational leaders from each of our largest three customers, the Maritz Business Units (BUs). Note: in addition to my team’s $18M target, the decentralized BU App Dev teams had their own $12 million combined cost reduction mandate. So everyone was in a “let’s find savings” mode during these workshops. 

Anyway, here’s how we structured the customer workshops:

  • Brainstorm: The initial workshop with each BU was a 4-hour brainstorm. Standard rules applied—no idea is stupid, don’t focus on the solution, etc. (For the record, some of the ideas those BUs came up with were stupid. Just kidding.) The instructions were to verbalize your idea, write it down on a Post-It Note, put the Post-It Note on the flip-chart where it’s best categorized, yada yada.
  • Prioritize: All ideas were compiled in a spreadsheet. After the meeting, each participant was asked to independently score each idea across 3 areas: “Likely” savings value (less than $50K, $50-250K, over $250K); degree of difficulty (1-10); and estimated time to accomplish (< 3 months, 3-6 months, over 6 months). To avoid analysis paralysis, we just tried to get these into the right ballpark at first.
  • Analyze: In the next session, with everyone’s independent scores in front of us, we went through each idea and collaborated to come up with an agreed-upon dollar value, degree of difficulty, and duration for each idea.
  • Assign: In the final session, we delivered a “bubble chart” analysis that graphically displayed the order of attack in the standard magic quadrant format. We assigned owners to the big and medium opportunities. 

Sidebar: Our mea culpa on “cost drivers”

Rather than looking exclusively at expenses, we also highlighted the BU’s consumption* of our services, an essential part of the equation. This is where we had to come clean about the flaws in some of our charging methodologies. Some of the things we had formerly represented to the business as cost drivers—levers they could pull to impact their costs—were ineffective. When they pulled them, they expected their charge for that service to go down the following year, but in reality, those levers didn’t impact the expense behind the charge.

For example, we had a charge for each network connection. If a business manager had someone with two network jacks in their office, they’d try to get them to eliminate one (in some cases hampering productivity, in pursuit of reducing a charge). However, turning off a voice/data jack didn’t save my group a nickel—we still had the same support staff and the same leases (or depreciation) for the installed technology. So, the next fiscal year, the same overall expense was just divided across fewer jacks, and the business’ net expense didn’t materially change. 

While this temporarily caused us to lose credibility with our customers, disclosing how the service fee sausage was made allowed us to be transparent regarding the correct levers and ultimately increase trust. 

3. We put project management front and center

My PMO leader’s skills and persistence is another one of the “stars aligned” aspects to our story. In addition to running #2 above, she created programs and projects around this whole enchilada, assembling our enthusiastic band and importantly, never letting us off the hook. (Although in my opinion, they need to take that “hold your boss accountable” step out of the PMI certification process. I mean, isn’t it insubordinate to mark deliverables assigned to your boss as “late” in a project plan?)

This is how “Project Lincoln”—the “freeing of business units” initiative that included our 35% reduction mandate—got started. It was a mix and match of figuring stuff out, hitting brick walls, whining about our lot in life, pointing fingers, re-starting, getting pissed, making hard decisions, having faith, and never giving up, even when it was 8pm and we had no clue how we were going to explain our shortfall to the Board the next day. It was the most stressful three-year period of my life. I swear on my mother’s grave several of us collaborated on each other’s résumés, because there were many nights we were ready to throw in the towel.

4. We focused on the culture

Then, there’s that culture thing, the point of every word in this blog series. In summary and in retrospect, the only way we could do what we did was by changing the culture.  And it’s the reason we résumé updaters are still at Maritz.

G’day, Mate!

One last item of note about our cost reduction strategy and finding The Machine’s OFF switch: our “Mates” approach. Tasking ourselves with identifying ways to better run IT like a business, we focused on finding opportunities to eliminate, automate, and consolidate, in that order of preference. (And yes, we knew consolidate didn’t contain an “m”, but eliminate did, so we went with it.) To be explicit, the rules regarding our stated order of preference were as follows: 

  • The run rate of something you eliminate is $0, so try doing that first
  • Automation reduces labor expense dedicated to repetitive tasks, so try doing that next
  • “Consolidate” means moving tasks that can’t be eliminated or automated (or at least not quickly) from higher-salaried roles to less expensive ones; for example, from an engineer to the Service Desk or the Network Operations Center (NOC).

It was amazing the number of things senior (expensive) people were doing that fit into one of three Mates categories. Some people and managers freaked out at eliminating, automating, or consolidating their stuff. Common refrains from The Machine included, “That’s My Job We’re Talking About,” “We’ve Always Done It That Way,” and “We Tried That Before and It Didn’t Work.”

Managers and people on board with the culture and strategy didn’t freak out—they’d been effectively coached to do the right thing because it’s the right thing to do (I realize how noble that sounds). These folks were celebrated in our quarterly talent review meetings as we evaluated where else we could apply their talents, because there’s no end to things that can apply to the Mates strategy. Those freaking out also were discussed in those talent review meetings... a bit differently. 

Connecting the Dots

If you’re tracking the dots I’m attempting to connect, you’re seeing how culture change and cost reduction come together.

For example: let’s say a Mate enthusiast manager starts with six people doing manual user administration (rights management), realizes some activities are no longer required, then relentlessly focuses on automation, and gets to a point where the job can now be handled by one person. Business unit managers, who used to get irritated because it took days to get their new employee up and running, are now amazed when they learn that all that’s required is to initiate a self-service request and minutes later Ned or Nellie New User is logged in and productive.

This is especially impressive when they realize they forgot, again, to tell you they hired someone new, and need this to happen TODAY. (Yes, the workflow pauses where system owner authorization is required; hey, I’m not writing automation business requirements here.) 

You get the point: find the friction, empower your people to find solutions, and hold them accountable for doing so. Lower cost + faster service = happier customers + happier IT team. Dots connected. 

"Someday" is today

Obviously, we didn’t flip The Machine off overnight. And every once and a while someone turns over a rock where The Machine is still active. But we’ve gotten pretty good at recognizing and responding to that quickly through coaching. Working on the really hard stuff together, my leadership team and I have learned to trust each other, more and more every day. We've stopped deferring the big rocks to “someday.”  Tweaks won’t help, hope is not a strategy. To achieve true transformation, someday is today. 

I mentioned our quarterly talent review sessions in the prior section; we started those about 3 years ago. In them, we review the performance ratings of every employee in the organization across the 6 values defined for our culture. The first one of those quarterly meetings, before we hit our cohesion point, took 3 full days and was U-G-L-Y. Imagine enlightened commentary like this and you won’t be far off base: “How dare you point out an area where one of MY employees consistently falls short! That person on your team couldn’t communicate their way out of a wet paper bag. AND their shoes are ugly too!”

Perhaps it was sheer exhaustion from fighting each other that finally led to a different approach. Namely, listening, not being so darn territorial, actually viewing input about our “stuff” as an opportunity to get better, and, importantly, being accountable to each other to deliver on those improvement opportunities. Whatever the reason, things started clicking between us.

Winning is addictive

Learning about personal and team improvement opportunities has become our organization’s addiction.  When you improve, people notice. They tell you they’ve seen a positive change. People you didn’t think even knew you will stop you in the hall to compliment versus complain about your work.  When they point out something you (or your team) could have done better, rather than bark an excuse or counterpoint back at them, you own it and work to improve it.  

Creating amazing customer experiences because you’ve improved is completely addictive; when you see the delight in your customer’s eyes, you want to experience that again and again. By teaching our management team what to coach on and how often to coach (constantly, as superlative as that sounds), our people are now addicted to that formerly-thought-to-be-lame expression “feedback is a gift,” because they understand that when they act upon it, THEY GET BETTER.  We even promote peer-to-peer as well as employee-to-manager coaching; it’s equally addictive. If you get over yourself and become open to feedback, why on earth wouldn’t you want to act upon it and get better? Winning is FUN. 

The Machine’s OFF switch? Turns out it’s a culture-focused, empowered and accountable, constantly-coaching-in-every-direction team.

Coming soon: Part 3

Because you must have things to look forward to in life, you’re going to have to come back for part 3 in our series to learn the specifics of how we got people on board, what we did when they didn’t, how we set expectations and coach on “Task, Behavior, Perception,” and how TBM and Apptio fit in to all of this.

We’ll also have some fun discussing bar meetings, other really stupid chargeback methodologies, and how being “accountable” went from scary to awesome. And of course, I’ll have more to share regarding setbacks we experienced and pitfalls to avoid.

I appreciate you hanging with me for this long, and I’d love to hear your thoughts on LinkedIn.

*To learn more about highlighting BU consumption of services, download our Apptio Cost Transparency for Business Units whitepaper.