This diagram illustrates (in red) the cumulative
Transformation Costs of an Enterprise that does not
expose and manage Enterprise Debt™ and is typical of many Enterprises.
Cumulative Transformation Costs rise, but very slowly, while
Transformation Costs are kept low. During this time hidden Enterprise Debt™ is
slowly building up…
When this hidden Enterprise Debt™ reaches a critical point
(akin to when the pile of dirt that is swept under the carpet has become too
big to ignore any longer) a very large and abrupt rise in Transformation Costs
is required to deal with it. Often referred to as “getting the car out of the
ditch”, its focus is usually very tactical - short term and only concerned with
dealing with the major issue that cannot be ignored any longer.
Having spent a large amount of money on Transformation over
a very short timeframe, the focus then tends to be, once again, to keep
Transformation Costs low and therefore we return to the low level of
Transformation Costs we saw before and the whole process repeats itself.
Not exposing and managing Enterprise Debt™ is characterised
Low Transformation Costs while hidden Enterprise Debt™ builds up…
Followed by large, unplanned and abrupt Transformation Costs when
things get too bad…
Causing Un-predictability, which leads to Un-stability, which
means management is not in Control.
These large, unplanned and abrupt rises in Transformation
Costs, can often occur at the same time that an incumbent CIO is replaced by
another! This is obviously not good news for the CIO, but more importantly is
not good news for the entire Enterprise.
A cynical view might be this.
From the point of view of giving prospective Enterprises a
feeling that someone senior is a good hire, what could be better than for a
previous Enterprise to have been fantastically successful while they were there
and then fall apart when they left? What could be better than to say “While I
was there, they were growing well and highly profitable because I kept
Transformation Costs low. When I arrived they were in the doo doo, but I turned
it around! Then, after I left, without my guidance, Transformation Costs
increased and profits fell. It all fell apart”. Of course the reasons they
managed to keep Transformation costs low was because they were raping the
So, what could be a perfect way to engineer this outcome? Is
there one thing that could be done to achieve both of these things? Can I hit
two birds with one stone?
The answer is yes you can.
All you need to do is rape the future of the Enterprise by
ignoring Enterprise Debt™. You will then guarantee short term benefits while
you are there (for which you will be applauded and given large bonuses because
everyone loves quick wins) at the same time as guaranteeing it will all fall
apart when you leave.
But that’s not the best part. The best part of it is, you
can achieve all of this by effectively doing nothing!
(Is this the definition of Management Nirvana?)
Not exposing and not Managing Enterprise Debt™ is like boom
and bust in the economy, and we all know the effects of boom and bust!
Have you seen this happen
When it does happen, is
Management happy to be surprised?
Did you ever lose or get a job
because of this?