Good Management, Business Performance and IT- the Complex Relationship

A lot of our understanding about the way this world operates is simple and one directional. IT leading to business performance is one of them. Though it may be a correct and valid hypothesis, it is only partially true. Our existential reality is much more complex than that. This complexity is caused by prevalence of multiple aspects and the multiple ways in which they impact (and get impacted) by each other. They exist as a system, in a state of complex inter-dependency.  

I shall discuss one such complex and intricate relationship between good management, business performance and IT. A lot of the prevailing discussion adopts a selective and an one directional approach to understand relationships between them. But there exists lesser known, lesser acknowledged and lesser appreciated sides of the relationship, which can help us make a better assessment of the situation.

In many ways this discussion shall also highlight the importance and centrality of leadership, both business and IT. It is an aspect, which every CEO and business leader must understand and appreciate. Moreover, it is also a discourse, which every CIO must build in his organization for any meaningful change and transformation through IT.

Let me highlight the 6 set of relationships between good management, business performance and IT. It can be very complex depending on what aspects of each of them become salient and the way the umpteen numbers of relationships operate. But for the sake of keeping my argument simpler, I am restricting to only the following 6 relationships.

1.       Good Management leading to Business Performance

A known relationship, an organization which is managed well, performs well. Let me elaborate what is good management all about. It includes creation and communication of a motivating vision, building a strong team, development of capable processes, creation of functional structures to support, adoption of relevant practices (like process maturity, people development, regular review) and strong participation of the top leadership. It is well established that each of these aspects lead to good business performance.

2.       Business Performance leading to Good Management

This is a little less talked about, but a true phenomenon. Good management leads to business performance and business performance in turn support good management, thus creating a recursive and a two way relationship. How does performance support good management? Well it does by creating human energies in the system by motivating people and it creates resources required to develop and practice good management. People are happy where the Sun shines and water flows.

So much so that the two can create a virtuous cycle of sustained performance or a vicious cycle of uncontrolled downfall.  

3.       IT leading to Good Management

Well, that’s the most popular belief with which organizations operate. IT is expected to help manage an organization more efficiently and effectively. IT automates existing processes, creates new and relevant processes and generates information for decision making. Each of the phenomenon helps manage an organization in a better way.

4.       Good Management leading to IT

A lesser explored relationship is good management leading to IT. Good management creates a supporting vision and context for IT to flourish. I have discussed it in many of previous writings that good management creates a conducive environment for IT to find relevance and give boost to the endeavor to build IT.  I have seen organizations, which are well managed and give IT a supporting context. I have also seen organizations, which are ill managed and thus affecting IT drive negatively. In the ill managed organizations, lack of vision, lack of funds and the anxiety in people does not augur well for the CIO. Many a time it also impacts CIO, who starts acting in ways which adds on the woes.

It must also be brought to notice that a mild level of lack of good management also boosts the need for IT. In such case IT can be seen as a driver. However, it needs to be mild only else the functional side of the lack may become dysfunctional for IT.

5.       IT leading to Business Performance

IT by automating processes makes them more efficient,

through information management and its leverage generates process and business capabilities, and

through strategic intent, creates competitive advantage and bring transformation at the firm or even at the industry level. 

Though the impact of IT will vary depending on what is it deployed for, but it is well established that IT impacts business performance.

6.       Business Performance leading to IT

Another lesser known, debated and acknowledged relationship. Well business performance can give IT the required resources in terms of less anxiety driven resistance and the financial budgets. I have seen that in well performing organizations, IT (as another good management practice) gets the required boost.

It must also be brought to notice that a mild level of lack of business performance also boosts the need for IT. In such case IT can be seen as a driver. However, it needs to be mild only else the functional side of the lack may become dysfunctional for IT.

I have discussed the intricacy in terms of dyadic interrelationships . However, one can also explore the same by taking all three together and see how they exist in a state of inter dependency.  

It’s here that the role of leadership becomes very clear. Who is driving good management, business performance and IT? It’s the organizational leadership. Hence, the roles of the CEO and CXOs become quite evident. Without an able leadership at the corporate and business levels, all the three aspects may suffer.

Similarly, the CIO as the one leveraging the conducive environment (which is a necessary but not sufficient condition) and designing and deploying business relevant IT also becomes important. If all the elements are present and the CIO does not rise to the occasion, it affects everything else in the system. Hence, CIO may be directly responsible for IT but he is also indirectly (and also directly, increasingly so) responsible for good management and business performance.

The question to explore is ‘do the CEO, CXOs and the CIO understand and appreciate their roles in managing the intricacies of the good management, business performance and IT?’