The Power of Politics
How the internal political pressures of an organisation contribute to the very high ERP & digital transformation failure rate.
There is an old saying that people don’t start to listen until you are sick of delivering your message. Well after nearly 20 years of consulting in this space I am close to that now. Here is an example of why.
In Thursday 29th October’s edition of The Australian Financial Review there was a two-page article on Japan Post’s purchase of Toll and the difficulties it had trying to make changes in the business. At the outset remember that Toll has twice been a victim of ransomware attacks that have brought the IT systems to a standstill, resulting in massive hits to revenue, profitability and reputation.
Cast your mind back to 2000 just after the Y2K bug was a non-event. My then business partner and I had a meeting with Toll’s then CEO Paul Little to discuss a supply chain philosophy and the vision we had for how computer systems could help the business. At this time it was already a conglomeration of Brambles, eight different divisions of TNT, IPEC and Mayne Nickless. The discussion was focused on helping them bring stability to and timely visibility of both the company’s operations and finances. Our meeting lasted less than 10 minutes. We got a short sharp, “We have got all that covered”.
Move forward to now (some 20 years later) and the article references the number of different systems that run the business, specifically it references the 45 different financial systems, 33 customer-facing systems, 78 different systems to run the warehouses and 62 different systems to manage their fleet of trucks, planes and other equipment. With the benefit of hindsight, he clearly did not have all that covered! Ohhh I forgot to mention that the different divisions were reporting back to the CFO via … wait for it … spreadsheets.
“Customers grew so frustrated they just stopped trading with Toll Priority” an ex-employee is quoted in the article. Apparently “Toll’s businesses exercised autonomy over their technology, which made the company a technology free-for-all.” Work started in 2014 to fix this. Guess who won the contract? SAP and Accenture! They started out on the right foot setting up a dedicated team initially starting with 100 people that maxed out at 400 over a number of years.I am not sure they needed the hundreds of people who were quoted as being involved, but I don’t know the full details. It is a big and diverse business. However, a project team of between 100 and 400 sounds more like defending the ego of the project executives than an effective number to me at a first glance. However, a telling paragraph in the article says:
“(Named executive) didn’t like to override assertive subordinates. In a company of powerful personalities and big egos, (named executive’s) conflict avoidance helped him navigate internal politics that could quickly turn vicious. Counterparts from Toll’s operating divisions would not turn up for important meetings … information would take a long time to arrive or never appear at all.”
You will have heard me talk about there is no one big thing that takes a project of this nature down. It is death by a thousand cuts and this project is a prime example of how this behaviour can happen and the results that accrue from it occurring. This example demonstrates what a powerful force your culture is on digital projects. Eventually, the technology team working on the SAP project lost support from the business and found itself marginalised. This after investing more than $90 million over five years and involvement from two of the biggest names in the business. So much for quality from the big consulting firms. (Sorry my personal bias is showing there.)
I mention in my book, The 14 deadly Sins of ERP Implementation, an ERP or digital transformation project such as this is like open-heart surgery. It is clear Toll did not have the best surgical team and hospital staff performing this operation. Can you imagine the surgical team operating on your heart bickering amongst themselves and not delivering vital tools and information that the surgeon needed at the precise time they needed them? I certainly do not want to be on that operating table. The issue is unless you understand your political environment and take steps to control its influence, that is precisely what you will have.
In the introduction I talk about how success is not about the specific technology you are deploying, it is about what your people choose to do. This article shows clearly how those choices impacted Toll’s performance.
Some might say things happen for a reason. It would seem my ten-minute meeting with Paul Little really meant I dodged a bullet. Because at the end of the day an advisor such as myself cannot be the one driving the change in the business. My regular readers will know I consider it is the responsibility of the CEO and the CEO alone. I also believe change cannot be managed. It must be led. Leaders cannot be passive in these matters and leave it to others.
If you are a business owner or CEO, then you need to:
- Demonstrate to the business this project is important to you. (And if it is not – then don’t do it.) You do this by constantly talking about its importance to all and sundry and by allowing for the right resources to be deployed to the project.
- Take decisive action when blockers get in the way. Have an open-door policy to those running the project and listen to the challenges they are facing. You may need to listen for the cause, not simply the symptom. All the really successful projects I have worked on had the CEO swiftly removing blockers from the business. This sets the tone and provides the culture needed to get things done. Toll clearly does not.
- Ensure the corporate politics is well understood. It has a massive impact on the performance of the project team. Take whatever steps you can to have these behaviours under control and make allowances in your budget and timeline for the inevitable resistance and delays that come because of the political pressures that exist.
On a similar path but different company and technology. The ASX has recently announced a delay to its deployment of a new blockchain-based share trading system. Read the article here.
Again this is a project being led by one of the big consulting firms who are espousing the benefits of blockchain. The reality is this is still a new technology and, like AI (Artificial Intelligence) I am not convinced the right application has been identified. I have heard and seen a myriad of companies jumping on the bandwagon with promises of reinventing supply chains and other areas only for the real results ranging from a total waste of money through to significantly less than promised. Nothing has really reinvented an industry yet.
This is important to you because there are a lot of technology snake oil salespeople out there. And I say that with all due respect to my colleagues and friends who are in the sales profession selling technology solutions. It can be very important to have an independent and critical view of these opportunities when they are presented to you.
Regular readers may recall I was invited to join a very talented group of supply chain consultants in the special interest group of The Society for the Advancement of Consulting. Well, we have produced a new e-book covering topics of how to thrive in the new business environment. This edition is entitled, “Why The Strategic Supply Chain Matters”. It will be available on Amazon shortly.
I was recently interviewed for the MSDynamics podcast:
If you have gained some value from my blog I would encourage you to share it with associates and friends. Don’t forget to please sign up for my monthly newsletter and in return, you will receive a free copy of “Why The Strategic Supply Chain Matters” delivered to your inbox.
Also, referrals are the Coinage of my business so, if you or anyone you know is looking to:
- improve the way their business operates;
- improve the way they leverage their current system;
- replace their current system;
- want to dramatically improve their profitability;
please feel free to give me a call for a confidential discussion on the test way to achieve this.
Until next month…