In many companies, technology is a core asset. We experience that many CIOs face the challenge of deciding which technical assets to focus on. Short term-delivery delivery is often chosen as the most desirable option, causing a deficit in long-term technology investments. We believe that behavioural drivers are at the core of this disbalance and that understanding these behavioural drivers is a first step towards restoring the balance.

To shine a light on this complicated theme, Mike Blay, VP IT Central Southeast Europe & EU Collaboration at Ahold Delhaize, kicked off the afternoon by sharing his experiences and how Ahold Delhaize enhanced Business and IT collaboration. Floris de Bruin shared behavioural drivers and biases troubling current decision making. During the rest of the get-together, experiences and best practices from the participants were shared.

We were inspired by the input from all participants. Therefore, we would like to share the main insights:

1) Effective cross-functional collaboration delivers great scalable value

The case example from Ahold Delhaize has taught us that if cross-functional collaboration around a certain product or proposition is successful, the same proposition can be re-used by brands in different countries, while giving the customer the feeling of a real local product. To attain this result, you need a combination of three assets:

• Flexibly set-up technology with clear guidelines about what can be adjusted locally and what needs to be adjusted regionally, which asks for a solid understanding of local customer- and market insights.
• A virtual team with a steady balance of business, IT, decision makers and execution power.
• Facilitation to make this team connect, e.g. by examining and building a clear vision of the shared goals and added value of the collaboration.

2) Effective collaboration in one place does not guarantee better collaboration in other places

There are many factors that complicate making good decisions for both the short and long term. A few examples are complexity of the organization and the (financial) processes, the way in which a strategy is built, and tensions between local freedom and regional collaboration. The risk is that the complexity of the change is too complicated, and organizations or teams end up in deadlock or inertia. Therefore, success factors in one organization or team do not guarantee in others.

3) Analysing problems from a behavioural perspective lifts the discussion to another level

Understanding the risks of technical and organizational debt can help with creating a common language and more awareness of the consequences of short-term and long-term decisions. Concretely, three behavioural drivers have been discussed, but in specific organizations other drivers can also play a role. These three drivers are:

Lack of experience with governance of IT and technology by leadership

IT risks are abstract and roadmaps are highly uncertain. Due to high uncertainty, adequate risk-reward perception is distorted. It is difficult for CIOs and CTOs to speak a lack of common language between business and IT, resulting in failure create support or shared insights with business. In practice, we see that IT challenges are often seen as ‘IT’s problem’ and not tackled in company-wide strategies.

Tendency to overcommit triggers short-term steering

Many IT departments have a tendency to take on more work than they are able to deliver. Due to the high Work in Progress and lack of focus, delivery rates of the department go down. Managers often attribute the delivery deficit to their team. They start to micro-manage, increasing results on short term deliverables: putting out fires, requesting reports and ad hoc steering. As a result, less time is spent on portfolio steering and strategy, which causes a growing Work in Progress. So, in the long-term, problems of inefficiency and overcommitment worsen.

Personal biases amplify the emphasis on short-term decision making

Ambiguity bias. People prefer the known over the unknown. On the short-term it is easier to predict results of decisions, making it seem more attractive to steer based on short-term decisions.

Present bias. People prefer gains now over gains later in time.

Loss aversion. We dislike losses more than we like gains. Therefore, more risky options are interpreted as less fortunate and we thus tend to choose the plans with the lowest chance of losses. These are often the short-term plans.

Availability bias. Examples of unsuccessful projects are more vividly known than of successful projects. So, managers are under the impressions that unknown projects are more likely to fail than they actually are. Therefore, they are less likely to dare to take on long-term projects.

Status Quo bias. People favour the current situation over change.

4) Proper steering and designing other incentives are important

In subgroups, we elaborated further on the theme of the evening. All participants recognized the challenges presented and the need to exchange experiences and thoughts with peers. During the exchange, it became clear that proper steering and designing other incentives are important when balancing long-term and short-term decisions. Best practices to do so are, for example:

• Vividly mapping your work in progress results in a better understanding of under-delivery
• To enhance proper prioritization it is useful to bring the discussion back to numbers: Show where value is created.

The evening offered inspiration and a way to connect with each other. The attending Technology leaders have reflected on their experiences together and shared challenges and successes with each other. Will you be joining next time? If you are interested in joining, feel free to contact Floris de Bruin.