Philip Wik is a Senior Data Architect for American Express. Philip has worked for JP Morgan/Chase, Wells Fargo, Honeywell, Boeing, Intel, and other companies in a variety of applications development, integration, and architectural roles. He has published three books through Prentice-Hall:
How to Do Business With the People's Republic of China, How to Buy and Manage Income Property, and (along with other co-authors) Next Generation SOA.
The Annotated Next Generation SOA Business Case – Part I Published: June 10, 2015 • Service Technology Magazine Issue XC PDF
Abstract: SOA not only optimizes systems. It also optimizes organizations. Much of SOA's successes are due to what comes before and around that architecture. This article presents some of that theory behind the business case in our Next Generation SOA book.
The entire history of software engineering can be characterized
And slime had they for mortar. – Genesis 11 [REF-2]
The most recent book in the Prentice-Hall Service Technology series was Next Generation SOA: A Concise Introduction to Service Technology & Service-Orientation [REF-3]. The business case in chapter seven tells the story of a fictional company's transformation. Our goal was to show service-oriented architecture principles that the Rent Your Legacy Car Company (RYLC) used to make it more profitable in a highly scaled, non-trivial context. It's also a meditation on leadership and shows the tension between architectural abstractions and the slime of its real-world realization.
Just as programs abend, corporations abend. The former is recoverable. The latter is a devastation, leaving in its wake incalculable wreckage. The corrective comes down to this proposition: If capitalism is the hope of the world, then SOA is the hope of capitalism. We need only to look at our stock portfolio to assess the extravagance of that claim. Drifting or plummeting stock prices tell us all that we need to know. These companies struggle to find their footing in the face of global competition. In our example, a mid-range corporation is trending towards oblivion. SOA is the solution. It solves the problem in two ways. First, it requires that the company makes structural changes to make SOA work. Secondly, SOA builds a platform to deliver services to meet changing markeplace demands. The purpose of our book and this paper is to make this point.
Since Harvard University invented the case more than a century ago, strategists and students have used it as a tool for promoting holistic, multidimensional business thinking. It "creates the context in which leaders are formed: real-life challenges, wrapped in complicated and sometimes insufficient information, with a rich web of consequences and a demand for a prompt, responsible plan of action" [REF-4]. As with any business case, we should read this case for insight rather than as a one-size-fits-all road map. For example, it's not a given that layoffs must accompany SOA.
This article relates statements from the case to its rationale. While we don't need to have read the case, the 23 pages of text has more of the back story on how this transformation unfolded.
The Rent Your Legacy Car Company is a thirty year-old car leasing company in the United States that enjoyed success in the 1990s. In recent years, however, it lost market share as the competition was able to offer new products and better services. RYLC's board has become concerned because of its sluggish stock price and because similar companies have become targets for hostile takeovers.
At the apex of Rent Your Legacy Car is the board, consisting of seven people with three outside members. One member represents a hedge fund holding a 32 percent stake.
Reporting to the board is Jesse, RYLC's chief executive officer.
Reporting to Jesse is Robert, the chief information officer, a 25-year veteran who has managed major SOA projects as a chief technical officer at two other retail corporations.
Reporting to Robert is Raj, the chief technical officer, who has ten years of SOA experience at a multinational investment bank. Robert fired John, the former CTO, before hiring Raj.
Reporting to Raj is Jane, the Senior Vice President of Information Technology, and Mary, the Senior Vice President of Business Development.
Actions and Analysis
March – The Board Acts
Page 90: "Days after being hired, Robert and the board establish a five-year plan to move from seventh to third place in net revenue among ten of its key competitors, along with other ambitious financial and stock metrics."
Success started from the top with a clear vision to increase net revenue and market share. Power flowed from those with the funding. The board empowered Jesse, the CEO, to communicate that vision and channel resources to enable RYLC's service technologies. But, within a year, the company changed from a command and control model to become flatter as trust was pushed down and ideas came from all levels of the enterprise.
Page 91: "Robert, the CIO, asks that his directs to compile forced employee rankings to assess their performance, so as to better understand the capabilities of existing employees He spends time visiting and assessing each department and branch office for the first month, observing the social dynamics, tools, quality of data, and customer issues of each team."
Totemizing employees helps identify personnel to keep or to prune. This term comes from poles indigenous peoples of the Pacific Northwest coast of North America carve with faces that are stacked one on top of each other. Even when one role is assigned to one person, a comparative choice helps refine insight as to where the talent lies.
Robert's walk-around is Kaizen ("change for better") process improvement or what the Japanese call a Gemba ("the real place") Walk. The idea is to be a fly on the wall, watching only for understanding rather than to guide or to critique. Leaving his desk to see the rest of the office gave Robert a sense of the team dynamics. It also let Robert approach the process of managing change with self-assured humility. He realized that his team had a deeper understanding of their processes and the opportunities to optimize them. After he crystallized his vision, Robert was able to work with his team to support the changes to fulfill that vision.
April – The Most Risky Move
Page 94: "John, the current CTO, is dubious and insists the plan is too risky and aggressive. Robert invites him to continue his career elsewhere, with a generous severance package and recognition for his services to the company over the past years."
Robert's most risky move was firing John. This courage is both risky and rare. It's risky for the CIO as it shines a light on his intentions to launch a purge. Those fears were well founded as the reorganization two months later eliminated two divisions, eleven departments, and a third of RYLC's head count. It's rare because a CIO will resist removing leaders with their network of relationships and knowledge of the business. The usual course of action is to tolerate powerful managers and hope that they align as the strategy emerges.
Did Robert make a good decision? The reason for terminating John seems weak— a snap judgment. He shouldn't need to replace the CTO unless the new direction needs skills that John didn't have. Robert must allow John room to express doubt. He needs not so much to convince John as to explore with him the policy to ensure that there is unity as they start to navigate a new direction. We embrace rational decisions for emotional reasons. We cannot just state the facts without also addressing the anxieties that a new policy implies.
And yet Robert knew that the old guard would fight change. He had to break the back of reactionary resistance to the new order. From the start, Robert made it clear that he wasn't just promoting SOA as Web services but as a force that challenges orthodoxy and rebuilds RYLC's culture and community. The top sets the tone. A fish rots from the head, goes the old saying. We can shrink the number of those who report to the C-suite, but without ensuring leadership alignment, the values that feed dysfunction not only remain but are reinforced by the survival of those executives. They will hire acolytes that are missionaries for those values. This perpetuates all that was wrong in the first place.
Without minimizing the risk of such a purge, we must reject the myth of the indispensable employee. It's a greater risk to keep a personable, competent executive who cannot support a new direction than to keep a disagreeable, incompetent executive who can support it. We can do something about the latter. We can do nothing about the former.
Once Jesse and Robert had their executive team's support, their focus shifted to middle management. If managers don't have their heart in the vision, the staff will resist the change long enough to outlive the executive responsible for the change. CEOs hear at their back the tick-tock of the board room's clock with the certainty that the patience of the board is measured by just a few quarters. We cannot underestimate the intransigence of the permanent bureaucracy. Town hall and one-on-one meetings can drain some of that cynicism. But the best way to build belief is through incremental successes that the team celebrates with increasing velocity.
The German philosopher Friedrich Nietzsche observed that "something which has made life worth living" is "that there should be a long obedience in the same direction". Nietzsche is commenting not on chain-of-command discipline but on persevering in the face of daunting odds. It's staying the course to an overarching truth rather than a single deed that makes the difference. The dynamic should be inner driven rather than top down, less a marching band and more akin to a jazz ensemble. As Robert evangelized the new direction, the staff had to determine the extent that they could agree with that new direction. Change for most people isn't easy. It needs an external commitment—executing tasks—and an internal commitment—a belief in the principles that drive the company. For an organization to succeed with transformational change, the team had to have both external and internal commitment. RYLC's marathon had started. It had to have long obedience in the same direction.
If we must reorganize to have service-orientation, the question then becomes one of execution. Mishandling the layoffs could cause a run to the door by the best employees leaving behind a corporation of problem children, expose the company to litigation, damage vendor and customer relationships, and implode the stock. We must strike a balance between doing too little or too much. Incremental terminations won't get the notice of investors. It also creates a climate of fear making devil's advocacy and red teams unlikely. Butchery will cut the organization's sinews and sap morale and tribal knowledge. The principle of parsimony, that staff shouldn't be kept except out of necessity, must guide the scalpel.
Firings leave in its wake emotions among the survivors ranging from horror to relief. From those emotions come behaviors ranging from resistance to zeal. Layoffs can have a positive outcome, not just for the enterprise, but for those who have lost their jobs. Leaders need to frame this action in such a way that those who are released feel hope, respect, and dignity. They must be at peace as they move on to a new opportunity. Scorn, loss of face, and bitterness aren't seeds that we should ever plant. "You cannot do wrong without suffering wrong," the American essayist Ralph Waldo Emerson says. "Treat men as pawns and ninepins, and you shall suffer as well as they. If you leave out their heart, you shall lose your own. Cause and effect, means and ends, seed and fruit, cannot be severed."
Figure 1 – Emerson (1803- 1882)
A company's self-interest insists that it's better to treat people who must leave not as broken machines but as esteemed alumni or emeriti who matter. Kindness for those who are getting displaced fosters trust from the rest of the organization. It attracts future employees by maintaining good will, loyalty, and the company's brand. An enterprise will fulfill its karmic destiny largely as a function of its moral architecture. There are no simple answers on how to address the fallout of layoffs other than to say that candor and concern is the best short-term solution and that service-oriented success is the best long-term solution. We can mitigate that pain with a severance process and package that exceeds industry standards. Generosity is both an ethical and a pragmatic response to a difficult but essential action.
RYLC did well by doing good.
The rest of the story is in our next issue.
[REF-1] Erl, Thomas, et al., SOA Design Patterns, Prentice-Hall, 2009, Foreword by Grady Booch, xxxvii. www.soabooks.com/patterns
[REF-2] The Bible, King James Version, 1611, Genesis 11:3.
[REF-3] Thomas Erl, Clive Gee, Jürgen Kress, Robert Laird, Berthold Maier, Vijay Narayanan, Hajo Normann, Pethuru Raj, Leo Shuster, Bernd Trops, Clemens Utschig-Utschig, Philip Wik, and Torsten Winterberg, Next Generation SOA: A Concise Introduction to Service Technology & Service-Orientation, Prentice-Hall, 2014, pp 89 – 113. http://servicetechbooks.com/nextgen.
[REF-4] Harvard Business School, http://www.hbs.edu/teaching/inside-hbs/
[REF-5] Ralph Waldo Emerson, "On Compensation", 1841. http://www.emersoncentral.com/compensation.htm. Image of Emerson from 1859 in the US Public Domain, from Ralph Waldo Emerson, John Lothrop Motley: Two Memoirs, Oliver Wendell Holmes, Houghton Mifflin, 1904.
I wish to acknowledge David Kempson, Chief Information Officer at UnitingCare Health, Jürgen Kress, Fusion Middleware Partner Adoption Oracle EMEA, Jonathan Ooms, Technical Recruiter, Digital Intelligence Systems, LLC (DISYS), Clemens Utschig-Utschig, Executive Director, Head of IT Marketing & Sales Architecture at Boehringer Ingelheim, and Steve Wisner, Director, Enterprise Architecture at Genworth Financial, for reviewing this article. The views expressed here are my own and don't necessarily reflect the views of past or present employers.