Tech-tonic shift Featured

7:00pm EDT February 23, 2010

Sometimes good really can be the enemy of great.

There was nothing wrong with Compuware Corp. as it stood two years ago. President and Chief Operating Officer Bob Paul was running the day-to-day operations of a billion-dollar IT solutions firm with product offerings that were selling to an array of customers. It was a stable business with established revenue channels and no outward signs of trouble.

But Paul and the leadership team at Compuware saw something different when they looked past their company’s stable surface. They saw a product-driven business that had diluted itself by covering too much ground. It wasn’t a fatal flaw, but under that set-up, Compuware could never hope to be more than what it was: a producer and seller of prefabricated products and solutions.

Paul and the other leaders of Compuware wanted more. They wanted to know what their company could really excel at and then focus on those areas.

“We were in all kinds of different business environments, selling different business solutions and products into different IT categories around the world,” Paul says. “So the new strategy we introduced was really deciding what we were going to be the best in the world at, and aligning the entire organization around the goal of being best in class.”

To make that happen, Compuware — which generated $1.1 billion in 2008 revenue — needed to more directly address the needs of its customers. The company’s leaders shifted their focus from developing and producing products and services to identifying customers’ IT pain points and constructing solutions to those problems.

“It was basically changing the conversation from ‘What does the product do?’ to ‘What customer problem are we solving, and how are we differentiating our ability to solve that problem?’” Paul says. “As a result of that, we doubled down our investment in the area of education and training, we divested ourselves of some core solutions, and through all of that, it gave us a great opportunity to reinvest and accelerate our positions in some key areas.”

Shift the focus

Shifting from a product-focused mindset to a customer-solutions-driven mindset was more than a strategic shift. It was also a cultural shift. Paul had to change the way his developers and salespeople thought about creating products and taking them to market.

At an established company like Compuware, with entrenched processes, the shift needs to first occur on a tectonic-plate level — at the absolute base of the company’s foundation.

There was a lot of prior inertia that Paul and the leadership team needed to rein in and redirect.

“It’s a very common trap for technology companies to fall into,” Paul says. “They become so enamored with their own technology, they often lose focus on what is going to be required to value for the customers in the marketplaces they serve.”

To shift the ground beneath the company, Paul started at the top. Compuware assembled a core group of business leaders from within the organization and proceeded to hold off-site sessions with the assembled team over the course of several months. In the sessions, the selected leaders began a frank, honest dialogue about where Compuware needed to go in the future and in which areas the company could build the most core-competency muscle.

Compuware’s leaders were quickly able to define areas of strength and sketch an outline for goal-setting across three periods, dubbed horizons one, two and three. Horizon one was defined as the immediate future.

“We identified horizon two as anything beyond that quarter, and horizon three as anything beyond that fiscal year,” Paul says. “So we started investing in the capabilities we defined with the understanding that this is how we were going to accelerate the business. It’s all about focus.”

After setting ground rules regarding strategy and time frames, Paul and the leadership team began to roll out the new company focus with a three-pronged strategy focused on communication, process and consistency.

The first leg of the communication process involved staying on the message, making sure that every manager was hammering home the idea of identifying customer problems and fashioning solutions to address those problems, then repeating the concept at every opportunity.

“We were consistent in our communication bulletins that we sent out, we developed a global online collaboration portal where we talk about the problems we are solving for our customers,” Paul says. “At many levels, we were communicating business problems and value creation in the same sentence or paragraph.”

The second leg was to focus on the company’s process of allocating people and resources, again placing a priority on creating value and solutions for the customer, as opposed to solely developing products.

“We created checkpoints where you could not pass unless you had the problem and the value creation solved first,” Paul says. “From there, we’d go into how the solution is supporting that.”

The third leg involved getting people at different levels and locations within the organization involved in promoting the messages. Paul and his leadership team couldn’t be in all places at all times, so as the cultural shift began to take root, the leaders closer to ground level began to play an integral role in making the messages stick with employees in every corner of Compuware.

“Some of our leaders got it right away,” Paul says. “Some of our leaders are new to the organization and didn’t have the history of ‘That’s not how we do things.’ So we got everyone on board through a relentless pursuit of consistency not only in communication but in discipline around the processes.

“What is very rewarding is to see our internal IT group or our research and development group, they won’t even start to do work now unless they understand how it supports the customer problem. When you have a clear articulation of a core strategy that you can then align everybody else behind, it is amazing the kind of leverage and agility that you can have when executing in the field. It is a very powerful business model.”

To make it happen in your organization, you need to build a strategy, build a team and build trust.

“The most important thing in all of this is focus,” Paul says. “Focus on a business strategy that is going to be effective. Then, by bringing in cross-functional key leadership from around the organization and starting to frame the conversation first, you then have the opportunity to come up with what you want to be when you grow up to the next level as an organization. Only once you’ve gotten that strategy figured out can you really start to make all the other decisions relative to aligning the organization around that strategy.

“So you get the focus, get the strategy right and then start cascading it through a series of effective communications and decisions that are consistent, and narrowing the organization down to what you believe you can be the best in the world at.”

Create change agents

Any organization that undertakes a major shift in the way it does business will need people to step up, set an example and create buy-in from the people around them.

Paul says Compuware already had a number of such leaders in place. But he is always on the lookout for additional change leaders.

To find them, he sets clearly stated goals and observes who has the most success — and fewest setbacks — in reaching those goals.

“You will learn who your main players are in the near and medium term if you have set goals,” Paul says. “I set up quarterly goals for each of our business leaders that are all very measurable. You can tell who is capable of breaking through walls and achieving those goals. It can take a bit of time, but it’s something where you can kind of get there in the medium term.”

In the long term, you need to create an environment that develops and nurtures leaders who can help anchor and grow your culture and strategies. Paul creates that environment at Compuware by looking both inside and outside the organization.

“I have done a combination of things,” he says. “I leveraged the best and brightest that were already in place, plus I hired a bunch of new people to work with the existing people. The newer people are ones I thought would bring an outside perspective, a fresh attitude, agility and nimbleness. Then, we set up processes internally through training and evaluation programs to really encourage and foster the future leadership.”

Paul also wants to see a leader’s ability to groom and mentor other leaders. In order to be promoted, a manager at Compuware has to show not only excellence at their current job but also a demonstrated ability to mentor candidates who could potentially fill the role to be vacated.

The ability to teach as well as learn is, once again, rooted in effective goal setting. Paul wants employees’ goal-setting processes to be both collaborative and focused on the business plan.

“In goal setting, the No. 1 process is that you get the business plan right,” he says. “Every year, we go about the exercise of putting together a fair and achievable but aggressive business plan across the organization. We then break that down into geographies and solutions. From that, we expect two things to happen: One, that there is an evaluation process that happens between every manager and employee. Separate from that, there is a collaborative discussion about what that manager’s goals are for their team. It’s a very quick cascading from the business plan, and it creates alignment around the business plan.”

Protect morale

When you change your business, the worst thing you can do is keep employees in the dark with regard to the decisions that are being made. When uncertainty is freely flowing throughout your organization, people tend to assume the worst.

When Paul and his team made the decision to divest Compuware of some business segments that no longer fit the company’s long-term plans, Paul was upfront about the changes that would be occurring. Many of those employees were either retrained by Compuware or moved on with the company that purchased the business segment.

But going through the divesting process reinforced a core communication principle to Paul: Don’t let employees think you’re making change simply for the sake of change. No employee wants to feel like they’re a yo-yo on the end of management’s string.

“You have to be sensitive to a person’s predisposition to change,” Paul says. “We have some very brilliant people that by nature don’t like change. You have to bring those kinds of people along slowly.

“You can have them articulate answers to questions that you form for them, so they can come up with the reasoning for the change on their own. It’s a matter of leading questions so they can realize for themselves why these tough decisions have to be done.”

Some people will be gung-ho for change. Those are the people who can become your change agents throughout the organization. But even though you might be enthusiastic about your plan for change, don’t assume that enthusiasm is automatically shared by everyone. Don’t allow yourself to become quickly impatient with stragglers.

“It’s upon the leadership to make sure that you’re taking the time to describe why it’s best for the business and best for the employees, best for the customers and shareholders overall, to make these changes.”

How to reach: Compuware Corp., (800) 266-7892 or www.compuware.com