In this series on IT strategy, leading IT directors and
chief information officers share what they consider to be their
best and worst IT management decisions, and draw out the underlying
principles and lessons which can be used to generate positive
outcomes.
Margaret Smith explains how going against the
conventional wisdom can pay dividends, but warns against
prioritising cost considerations when you assess
proposals.
BEST DECISION
In late 1997 and into 1998, I was charged with establishing
Legal & General’s overall strategy for
e-business.
For the two years prior to that, I had been responsible for
developing Legal & General’s website, but taking charge of
e-business effectively handed me a far broader remit to shape the
group’s electronic strategy for years to come.
Getting that strategy right was absolutely crucial, so I began
by putting together a strong team which undertook more than three
months of research into the e-business landscape, such as it was in
1998.
At that time, the prevailing consensus was that
business-to-consumer was the best e-business model to adopt for a
firm like Legal & General.
But our research – which looked at everything from the technical
environment to human behaviours around electronic interactions –
reached an altogether different conclusion: it told us that
business-to-business was the right way to go.
When I first declared our intentions I came in for plenty of
scorn, but I was sure that B2B was the right approach and stuck to
my guns, though it was certainly a tough fight.
One thing that was in my favour was the logic of the fit with
Legal & General. Even if B2B went against all the prevailing
opinion, it was already Legal & General’s basic strategy, which
was based around its relationships with independent financial
advisers, business partners and financial consultants.
I think that fact helped to convince the group’s board, even if
there was plenty of scepticism flying around.
But that is not to say that it was an easy sell internally. The
fact is, I had no particular power base at Legal & General, as
I had been concentrating on the website for two years. This means
you have to go out and sell the idea from the ground up. It was a
risky business, and one that required a fair amount of political
nous to convince all the stakeholders involved.
Ultimately, of course, I got the agreement I needed – and Legal
& General’s B2B e-strategy became a reality with the creation
of an extranet for independent financial advisers and agents to do
business with us electronically.
The success of the approach became apparent very quickly. It not
only set Legal & General apart from its competitors, but the
platform itself worked well and, crucially, got support from the
independent financial adviser marketplace.
It also had not taken that long to develop the platform, which
meant that within a year of embarking on the project it was not
only firmly in place, but winning hearts and minds across the
business community.
With the success, Legal & General’s status as a market
leader in e-commerce was confirmed, and even the analyst community
wanted to hear what I had to say; so many of them, in fact, that I
remember we had to arrange lots of separate sessions to fit them
all in.
What is more, those sessions went down extremely well and really
boosted Legal & General’s standing and share price.
Some time afterwards, I remember the CEO of one of Legal &
General’s competitors asking me how I had spotted that B2B was the
way to go. I said then, just as I have said again now, that it was
not just a gut feeling that I went with, but the culmination of a
lot of analysis and hard work.
Of course, I did not know absolutely that it would pay off – all
new projects carry risk, and this one was no different – but we had
certainly done our homework first. It was just really satisfying
when everything came together.
Worst decision
My worst decision also dates back to the 1990s, which was an
exciting time to be involved in IT. It was late 1996, and
electronic communications and the internet for business were just
getting going.
Up until that point, most business websites were flat and
generally no more than brochures, but things were starting to
change.
At Legal & General, it was two years since we had launched
our Direct operation, for which I was responsible, and we had
already developed some innovative product offerings.
Among these was a flexible reserve mortgage. We were about a
year ahead of anyone else in the market with the account, but some
pretty weak marketing meant we had not really made the most of that
advantage.
The account was sold and managed over the phone, and by late
1996 we had not yet settled on a plan for using the internet
channel.
At this time, the head of business architecture came to me with
a plan to create the first interactive internet transaction. He
proposed that flexible mortgage customers be given the facility to
manage their accounts online – from making extra payments, to
borrowing against any built-up surplus or taking a payment
holiday.
One clever touch of the plan was that not much security was
required, since customers would only be able to move sums between
the mortgage and their own bank account.
I must say I was intrigued, and gave the plan a lot of thought,
but I took the decision that it was still just a novelty – and one
that my budget could not stretch to.
From my perspective, it was difficult to make the cost case as
there was no clear-cut return on investment. I rejected the
proposal. But all too soon it was a decision I came to regret.
When I turned it down I was basing my judgement on the wrong set
of measures. My rejection was premised on the fact that offering
the facility would not save money in the operation and cost a
substantial sum to build.
As I quickly came to understand, what I should have realised was
that that kind of online facility could act as a strong marketing
and public relations tool for the organisation, and really raise
its profile.
How was I able to see that mistake so quickly? Because despite
my scepticism, those who had pitched me the idea were not
disheartened, and within three months they had sold the plan to
directors elsewhere in the company with a lot more success.
So it came back around to me early the following year and I
eventually became the project’s key sponsor – and most vocal
advocate – when it launched successfully in late 1997.
Looking back, two things strike me about those events. The first
is that business cases can stifle innovation, because when
everything is rationalised on the basis of cost, no one is willing
to have a punt. I think this is more of a problem today than ever
before.
The second point, which comes out of the first, is that you must
not overlook the more intangible benefits when weighing up any
proposal. You really need to look at issues from every angle.
My advice, then, is this: make sure you are open to leftfield
ideas and true innovation – but still tread warily and do not be
afraid to say no.
CV: Margaret Smith
Margaret Smith has a wide experience of working with industry
bodies and advising business and government on IT and skills
issues.
Formerly chief executive of CIO Connect, the National Computing
Centre’s network organisation for top IT executives, she was also
chief information officer at Legal & General, where she
implemented major e-commerce B2B initiatives and business change
projects.
Smith has also been a non-executive director of insurance
industry standards body Origo Services and sat on the Cabinet
Office Portal Board.