The focus of this section is to provide a description of the Software Engineering and Development (SEAD) organization at MCG, the leadership practices of the company’s CEO, and the link between the CEO’s leadership practices and the SEAD organizational culture. This department and leader were chosen for two reasons. First, the SEAD organization underwent many changes over the past 3 years due primarily to the CEO’s leadership decisions, including a complete reorganization to align to Agile methodologies, and an acquisition to Hearst. Second, political forces governing healthcare and innovations in IT management due to cloud computing, in the same timeframe, had tremendous impact to the healthcare industry as a whole, the MCG company specifically, and the organization culture of the development department. Organization Description
The Company Mission
According to their website, MCG provides evidenced-based medical guidelines and case management services to the Payor and Provider markets. “Our evidence-based guidelines help providers and payors drive effective care in their own work and through the conversations that connect them. We provide fast access to globally sourced, clinically validated best practices that support clinical decision-making.” (MCG, 2014, p. Our Mission) They go on to state they are committed to helping the industry drive effective care: “We are all firmly committed to our mission of helping providers and payors drive effective care in their own work and through the conversations that connect them.” (MCG, 2014, p. Our Mission) The Organization – SEAD
The SEAD organization is responsible for providing the content and applications, and all related services, as ‘value-streams’ to the business. The SEAD organization is broken down into two departments. The Content Team includes the engineers concerned with packaging the guidelines and delivering them via a Content Service, and for consumption into other value streams produced by the organization. This team is comprised of approximately fifteen developers, QA experts, and front-line managers. These are further divided into two separate development teams. The Application
Team includes approximately twenty-five developers, QA experts, and front-line managers. These are divided into four separate development teams. Both divisions report to a single middle-manager, the Director of DevOps, who also oversees the Operations team. The IT Department was also part of the SEAD organization, prior to the acquisition by Hearst. The IT Department director was a peer of the Director of DevOps. The teams are responsible for delivering major product releases once per year to all clients and vendors of the services. They also produce a major mid-year, several patches which release on monthly or bi-monthly cycles, and several dozens of hotfixes to address bugs, each year. The business is attempting to move to a continuous delivery model, however there are substantial forces prohibiting adoption from the business, of this paradigm. Leadership values and influence has affected the organization in both positive and negative ways. The CEO – Jon Shreve
Jon Shreve is the CEO of MCG. From their website:
“Mr. Shreve oversees all facets of MCG growth and management. He was Chairman of Milliman Care Guidelines from 2002 to 2009 and became its CEO in 2007. Prior to MCG joining Hearst Corporation, Mr. Shreve had been with Milliman for 25 years. During this time he started or led ten different consulting and product practices, served on its Board, and led its Product Subcommittee.” (MCG, 2014) Leadership Practices
Jon worked doggedly to reorganize the SEAD division along Agile development methodology, in the past few years. His management style is consistent with the Assumptions of Theory Y Leadership, and many of his movements in recent years support a core tenant of the theory, that “The average human being learns, under proper conditions, not only to accept but to seek responsibility.” (Daft, Chapter 2: Evolution of Managment Thinking) Jon fosters a close relationship with his Provider clients by hiring and nurturing a field that has deep knowledge and experience with medical practice, mostly Bachelor’s degree holding ex-nurses. His experience as a former Actuary gives him direct connection and context with the Payor community.
His staff includes medical doctors and has grown to include a robust IT community over the following 10 years. Jon’s leadership practices over the past several years, since Obamacare and Cloud Computing emergence, have helped to align the business and organizations to mainstream and cutting-edge advances in technology. “Technological advances and the rise of virtual work, global market forces, and shifting employee and customer expectations have led to a decline in organizational hierarchies and more empowered workers, which calls for a new approach to management that may be quite different from managing in the past.” (Daft, Chapter1: Innovative Management in a Changing World) Relationship between Leadership and Organizational Culture
The SEAD organizational culture has shifted dramatically in the past few years, as the company has invested significant resources to realign the development and distribution of MCG’s software offerings to Agile methodologies. The Agile manifesto promises that more frequent delivery of features and updates to services to clients and partners will increase customer satisfaction , as well as increase employee productivity, efficiency and effectiveness. Attempting to capitalize on this vision, Jon has made sweeping, radical and rapid changes to the SEAD and other sub-organizations. Observations reveal both positive and negative impacts of Jon’s leadership on the SEAD organizational culture.
While challenging the status-quo to align with Agile has in fact lead to more frequent value delivered to clients, as well as greater accountability of the product management and development teams, some data suggests that the culture shift was too extreme, and in too short a time-frame, supported by the high turnover rate of staff and executives across the SEAD and other sub-organizations, over the past few years. From the Agile Manifesto we learn that Agile isn’t just a process change to software development and delivery, but represents a true culture shift for any organization choosing to adopt it. “We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value: Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
That is, while there is value in the items on
the right, we value the items on the left more.”
(Ward Cunningham, 2001)
The Agile methodology conversion is certainly evidence of in support of leadership’s embracement of the Theory Y perspective in management thinking. While Agile development appears to have helped the teams become more engaged and accountable, bringing greater transparencies in development practices, and allowing for better tracking towards release objectives, the observed organizational casualties in the same period of time suggest that the rate of change and radical culture shift was largely ineffective in strengthening the SEAD organization. Employee turnover rates suggests somewhat misguided judgment, as the teams subject to the changes weren’t adequately prepared for the adoption, nor supported by a combination of strong leadership, robust IT infrastructure, nor particularly by the maturity of middle-level engineering managers held accountable for the changes. Quality of releases suffered, and client and partner relationships were overly taxed, as evidenced by substantially negative feedback from the field during the same period.
Continuous Delivery has also been a main goal for the organization over the past few years. Jon pushed to move to a Continuous Delivery paradigm at the same time as pushing the adoption of Agile. “Continuous Delivery (CD) is a design practice used in software development to automate and improve the process of software delivery.” (Pantha Corp) Clients and partners were impacted by the poor quality of the initial releases resultant from the move to deliver software more frequently. They also suffered as their businesses were not aligned to absorb more regular release cycles as per the push to Continuous Delivery.
The tenants for CD hold that the software developed should be to a high standard, but the fervor to ‘go to market’ with a CD delivery solution outweighed the quality control measures and maturity of the managerial teams responsible for implementation. “Techniques such as automated testing, continuous integration and continuous deployment allow software to be developed to a high standard and easily packaged and deployed to test environments, resulting in the ability to rapidly, reliably and repeatedly push out enhancements and bug fixes to customers at low risk and with minimal manual overhead.” (Pantha Corp) SWOT Analysis
A SWOT analysis is conducted to analyze the SEAD organization’s strengths, weaknesses, opportunities and threats, towards the goal of guiding the organization towards greater health, productivity and efficiency. Organizational Strengths
The SEAD department has high technical skills, defined as:
“…the understanding of and proficiency in the performance of specific tasks. Technical skill includes mastery of the methods, techniques, and equipment involved in specific functions such as engineering, manufacturing, or finance.” (Daft, Chapter1: Innovative Management in a Changing World) The technical skills of both the individual team members and especially the low-level SEAD management are high. The members are professional, highly skilled software and program managers and QA experts. They are largely seasoned, non-junior resources that contribute in high-capacity to the overall productivity and efficiency of the organization. Strategic Thinking
The SEAD department eagerness and readiness to move to Agile methodologies demonstrates management skill at aligning strategically with industry best-practices, towards the end of delivering value to clients faster with higher-quality results. This demonstrates the conceptual skills of its management, defined as: “… the cognitive ability to see the organization as a whole system and the relationships among its parts. Conceptual skill involves knowing where one’s team fits into the total organization and how the organization fits into the industry, the community, and the broader business and social environment. It means the ability to think strategically—to take the broad, long-term view—and to identify, evaluate, and solve complex problems.” (Daft, Chapter1: Innovative Management in a Changing World) Agile Software Development practices are quickly becoming the norm for leading software organizations to deliver frequent features and service updates to clients and partners.
Agile practices foster a dynamic, team-centric corporate culture in which the organization is willing and able to adapt to the ever-changing needs of the business. “When looking at the agile process, it is important to understand that agile is an umbrella term used to describe a general approach to software development. Though there are many agile incarnations, all agile methods, including the Scrum agile process, emphasize teamwork, frequent deliveries of working software, close customer collaboration, and the ability to respond quickly to change. ” (Mountain Goat Software, 2014) The support of moving to Agile development by leadership was a good call, and caused teams to become more self-empowered and operate better as a team towards business goals, as evidenced by their ability to deliver small, incremental fixes to software problems discovered by customers, in short periods of time, with reasonably high quality. Organizational Weaknesses
The MCG business leadership profile demonstrates a substantial lack of higher-educated business leaders. The lack of true leadership and managerial context is a significant liability to the organization. “Relentless improvement in educational standards is also essential. Better-managed firms need more highly skilled workers and they make better use of them, while better educated managers will be a key component of the performance transformation that both established and emerging economies must undertake if they are to maintain and improve their global competitive position. ” (Nick Bloom, Management Practice & Productivity: Why They Matter, 2007) Neither the CIO nor the Directory of DevOps hold degrees higher than Bachelor’s. Few of the executive team members have in-depth experience in software development or IT. For example, the immaturity and lack of leadership training of the Director of DevOps has continued to expresses itself in toxic ways to the SEAD organization, which have led to many complaints of subordinates to HR, and significant employee turnover, due to his perceived ‘bullying’. Failing to deliver quality results
Leadership also has a track-record of failing to deliver quality results. “No matter how good of a human being a leader is, without producing good results, this person isn’t a good leader. Producing results is the ultimate measure of being a good leader, and those results need to be long-term, unselfish and benefiting all stakeholders.” (Jack Zenger) Quality results would not include the substantial turnover rate of highly qualified, experienced team members during the acquisition and reorganization already discussed. Quality results would also have accommodated a smoother transition of the IT systems through the acquisition, which was substantially painful and stressful for all members of the organization, especially SEAD’s IT department. Several business systems were out of commission for several months, which had negative impact on the organization as well as our customers and partners.
Quality results also would have better supported the cultural shift presented the organization subsequent to the acquisition. There was substantial animosity felt by most employees, who appreciated the small-company feel of the one-hundred fifty member company. Most people had a pervasive fear of what the acquisition meant to the business, their teams, and particularly to their own jobs. This was an insensitive time to make further demands on the organization. “An M&A brings two distinct cultures face to face. This is akin to a union of two totally different people. Unlike in a relationship where one hopes the onus is on making it work, a corporate M&A always has an element of animosity, especially among the individuals at the target company, who tend to believe they have been taken over and upon whom the biggest adjustments usually fall.” (Cognizant) Organizational Opportunities
Political Forces – Obamacare
Due to Healthcare governmental regulation with The Affordable Care Act, both Payor and Provider markets are looking for ways to reduce costs. “Total healthcare spending in 2012 came in at $2.79 trillion—up just 3.7 percent over the previous year and continuing a four-year trend of significantly reducing the amount of growth in annual healthcare expenditures…The current numbers represent the slowest rate of growth since the government began tracking the data in 1960.” (Ungar) This presents a substantial opportunity for MCG, whose primary purpose is to increase efficiencies in both the Payor and Provider communities. Market demand has already increased significantly for the products and services MCG offers, and will only continue to grow as the Payor and Provider communities continue to invest resources into cutting costs and improving efficiencies in their business practices.
MCG products and services are perfectly aligned to help both markets meet this need. “Seven of the eight largest US health plans and more than 1,200 hospitals use our evidence-based guidelines and software. Together, our Cite® and Indicia® products help drive effective care for a majority of Americans, resulting in better outcomes and contained costs.” (MCG, 2014, p. Our Difference) As the software and IT seat of the company, the SEAD department will substantially contribute to this extremely worthwhile mission, and is bound to have positive changes to the morale of the organization. Economic Forces – Cloud Computing
Another opportunity MCG could heavily leverage, are the readily available IT resources for Cloud Computing. MCG could substantially curb costs in both development and IT management by investing in moving Platform, Infrastructure as well as their Software offerings to the Cloud space. Cloud computing offers another substantial opportunity for MCG products and services, especially with Mobile computing opportunities for the Provider market. “Business applications are moving to the cloud. It’s not just a fad—the shift from traditional software models to the Internet has steadily gained momentum over the last 10 years. Looking ahead, the next decade of cloud computing promises new ways to collaborate everywhere, through mobile devices.” (Salesforce) Imagine doctors and nurses with touch-screen applications accessing the latest research-based clinical guidelines at point of care, managing their cases in real-time, and transferring information at the touch of a button to your pharmacy, another provider, or even to the insurance company for automatic authorization of your services.
The SEAD department would be most directly responsible to moving the technical components of the software and services offered by MCG into the cloud-space, having a positive impact on the organization and increasing the vitality of the workforce involved. “The latest innovations in cloud computing are making our business applications even more mobile and collaborative, similar to popular consumer apps like Facebook and Twitter. As consumers, we now expect that the information we care about will be pushed to us in real time, and business applications in the cloud are heading in that direction as well.” (Salesforce) Both of these opportunities could serve to stabilize the direction of the company and help to align the organization with truly positive market changes. A company with a positive impact on the community, working in and with cutting-edge technology, would bring positive changes to the SEAD organization’s atmosphere. Organizational Threats
As much as Cloud Computing is an opportunity for MCG, it also represents considerable threat. Competitors are likely to emerge eager to exploit the opportunities presented now that Obamacare has shifted the industry’s priorities. Cloud computing offers small business a lot of the same leverage that was once only available to medium sized to large enterprises. One advantage of Cloud Computing is Commoditization of infrastructure and IT services. Small businesses can subscribe to the platforms, infrastructure as well as services they need to operate their business, and choose to add or decrease the amount of storage, memory, capacity or other services on demand, for a fraction of the cost of traditional in-house hosting. “A cloud service has three distinct characteristics that differentiate it from traditional hosting. It is sold on demand, typically by the minute or the hour; it is elastic — which means that a user can have as much or as little of a service as they want at any given time; and the service is fully managed by the provider (the consumer needs nothing but a personal computer and Internet access).” (Rouse) Competition will likely only grow with the increase of cloud services and providers.
Social Forces – Bureaucratic leadership in a Millennial (Gen Y) world “One social force is the changing attitudes, ideas, and values of Generation Y employees (sometimes called Millennials).” (Daft, Chapter 2: Evolution of Managment Thinking) Leadership at MCG is highly bureaucratic and hierarchical. The executive leadership team operates in an exclusive, non-transparent way that will likely deter rising-star Millennials from success. One demonstration of this was forcing the reorganization of the SEAD department without any feedback sought from the employees or mid-level leadership in the organization. This caused significant rifts through the department and lead to some highly talented young professionals leaving the company. “Millennials Value an Open, Transparent, Inclusive Leadership Style. Millennials grew up in glass houses. They are comfortable with transparency. They believe leadership should be the same. When asked what they look for in their leaders, they look for openness, inclusion, and diversity.” (Bersin, 2013) Leadership
Jon Shreve was selected as the leader to analyze, using Power and Influence theories of leadership, which focuses on understanding what the sources are of the leader’s power. These theories evaluate the different ways leaders use power and influence to get things done. Jon has both strengths and weakness in both Transactional and Transformational leadership styles. The Transactional approach: “…assumes that people do things for reward and for no other reason. Therefore, it focuses on designing tasks and reward structures. While this may not be the most appealing leadership strategy in terms of building relationships and developing a highly motivating work environment, it often works, and leaders in most organizations use it on a daily basis to get things done.” (Mind Tools)
One of MCG’s core strengths has been in the compensation packages awarded high-performing employees, including an aggressive bonus model, which has been known to exceed 20% of employee’s base rate of pay. Transformational Leadership approaches are commonly referred to as the most effective style for today’s businesses. Jon exemplifies many of the core tenants of this approach as we will show in this section. “Transformational leaders show integrity, and they know how to develop a robust and inspiring vision of the future. They motivate people to achieve this vision, they manage its delivery, and they build ever stronger and more successful teams.” (Mind Tools) Leadership Strengths
Jon demonstrates a high degree of innovative thinking in his management style. “The company’s innovative managers search for better ways to serve customers and expand the business” (Daft, Chapter1: Innovative Management in a Changing World). Jon demonstrates this clearly in his decision to align with Hearst, who was in the process of forming Hearst Health, and better aligned to the business purposes of MCG’s offerings than Milliman (the former holding company, an Actuarial firm). Jon has also demonstrated his innovative thinking skills with his ambitions to align the SEAD developmental model to Agile methodologies and mainstream CI/CD standards. Future-Facing
Jon’s move to Agile methodology suggest he fills the entrepreneur role for the company with skill, “The entrepreneur role is also critical in small businesses because managers have to be innovative and help their organizations develop new ideas to remain competitive.” (Daft, Chapter1: Innovative Management in a Changing World) It also clearly demonstrates he is a “Future-Facing” manager. “…today’s best managers are “future-facing.” That is, they design the organization and culture for creativity, adaptation, and innovation rather than maintaining the status quo. Today’s world is constantly changing, and success depends on innovation and continuous improvement.” (Daft, Chapter1: Innovative Management in a Changing World) Being “Future-Facing” is further evidence he espouses the core principle of a Transformational Leadership style by inspiring a vision of the future. Managing Relationships
Jon Shreve has regular “Ask Jon Anything” lunches where he invites small groups of his staff from different parts of his organization to sit with him for a private lunch, and invite to ask him any questions they wish. This practice has shown to increase employee’s engagement with the company and its objectives, and engenders an atmosphere of collaboration and trust throughout the organization. “Managing relationships based on authentic conversation and collaboration is essential for successful outcomes.” (Daft, Chapter1: Innovative Management in a Changing World) Jon also solicits feedback from employees with various feedback sessions throughout the year, where employees can discuss feelings about company policy and direction, and produce actual recommendations to leadership for changes. At least once a year the feedback is tallied, voted on by all employees, and top issues are addressed with an action plan for mitigation in the following year. There can be no question this has a positive impact on employees.
“Like a good therapy session, giving workers of all levels a chance to express their thoughts on the direction of the company has the opposite effect: Show your employees you’re interested in their opinions and they’ll be more likely take a personal stake in the business. They’ll go from feeling like they’re working for the man to feeling like they’re a part of the team.” (Donnelley) Jon seeks to align the goals for the company with the feedback of the organization, and we know from Transformational Leadership theory that this helps followers grow and develop into leader: “Transformational leaders help followers grow and develop into leaders by responding to individual followers’ needs by empowering them and by aligning the objectives and goals of the individual followers, the leader, the group, and the larger organization.” (Cherry, 2014) Leadership Weaknesses
Lack of formal higher education in executive staff
John, who was an Actuary previous to becoming CEO of MCG, has never worked in nor been formally educated on IT, software management, nor even in the medical profession. He refuses to classify the company as a data warehousing company even though the MCG systems hold 10.5% of the digital Medical Personally Identifiable Information (PII) available in the country. This puts the company in danger of being vulnerable to security threats that are governed with strict controls over PII data. Weakness of Human Skills
Shortly after the transition to Hearst, Jon decided to overhaul the SEAD organization to a management hierarchical which didn’t align to any particular methodology or industry best practice he could cite. When pressed by staff on where he was advised on the model, he stated “I came up with it in the middle of the night, by myself”. This is evidence of a lack of maturity in managerial skill, common in new-managers, as we read here: “Indeed, one of the most common mistakes that new managers make is wanting to do all the work themselves, rather than delegating to others and developing others’ abilities.” (Daft, Chapter1: Innovative Management in a Changing World) The timing of the reorganization was profoundly inappropriate. First, the acquisition by Hearst Business Media happened just months prior. Second, the IT Director quit without notice after the acquisition, the Senior VP (and acting CIO) passed away due to natural causes days later, and the interim CIO quit just three short months later.
His departure truly left the SEAD department with no experienced middle management to support them during the transitions. Jon’s decision to make broad-sweeping changes to the organization of SEAD, seemingly on a whim, at a particularly vulnerable time for the department, demonstrates a lack of connection with his staff, and is clear evidence of weak “Human Skills”. “Human skill is the manager’s ability to work with and through other people and to work effectively as a group member. Human skill is demonstrated in the way a manager relates to other people, including the ability to motivate, facilitate, coordinate, lead, communicate, and resolve conflicts. (Daft, Chapter 2: Evolution of Managment Thinking) Lack of Systems Thinking
Add to this the recent push to realign the development and delivery methodologies to Agile and CD, the teams reached an emotional breaking point and many staff quit or exhibited stress-induced behavior that led to their departure in some other way (disability leave, being laid off or fired, etc.) Another trouble with pushing for this model too rapidly is that development teams need to invest significant time and resources into preparing codebases and delivery systems to support it. Jon has never served as an IT engineer, and has little context or true understanding of the intricacies involved in such a radical transformation. It does no good to deliver products and services to clients or partners that are not ready for them. Every change to the platform or services of a production environment introduces risk as well as ambiguity that must be accounted for. Several client and partner engagements were negatively impacted by the radical change in the delivery processes during the Agile and Continuous Delivery transition.
This further strained and bread hostility between field operations and the SEAD organization, which translated to massive rifts between the organizational silos. Damaged expectations and relationships led to a high stress environment and further promoted employee turnover in both SEAD and other sub organizations within MCG. While Jon’s leadership is founded in a desire to push the organization towards innovative and cutting-edge development practices which in theory should give the business and the organization an edge in the industry, the change management process was poorly managed within SEAD, cross-departmental leadership, and with top vendor and client relationships, which lead to negative impacts that could have been avoided or dampened significantly, with higher quality leadership. Recommendations for Leadership Development
This section will introduce three practices that could be used to enhance Jon’s effectiveness and maximize his performance in the organization. Lead with Humility (Level 5 Leadership) While Jon shows a fierce resolve to do what is best of the organization, it is recommended he work on tempering his ego, engaging with the organization with greater humility. “One effective approach in today’s environment is Level 5 leadership, which is characterized by an almost complete lack of ego (humility), coupled with a fierce resolve to do what is best for the organization (will).” (Daft, Chapter 15: Leadership) If he had shown greater humility during the reorganization process, he could have experienced greater alignment with his followers during a tumultuous time, which would have established trust and eased tensions and fears that promoted undesirable behavior such as excessive turnover of highly competent staff. Engage in Interactive Leadership
Whereas Jon has selectively engaged in successful Interactive Leadership practices, he should be more consistent with this behavior: “A leadership style characterized by values such as inclusion, collaboration, relationship building, and caring…means that the leader favors a consensual and collaborative process, and influence derives from relationships rather than position power and formal authority.” (Daft, Chapter 15: Leadership) If he had sought out the consensus of the team prior to making his reorganization decision, he could have gained the buy-in of his followers and perhaps guidance on more appropriate timing that would be conducive to the health of the organization. If he begins this practice now, he should engender more support and useful information that can help his followers achieve the results Jon has envisioned. Practice Authentic Leadership
“Authentic leaders demonstrate self-discipline. A high degree of self-control and self-discipline keeps leaders from taking excessive or unethical risks that could harm others and the organization. When authentic leaders make mistakes, they openly admit them.” (Daft, Chapter 15: Leadership) There can be no question that Jon’s leadership would be more effective if he engages in a more self-disciplined approach. The organization will respond favorably to a leader they can trust to not exacerbate volatile situations, guide them with greater self-control even when that may mean putting the breaks on an ambitious vision which would help the organization maintain a competitive edge.
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