Legacy companies, legacy thinking and the fear of the unknown

Written by on September 8, 2016 in Guest Blog with 2 Comments

IMG_0972I had a meeting with an incumbent company in an industry. We talked about opportunities to utilize data and analytics. They commented that it is so easy for startups to do anything with data, but they have their regulation, internal processes, legacy IT systems and responsibilities.

I tried to be polite and understand their problems, but I felt angry. Do these people have the slightest idea how hard it is to build a business from scratch, with nothing, no money, no people, and no data? At the same time, they summarized the problem they have and why startups have the opportunities. What is their problem?

This company is in the finance industry, but I have had very similar discussions with telecoms, retail and media businesses. These companies have a lot of data, internal resources and customers, and they should just utilize them. But the problem is that they have developed their systems, people and organizations to produce something that used to be good business and it is so damn difficult to change anything.

It might indeed be difficult to change organizations, processes and IT systems. But it is not really the problem that the comment highlighted. The person basically said that she believes they are not allowed to change things. This belief is the problem.

People can blame external restrictions, such as regulation, laws and competition, or customer expectations, or internal reasons such as limited resources, pressure with all daily duties, or management, or other departments. But in the end the main obstacle is often in people’s heads.

This is starting to sound like some life coaching. And it is not my point. The point is more that these restrictions are often based on assumptions and fears that are not real and it would be at least worthwhile to check facts. It is also the case with data. There are all sorts of privacy, security and system issues, but there are also a lot of creative ways to find solutions and respect all rules and limits.

It is also important to remember that changes typically start with small practical things. One issue in big organizations might be that too many people think big changes, but too few make small practical ones. For example, in the data area, it can be one application that can improve customer experience, or internal processes, and it must be based on a real need from customers or employees, not an idea to copy a startup or artificial strategy session results.

If an employee believes that something can be done in a better way, but he or she feels it is not allowed to in the organization or by the regulations – and a startup could do it anyway – then the employee should make a simple version during his or her free time.

Seriously.

It doesn’t need to be perfect, but at least it provides an idea of how easy or difficult it is for a startup to do it, and it gives you something practical to ‘sell the idea’ internally. Or at the very least it develops competencies in the person that will be sorely needed when disruptive startups come to change the business.

It is not easy to change things in big organizations and legacy IT systems are often a real problem. But the reality is that startups start without any IT systems, data or organizations. People in big organizations must also focus on how to get something done, not why some external reasons might prevent it.  If you want start a data analytics or AI project, take a minimum data set, some free or inexpensive tools and make an application you need the most. By actually doing things it is much easier to find the limits than by speculating about external factors.

This article was first published on TelecomAsia.net.

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Jouko Ahvenainen

About the Author

About the Author: Jouko Ahvenainen is a serial-entrepreneur and Co-Founder of Grow VC Group, a holding entity including over 10 companies, a pioneer in digital finance, fintech and data analytics solutions. Jouko started his work with digital finance and fintech models in 2008 and listed world-class influencer. He participated in changing US finance regulation, getting the Senate and President to allow JOBS Act and has worked with EU and Asian finance regulation. .

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  1. Avatar Michael Elling says:

    As a Chief Strategist for a leading financial services information company of 200+ people and $100m revenues I suggested they first develop a strategic framework from a product market matrix. By slicing this matrix through the organizational layers it was more obvious to see where resource, power and data concentration lay (and what was lacking). But doing so also let all the piece parts see what data was immediately around (above, below, to the side, etc…) as well as data that was far away, but might have an impact on what they were doing, or vice versa.

    Breaking down boundaries requires this first step. It leads to an understanding not only of the power of the individual but the power of the team. Knowledge empowerment so that every human asset becomes more productive.

  2. Jouko Ahvenainen Jouko Ahvenainen says:

    Thanks for your good comment. This definitely makes sense from the management and strategy point of view. I also tried to emphasize the point each individual is also responsible to be more active and not think boundaries too much. But of course the management and strategy have very important role in this too.

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