Understand Legacy Debt, Or Be Crushed By It

“Going into debt usually isn’t caused by lack of money, it’s caused by lack of vision.” Dave Ramsey, American businessman

One of my clients has offices near a river, and a taking quick walk during breaks has become a practice. At one spot, the remnants of two bridges are at either side of the current bridge. In the past, these blocks and pillars were the critical underpinnings of transportation – now they are reminders that needs of the community surpassed their capabilities. It’s important to know which aspects of an organization that are not just creaky, but moving towards being impediments to innovation and sustainable growth.

IMG_7819Talent debt. The days are long gone where one set of skills will carry a person through an entire career. Perpetual learning and upskilling is necessary. Individual development plans, supported by time and money, are critical to ensuring skillsets don’t slip too far behind the curve.

Process debt. Left unmeasured, processes can become concrete. Organizations can get weighted down by complex processes that, left unattended, expand operational expense and therefore limit investment capital.

Technology debt. Every technology has a half-life, after which negatives accelerate: value degrades, operational costs increase and replacement costs increase. Half-lives may vary, however they are all shortening. My #CIOchat colleague @dhinchcliffe recently published a great article on technology legacy debt.

Decision debt. Opportunities slip away if decision-making is too slow. Arcane governance processes or analysis-paralysis (what my grandmother would have called “dithering”) hinder progress.

Talent, process, technology and decision debts can create barrier conditions that are greater than the sum of their parts. Inefficient processes can drive unnecessary customizations in software, exacerbating technical debt. Undeveloped talent leads to skills gaps, leading to poor decision-making ability.

Debt is more than a number on the balance sheet. Leaders must identify and measure all debt types that hobble an organization, and work to eradicate.

“Failing to plan is planning to fail.” Sir Winston Churchill (among others)

Worth considering:

Depending on your industry, salaries can be 20% – 50% of revenue, so investments in people are important. Predicted trends in 2018 include the “consumerization of HR,” whereby individuals are treated uniquely (much like Amazon treats its customers), vs. put into talent buckets.

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