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The recent past gives us rich examples of impactful technologic change. Quantum leaps in mobile technologies and in device/software interconnectivity have simplified our lives and lifted all of us to some level of geekdom. But happy outcomes of technology change are not always guaranteed; Knight Capital’s 2012 trading loss and the more recent NYSE software upgrade glitch are dramatic examples of technology change gone awry. So it’s no surprise that FINRA is now reminding our industry of its responsibility to more closely supervise the process of technology change. This is the first time I’ve seen one of our regulators specifically pursue examination of the change process, and it’s gratifying to see the acknowledgement that the process of technology change has impact that is independent of the change itself. Change is inevitable, and managing change can be difficult. But careful oversight of the technology change process helps maximize the profit impact of new technology.
I’ve been part of thousands of technology changes over the years. Some have been disruptive technologies and others have been incremental changes to existing technologies. In the initial process of developing, testing, deploying and modifying software, the most difficult work is incremental – where new capabilities are retro-fitted to older systems. And the difficulty post-implementation is similar; it is the risk that new technology will be retro-fitted to older processes.
Here’s what I mean. Start with the fact that everyone in your office is smart. But being smart, according to a Georgia Institute of Technology School of Psychology study, is actually a deterrent to successful technology change. This is because smart people trust their experience and exercise their discretion during times of change. So when new technology is introduced, smart users’ acceptance of the technology and their ability to fully leverage the power of the technology can be limited. Some of our smartest people will choose to apply the new technology to legacy processes rather than refresh old processes to take full advantage of new capabilities. Their exercise of discretion can result in a less-than-optimal profitability impact of technology change.
What’s behind this smart-people-doing-it-the-old-way phenomenon? According to Harvard, the answer is relationships. A Harvard team observed change processes and found that the social aspects of change had a significant impact on individuals’ willingness to change. In Harvard’s study, an assembler was asked to test relatively equivalent new parts designed by two different engineer colleagues. The assembler had a working relationship with the first engineer, but had never before worked with the second. The operator easily applied the new part when it was presented by the first engineer but rejected the part presented by the second. HBR observed: “the second engineer was introducing not only a technical change but also a change in the operator’s customary way of relating herself to others in the organization.” Because the assembler had no prior relationship with the second engineer, she was disinclined to accept his part. Relationships influence change.
Cognizant of the relationship impacts of change, leaders are challenged to champion the benefits of a new technology introduction and to ensure that downstream efficiency opportunities are leveraged. Generous amounts of training, troubleshooting, and support for rethinking technology-dependent processes are key to moving teams through the process of acceptance and effective use of new technologies. In fact, what many of us call user training is simply a forum for users to build relationships around new process opportunities presented by the change. Successful adoption of technology change requires the team to get to the point of saying, “I’m good with this. You’re good with this. We’ve got it.”
The right technology implementation partner provides the resources and expertise investment managers need to fully engage new-technology profitability. As the largest consumers of our own technology, Archer honors the profit potential of technology-enabled process improvement, and continually vets technology change with downstream processes. Each evaluated process is adapted or abandoned to fully leverage the technology’s capabilities. Which allows us – and you – to profitably scale our respective businesses.