Change is difficult. Whether in our personal lives or at work, we tend to live and think in the present—based on past experiences. If prior thinking served us well, then why do things differently? Yes, this line of behavior works, but we risk operating at sub-optimal levels. And worse, when something breaks, it catches us by surprise. We then ask ourselves the following questions: Did I ignore earlier symptoms and risks? Could I have been more proactive in preventing an issue? Was I myopic or siloed in my thinking?
Legacy thinking involves holding on to the way things have been done in the past. Transformation consultants cringe when they hear proverbial sayings like “it’s the way we’ve always done it” or “if it ain’t broke, don’t fix it.” This type of thinking poses big risks to transformation projects, in addition to stifling innovation.
It’s difficult for organizations to recognize when behaviors that served them well in the past are now a hindrance moving forward. And it’s even harder for people to let go of habits and actions they believe are effective, especially when they’ve been reinforced by organizations over long periods of time.
We hear much these days about legacy technology replacement, as investment management firms continue to leverage systems put in place decades ago. However, a critical and oftentimes underserved objective of these initiatives must be in the spotlight: legacy thinking replacement. Transformation project mission statements should not only be about replacing legacy technology, but inclusive of legacy thinking. In my opinion, transformation must lead with behavior (e.g., thinking) and process, and then evolve to the system or platform.
My colleague Tom Secaur discussed legacy behavior in a prior blog Picked-Up Pieces: Legacy Tech, M&A, Fintech Disruption, and Other Musings, which states these behaviors are “holding us back” and “must be overcome to make true strides.” I couldn’t agree more. A new system or platform can provide a more stable and modern architecture, but the user experience and functionality must be driven by new behaviors and processes aligned with an evolved operating model. Investment managers need to enable approaches that allow for behavior and process-led transformations in the early stages of these initiatives.
For those firms considering operations outsourcing, conversations early on typically start with an emphasis on services, process and behavior—with less prominence on the underlying technology. Getting the technology to work is the service provider’s issue. The investment manager’s primary focus is therefore interactions and provider oversight (a.k.a. processes and behaviors!).
Unfortunately, for many companies, large software implementation initiatives begin with the primary objective of “replacing a system.” Although secondary objectives involve process and behavior change, many software projects run out of budget and steam before the full process and behavior changes can be implemented. Therefore, impact and benefits oftentimes fall short of potential outcomes.
Citisoft’s Outlook 2020 whitepaper also noted several references to legacy thinking. In the section entitled “Misalignment of Legacy Models and Business Strategy” a key point mentions “legacy models persist with deep-rooted structural deficiencies driven by decades of tactical thinking.” For many organizations, legacy thinking has persevered for over 20 years! In the concluding section of the whitepaper, we suggest asset management firms “throw out what you think you know and change the way you think.”
In summary, firms must rethink the way transformation initiatives are undertaken, and lead with eradicating ‘legacy thinking’ as a primary objective. If companies want to be innovative in their journeys, they have to provide strong leadership to bring forth change. Replacing legacy systems is a good objective; however, earning the gold medal starts with envisioning a better way of aligning the operating model to achieve the intended business goals. Say goodbye to legacy thinking first, then show your legacy systems the door. Not vice versa….
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