Sure it’s one thing to say CIOs should be more strategic, participating in setting business strategy, driving innovation and helping their organization differentiate. Yes, they can equip themselves to be well-rounded c-level executives, boosting their acumen in such underdeveloped competencies as market knowledge, commercial orientation and external customer focus. But the inescapable fact is that CIOs’ focus in the role is shaped (constrained, in many cases) by the immediate needs and attitude of the businesses that employ them. Many members of the CIO Executive Council have expressed frustration that they are ready and eager to help drive innovation and leverage their role more strategically, but their companies don’t see them in that light. There is a nagging “expectation/capability gap” that undercuts the potential value of the CIO in that enterprise.
That is why Council members created an assessment to compute organizational readiness for an expanded CIO role and to identify leading indicators that the enterprise might be ready, with a little nudge, to give greater rein and strategic responsibility to the position. This tool is a companion to the c-level competencies assessment highlighted in the Forum section of our July issue, and is a component of the Council’s Future-State CIO program.
This Business Readiness Index Assessment is organized into two umbrella themes: Business Characteristics and Conditions (questions about business direction, business process, and the business leadership climate) and Business Regard for Technology and the IT Organization (questions about company attitude toward IT spending, the IT organization and how the business interacts with the CIO). Both areas combine to determine the business need for and openness toward a strategy-oriented CIO.
RECOGNIZING THE NEED
Changes in business direction, market forces or new growth opportunities instigate a need and desire for strategic input at the executive level. These are opportunities for CIOs to step up their strategic contribution. “The faster your business environment is changing, the more a CIO business strategist makes sense,” says Thomas Henkel, Amer Sports Vice President of Global IT, based in Neuried, Germany.
The events of 9-11 brought business continuity to the forefront for financial services firm Federated Investors. Seeing a void in enterprisewide leadership, Rex Althoff, CIO and President, Technology at Federated Services Company responded by taking over management of the corporate business continuity function for the $1 billion enterprise. Althoff knew his experience with IT disaster recovery and deep understanding of the different business units made him a natural fit for this strategic leadership role. “I saw a critical business need which required a solution: how to ensure the well-being of the company in case of a disaster. So I brought my restructuring recommendations to executive management,” he recalls. Althoff didn’t give a second thought to the fact that corporatewide business continuity isn’t a typical IT activity. “I don’t worry about who owns what; I worry that the firm is continually moving forward,” he says.
Evan Stewart, CIO at BE Aerospace, also saw an opportunity to expand his strategic contribution when business spiked in a particular market. The company – a manufacturer of commercial jet parts – is experiencing extreme growth in the Asia/Middle East airline market due to the growing numbers of middle class travelers with discretionary income. Almost two years ago, Stewart noticed an uptick in the number of requests from senior business leaders asking IS to consult on new processes for this region. “It was a watershed moment for me and the IS department; we were actually being asked to be more strategic.”
Stewart responded by reorganizing the department into three parts: an operational group, a strategic group, and a new strategic liaison role which visits with external customers and discusses what they will need two or three years out. Stewart’s role is now akin to a business leader of a strategic consulting group, in addition to supporting the continuing operational needs of the business. “I changed the way I think, talk and act; now everything is about business value” and how we can contribute to business growth, he says.
CIOs should realize that because of their enterprise-spanning viewpoint, they have process and operational insight they can bring to bear in situations where a more function-bound CIO might not dare to contribute. Philips Medical Systems CIO Kenric Anderberg is not formally responsible for business process improvement and standardization. However, when the operations lead is focused on other initiatives, he takes the opportunity to fill the gap. “As CIOs, we already know the business processes and how to think about business improvements,” says Anderberg, so operations leadership is a natural opportunity to step up. By doing so, we come across as business leaders who are willing to step outside the IT box and take a risk in a new area, he adds.
Business indicators that signal opportunities for the CIO to step forward:
• Business leaders are considering significant changes to the customer’s experience
• The business is pushing harder than normal to develop products, services and markets
• The organization is expanding into new lines of business
• There is a lack of ownership of some cross-enterprise discipline
• There is a new or growing emphasis on cross-enterprise business disciplines such as security, business continuity, and regulatory compliance
• There is recognized need for new types and/or more granular knowledge about customers, products and processes to enable better decision making
ATTITUDE ADJUSTMENT TIME
Even when opportunities present themselves, if the business attitude toward IT and the CIO role is antiquated or negative, a CIO seeking to make a broader contribution could be rebuffed. Changing attitudes is difficult, but CIOs can be successful creating incremental change. Darin Brumby, CIO at $5.5 billion UK transportation company FirstGroup plc, says it’s all about the sum of small steps. “The key is showing in every interaction what you can do for the business beyond running IT operations,” suggests Brumby. By “relentless execution” and repeatedly showing well-honed skills in areas like change leadership and process improvement, Brumby has built credibility, which helped him convince the executive team that a CIO can bring a different value proposition to the table.
Brumby warns that ambitious CIOs may see all forms of classic resistance from their executive peers: rational, irrational and egotistical. CIOs must fight this with their communication skills, making it clear that they have no secret agenda to usurp power. “It’s not about one-upmanship or taking advantage of anybody,” he says.. “It’s about doing the right thing for the business. You must be 100 percent authentic when you offer advice.” According to Henkel at Amer Sports, the CEO and other c-level executives are the key drivers of attitude toward the role, and that’s where CIOs should sow the seeds of change. For Henkel, this c-level influence came about in the smaller organizations that Amer Sports has been acquiring. As these acquisitions shifted from independent systems to enterprisewide processes, Henkel successfully communicated to those businesses’ leaders that IT and the CIO needed to be involved with the business strategy and looking at the big picture.
In the Business Readiness Index, these attitudes toward IT are indicators of potential acceptance of the strategic CIO:
• Relative to other capital spending, major investments in IT are perceived by executives as sound
• The business executives are aware of and publicly acknowledge the importance of IT to the business
• The business leaders are aware and appreciative of the transforming potential of IT
• The IT organization is viewed as a source of innovative ideas for the business as a whole
• Business units and departments poach IT staff members
MOVE ON AND MOVE UP
If your company does not accept the CIO as a business strategist or is not responding to sincere and sustained efforts to move in this direction, then it might be time to look elsewhere. “If there is the wrong organizational structure, the wrong corporate culture, then you can’t be successful as a strategist,” concludes Kumud Kalia, Toronto-based CIO of Direct Energy. He suggests CIOs focus their job search on companies that are specifically looking for strategic leadership from the CIO. During the interview process, make sure the CEO can explain what he or she means by “strategic” and that it matches your own expectations. Also, Kalia advises, assess how your business peers will react to working with you as a fellow strategist rather than as a traditional service provider. Direct Energy’s executive committee deliberately recruited for a strategy-oriented CIO, believing that a CIO focused just on technology would not contribute to growing the business. Because of this preset expectation, Kalia estimates he saved two years that would have been spent building relationships and acceptance in another organization. “From day one on the job, I’ve been accepted and treated as a business peer. I talk about what I’m going to do for the company, not for the IT department specifically,” says Kalia. 075585
Carrie Mathews is senior program manager with the CIO Executive Council
SIDEBAR: THE BUSINESS STRATEGIST IN ACTION
So what does a strategy-oriented CIO do anyway? It’s more than enabling business initiatives or providing services. When Direct Energy introduces something new into the market via its Web channel, CIO Kumud Kalia leads much more than the IT piece. He co-owns the business outcome regardless of how well the technology platform works. If the expectation is that 20,000 customers will register in the initial round, and that goal isn’t met, Kalia takes charge of finding out what happened. “I’ll go back and ask about the marketing campaigns, brainstorm new ways to attract customers, check about the branding of the URL or change the marketing message a bit,” he says. Kalia has been operating at this expansive, strategic level since he started at Direct Energy and he has earned formal acknowledgement with the addition of the title “executive vice president of customer operations.”
Tools we use
Find out how ready your organization is for a business strategist CIO. Download the CIO Executive Council’s Business Readiness Index Assessment at www.cioexecutivecouncil.com/futurestatecio
