Critical success factors for the transformational CIO
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Critical success factors for the transformational CIO

October 2016

In the first part of our Special Report on the fast-evolving character of IT leadership, we ask three CIO insiders — Martha Heller, Hunter Muller and Dion Hinchcliffe — about what it takes to win as a CIO leading digital transformation.

It’s time for CIOs to be the business
by Martha Heller

“Martha

At many companies today, senior management are confused, frustrated and farther away than ever from the promise of digital. With all of the innovation coming out of places like Silicon Valley, they worry that they’re missing out on some digital disruptor that their competitors have surely discovered.

Those suffering from such fear-of-missing-out syndrome do one of three things:
• they anoint their CIO, formally or informally, as head of innovation and charge them with charting the company’s digital future
• they fire their CIO and hire a new one who arrives all shiny with the promise of digital innovation
• they gently push their trusted CIO to the operational margins and hire a chief digital officer (CDO), someone with a background in marketing, strategy or product development to build and drive a digital roadmap.

In short, a digital leadership void is afoot which represents either a threat or an opportunity to the CIO. One viable option for them is to acknowledge the existence of the company’s new CDO and develop a solid relationship with them. But the other option is to see the void as an opportunity and step directly into it. CIOs who choose the latter path have work to do, especially if they want the CEO to start seeing them as strategic. Here are just some of my recommendations from Be the Business for CIOs who want to be strategic business executives in the new era of IT:
Make digital an enterprise capability
Whether you have ‘digital’ in your title or not, it is time to make digital an enterprise capability. This is not easy. If you are like most CIOs, you see digital innovation happening today all over your company. You are happy to see this activity but need to wrangle it into a core enterprise strategy that can scale. One option to provide that digital leadership is to create a ‘digital accelerator group’ that identifies opportunities for digital products and processes across the entire company. This is what Rhonda Gass has done at Stanley Black & Decker, working jointly with one of the company’s business unit presidents. “It was important that the digital accelerator group not just be led by technology alone,” she says. “We needed it to be run by someone accountable for delivering products to the paying customer, which is not something IT traditionally does. We need our business leaders to stop equating digital with technology and to understand that they need to develop digital capabilities within their own businesses.”

AstraZeneca has a similar aim. It established a ‘digital center of excellence,’ spanning the whole digital strategy, including social, apps, websites, devices, sensors, data analytics — and enlisting a marketing leader who had both the customer perspective and some experience with systems implementation
. “We want to make sure we’re having one conversation around what technology can and can’t do, not two,” says the pharma giant’s CIO Dave Smoley. “We want to avoid the scenario where there’s the digital conversation and then there’s the IT conversation.”
Run IT like a business
Any CIO who wants to move from supporting the business to being the business has to change their own mindset. When you are the CEO of a business, you care deeply about every dollar, where it came from and where it’s going. Stephen Gold, CIO of CVS Health, says CIOs need to ask themselves some fundamental questions: “‘If this IT organization were my own business, would I be spending my money this way? Is this how I would be managing my investments?’ So your first step in running IT like a business is to stop thinking of IT investments as other people’s money and treat it as if it was your own.” And once you’ve shifted your own mindset to running IT like a business, you have to change the mindset of you fellow executives.
Be a master of almost everything — including technology
Successful CIOs are business oriented. But being the business does not mean abandoning your knowledge of the technology stack, architecture and of how a new array of vendors does or does not fit into your portfolio.  As Ralph Loura, ‎CTO at Rodan + Fields, says: “To be a CIO today, you have to be the master of almost everything, including technology. If you take a CIO with a great business background and ask him to meet with a cloud-based vendor who is talking about columnar compression and node-based architecture, his head is spinning. On the other hand if CIOs don’t have depth in finance, they will not be effective. CIOs with no legal savvy will find themselves with unanticipated incremental costs from new vendor contracts. And the list goes on. The challenge of today’s CIO is to be expert in a large number of disciplines all at once.”
Bet on new vendors
CIOs have a complicated relationship to risk. Responsible for securing the enterprise, they have to be extremely careful about lowering the drawbridge to new technologies. But gone are the days when they can say: “We’re an XXX-shop.” Today they have to take all sorts of chances on new players. And in a new era of IT, when the boundaries between inside and outside are blurring, CIOs may need to alter their risk profile.  As David Smoley of AstraZeneca says: “Today, we will partner with a company that is so new and so small that we traditionally would have said, ‘No way — it’s too risky.’ The new player might not have the right product today (or even be solvent), but we believe in their vision and what they are capable of. When we look at our IT supply chain, we look at more than just the product; we look at innovative thinking, an entrepreneurial spirit, and their ability to partner. Scan the horizon for new technologies; connect people across the business who are looking for technology solutions with the right IT staff, IT vendor partners or venture capitalists.” But if CIOs are going to increase their risk tolerance for new players, then they need a sophisticated vendor management office that will help manage the new slew of vendors. This kind of next-generation VMO helps them “stay close to the vendors the way a venture capital firm would,” says Gerri Martin-Flickinger, the former CIO of Adobe. “More than ever in IT, you can’t wait to watch the next thing happen. You need to be in the middle of it.”

Become the ‘competitive capabilities champion’
CIOs, more than any other executives, have an end-to-end view of how the business works, and the tools to turn that view into insight. CIOs can see endless opportunities for improvement and change. Says Scott McKay, CIO of Genworth Financial: “The CIO has the unique opportunity to become the ‘competitive capabilities champion’ at the executive table. CIOs can take key capabilities, like processes for new product introduction or customer fulfilment, and say: ‘If we want this process to differentiate us, here is what we need to do.’” That is echoed by Ralph Loura at Rodan + Fields: “The mode of CIOs in the past was to keep your head down, deliver what you’ve promised, and stay out of trouble. But that approach doesn’t work anymore. If you want to have an impact in your company, have a point of view that sometimes challenges the status quo but do the work required to make that point of view an informed one.”

It takes courage to bet your company’s future on a suite of technology products. It takes courage to commit to a cost reduction when you have little control over the vendor market. It takes courage to tell your board of directors that the enterprise is secure. But stepping into the role of competitive capabilities champion involves a greater level of personal risk than any of those activities, and a number of CIO who are moving their companies from the industrial age to the digital age tell me the one attribute they rely on every day is ‘courage.’


Martha Heller is president of Heller Search Associates, an executive search firm that specializes in IT leadership positions across all industries. Her latest book, Be the Business: CIOs in the New Era of IT, is out now, and follows 2012’s The CIO Paradox: Battling the Contradictions of IT Leadership, which has become a must-read for IT executives at all levels and established Heller as one of the most respected voices in the technology industry.


Becoming the CEO of technology
by Hunter Muller

“Hunter Muller

From a tactical standpoint, successful CIOs are no longer concerning themselves with aligning IT with the business — they view themselves and the IT organization as part of the business. Another change is how the CIO is now serving as a trusted advisor to the board. This includes apprising them of emerging cyber security issues and how these are being addressed by the enterprise.

Ideally, the CIO is conceptually viewed as the CEO of technology, helping other CXOs to clarify their thinking about core, parallel, and new markets. This includes facilitating, enabling, and in some cases accelerating the customer experience through a digital strategy to help reimagine and reinvent the company’s go-to-market strategy
.

The CEO and the board need the CIO to be a ‘rock star’ and to drive change throughout the enterprise. Companies that don’t look to disrupt or transform their own business model are doomed. Within 20 years, 75% of companies will no longer be in the Fortune 500
.

CEOs have a quarter-to-quarter, year-to-year point of view. Unique CEOs look to disrupt their businesses, like GE’s Jeff Immelt, who is positioning the company to become one of the world’s biggest software companies.  The reality of the new competitive landscape requires a completely new skill set at the individual, team, and company level. Today’s CIO needs to be courageous in breaking out of their comfort zone to set stretch goals and lead with passion, conviction and innovation.  

New skills of digital CIOCIOs now need to enable and drive innovation throughout the enterprise. They also need to foster business transformation through digital upheaval.
To accomplish this, CIOs need to exhibit courageous leadership at a time when there appears to be a leadership void in the latest era of the digital age.
CIOs must understand core, parallel, and new markets even better than the business and the CEO does. They must have exceptional communication and sales skills. The board should want them to be in the boardroom quarterly. If you’re not invited to the boardroom and considered part of the CEO’s inner circle of confidants, then you’re in trouble.
Growing into the roleThe CEO has to be a brilliant leader and set the context and the culture for the organization. The individual contributors like the CIO have to take responsibility for their own development, but in organizations that are highly matrixed, it requires an interdependency of internal and external partners to collaborate and be transparent with
.

It’s also critical for CIOs to leverage world-class networks like HMG that are uniquely different and designed for this innovative, digital age. It provides CIOs with a distinctive opportunity to network with their peers and share best practices and challenges around today’s dynamic business challenges
.

Courageous leaders disrupt their existing approaches to business. It’s about looking at that new idea which can help accelerate your organization’s strategy and reinvent how to tackle core, parallel, and new problems. It’s about changing how you visualize and tackle problems. It’s the only way to survive in this world of accelerated change
.

Hunter Muller is CEO and president of HMG Strategy, an advisory, networking and conference organization dedicated to helping CIOs become transformational executives and leaders. He applies more than 25 years of hands-on IT experience to IT organization development, strategy and business alignment, and is the author of The Big Shift in IT leadership, Leading the Epic Revolution and The Transformational CIO.


CIOs and democratization of IT
by Dion Hinchcliffe

“Dion Hinchcliffe

While day-to-day operations and maintaining a proactive stance around cybersecurity are still top-priority issues for today’s IT leaders, never before has the CIO been in the hot seat for delivering on the digital future. This ranges from much better digital brand and customer experience to entirely new digital business models and using technology to reaching new markets. Digital transformation has become a leading priority just as activity in IT has steadily shifted away from the traditionally centralized model to one that is more loosely federated across the organization.

In general, tech initiatives and spending now comes from many more places within the organization, including the CMO and chief digital officer, and the various lines of business. This means the modern CIO is spending more time jockeying for internal market share than ever before. Shadow IT has also become a growing phenomenon that has become large enough to require significant attention in many organizations — increasingly for the positive, as an incubator of innovation. Finally, the relentless shift of IT workloads and, indeed, the whole architecture of the business to the cloud has been brought into focus and capped off a major set of IT changes in the last five years.
Adopting a startup mindset
There is a new mindset emerging among the CIO set. Long-time players in the role are proactively seeking ways to find and internalize the latest ideas and concepts for tech enablement of the business. One primary way I see this happening is to adopt a start-up mentality. It's been popular for several years now to do tours of Silicon Valley companies, especially newer ones that are just breaking out, to see how they work and think. This helps cross-pollinate traditional thinking, often imbued with old-guard ideas, with the methods that fast-growth technology companies use. I also see CIOs coming together more often to exchange ideas about what works. More broadly, I am starting to see culture-change initiatives, which attempt to shift the thinking not just at the top, but across the entire organization, to be more focused on the digital customer or prepare for faster, more pervasive technology change
.

Other top new skills include:

• being able to bring a digital native understanding of today's marketplace to the executive team
• the ability to understand and deliver on next-generation digital customer experience
• cultivating top talent in a rapidly changing technology landscape
• being a business leader just as much as a technology leader
• the ability to foster and drive much more rapid change across a vast and growing legacy portfolio of technology, business solutions and stakeholders.
Evolving the digital DNA
In general, today's successful CIO is a self-starter and go-getter. Reaching the top IT position in most organizations remains a major accomplishment and requires talent both in technology thinking as well as engaging with people like never before. The reality is that most organizations just aren't prepared to mentor promising executives for the contemporary incarnation of the CIO role, as it’s not only evolving quickly but requires deep knowledge of today’s digital arenas into which the majority of organizations are just moving and learning about. So it’s up to CIOs to acquire the knowledge and skills they need to succeed in this very fast-paced industry.

Dion Hinchcliffe is an internationally recognized business strategist, enterprise architect, transformation consultant and keynote speaker. One of the most influential figures in social business, digital strategy and enterprise IT, he currently serves as chief strategy officer at online community strategy and design firm, 7Summits. He writes regularly for ZDNet, Information Week, and On Digital Strategy, and is the co-author of Web 2.0 Architectures and Social Business by Design. (Image: AIIM)

First published October 2016
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