The new business skillset of the digital CIO
Illustration: Cajsa Holgersson/MP Arts
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The new business skillset of the digital CIO

Maxine-Laurie Marshall — May 2017
As digital transformation has moved to the top of the business agenda, CIOs have been thrust into a wider leadership role. We ask some of the world’s leading CIOs what it takes to succeed in that new world.

As digital technologies have become pervasive and fundamental to business success — or even survival — the profile of the IT organization has changed dramatically. But what of the people who lead the function? According to research from Experis, some of the archetype of the CIO is largely unchanged from previous decades: Predominately male (87%), aged 45-55 and STEM degree-educated. While the industry is actively working to broaden that demographic pool, one aspect of the role has changed rapidly and dramatically: the skillset of the successful CIO.

James Parsons, CEO of recruitment solutions firm Arrows Group Global, offers an insight into what these changes mean for the CIO. “There used to be a real waterfall-based career progression for the CIO — through from IT project manager to IT director and onwards. With the traditional CIO role now often coming under threat from newer, often younger, chief digital officers (CDO), the absolute necessity for a CIO is to be able to embody digital transformation. And that means the role will increasingly be filled by someone with a background in digital rather than IT.”

“The CIO has a duty to provide a new level of flexibility to make the business part of the fast-moving digital world.”

That view does not always chime with those experiencing that change. Terence Stacey, group CIO at Swiss food and beverage company Nestlé, says: “There is a definite need for new skills in the areas of digital, IoT and advanced analytics, supporting an agile innovation agenda. But the need to sustain the basics still exists. IT needs people geared towards change who are able to drive innovation while understanding the importance of integration between the existing and the new.”

“Terrence
Terrence Stacey, CIO of Nestlé
CIOs used to be largely concerned with installing and running technology fundamentals, with changes largely determined by efficiencies and cost. But today those IT leaders know they need to go well beyond this if they are to deliver business — and personal — success. As Stacey says: “CIOs must take the lead to help the business bridge the gap between the existing and new business environment. While safeguarding the fundamentals, the CIO has a duty to provide a new level of flexibility to the business to make it part of the fast-moving digital world.

That is also recognized by Martha Heller, whose company Heller Search Associates manages the career moves of some of the world’s top CIOs. While CIOs can’t forget their back office duties, she says, their role is now quite different. In particular, CIOs now have a very different relationship with product teams, she notes. With the phrase ‘every company is a technology company’ ringing truer each year, software engineering is now inseparable from product engineering, says Heller. “In the automotive industry, companies are now putting digital functionality in their cars so what used to be mechanic and then electronic engineering is now software engineering. Since CIOs are used to leading software engineering teams, where does IT stop and product engineering start? That line is being drawn in different places in different companies, so in some cases CIOs now run product engineering — and that’s a new role for CIOs.”
Sharing the digital pie

However, the impact of digitalization now stretches beyond the technologist’s arena; it presents tantalizing opportunities as well as business hazards to all in the C-suite. While in some cases that has led to a challenge to the CIO’s powerbase — their budget in particular — it has led to a greater focus on internal collaboration. “The IT function has to demonstrate it can add value to the business by working hand in hand with the CMO and other C-suite members,” says Stacey.

Wiebe van der Horst of BASF
Wiebe van der Horst, CIO of BASF

The pressure to stay one step ahead has also triggered greater reliance on external collaboration with vendors whose cutting-edge technologies and implementation expertise can drive digital transformation and competitive advantage, according to Wiebe van der Horst, the CIO at German chemicals giant BASF. As he points out: “It is why our strategic partners are very important. For us it is important to collaborate globally and cross-functionally.

It is almost impossible to imagine IT establishing higher levels of credibility and respect without robust internal partnership capabilities. Heller offers criteria CIOs should apply when forging bonds with their C-suite peers. “Identify where there is the greatest need [for tech innovation] and where you’ll be able to deliver the greatest impact. However, if that need lies with a specific executive who is absolutely down on IT, don’t go for that one.” Every part of the business has a need for IT, Heller says, but you need to work with executives who are receptive to the idea that IT can have a highly positive impact on their department and career. Such a partner will in turn act as an effective advocate to sway colleagues who are more resistant.
CIOs as business leaders

But collaboration should not be confined to the C-suite. David Bray, CIO of the US Federal Communications Commission, recognizes that the ability to collaborate is a key attribute for tomorrow’s IT leaders, but collaboration can be both horizontal and vertical, with innovation and ideas sought “from the bottom up.”

“David
David Bray, CIO, US Federal Communications Commission

IT executives need to transition into business leaders if they are to maintain ownership of the business’s technology, says Bray. “CIOs and CEOs must open their eyes to the reality that organizational boundaries are beginning to fade. With the right pairing of a strategic, future-focused CEO and CIO, the role of CIOs in more progressive organizations will evolve in the age of the ‘internet of everything’ towards more of chief strategy officer. In other words, progressive CEOs will expect their CIOs to act like venture capitalists on the inside, seeking new, transformative ideas and solutions to ensure the organization delivers great results, continues being relevant and is resilient to the changes ahead.”

Martha Heller agrees that this relationship only works if the CEO is progressive. She wonders if CEOs are actually ready for CIOs to be true business leaders, even if the technologists themselves are prepared for that change. She explains that the CIO role is relatively young compared to other positions in the C-suite. “The first CIOs emerged in the 1980s, so it’s is a very adolescent role. Only five years ago CIOs were mostly in a back office and support role, so it’s not surprising that many CEOs still see them that way.”

Martha Heller
Martha Heller of Heller Search Associates

The assumption that “the old CIO is the same as the new CIO” results in CEOs giving priority to newer tech titles when it comes to the ownership of customer-facing digital projects. Heller explains: “Rather than ask a CIO to move toward the front office, often what CEOs will say is: ‘I’m going to ask my CIO to keep supporting and hire a new executive, such as a CDO or chief innovation officer.’”

With technology becoming far more critical to business units and CIOs challenging outdated perceptions of their role and capabilities, Bray offers some advice. “My recommendation to any leader is to begin with a culture of openness, diversity and bottom-up empowerment.” That environment should be one where “it’s okay for people to come to you with their ideas, to disagree with you — as long as they support that with data; one where different views are sought and appreciated; and one where as a leader you’re beating the drum of collaboration.”
Experimenting at the business edge

Fostering collaborative cultures and stepping up to a leadership role aren’t the only changes required to be a successful CIO in an era of digital transformation. The ability to experiment freely and without fear of failure must be part of the DNA.

Enterprise technology is not the traditional ground for trial and error, with projects traditionally taking many months or even years to get from business requirement to implementation. However, the desire to experiment with new technologies, services and models must now be instinctive to tech leaders. As Van der Horst at BASF says: “CIOs have to be ready to dare to fail, to try out new things, to build prototypes.”

Bray sees this mindset as the best way to develop new expertise. “Experiments won’t always work out, however that’s how you learn. ‘Dangerous experiments’ provide expertise — that’s actually how you adapt.”

The view may be heresy for some who want IT to be a much more predictable area of investment, but Bray suggests a solution. “Several established organizations in both the public and private sector might have challenges with this way of thinking. If senior executives have too many experiments that don’t work out, their boards may question their leadership. This is why the best thing CIOs and CEOs can do is champion bottom-up change agents to try ideas at the ‘edge’ of organizations. And if these ideas prove successful, then scale the ideas across other parts of the organization.”

The new skillset demanded of CIOs leading digital transformation will, however, expand the number of roles available to them. Highlighting trends he is seeing in the technology jobs sector, Charlie Grubb, associate director at recruitment company Robert Half, says there’s good news for technology leaders looking for the next step in their career. “As the role of the CIO evolves from being purely technology-based to becoming a core component of business, more organizations are introducing the role into their development plans. Consequently, there has been a rise in the number of roles available for CIOs/CTOs who can add real value to the organization.

See the first part of this in-depth series on the fast-evolving character of IT leadership  Critical success factors for the transformational CIO

 

First published May 2017
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