CIO as a change agent and ‘internal’ start-up CEO

In my experience many organisations are struggling with the relationship between strategy, IT and digital. The smart organisations are racing ahead knowing that they are all entwined. Thus to talk about business strategy, digital strategy and IT strategy as three separate activities is to really miss the point.

Some organisations think of digital as a business function like HR or marketing. To avoid having to come to grips with it at the top table they appoint a Chief Digital Officer. This is really just an exercise in risk management rather than a commitment to lead the organisation into the 21st Century. Business strategies that are not built with digital at their heart are destined to fail.

Many CIOs are conscious of how the world is changing along with their value proposition. Some are perhaps calculating whether the existing (read ‘legacy’) systems will be in service long enough to buffer them from premature retirement. Some are looking at the CDO role and thinking that this is the next logical career step. In blunt terms this is akin to running flat out to catch a bus that has already left the bus stop. A blind focus on catching the bus hides the fact that the bus is skidding out of control and is about to hit a wall.

Many CIOs are still perceived as IT managers by the organisation as a whole. The natural reaction to this for those wanting to become more strategically relevant is to become a ‘technology-denialist’. By decoupling your tech heritage from your branding it is believed that you will be perceived as a business leader. Not going to happen. And it doesn’t need to happen. Sooner or later your leadership is going to wake up to the fact that IT is both the nervous system and critical organs of the corporate body.

However you quickly need to move beyond providing basic IT services. Job number one is thus to provide basic IT services that work. Then to focus your resources on delivering analytics capability to the users to enable them to ascertain first-hand that their existing business model is crumbling.

It is very likely that in the near future your business will do one of the following:

• Acquire more businesses.

• Divest itself of elements of the business.

• Be acquired.

In all cases much value is lost through poor diligence and preparatory work in respect of the associated technology dis/integration. You can play a key role in proactively managing this activity and thus amplifying the resultant business value.

If you are employed by an industrial era organisation, sooner or later it will dawn on your leadership that the model is no longer working. Perhaps it has already stopped working; your on-going profitability being engineered through operational efficiency measures rather than growing the top line. Such a tactic eventually comes to an end.

This takes us into the arena of business transformation. Some see this as a logo change and a few new services. The reality is that it requires a ‘drains up’ overhaul of processes, culture and customer engagement. The more sober reality is that the associated changes required are usually impossible to make. What are the chances of turning the process-oriented employees of a 200-year-old bank into an army of hyper-creative Lady Gagas? Slim at best.

So business change as a term is misleading. Better to think in terms of business 2.0. A new business based on digital economy principles is built to run alongside the existing model. It is unhindered by the culture, infrastructure and offerings of its older brother. You may discover that not all your existing employees are process cogs and thus they may be attracted to the new start-up. The idea here is to run the existing model for as long as it remains economical to do so, whether that be another decade or just six months. Waiting until the old model collapses to think about what happens next is leaving it too late. Business 2.0 is an urgent requirement.

There is no reason why you as the CIO could not come up with the new business model. Perhaps treating the exercise as a lean start-up will help you and your organisation take the idea forward in a risk-managed manner. I would push to be part of the leadership team if not the CEO if that is attractive to you.

The clever bit, I think, would be to turn your existing IT infrastructure into a set of IT services that could be incorporated into the information model of the new business. So your existing systems of records would feed your new systems of engagement architecture.

The point I am endeavouring to make is that CIOs who recognise that IT, digital and strategy are entwined and who also recognise that the traditional notion of business transformation when applied to the digital economy is flawed, will be better prepared to navigate and capitalise on the tempestuous journey ahead.