CIOs face complexities in moving from a cost-cutting to an entrepreneurial mindset

CIOs must balance operational management with an entrepreneurial focus if their organistions are to make the most of growth opportunites in 2010, according on analyst firm, Gartner.

The challenge is hardly new; IT leaders are well aware of the need to move from the cost consolidation to revenue creation.

“For IT leaders, entrepreneurial growth, and the shift from a ‘problem-focused’ organisation to one that is ‘opportunity-focused’ requires more planning and execution than simply changing the organisation chart,” Gartner vice-president, Jorge Lopez, said. “Entrepreneurial IT organisations must maintain a dual focus: Achieving ambitious growth, while running the current business. Both are critically important to the mission of the organisation.”

Building of new sources of revenue and positioning the business for dominance in the new venture is an entrepreneurial task that requires an equally entrepreneurial CIO to seize the opportunity. Gartner has outlined two key tools that the CIO must employ to satisfy ambitions for entrepreneurial growth; frameworks that set the agenda — and actions — for change:

The entrepreneurial scope assessment framework

The framework enables CIOs and other business executives to evaluate the magnitude of the opportunity and understand the scope of the task facing IT, as well as other business units.

The strategic change roadmap

A level-by-level tool that helps assess the tasks that must be performed by an organisation in moving from the current mindset and behaviours of cutting costs to an entrepreneurial mindset. It can help CIOs outline the current situation and compaire it to the desired future, identifying the required transformational changes around culture, organisation, infrastructure and processes.

Lopez said CIOs must evaluate two factors that were first defined by Gary Hamel and CK Prahalad in the book Competing for the Future. The book challenged the commonly held idea that to win in business, you must have superior amounts of resources. They contend that organisations which are in the best position to win business that seemed to win are those with ambition and resource leverage.

“Ambition is the animating entrepreneurial vision that redefines the rules of competition for an industry,” Lopez said. “It deliberately sets out a compelling picture of the future that will outstrip existing resources to challenge incumbent competitors to match the magnitude of their vision.”

Resource leverage is based on the premise that large differences exist between different industry rivals and the competitive impact they are able to generate with a given amount of resources. The ability to create greater distance between the required efforts and the results is an important distinction for the entrepreneur and, in doing so, establishes new levels of competition.

Lopez warned, however, that the move from a problem-focused organisation to an opportunity-focused organisation was not without risk.

“The greatest conflict faced by entrepreneurial CIOs will be the tension between the team that is focused on the entrepreneurial opportunities and the team that is focused on ‘keeping the lights on’,” he said. “Both must function effectively in an environment of elevated risk. Failing on either responsibility is unacceptable and highly dangerous for the business.”

Gartner’s report, Moving IT From a Cost-Cutting to an Entrepreneurial Mind-Set, is available on its website.