How a CIO shifted IT’s role to enable growth through digital innovation

Imagine you’re the new CIO at a global vehicle manufacturing company (with industry-leading products) that now faces stiff competition from new players in its market. The CEO brought you in to lead the company transformation to enable dramatic growth quickly. The management committee had already developed a vision of its future state and developed broad, ambitious goals including doubling top-line revenues by 2020 while reducing working-capital requirements.

But the true level of commitment to the vision was not certain, and there was no clarity on what it would take to achieve the goals. The only known factors were (a) growth opportunities would be in digital innovation, especially in the Internet of Things (IoT) and (b) the IT group would need to change from being “order takers” and missing service-level targets to becoming a business enabler and driving the pace of change. How would you go about leading this challenging transformation?

Framing the challenges

The CIO started by bringing in an external business advisory team to help frame the challenges and develop the overall solution approach to the 2020 vision. Existing processes and systems would not scale to the capacity and quality needed for the target business and were not positioned for digital innovation and the Internet of Things. The change would be enormous, and they broadly framed the challenges as follows:

• Become more global, agile, cross-functional, scalable and LEAN in operations and integrate existing business lines
• Become a technological disruptor in its market
• Urgent need to begin delivering value from innovations as quickly as possible
• Transform IT’s operating model to an IT-as-a-Service model; IT had stability, security and architecture gaps
• Transform 40 major business processes and underlying systems in every area of the company on three continents
• Change the business model (involving changes to existing product lines, establishing new product categories, changes in geographical markets and external partnerships)
• Build a foundation flexible enough to support any business model; position the company for rapid value capture when new business models are defined in the future

These changes would be very complex. The company had been operating as a series of small companies and not leveraging the advantages of its global scale. In determining how to benefit from global scale, it was still necessary to adhere to the company’s goal of customer intimacy through understanding local markets. Further complicating the changes was the company’s very strong engineering culture. Its engineers were superb on the shop floor, outstanding at developing great products. But they now needed to become great in areas such as logistics, supply chain management, social media marketing, implementing digital technologies – and do it all on a global scale. The company also needed to invest in technology that would enable coordinating its various businesses across the globe plus build platforms to support the various businesses and enable growth.

Shaping the transformation approach

The team reduced all the objectives and complex change agendas into a simpler set of three initiatives that the company would undertake in three overlapping phases over four years. Phase 1 focused on fixing immediate problems and risks in the business foundation (including IT). In Phase 2, they would implement efficient, consistent, scalable, global processes and systems. The focus of Phase 3 was enabling new business models.

In shaping the transformation approach, the leadership team recognized the need to first bring in new talent to make sure they had the capability to execute against the vision. The first component was the new CIO, who brought in the external advisory team. Next, they hired a VP of Strategy, VP of Change Management and a VP of Transformation. Besides these external resources, they identified internal champions and put them into roles with authority and resources to drive the change. This included establishing a set of global process owners (GPOs) with global, cross-functional roles.

Shaping the transformation approach was an exercise in deepening the vision as well as understanding the implications of the vision before determining the action plans to get there. The GPOs defined their current and target end-state processes, underlying systems and models. The CIO defined how to fix the IT foundation and transform IT to an as-a-service vision. They secured leadership consensus and captured the collective vision in a Strategic Intent document.  The VP of Transformation, VP of Change Management and GPOs were instrumental in securing cross-organizational buy-in.

Another facet of shaping the transformation approach was choosing transformation partners — third-party service providers that would bring innovation, talent and speed to the transformation project. The company held a series of joint-design workshops with several service providers to design the best approach for how to address the 2020 vision described in the Strategic Intent document.

Capturing the vision

I frequently blog about the need to go slow up front in order to go fast in transformation initiatives. A primary goal of the vehicle manufacturer was to accelerate time to value, and the leaders expressed an urgent need to deliver value from innovations as soon as possible. The actions I described earlier in solidifying the vision, framing the challenges and shaping the transformation approach took six months. But at the end of that effort, the company was well positioned for the execution phases and managing risks.

During that period, the company garnered buy-in and support for the transformation goals at all levels. The leadership team brought in essential expertise to accelerate time to value. They created an action plan for changing IT from being a support team to being a business-enabling team. They also created an action plan and initiative phases for evolving the business foundation and model.

Most importantly, their action plans and transformation phases were not a detailed road map. Instead, they were designed to be agile for changing marketplace dynamics. The agile transformation approach enabled both short-term digital innovation goals as well as evolving the business model over the longer term for newly rising opportunities.