Ready for a Strategic CIO?

It’s one thing to say CIOs should be more strategic, but the CIO role is shaped (and in many cases constrained) by the business. CIOs can equip themselves to be well-rounded C-level executives and boost their acumen in competencies such as market knowledge, commercial orientation and external customer focus, but, as many members of the CIO Executive Council have found, if their companies don’t see them in that light, it doesn’t matter how ready and eager they are to leverage their role more strategically. Consequently, in many organizations there’s a gap between expectations and capability that limits the value of the CIO.

That’s why Council members created an assessment tool to compute organizational readiness for an expanded CIO role and identify indicators that the enterprise might be ready (with a little nudge) to grant greater strategic responsibility to the position. This tool is a companion to the C-level competencies assessment highlighted in the July 1 article “What It Takes for a CIO to Be a CEO” and is a component of the Council’s Future-State CIO program.

This Business Readiness Index Assessment is divided into two themes: business characteristics and conditions (the company’s direction, business process and the leadership climate) and business regard for technology and the IT organization (the company’s attitude toward IT spending and how the business interacts with IT and the CIO). Both areas combine to determine the business need for and openness toward a strategically oriented CIO. A spreadsheet version of the tool is available on CIO.com’s Strategic CIO page.

Seizing the Opportunity

Changes in business direction, market forces or new growth present opportunities for CIOs to step up their strategic contribution. “The faster your business environment is changing, the more a CIO business strategist makes sense,” says Amer Sports Vice President of Global IT Thomas Henkel.

The events of 9/11 brought business continuity to the forefront for financial services firm Federated Investors, as it did for many others. Seeing a void in enterprisewide leadership, CIO and president of technology, Rex Althoff, responded by taking over management of the corporate business continuity function for the $1 billion enterprise. Althoff knew his experience with IT disaster recovery and deep understanding of the different business units made him a natural fit for this strategic leadership role. “I saw a critical business need which required a solution: how to ensure the well-being of the company in case of a disaster. So, I brought my restructuring recommendations to executive management,” he recalls. Althoff didn’t stress about the fact that corporatewide business continuity isn’t a typical IT activity. “I don’t worry about who owns what; I worry that the firm is moving forward,” he says.

Business Strategist at Work

So what does a strategically oriented CIO actually do?

Being a strategically oriented CIO means more than enabling business initiatives or providing services. When Direct Energy introduces something new into the market via its Web channel, CIO Kumud Kalia leads much more than the IT piece; he co-owns the business outcome regardless of how well the technology platform works. If the business’s expectation is that 20,000 customers will register in the initial round, and that goal isn’t met, Kalia takes charge of finding out what happened.

“I’ll go back and ask about the marketing campaigns, brainstorm new ways to attract customers, check about the branding of the URL or change the marketing message a bit,” he says.

Kalia has been operating at this expansive, strategic level since he started at Direct Energy, and he has earned formal acknowledgment of his role with the addition of the title executive vice president of customer operations.

Evan Stewart, CIO at BE Aerospace, saw a chance to expand his strategic contribution when his company, a manufacturer of commercial jet parts, experienced a spike in growth in the Asia/Middle East market due to a growing number of airline travelers with discretionary income. Stewart noticed an uptick in the number of requests from senior business leaders asking IS to consult on new processes for this region. “It was a watershed moment for me and the IS department,” Stewart recalls. “We were actually being asked to be more strategic.”

Stewart responded by reorganizing his department into three parts—an operational group, a strategic group and a new liaison group that visits with external customers to discuss what they will need in the future. Stewart’s role is now akin to that of a leader of a strategic consulting group. “I changed the way I think, talk and act; now everything is about business value” and how we can contribute to growth, he says.

CIOs should realize that because of their enterprise-spanning viewpoint, they have process and operational insight they can bring to bear in any number of situations. Philips Medical Systems CIO Kenric Anderberg is not formally responsible for business process improvement. However, when the operations lead is focused on other initiatives, he takes the opportunity to fill the gap. “As CIOs, we already know the business processes and how to think about business improvements,” says Anderberg, so operations leadership is a natural opportunity to step up. By doing so, CIOs can position themselves as business leaders, willing to step outside the IT box and take risks in new areas, says Anderberg.

Now It’s Time for an Attitude Adjustment

Even when opportunities present themselves (see below, “Does Your Business Need a Strategic CIO?” ), if the business’s attitude toward IT and the CIO role is antiquated or negative, a CIO seeking to make a broader contribution may find himself rebuffed. Changing attitudes about IT and the CIO role is difficult, but CIOs can be successful by doing so incrementally. Darin Brumby, CIO at $5.5 billion U.K. transportation company FirstGroup, says it’s all about small steps.

Does Your Business Need a Strategic CIO?

Six indicators that signal opportunities for CIOs who want to focus on more than IT

1. Business leaders are considering significant enhancements to the customer experience.

2. The business is pushing hard to develop new products, services and markets.

3. The organization is expanding into new lines of business.

4. There’s a lack of ownership of some cross-enterprise discipline.

5. There’s a new or growing emphasis on cross-enterprise business disciplines such as security, business continuity or regulatory compliance.

6. There’s a universally recognized need for more knowledge about customers, products and processes to enable better decision making.

Is Your Business Ready for a Truly Strategic CIO?

Five indicators that your enterprise will accept a CIO who focuses on more than IT

1. Relative to other capital spending, executives perceive major investments in IT as sound business practice.

2. Executives publicly and enthusiastically acknowledge the importance of IT to the business. They “get it.”

3. Business leaders are educated about and appreciate the transformational potential of IT.

4. The IT organization is viewed as a source of innovative ideas for the business as a whole.

5. Business units poach IT staff because they know that’s where the best and brightest and most knowledgeable come from.

“The key is showing, in every interaction, what you can do for the business beyond running IT operations,” suggests Brumby. By “relentless execution” and repeatedly demonstrating skills in areas like change leadership and process improvement, Brumby has convinced his executive team that a CIO can bring a different value proposition to the table.

However, Brumby warns that CIOs who are ambitious in terms of what they believe they can do for and add to their organizations may experience resistance from their executive peers. In order to overcome that, the CIO must make it absolutely clear that he has no secret agenda, no lust for power. “It’s not about one-upsmanship or taking advantage of anybody,” Brumby says. “It’s about doing the right thing for the business. You must be 100 percent authentic when you offer advice.

According to Henkel at Amer Sports, the CEO and other C-level executives are the soil in which CIOs should sow the seeds of change. For Henkel, his C-level influence sprouted in the smaller organizations that Amer Sports has been acquiring. As these organizations shifted from running on their independent systems to partaking of Amer Sports’ enterprisewide processes, Henkel successfully communicated to those businesses’ leaders that IT and the CIO needed to be intimately and actively involved in the business strategy in order to keep the big picture in sharp focus.

Move Up or Move Out

Of course, no matter how authentic and careful you may be, sometimes the resistance is too hard to overcome. If your company is too hidebound to accept you as a strategist, or is not responding positively to your sincere and sustained efforts to move in that direction, it might be time for you to look elsewhere.

LESSONS ON VIDEO

To learn more about C-level leadership competencies from the CIO Executive Council, see the Outlook Leadership video series at

www.cio.com/video/

outlookseries.

“If there’s the wrong organizational structure, the wrong corporate culture, then you can’t be successful as a strategist,” concludes Kumud Kalia, CIO of Direct Energy. In those cases, Kalia suggests that CIOs focus their job search on companies that are looking specifically for strategic leadership from the CIO. And how can you tell?

During the interview process, make sure the CEO can explain what he or she means by “strategic” and that that matches your own definition. Also, Kalia advises, try to assess how your business peers will react to working with you as a fellow strategist rather than as a traditional service provider. Direct Energy’s executive committee looked for a strategically oriented CIO, believing that a CIO focused solely on technology would not help grow the business.

“From day one on the job,” says Kalia, “I’ve been accepted and treated as a business peer. I talk about what I’m going to do for the company, not for the IT department specifically.”

Carrie Mathews is senior program manager with the CIO Executive Council. Send feedback on this article to letters@cio.com.

This story, "Ready for a Strategic CIO?" was originally published by CIO Executive Council.

Copyright © 2007 IDG Communications, Inc.

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