Turnaround CIOs: Meet Mr.Fix-It

Definition Turnaround Artists are hired guns and risk takers who see themselves first and foremost as agents of change. They’ve got deep experience in IT and have the ability to come into a chaotic situation, ascertain what the business needs most, recharge a beaten-down staff and start piling up the wins—quickly.

Completely messy, chronically dysfunctional and insanely challenging: That’s the IT situation in which Turnaround CIOs usually find themselves, though the company names and locales change. And they love it.

When Jay Rollins signed on as vice president of IT for Churchill Downs, owner of horse tracks and races including the Kentucky Derby, he found an IT infrastructure “more along the lines of something you’d see in the ’80s,” he recalls, “and whether it was functional or not is up for debate.” This was in 2004. What hurt even more: IT-enabled advances that were common in much

of the gaming industry—such as Internet, wireless and sophisticated customer-loyalty applications—were also missing. An example of this problem, Rollins says, would be on occasions when Churchill Downs would offer the same loyalty reward for its $125,000 bettor as it did for its $40 bettor: a bobblehead doll. “We were not treating the big customers any better than the small customers,” he recalls.

Turnaround CIOs, as defined using “The State of the CIO” survey data, call change management skills their primary personal strength. They’ve got deep experience in IT, and they are hired to make tumultuous changes to the IT department—and make them ASAP. Sixty-eight percent of Turnaround CIOs said their top priority from the business side is to align IT and business goals; that’s the highest of any archetype.

These change gurus get an anxious initial greeting. “The CFO basically said IT was broken, and it needed fixing,” Rollins says of his arrival—which, it turns out, is the typical welcome a Turnaround CIO receives.

Strengths

The Turnaround CIO’s ability to come into a chaotic situation, ascertain what the business needs most, recharge a beaten-down staff and start building successes is both an amazing feat and all part of the plan. “You know coming in what you’re going to do first, second, third,” says Marc Smith, a veteran of three turnarounds who is now director of IT for Pabst Brewing.

That’s a good thing—because usually, there’s no description of IT or its services to be found, no centralized inventory of IT assets or vendor contracts, and no CliffsNotes for how IT should support business operations.

Just before Smith joined the company in 2004, Pabst management decided to upend its business model: Pabst would outsource all brewing operations on the 50-plus beer brands that it owned, and morph into a virtual brewer. Management also had the opportunity to outsource all IT operations but decided to decline. “All legacy systems were built along the lines of running a manufacturing concern,” Smith says. “That no longer applied to the new business model.” They ultimately decided to keep IT in-house, build a virtual brewery system to manage operations and get IT under control. “Much of [my job] was just bringing order to chaos,” Smith says.

One of the Turnaround CIO’s strengths is his ability to prioritize. According to the survey, nearly half of Turnaround CIOs reported having experience in business operations, which was the highest percentage of all archetypes.

Combine that with a deep background in IT—82 percent of Turnaround CIOs listed IT as primary experience prior to current job, which was also the highest percentage among all archetypes—and you’ve got a CIO who can spot inefficient business and IT processes a mile away.

“I hate inefficiency,” says Rollins. “When a situation is presented to me with a lot of opportunities to gain efficiencies, it gets the juices flowing.” At Churchill Downs, Rollins quickly set out to fix ineffective practices, such as business users avoiding an existing ERP system and laboring to use Excel spreadsheets, which in some cases weren’t completely up to date, for core ERP processes and business intelligence; and the use of unmanageable one-off vendor contracts that didn’t allow for any technology standardization. Rollins adds that by the next Kentucky Derby he will have implemented new Internet and wireless applications that will mean shorter lines for customers.

Wasteful operational processes are also the enemy of Charles Livingston, senior vice president of technology for Exclusive Resorts, whose members pay for access to upscale vacation homes. In one instance, Livingston married members’ desire for self-service with a Web-based reservation application: This increased the company’s customer-to-internal-staff ratio by 300 percent while helping improve the level of customer satisfaction to more than 90 percent—meaning a lean team delivers better service, he says. (Livingston, though not in a typical turnaround situation because his company is still young and growing, has the entrepreneurial and risk-taking qualities of typical Turnaround CIOs.)

Though it can be an uncomfortable challenge for other CIOs, Turnaround CIOs are well-prepared for the “house cleaning” they’ll need to do. “You’re coming in and you’re trying to make some hard and quick decisions,” Pabst’s Smith says. “What you’re going to salvage, and what you’re going to let go.” That usually involves IT staffers. Rollins says of the 28 IT staffers he inherited when he took the job, only two remain in his now 22-person team. “We decided we needed fewer people [in IT] but higher skill sets,” he says.

In our “State of the CIO” survey results, 58 percent of Turnaround CIOs cite their ability to influence change in others as one of their top personal skills, compared with just 34 percent overall. And more than half of these CIOs call their ability to lead and motivate staff a top skill.

Challenges

What’s the most critical challenge that Turnaround CIOs face? Deciding what to do when the initial turnaround is complete. Or, as Marc Lewis, who as CEO of executive search firm Leadership Capital Group has placed several turnaround CIOs, puts it: shaking the stigma of being “just a Turnaround CIO.”

At Pabst, Smith is going through that now: A recent shake-up in senior management has provided Smith with another new beginning and a new set of challenges. “I think I’ve got to do some convincing of these new folks,” Smith says, “to show them that I can step up to that, that I’m not just a one-trick pony.”

If not, Smith, like many Turnaround CIOs, may be tempted (or asked) to leave for another company that sends out the “SOS” beacon. “The State of the CIO” data indicates this allure is sometimes too much for these CIOs to ignore: Turnaround CIOs had the shortest mean tenure (3.9 years) of all CIO types (overall average of 5 years).

“The one dynamic that we all find in this turnaround area is that there are a lot of companies that have those needs,” Smith says. “They come looking for you. They want someone who’s been there and done it before.”

To avoid being pigeonholed, Churchill Downs’ Rollins says he’s consciously trying to move away from the Turnaround CIO archetype, to be seen more as an Innovator and Business Leader. He’s already finished the first two phases of his turnaround—planning and executing—and now he’s in the “solidifying business and IT processes” stage. His big job today is to improve the business-IT relationship.

Your Best Fit

As the recruiter Lewis puts it, what companies seek in a Turnaround CIO is “someone who has the intestinal fortitude and political savvy to know how to cut and grow at the same time.” That’s no easy task.

Given the strengths of their skill sets and their save-the-day personalities, it’s not surprising to see where Turnaround CIOs will flourish—in organizations where they are free to rejuvenate their IT department as they see fit.

Whatever the challenges, the desire to make an immediate and long-lasting impact on an organization—no matter the career risks, technical obstacles or long hours—fuels the Turnaround CIO. “I joke with my CFO sometimes,” Rollins says, regarding whether he should have taken the job. “I tell him, ’If I knew then what I know now….’” The joke, in a sense, is on him and his turnaround brethren: Deep down inside, Rollins knows he would’ve taken the job anyway.