Tips on Changing Industries for the CIO

When Paul Lemerise joined an apparel manufacturing company as its first vice president of MIS, he had quite a leadership challenge on his hands. The company’s IT infrastructure was in such disarray that upward of two months were needed to close the books. When systems were down—as they were 50 percent of the time—manufacturing operations came to a halt. To gain control of IT, Lemerise got rid of IT contractors and hired a full-time staff. Unfortunately, the only place to house the nascent IT department was in a men’s room, so Lemerise had to rip out the stalls, toilets and sinks to make room for the cubicles, chairs and PCs.

As fundamental as these challenges were, however, they weren’t Lemerise’s biggest hurdle in the new job. Harder still was learning the intricacies of an industry in which he had no experience; his previous IT job had focused on sales and marketing but provided no insights about manufacturing. “When you change industries, you’re disadvantaged because you don’t know what suppliers expect,” he says. “You don’t know about the software needed to support the suppliers. You don’t know what systems your competitors are using or what is the best application for your particular industry.”

That was in 1980. Since then, Lem-erise has spent 25 years as a CIO or equivalent in a multitude of industries, including aerospace, wholesale distribution, insurance and retail. Now a partner with Tatum CIO Partners, a rent-a-CIO outfit, Lemerise is proof that changing industries isn’t a barrier to leading an IT organization. Switching industries is something that an increasing number of CIOs are doing, according to Carl Gilchrist, a partner and leader of the CIO practice at executive search company Spencer Stuart. “Inside every business there are supply chains, distribution processes, HR and finance systems,” he says. “That’s why it’s easier for CIOs to move among industries than CEOs.”

Still, CIOs can’t change industries without doing considerable legwork. With any new job, it’s necessary to acclimate to the culture, learn the intricacies of the business, get up to speed on relevant technology and build strong relationships with peers. Making the move to a new industry, however, presents CIOs with a steeper learning curve, say those who have done it.

And industry switchers typically don’t have a lot of time to waste. In order to gain the trust of executives and establish credibility among the IT staff, new CIOs typically have a 90-day window or less in which to make their mark. The reason for the urgency: When a company taps a CIO from outside its industry, often it’s because the company is in dire need of fresh blood. In other words, CIOs who switch industries had better be prepared to hit the ground running.

The Need for Speed

When it comes to gaining credibility, nothing speaks louder than fast action, and CIOs new to an industry are uniquely positioned to benefit from short time frames. “When you arrive, expectations are that you’re going to improve something or take the company to the next level,” says Greg Buoncontri, senior vice president and CIO of postal services and document management company Pitney Bowes. CIOs can use that expectation to their advantage. Buoncontri, who had previously worked in the pharmaceutical industry, quickly evaluated Pitney Bowes’ IT infrastructure and determined that a move to shared services was in order. “Within the first 90 days, I asked for $50 million and got it,” he says.

Learning about a new business is particularly critical for switchers because they lack an industry-specific track record, which can result in a credibility gap among their peers. Tim Wright, CTO and CIO at Geac Computer, a developer of enterprise software, spent nearly two months doing research on Geac and its industry before he moved from Internet company Terra Lycos. He read material from McKinsey & Co. (compiled during a previous restructuring), pored over minutes from board meetings and studied analyst reports. When he started his job in late 2002, Wright was already up to speed on Geac and its IT needs.

While the research gave Wright confidence from day one, it also served a much more important purpose. “Building credibility within the executive team is the most important aspect of leadership because you want them to trust your decisions,” he says. Having solid knowledge about Geac at the outset was Wright’s way of signaling to his peers that he was ready to spend time with them learning about their particular challenges rather than learning about industry basics. Within 60 days of his arrival, he had ripped out the legacy customer databases, which were organized along business lines, and deployed a single enterprisewide CRM system from Salesforce.com.

Sometimes a CIO’s previous work experience can be an asset. Publisher Dow Jones recently shifted its marketing emphasis from producing content that appealed to a broad range of customers to a strategy of satisfying specific consumers’ needs. Bill Godfrey, who arrived at the company in 1999, after holding IT positions in insurance and financial services, had experience in customer segmentation. As vice president and CIO, he’s currently implementing a CRM project. His perspective as an outsider is valued by executives who look to him to align IS behind the business’s new goals.

Soon after Jeff Kubacki became vice president of information services at Ecolab, a pest control and cleaning and equipment services company, in November 2002, he held one-on-one talks with the CEO, COO, CFO and business unit leaders. Kubacki learned in these conversations that few understood what value IS was providing. To improve his department’s reputation, Kubacki drew on his experience in the eye care and computer hardware industries to restructure IS as an internal service provider. “We [in IT] think of EDS and IBM as our competitors, and our goal is delivering value at a competitive cost,” he says.

Culture Club

The need for a CIO to quickly assume the mantle of leadership places an added emphasis on learning about his new company’s culture. A particular kind of culture can dominate an industry; engineering cultures often characterize manufacturing companies, for example. Yet company culture can be difficult to grasp, and its importance is sometimes overlooked.

David Dotlich, a partner with executive coaching company CDR International, agrees that getting a pulse on company culture is difficult, yet believes it’s even more important than learning the ins and outs of a new industry. As Dotlich sees it, a company’s willingness to change is primarily a cultural issue—one that can trip up a new CIO faster than a lack of industry knowledge. “You need to know who has the power to make decisions, how decisions get made and who influences whom,” he says. CIOs should find out that kind of information before accepting a new job (see “Four Questions to Ask a New Company—Before You Join,” Page 110).

John Carrow, Unisys CIO and vice president for worldwide IT, boils culture down to personal chemistry among his peers. After a stint as CIO of the city of Philadelphia, Carrow joined Unisys in 1996 just before the company embarked on a major transformation from a hardware manufacturer to a services provider. No amount of due diligence could have prepared him for Unisys’s new strategic direction, but he was able to take the change in stride because he was focused on his new peers rather than corporate strategy. “The biggest part of determining whether or not you’ll be successful—regardless of whom you report to—is the chemistry mix among the people you work with,” Carrow says. In that regard, moving to a new industry is no different than starting any new job.

Of course, being savvy about company culture is only one step on the path to credibility and trust. Outsider CIOs have to walk a fine line between an executive management team that seeks change and an IS group that’s wracked with anxiety over the prospect of change. John Parker, who moved from the airline industry to become investment company A.G. Edwards’s senior vice president and CTO in January 2001, was on the lookout for “fear paralysis” among the incumbent IT management team. “Initially, they don’t know what you want, and they think they’ll get replaced,” he says. Parker’s advice: Be candid and clear about goals for the IT organization, and assure employees that their jobs are safe if they can satisfy those goals (as long as that’s true).

Kubacki found that engaging Ecolab’s IT staffers in his plans for change helped allay their misgivings. One of his first tasks was talking with IS employees about their job challenges—”really focusing on the people issues,” he says. Staffers were willing to embrace change if initiatives would help them do their jobs better.

Once the transition period is over, a CIO who changes industries is judged by the same leadership criteria as any other executive. As Unisys’s Carrow sees it, if he helps make the people around him in both IT and the business successful, he’s done his job.