The Strategic CIO: Using Leadership Skills and IT to Create Competitive Advantage

You wouldn’t expect a traditional CIO to manage the process of, say, opening 10,000 seasonal locations and hiring 100,000 seasonal employees, and then be asked by the CEO to run a line of business in addition to the IT function. Nor is it typical for a CIO to routinely work with business leaders to clarify their strategy and translate it into action, and then be asked by the CEO to manage business strategy worldwide. But this is what happened to us last year at H&R Block and Chevron Global Downstream, respectively.

We aren’t unique in seeing our roles evolve and take on a broader, more business-oriented and strategic focus. We believe that this is the future state of the CIO role, which in time will become the mandate for most CIOs at most businesses.

What distinguishes a strategic, or “future-state,” CIO? Fundamentally, the CIO role encompasses three aspects: the function head (focused on operations), the transformational leader (focused on alignment, enablement and process change) and the business strategist. The strategist targets how a company creates shareholder value and serves its customers. The strategic CIO is a business leader who happens to use technology as the core tool to create competitive advantage. CIOs who primarily have an operations or transformational role look at a company from the inside out—starting with how they operate and then looking out to the customer. Strategic CIOs look at the company from the outside in and ask, How is the company perceived by customers? What is the technology platform our competitors are using to compete against us?

How We Got Here

Why are CEOs asking CIOs to act more as strategic business partners—and why is it happening now? First, IT is more and more pervasive in everything we do, and this drives a strong relationship between business goals and the IT that will help achieve those goals. Therefore, the CIO must be effective at understanding strategy, and working in a structured way to translate that strategy into opportunities and sound IT investments.

STRATEGIC CIO

Learn more about how to become a Strategic CIO. 

At Chevron during the past three years, Louis Ehrlich had made great strides in helping the business turn strategy into action. At the same time, because of globalization and the need for a more integrated value chain, there was a desire to get better at strategy deployment. The dialogue Louis was having with the chief executive of Global Downstream and others was about strategy in general and what it takes to achieve it. Ultimately the business unit leadership recognized the value of a deliberate approach to translating strategy into action. They moved the business strategy group, along with a new group focused on overall business architecture and many other services, to the new position that Louis now holds.

The path Marc West took at H&R Block was different. Originally, Marc focused 95 percent on getting the technology foundation right. H&R Block engaged the key processes for opening, staffing and delivering tax preparation software for its seasonal storefronts. That led to more insight into the core business, its operations and how the company serves customers. Marc’s team then looked at how that compared to what competitors were doing, which in turn helped them see the larger industry dynamics. Through this, Marc gained industry understanding that provided some strategic insights for H&R Block’s CEO and management team about what was happening in its market. The CEO said, “That’s really interesting, so why don’t you keep going?” As this “outside-inside” view matured, the CEO asked Marc to lead a new line of business, driving growth in the commercial markets.

None of this is to say that we, or any other CIO, should turn our backs on the operational or transformational aspects of our role. But as the CIO position evolves, we are spending more of our time as strategists and less on the other aspects of the role.

Unfortunately, a lot of companies still aren’t ready for a CIO who has a broader, strategic focus. Many execs have a bias against IT based on history and lack of trust. Also, many business leaders still in place today haven’t grown up with technology and don’t see its possibilities the way younger generations do.

CEOs who don’t embrace CIOs as business strategists will miss out on the ways IT can make a difference and transform the business in ways they could not think of themselves.

Companies that are not able to leverage the maximum value from technology are creating their own competitive barriers in the market. CEOs need to understand that even if you take IT out of the equation completely, CIO is one of the few roles within a company that has a good view of the end-to-end value chain. If the CIO isn’t leading strategy or isn’t at least very much involved in it, the company will miss that perspective—that ability to connect the dots between businesses, functions and geographies.

From Technologist to Strategist

Of course, you can’t blame the CEOs. It’s primarily the CIO’s responsibility to educate the business on the strategic value the role can bring. No one will hand that role to us because we’re nice guys or because we made the network stay up 99.9 percent of the time. There are specific competencies that we need to develop and demonstrate consistently.

To identify and help our peers hone these competencies, we urged the CIO Executive Council to take on this challenge in its Future-State CIO program. Over the past year, dozens of Council members have gotten together to map where we think the role is going. We’ve partnered with executive recruitment and talent appraisal firm Egon Zehnder International to define the essential C-level executive competencies and help us develop tools to assess and benchmark CIOs against those competencies. The nine C-suite competencies we’re tracking are Strategic Orientation, Market Knowledge, Results Orientation, Team Leadership, Change Leadership, Commercial Orientation, Collaboration and Influence, Customer Impact and Organization Development.

As part of this commitment, the Council has joined with CIO magazine to bring you this new column. Each month, a different CIO will reflect on how he or she has developed, refined and applied a different competency in his or her business context.

We’ve all heard CIOs say, “We’re not getting invited to the table.” We used to say that too, and then we got tired of it. We decided to create our own table. Now it’s up to all of us to make the most of that opportunity, to apply the right stuff as strategic, future-state CIOs.

Louis Ehrlich is vice president, services and strategy, and CIO, Global Downstream, with Chevron; Marc West is senior VP and CIO and general manager, commercial markets, at H&R Block. Both are board members of the CIO Executive Council.