How IT Helped Shape UL’s New Business Strategy

Lots of people make New Year’s resolutions, using the turning of a calendar page as a spur to change. But for Underwriters Laboratories’ CIO Christian Anschuetz, January 1 marked the beginning of a profound transformation — one that he and his team have helped envision and enable. As the ball dropped in Times Square to mark the start of 2012, UL — the product testing and certification company that has been ensuring safe products for over a century — transformed from a non-profit organization to a for-profit company in the U.S., with a focus on delivering new products and services to its global customer base. In this first installment of the IDG Enterprise CIO Interview Series, Anschuetz spoke with IDGE Chief Content Officer John Gallant about IT’s role in shaping and supporting this business change and what it means for him and his organization. Anschuetz, who worked for years in the advertising industry, described why embracing consumer technology is critical to ‘amplify human ability’ and how IT should be measured for its success in driving customer value and revenue. He explained why he holds up Amazon.com as UL’s ‘metaphorical competitor’ and why ‘big data’ without ‘big discretion’ will lead to ‘big failure’.

Tech Titans Talk: The IDG Enterprise Interview Series

Anschuetz, who’s a member of the CIO Executive Council — IDGE’s peer-based global community of leading CIOs (click here to learn more) — also talked about why he believes there’s never been a better time to be a CIO and offered advice for emerging IT leaders eyeing the CIO office.

Q. You worked previously in the advertising business, which is a pretty far cry from the business that you’re in today. What attracted you to this role with UL?

A: There were three primary drivers that made me want to join this firm. You are absolutely correct that UL is 180 degrees out from advertising. Advertising is about, in many ways, driving conspicuous consumption. UL’s mission, however, is about humanity. UL’s mission is about making the world a safer and more sustainable place. After having worked in advertising for a decade, I wanted to work for a firm that had a mission I could believe in and truly throw myself behind. That was factor number one. Factor number two was that the company was poised to go through major changes in the interpretation of its mission. The world has changed, and UL was responding by taking a broader, more holistic interpretation of its mission. This would result in significant transformation and being part of those important changes was very, very intriguing to me. Certainly I knew such fundamental change would be a challenge, as such changes are to all organizations, but the challenge itself was appealing. And then the third reason is, quite frankly, that UL’s CEO is a visionary. He sees and understands that technology is not a means to its own end, but rather has the ability to change companies and industries. The intersection of these three factors made coming to UL the perfect opportunity for me.

Q. I think most readers have a pretty specific idea of what UL has been up until now, but talk about what the company is becoming. What’s driving the transformation UL is going through and why is it changing?

A: We will continue to ensure that the best and safest products get to market quickly. But we are very cognizant of the significant changes in the world and the customers we service, and we are thinking beyond just products to ensure that UL is able to promote and create safer working and living environments. Today we’re going through these changes with speed as our customer base and their needs are changing. The global economy, supply chains, how we manufacture, and how we consume are radically changing. Technologies are changing. I don’t mean IT, but rather the dramatic and important changes we see in photovoltaic, the advances in batteries and energy storage, and the rapid development and adoption cycles of technology products have changed dramatically. Just think about how intimate we are with our electronics today. Right now, as I speak to you, I have a tablet in my hand, a phone in my pocket and an ear bud in my ear. And these items all have power and they all have the ability to do great good. But if not manufactured to proper standards, similar products could be harmful to the user, the environment or both. UL dedicates itself to a mission that seeks to ensure that that never, ever happens. That’s directly in response to the changing needs of our customers and the markets and industries that we serve.

Q. So you made this transformation on January 1st to a for-profit. Can you talk a little bit about that and what that means for the company?

A: To support this broader mission and the more diverse service lines that we are creating [for] our customers’ needs, we [made] a structural change effective January 1. We moved from a not-for-profit to a for-profit structure in the United States. This will be transparent to our customers, but internally it is important. I would even say this will drive a genetic-level change across the firm, making us more customer focused, and steadfast in our ability to drive financial results. Really, if you think about it, there’s a fundamental mindset shift that happens when you move into a for-profit world. That’s also going to be very interesting, and quite intriguing.

Q. So how do you need to serve customers differently and how did you and your team specifically help the organization understand the new ways that you could serve customers?

A: Today, we’re a professional services organization. We are just under 10,000 people worldwide, and of those 10,000 people, the majority of our workforce is engineers. Even those that aren’t engineers are almost certainly knowledge workers. We provide these professional services for over 60,000 manufacturers every single year. Think about that figure. Think about the impact, and the potential to do more. In all those interactions, we are examining products, processes, standards — that more often than not we wrote for the industry — and exercising judgments based on the available information and expertise of our engineers. The access to such a volume of information and perspectives leads to the identification, if you will, of opportunities and potential obstacles. In the end, we help organizations make sure they are doing the right thing for their customers in the markets that they’re trying to get into. What we’re thinking about, and how we’re envisioning our future being fundamentally different, is that while we continue to provide these world-class services, we begin to further develop those services with the very information that we create, or co-create, every single minute of every single day. It’s going to be those underpinnings of information elements that will be applied to help our customers solve problems they don’t yet know they have, or answer questions they haven’t asked. It’s not hyperbole — we see this as real opportunity. Clearly there will be information that will be kept in the strictest of confidence. But consider for a moment just how connected [we are] with so many countries around the world from an information perspective, you can imagine that we are uniquely positioned to help get firms’ products into the markets they need to be in.

There’s a lot of information that has to be known and/or identified to allow a firm to get their very safe product into a desired market as quickly as possible. And we’re seeing ourselves shift from just this professional services orientation to one where we become increasingly an information broker that provides superlative services in pursuit of getting those products into any and every market as quickly and safely as possible.

Q. You’ve said that your team is taking a three-level approach to helping drive these changes in the business. Can you talk about that approach?

A: There are three legs of our business strategy as it pertains to technology and information. One is around information attainability, one is around information orientation and the third is around workforce advancement. We see ourselves moving from that professional services posture to that of an information broker with professional services together and highly integrated. So, we have to make sure that our processes and our platforms — and I mean not technology platforms alone, but the platform on which we deliver all of our services – are highly oriented towards obtaining and pulling the most important and relevant pieces of information out of our transactions. That’s information attainability.

Information orientation is then having the skill, the discipline and the wherewithal to take that information and use it in new and innovative ways to provide ever-increasing value to our customer base. With supply chains becoming infinitely more complex, with the need to get to market quickly becoming more important, can we work with our customers earlier in their product development lifecycles to help them achieve their goal of getting that safe product to market the moment it rolls off the assembly line? The answer is yes, we believe we can do that with great services, combined with this information underpinning. That’s our information orientation. The last one is workforce advancement and this is something every firm needs to think about. This overused term of “big data”, which it seems every company says it is moving towards, is more difficult to achieve than most people understand. If we think big data, but fail to consider that a firm must also ensure that it has the workforce that’s capable of capturing, analyzing and ultimately using massive amounts of information in the most effective fashion, you will simply find big failure. What I like to say is that if you have big data and you don’t have big discretion, you’re going to fail miserably. You’ll have people lacking the appropriate skills to deal with it. What you will end up with is a workforce that has all the information they need to contemplate their navels in perpetuity.

At UL, we have thousands of highly skilled engineers who are, of course, incredible and valuable resources. Still, they are going to have to think about working a little bit differently in the future. Often with more information, comes greater ambiguity. How to handle this increased ambiguity is new to our historical culture, and one that we’ll focus on and manage through. And we have to think about those things as well as other things in advancing our workforce so that as we move the company towards this different orientation, it is moved with, by and for, that workforce that’s going to support it.

Q. Christian, is there also an effort around modernization of the infrastructure?

A: Absolutely. Modernizing the infrastructure was the predecessor to advancing the workforce and that’s what we call the technology advancement program. We have spent considerable effort to uplift the company’s technology foundation. It’s a continuing effort. We have made some remarkable changes in the organization in terms of putting great tools in the hands of our colleagues and giving them the technology that’s going to help them advance themselves. The best workforce is going to be the workforce that has great technologies that they can use, that they can apply, change and modify to the benefit of our customers without having to get IT involved. We’ve made important and big investments and changes to accomplish just that goal.

Q. So what were some of the key elements of that modernization?

A: Our technology advancement program started with the base infrastructure: it was networks, PCs, data centers – a refresh of the technology foundation. UL had a credible technology foundation before, but as we discussed, the times and assumptions have changed. Today we are executing against both a clearer vision, as well as the broadened mission we discussed earlier. This concept of becoming an indispensable partner to our customers in part through the acquisition and application of information required us to make different bets and different investments. At the same time, we know that the best way to attain information is by connecting our workforce and creating a truly global, unified working community. To that effect we’ve made big bets in terms of how we look at our internal communications and collaboration. As part of that we look to ensure that there’s a seamless way for our colleagues in, for example, China, to talk and work with our colleagues in Melville, New York. We need to give our engineers the ability to work on product designs and schematics, and discuss knowledge and information that are contained in any number of our systems, so that they can come to better, quicker judgments regarding the standards that we help our customers’ products meet. In short, we are becoming a truly global company vs. a multi-national so that our teams can work with customers to get their safe and sustainable products to the markets as quickly as possible — certainly, quicker than our competition. Simultaneously, we’re also looking at how we continue to modernize both our back-office and our front-office systems to facilitate both attainability and orientation.

Q. Consumerization of IT is a hot term these days. It seems that was a big piece of this effort, empowering the workforce with new information and new tools to access and utilize it.

A: Absolutely. Again, that’s why the context here is so important. If the workforce is going to advance, then the workforce has to have the technology that’s going to allow them to advance themselves, to allow them to achieve their greatest individual potential. I’m going to pause for a second to say that I passionately believe that technology exists only for one reason. And that one reason is to amplify human ability. Insofar that we can, as a firm, loosen the reins of IT to allow our colleagues to find the technologies that amplify their abilities to the greatest extent possible, well that’s going to allow us to get greater and greater productivity out of our workforce. Insofar that we create applications, frameworks and interconnectedness, if you will, amongst our many, many offices across the globe, we will allow our colleagues on their own to find new ways to work with one another to the great advantage of our customers. Again, that’s amplifying their ability, but now on a team and worldwide basis. Those things have caused us to look at technology differently. In the first case, we’re creating options. What phone do you want to use? How do you want to be mobile? What is the persona, if you will, that you fall into that says you work on a corporate PC or a corporate phone or something completely different that you decide you need to use? We’re loosening the reins and allowing people to make a lot more decisions on their own. Right now that’s exclusively happening in the mobility space, but we’re already well down the path of figuring out how that affects all the corporate assets – PCs, home offices and even, to some extent, fulfillment workflows. Build a really good internal infrastructure and then you are well positioned to offer choices.

Q. Within the context of this overall transition that you’re going through, you’ve discussed this concept of Amazon.com as the metaphorical competitor. What does that mean and how does it shape what you’re doing?

A: UL’s mission is to ensure safer living and working environments. We do not sell books, DVDs or other products like Amazon, but that doesn’t mean that Amazon is not our metaphorical competition. I say that because while Amazon is a B-to-C player primarily and we’re a B-to-B player, the customers we interact with on an individual basis are increasingly bringing their B-to-C experiences into the workplace. The individual employees of firms that use our services are also consumers in another aspect of their lives, and their perspective is that consumption and the use of services should be seamless. It should be intuitive and transparent like Amazon. You should be able to go online, have a great experience by finding what you need in the easiest way possible, get the answers that you require in the most intuitive fashion possible, and conduct transactions in a way that is not just functional, but is also — and I like to use this word — delightful. The concept that people are having these delightful experiences with technology and transactions and they’re bringing those perspectives into the workplace, so Amazon is our metaphorical competition. And it’s a gold rush out there. It’s a gold rush to be like Amazon in B-to-B industries because any company that can provide that superlative experience combined with absolutely exceptional services, which we already provide, is going to win the hearts and minds of the individuals within the manufacturers [we] service.

Q. How are you reshaping your IT organization to enable these changes and to drive business results? What skills and knowledge are emerging as critical?

A: UL is largely outsourced from a support and maintenance, as well as an application development perspective. But there are, in my opinion, some skill sets that no firm should ever consider outsourcing. The skill sets that we have to have and that we’ve been working very hard at UL to ensure that we have, in copious quantities and high quality, are around relationship management; architecture, which is both technology and business; program management, because nothing matters if you can’t execute these big changes; and business analysis skills. That has caused us to fundamentally reshape the organization and put an emphasis – a huge emphasis – on those four core skill sets. We’ve been making a lot of changes in that regard, a lot of the people in the organization have really stepped up their game and have, shall we say, retooled themselves. Many others have been added to our roster externally as well, bringing both the necessary skills, but also infusing the team with new energies, perspectives, and quite frankly, enthusiasm. In fact, probably about 30 percent of the IT organization is new within the last number of years.

Q. Have you changed the structure of the IT organization?

A: The answer is yes. However, I would tell you that the structural changes to date have been mostly “happy-to-glad” alterations. In many ways we still look very, very much like a traditional IT organization. As I say that, I am in the process now of moving to a structure that is much more firmly focused on the customer and the user experience, and ultimately on the commercialization of the incredibly valuable products and information capabilities we bring, and intend to bring, to the market in the future.

Q. This is a big change, with your team enabling this big business change. What are you learning along the way as CIO?

A: It is a nonstop learning exercise. Every day I learn something new. I would tell you that it’s never been a better time to be a CIO, because all this learning is coming as a result of new and different opportunities that CIOs haven’t been able to have in the past. The days of aligning IT and the business are gone. IT now is the business and the business is increasingly IT. CIOs who realize that and who learn more and more about how to leverage their technology savvy and the savvy within their organization to increase the capability and knowledge and savvy of the whole firm are going to be the ones that drive the biggest, most lasting and meaningful change.

Q. You’ve said that the CIO role is an increasingly pivotal role for companies. Explain why you believe that.

A: Well, I think it’s finally getting to the point where it’s becoming patently obvious even to the casual observer that technology is not about just driving efficiencies. It definitely does that. But now it’s becoming increasingly obvious to the non-technologist that top-line growth, that obtaining and retaining customers, the ability to innovate and drive and deliver new services, are all invariably going to happen because of, and in many cases as a direct result of, technology. This general awareness of this fundamental fact is driving firms to act differently, to think differently and it’s creating more and more opportunity for CIOs to take a much more active role in leading the whole business as opposed to just the technology function.

Q. How do CIOs need to change to take advantage of that? What are the kinds of things that maybe they’re not thinking about or maybe not approaching in a way that allows them to capture that opportunity?

A: There are CIOs I know out there who are absolutely great leaders in this space; just fantastic and way ahead of me in so many ways. But I would tell you that to lead their organizations, CIOs have to do a couple of things. One of them is that when you say you are delivering technology for the customer, first of all, be real clear who that customer is. Is that customer a paying customer or is that an internal colleague? While it’s important to serve both the colleague and the customer, the mind shift that really needs to happen is that the customer — those that drive revenue — is where technology needs to focus. You need to focus on the experience that they need to have, and the job that they’re trying to do, the problems that they’re trying to solve. You think about those things and you think about how the technology services and capabilities that you’re delivering to your firm, and ultimately to your customer, can help answer their problems, can help them do their job and ultimately allow them to serve their own customers more efficiently. It sounds like rhetoric, but it’s very, very difficult because it almost always requires a fundamental mind shift change both within, but especially outside of, IT.

Q. It sounds like you and your team are spending more time dealing directly with external customers these days.

A: We are spending more and more time dealing with external customers, that’s correct. We are, I would tell you, spending far less than we need to in the future. We have a lot of work to do and room to improve. Our customers deserve great technologies and capabilities from our company, because we deliver such important services. Our technology has got to step it up and we’ve got to interact and do more for them than we are today, and so there’s plenty of room for us to improve and to continue to push this envelope.

Q. So how does the language of IT need to change in order for CIOs and their teams to be more successful in driving that kind of customer delight and driving business results? How does the way you interact with customers or the business need to change from a communications perspective?

A: There are subtle language changes that need to be made. Language is so important and my team knows this well. I hate certain aspects of the old ways of thinking that manifest themselves with language. For example, I can’t stand it, and I will always correct our team when someone says it: “IT and the business”. That language represents the thinking that the business is separate from IT and IT is separate from the business. That is simply not the case. As long as we think that way, we will act differently. It is very important to change this mindset. And one of the ways that we’re doing that is we’re becoming more and more, shall we say — overt? More and more explicit as to how we talk about technology, about how we talk about our customers and how we talk about the intersection of the two. It’s not IT and the business. IT is the business and the business is increasingly IT.

Q. Along these lines of communication, you’ve even talked about a goal of being able to show what percentage of revenue IT is directly responsible for driving in the organization. Do you think that’s feasible today, and should that be a goal for all CIOs?

A: For some firms certainly it is feasible. For us it’s aspirational. But most firms should be able to think that way. More and more firms are going to find the products and services they deliver are directly via IT systems. If you can get your mind wrapped around that, then it’s not that hard to imagine that one of the IT organization’s goals should be trying to drive more value. It’s not just about driving revenue, it’s about driving value to the customer. Where IT is thinking about customer value, then you should be thinking about how to measure the success of that organization in delivering that value. Just as IT should be thinking about how it invests itself in such a way as to take out unnecessary cost from the business — and I mean the whole of the business: from technology, the lines of business, and all the different functions. So it has a huge enterprise efficiency play. It’s got a huge external customer play and an increasingly obvious customer value component, and organizations should explicitly state what IT intends to do in [all these] areas.

Q. In preparing for this discussion, you and I talked about this idea of helping to expand digital literacy in the organization. Why is that important and what does it mean?

A: As an organization aspires to become increasingly information based, increasingly capable of providing value in the market via information products, and using that information internally to drive various services, you have to have a different set of skills as a workforce to do that. Again, if you give a ton of information to a person — and I’m talking about a typical person — and they’re not well skilled in how to use information, you will find them overloaded by it. You will find them burdened by the same information that you hope will improve their productivity. To function well in a company where a lot of information is available that’s very relevant to you being able to do your job, you have to actually become — this is counter-intuitive, I think — more comfortable with ambiguity. Digital literacy to us is developing the capabilities and the technology savvy and know-how to use technology to help you overcome the challenges of dealing with a lot of information. Ultimately, where this volume of information and these skills intersect is where we find employees able to amplify their productivity in ways that were unheard of before. Better yet, done properly, these skills applied to the proper technology capabilities allow many changes and individual “amplifications” to take place without IT involvement.

Q. How do you drive that change within UL?

A: Today we are working at becoming better advocates and catalysts for increasing digital literacy across the whole organization. I think that what we’re doing from a departmental perspective is something that the whole enterprise could consider doing, which is using someone’s digital literacy to help determine how far one can advance within the organization. We spend a lot of time as an organization screening people — how we hire people, how we decide to promote people. All of these things need to be increasingly influenced by an individual’s ability to use technology efficiently and effectively.

Q. At the end of 2012, when the company is one year into this transition, what do you expect to be different? What do you expect to have accomplished?

A: We’ve got just one year from now to make many different accomplishments. I would expect us to make really great strides in improving our internal effectiveness. I see this both from a fulfillment perspective, as well as from a back office perspective. We are investing in ourselves to provide ever-increasing value to our customers and I would expect to see us continue to make very tangible gains. I’d expect to see some of those metrics in place that we were talking about earlier. We can’t just talk about it; we have to do it. I would expect to see real, demonstrable progress in showing how technology is allowing the organization to operate much more efficiently. But what is really more important, and much more intriguing, is that we will be ever clearer on how technology is a value generator for our customers and how exactly we are poised to provide industry leading services our customers find they cannot live without.

Q. We talked about advice for CIOs, but what about someone who’s moving up the ranks in IT, someone who’s on a career path to eventually become a CIO? Their landscape is changing pretty dramatically with cloud, mobility, consumerization, all kinds of major trends reshaping the IT organization. What’s your advice and guidance to that person as they try to shape their career?

A: If the intent is to move up within IT and ultimately be the CIO, there are a number of things you have to be thinking about. Certainly, first and foremost, it’s not about technology. It never was, and it’s patently obvious now, that it isn’t about IT. It’s about impact. It’s about outcomes. And those outcomes are particularly relevant if they generate commercial value by generating value to your customers. To do that, it’s less important that you are a great technologist, in terms of the bits and bytes, but rather that you understand the import and impact of technology to your customers and the business that delivers to them. To make such advances for a firm, relationships are critical. Change, that technology both drives and responds to, requires strong relationships to be successful. Technologists who spend a lot of time making sure they’re technically proficient, they have to work on becoming relationship proficient. Becoming “people proficient” sounds easy, and far too many think they have this skill than actually do, but it is difficult. It takes serious introspection and time to develop. But if one commits to focusing on impacts and outcomes while simultaneously developing the appropriate soft skills, you will find yourself in a position to generate hard results.