The CIO-CEO Relationship at Direct Energy

Would you hire a CIO without a technology background? What does the CIO bring to the table that’s unique in the organization other than their functional expertise? When a new technology comes along, does your CEO understand what it takes to leverage that technology and work it into the existing infrastructure?

Those were some of the many questions CIO magazine Editor-in-Chief Abbie Lundberg asked Deryk King, the chairman and CEO of Direct Energy, and his CIO, Kumud Kalia, during a session on the CIO-CEO relationship at CIO’s Leadership Conference in Huntington Beach, Calif.

The Q&A session was designed to reveal what makes King’s and Kalia’s relationship tick, to suss out the future of the CIO role, and to extract lessons for the IT executives in the audience on how they can improve their relationships with their C-level colleagues. What follows is an edited excerpt from the session.

CIO: Deryk, when your business leaders get excited about a technology and want to use it, and if Kumud says that the technology is a great idea but the company needs to consider the complexity before moving forward, how do you as CEO weigh those different perspectives and interests?

King: I draw on experience. We put in a $1 billion (Canadian) CRM system into the UK business. We took all that gun power and fired one enormous canon ball and missed because the market had moved on. We learned from that experience with the CRM system. Kumud and I share a passionate desire to not do big IT projects. We would rather redesign business processes than do a big IT project.

CIO: Kumud, how do you avoid saying no to stakeholders, and how do you advance the conversation about implementing a new technology in a positive direction?

Kalia: Sometimes I do say no.

King: I always want to do everything. I have a long to-do list and I don’t have a “stop to do” list. Kumud is in control of that sort of thinking.  CIO: Deryk, how did you establish that trust? How did you get to that point where you trust that Kumud knows what’s best for the business?

King: Our trust was established when he came on board. He had a detailed and extensive recruitment process. We took great care to recruit someone with a good track record of operational excellence and strategic thinking, and who had worked in customer service and had diverse career.  He’s only been on board two and a half years so it’s too soon to say whether he’s doing okay. [laughter from the audience.]

CIO: What does the CIO bring to the leadership table that’s unique in the organization other than their functional expertise?

King: Everyone with functional expertise brings their functional expertise to the table. That’s table stakes. You don’t get a seat at the table unless you’re good at your day job.  But I expect a much broader contribution [from my CIO]. He has to be open and honest and rigorous. He has to be prepared to talk about issues outside of his immediate responsibility and outside his comfort zone. They’re personal characteristics I’m looking for. CIO: Would you hire a CIO without a technical background?

King: I was thinking about that question last night. I have no idea how to answer. If I had a really strong CTO, which I do have, I’d be more inclined to do that.

Kalia: CIOs today have to have mastery of their technology discipline. If they didn’t, they could make some very poor decisions and not exercise judgement that is in the best interest of the corporation. It’s very easy to be confused by different knowledge sources and not have experience to fall back on. CIOs have developed that gut from being in the trenches. If we have a CTO who can do all that, it does free up the CIO, as in my case, to do other things. CIO: Someone made a comment yesterday that a CIO doesn’t have to have a technology background as long as they ask the right questions. Why can’t CEOs ask those questions?

King: The CEO role is so external nowadays that you don’t always have the time and space to think deeply about those questions you’re talking about.

CIO: So even as CEOs become more conversant in technology, companies still need someone who’s going to be really focusing on that area?

King: Absolutely.

CIO: Kumud, what has it been like working with other business and functional leaders to get them to understand what you do and what the company is doing with technology?

Kalia: I’m not sure they still do understand, but they’re much more trusting.

CIO: How’d you get them to trust you?

Kalia: I don’t know. I just started doing stuff, and it seemed to work with them. I didn’t have a strategy for winning over my colleagues. They were very welcoming [of me] to start with. They accepted that there was a void that needed to be filled and let me spread in there without challenging me, though they did ask what’s this going to do for me and for my business.  I didn’t talk about technology, but about the application of the technology.

King: Explaining his mission in terms the rest of us can understand was really pivotal. That’s what Kumud brought to the table. We’re seeing successful outcomes from some of those approaches.

CIO: Beyond Direct Energy, how do you see your role as CIO as having changed and where do you see it going in the future?

Kalia: I believe it’s a trajectory.  Keeping the company secure, safe and operationally stable was the role of the CIO not too long ago, but now there’s an expectation of more. You need to do more than just keep things running. CIOs have had to acquire a lot of the skills of a traditional general manager. We’re now thinking more aboutt value than cost. We’re very versed in M&A activity, supply chain management, and sophisticated marketing techniques, which we use to build coalitions and get consensus. 

CIO: Deryk, does Kumud’s vision of the CIO role fit in with your view of the CIO role? Is that what you think a CIO should be spending time on?

King: Yeah. The CIO is a very powerful position. Kumud has this [additional] customer operations title but none of the people in customer operations report to him. It’s an influencing role. It operates on a mixture of fear and greed. In other words, if you have the CIO on your side, you know he can deliver great things for your business unit. If not, you know he can stop you in your tracks.  I expect operational folks and business units to operate in a collective fashion, but I need someone who can stand back and take a strategic view of that and manage that process.

CIO: Do you think today’s CIOs are ready to move into CEO positions? Why or why not?

King: I came to this even thinking most CIOs had risen vertically in the IT function. My research at dinner last night showed that assumption to be wrong. If CIOs have risen vertically in the IT function, it’s going to be very difficult for them to become CEOs because they haven’t had hands on experience with the rest of the business. I worked for company that required employees to work in two different geographies, two different functions and two different businesses in order to become a general manager. The CEO role is a very diverse job. So it’s absolutely critical to get outside the function perhaps a number of times as early as you can and then go back in [to IT]. If you’ve done that, I see no reason why you can’t make the transition.

Kalia: Most of us [CIOs] are already running the equiament of an IT services company or a software development house, so for us to do that at an outside company isn’t much of a stretch. Boards are looking for the most fully rounded candidate, and there are often better candidates than the sitting CIO. But smaller companies looking for executives who’ve done outsourcing, cost-cutting, M&As might do well to hire someone who was CIO of a bigger company.   For CIOs, whether or not you’re an aspiring CEO, find an accomplished CEO and stick close to him or her and learn as much as you can.