Isn’t It Time CEOs Were Held Accountable For Technology?

I realize I’m posting two rants in a row here (my last one was on marketing being a dirty word), but this is important! I just read in the WSJ that it’s timemore CIOs report to the top… my initial reaction was “oh come on, really, are we still on with this old chestnut?” — the thing is, I couldn’t agree more. But here’s what gets me — we were saying this in the ’80s. The hope back then was that, as more CEOs stepped up who had grown up with technology, things would change and more CIOs would report into the CEO. Clearly this was pie-in-the-sky optimism … so what went wrong?

Traditional wisdom (aka analysts) suggests that it’s up to the CIO to “earn” a seat at the table by demonstrating leadership, delivering business value from IT, and lots of other hoops to jump through. While my colleagues and I work diligently on research to help CIOs achieve this, I can’t help feeling there is an alternative perspective we are missing, and that’s what drove me to write this blog post.

So what’s the alternative? When new CEOs take on the role, they must make a decision as to which roles are strategic enough to have as direct reports. This decision isn’t based on the performance of the incumbents (or the new team they will hire) — instead it’s based on their preconceptions of what they should focus their attention on. So if the CIO isn’t on the executive team, it’s because the CEO doesn’t see technology as important enough for the success of the company. And in today’s digital economy, any board of directors that hires a CEO with such backward thinking should be fired by the shareholders (my opinion and not Forrester’s). So it’s perhaps fair to say that at least 50% of the problem lies with the CEO. But why not 100%?

Well, the other 50% falls on the CIO because the CIO has to agree to work in the reporting line dictated by the CEO — they always have a choice. When I was a CIO I was on the executive board —  I truly believe this had a significant impact on my ability to lead the organization through multiple technology transformations that delivered significant bottom-line results. But I also went through a number of CEO transitions while in my role. I was fortunate enough to work with three CEOs who could see the potential for technology to be used as a competitive weapon. But then came the fourth CEO. His approach was that IT was “data processing,” and the role of the “IT manager” was to keep the costs down; his approach was to change the reporting line and have IT report into the CFO. He clearly had his preconceptions, and I had a choice to make: accept his narrow vision and spend energy on convincing him he was wrong, or move on — I chose to move on. This is a choice every incumbent CIO must make upon the arrival of a new CEO. If the CEO doesn’t get it, i think it’s time for a good CIO to move on. So yes, I think the CIO is also 50% responsible for where he or she reports.

Unfortunately the problem with this is that good CIOs move to good CEOs and bad CIOs remain with bad CEOs — which perpetuates the thinking of these CEOs that IT is not strategic. Perhaps that’s a good thing — they get the CIOs they deserve? Of course it’s not as black and white as that, and I know many great CIOs who report into the CFO or COO even though they deserve to report to the CEO. It seems to me that the only way to break this cycle is for the board of directors to begin asking potential CEOs about their perceptive on IT. If they don’t understand the strategic importance of IT in 2011, it should be a signal to move on to another CEO.

So what do you think? Have I finally lost it or is there something to this? If you are a CEO or on the board of directors, what’s your perspective? If you are a CIO, have you had to make this choice?

by Nigel Fenwick