Northwestern Mutual CIO on Eliminating the ‘IT v Business’ Paradox

How do you define innovation at Northwestern Mutual?

Some people define “innovation” as “invention” – or creating a steady stream of brand new products. That’s not how we view innovation at Northwestern Mutual.  We define innovation as the intersection between the creation of value and doing things in a distinct way.

Can you give me an example?

What makes Northwestern Mutual distinct among businesses that deliver financial security to their policy owners is this focus we have around building lifelong and sometimes even multi-generational relationships with our clients.

When our financial representatives sit down with brand new prospects, they do a fact-finder and gather a lot of information about that person.  They learn as much as they can about their clients: lives, goals, challenges, and families.  This is an early, critical moment in what we hope will be a long-term relationship.

So last year, we built an app and moved the fact-finder process, which used to be paper-based, onto the iPad.   We allowed our representatives to decide, within each of their own practices, how they want to use it. It’s proved very beneficial, and we’ve seen a number of them find very creative ways to use that app to gather information.

For example, I was talking with one of our financial representative who admits that he is not a particularly good typist.  He had a younger couple in his office and was projecting the fact-finder app on a large screen TV. While he worked through the questions, he could tell the younger couple was growing frustrated by his slow typing.

So, he turned his iPad around, and let them do the typing.  He walked them through the process, but they got to interact with this app while the representative could focus on the relationship.

That kind of innovation requires that IT be in lock-step with the rest of the company. How do you foster that relationship?

Northwestern Mutual’s IT organization has a dedicated relationship management team that consists of senior level people with a great deal of experience both in and outside of the IT organization. They are not just “aligned,” but are actually integrated with our various business areas.  They sit in on the business area’s strategy and staff meetings. They become a part of team; they work with them toward the same goals.

What kind of advice can you offer to CIOs who are just building a relationship management function in IT?

First, I would tell them that they have to come in with the perspective that IT is part of the business.  I think IT organizations get themselves in trouble when they perpetuate this idea that there is IT and there is “the business” and somehow those two entities are distinct and separate from each other.

Next, I would advise them to challenge their team to create the function themselves.  I don’t believe you should look to other parts of the business for the resources or funding to support this kind of capability. You have to view it as important enough to your own IT organization that you create the capacity to define the roles, get the resources and fund these positions.  In doing so, you are showing a new kind of commitment to the rest of the company.

Third, I would advise them to fill the new roles with people who either are already working in other business areas, or who are in IT, but for whatever reason, have strong connections with the rest of the business.  You also need these people to really see the value of this new function. One of their greatest challenges is defining the way that they add value day in and day out.

Many people in IT organizations are conditioned to believe that if you aren’t writing code, managing a project or keeping the systems up, you are not adding value.  We are asking people who are used to focusing on tasks to shift their focus to relationships.

What are other ways to break the “IT versus the Business” Paradox?

Let me answer that with an example. We are a company that is focused on delivering financial security to people. In doing so, we have financial assets that we manage for individuals, and we have our own internal assets to manage. One of the things we’ve done in IT in the last few years is adopt an “asset management” mindset and talk about technology as assets of the organization.  Just as we manage a portfolio of financial assets for our clients and our company, we also have to manage this portfolio of assets around our technology.

I think that’s what often stands in the way of some IT organizations. They believe that in order to stand out or be distinct within the company, they have to use a different language.  If you can find common ground by speaking a common language, you will open up dialogue with the rest of the organization — and get rid of unhelpful concepts like “alignment.”

Let’s focus on the “archivist versus futurist” paradox, where IT needs to deliver on the “brand new thing” while also managing legacy systems. How do you get your business partners to understand this balance?

It is all based on this framework of treating technology as a portfolio of assets that we manage. We categorize all of our assets into areas of investment, migration and elimination. And we make sure that every business gets a look, at least once a year, at how their portfolio is performing. 

We also have added a concept to handle new technology investments. About five years ago, we set up an enterprise venture fund within IT. We allocate a small percentage of our annual IT spending to this group, which operates similar to a venture capital firm. We work with business leaders across the company to generate ideas and experiment and look for opportunities with new technologies. This way, we avoid the risks of trying to evaluate new technologies within the context of a large scale project.

All of these concepts – asset management, investment portfolios and venture funds –create a framework that resonates with the business leadership of the company.   This is a great framework for our company, because we are in the financial services space. Our framework may not work for everyone, but I do believe every company has a metaphor for technology that will resonate with the rest of the business.

About Tim Schaefer, CIO of Northwestern Mutual

Tim Schaefer is senior vice president and chief information officer for Northwestern Mutual in Milwaukee. Schaefer joined Northwestern Mutual in 1988 as a programmer in the information systems department. In 2007, Schaefer was named an executive officer, responsible for the development and support of application systems. In 2008, he was named chief information officer and department head of the information systems department. Currently, Schaefer is a member of the company’s human resources committee, the enterprise operations integration committee, the project prioritization committee, and the chair of the technology strategy committee.

A native of Milwaukee, Schaefer graduated from the University of Wisconsin-Milwaukee in 1988 with a BBA, and later earned a master’s degree in management and organizational behavior from Silver Lake College in Manitowoc, Wisconsin. In 2007, he completed the Leadership at the Peak program at the Center for Creative Leadership in Colorado Springs. In the community, Schaefer is a member of the board of the Next Door Foundation. He is currently serving on the iStrategy Executive Leadership Committee of Children’s Hospital and Health System.

Thanks for reading, 

Martha