CIOs must step into the digital leadership void

In this excerpt from her latest book, 'Be the Business: CIOs in the New Era of IT,' contributor and IT executive recruiter Martha Heller discusses the CIO's role in digital leadership.

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Bask Iyer, CIO of VMware, once told me about the “CEO missing-out syndrome.” It goes like this:

Most CEOs really like their CIOs. “My CIO is great,” they say. “She has kept costs down, has secured our enterprise, and runs a highly available infrastructure. In fact, she has done everything I have asked her to do since I hired her five years ago. However, I feel like I’m missing out. What with all of that innovation coming out of Silicon Valley,” these CEOs worry, “I must be missing out on some really cool digital disrupter that my competitors have surely discovered.”

CEOs who suffer from the missing-out syndrome do one of three things:

  • They anoint their CIO, formally or informally, as head of innovation and charge her with charting the company’s digital future.
  • They fire their CIO and hire a new one who arrives all shiny with the promise of digital innovation.
  • They gently push their trusted CIO to the operational margins and hire a chief digital officer (CDO), someone with a background in marketing, strategy, or product development to build and drive a digital roadmap.

This last move can spell real trouble for a company, says Iyer. “I’ve encountered many CDOs who can talk a good game,” he says. “They’ve read enough about digital technologies and have used enough mobile apps to convince the CEO that they are the right digital leader for the company. They come in and everyone loves them . . . for about six months. But they don’t really understand how to deliver technology change, so they flame out. A year later, they are gone, and it is the CIO who is left picking up the pieces.”

Currently, the average tenure for a CIO is five years. This means that a company can reel from major IT strategy shifts (“Outsource all of it!” “Bring it back inside!” “One turnkey solution!” “Best of breed!”) twice every decade. That’s a whole lot of change and a whole lot of money for an executive team to stomach. But CDOs, who arrive with their own list of technology investments, have tenures of eighteen months or so. They come in, set the strategy, and then leave before the ink is dry on their new vendor contracts. With two technology executives, each coming and going in a few short years, senior management winds up confused, frustrated, and farther away than ever from the promise of digital.

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“It appears we are experiencing a revival of a tried and failed axiom that the IT needs of a large enterprise are best served by the adoption of a joint technology leader configuration,” says Bob DeRodes, who has served as CIO of Home Depot and Target. “This concept is best described as having one bright, energetic technology leader charged with inventing new ‘digital’ capabilities while the other IT leader (the CIO) oversees ‘traditional’ IT. Two IT leaders means two IT strategies, two IT architectures, and one assurance of high cost and low interoperability.”

What’s more, chief digital officers are often really chief marketing officers (CMOs) who have boned up on digital technologies. But “digital” is so much more than marketing. “We are so digital,” some CEOs think. “We no longer use print ads; we advertise on social media now!” But they are missing the point. Digital is not only a new way to market; it represents an entirely new operating model.

Dave Truzinski was named CDO a year after joining wireless provider NII Holdings as CIO. To him, a digital strategy is one that acknowledges that “algorithms trump organizations.” According to Truzinksi, “For years, we’ve been taught that when we have a business problem, we can solve it by bringing teams together and that the more people we have, the more power we have. But that thinking is a byproduct of how organizations have evolved. People and processes create latency; algorithms create speed. In the digital age, we need to move our core business processes to algorithms. Imagine what would happen if we automated everything your back office teams did and then told them, ‘Now that you are free of that manual work, spend more time thinking about your customer and driving top line revenue.’

Moving an entire organization from industrial thinking to digital thinking is a big job. We are talking about an operating model that has been with us since the nineteenth century that we are trying to change in only a handful of years. Does a marketing executive have the end‑to‑end process knowledge to bring digital to the back office? Can a career strategist tie a social media strategy to the messy quagmire of your infrastructure? Does a product executive have the broad influencing skills to change the way an executive team understands every facet of their business?

I doubt it, and Bask Iyer does too. “In many instances, a company’s most promising digital leader is the CIO,” he says. “Digital transformation is more than painting a shiny picture of the future; digital transformation means tying the back end to the front end, which CIOs have done over and over again.”

Becoming a digital leader

A digital leadership void is afoot, which represents either a threat or an opportunity to the CIO. One viable option, of course, is to acknowledge the existence of your company’s new CDO and develop a solid relationship with her or him. You have played this role in the past by partnering with sales, marketing, product, and the like. But, in the past, those partners have not been as involved in making technology investment decisions as the CDO is today. If your CDO is not in it for the long haul, then picking up after this new technology leader may not be much fun.

Your other option is to see the void as an opportunity and step directly into it. Should you choose the latter path, you have work to do, especially if your CEO sees you as more operational than strategic.

Change your mindset

Aaron Levie, CEO of the enterprise cloud company Box, places CIOs at the center of what he calls “the industrialist’s dilemma,” where companies that have been around for a while rely on big teams, lots of plants, and big equipment—all of which become a legacy drag on innovation. This is true of CIOs and their infrastructure as well. “There is a tendency for CIOs to ask what assets they have and how to repurpose them for a new era,” says Levie. “When really, you have to do away with your legacy environments and vendors, if you’re going to be competitive in this new digital economy.”

Digital leaders need a digital mindset, which is about much more than social media. If you simply must own all of your IT, and you need big teams to get things done, you may not be ready for a digital leadership role.

Get strategic

We all know about Maslow’s hierarchy of needs, which points out that we tend to take care of food and shelter before worrying about socializing and self-esteem. This goes for CIOs as well, who should not waste their time proposing digital strategy if email isn’t working. Being operationally efficient merely serves as table stakes. “Someone once told me that, when your operations are not good, you should not talk strategy,” says Iyer. “Fair enough. But the opposite is also true. If your operations are good, then you must talk strategy. You can always cut more costs, but you need to break off from an ‘efficiency’ way of thinking if you are going to evolve into this new leadership mode.”

Stop serving and start leading

For years, we have been telling our IT teams that the business owns IT projects and that our job, as CIOs, is to support and enable. Sure, we can advise on IT investment strategy, but the business sponsor owns the outcome of those investments. If this is the message we are sending future CIOs, how can we raise a generation of IT leaders? How do we teach IT professionals to serve and to lead simultaneously? “The old story is, IT enables and supports the business, IT is in service to the business, the business owns the project and the job of IT is to deliver,” says Iyer. “That’s what we’ve been telling our IT leadership teams for an awfully long time now. But if CIOs are going to step into a digital leadership role, they need to change that thinking.”

Iyer thinks back to a CIO position earlier in his career when he and his team had some ideas for innovating on a major product. “We were so focused on operations, and so worried about the political backlash from moving in on the product group’s territory, that we didn’t bring our ideas forward,” he recalls. “In retrospect, we should have played it differently because we could have made a significant difference for our customers and our business.”

Years later, Iyer is not making that same mistake. “I don’t need to have a business sponsor for everything we do in IT,” he says. “I always have two or three innovative projects going on in IT where I, as CIO, am the sponsor.”

Ask for the job

During the year that Dave Truzinski spent as CIO of NII Holdings, he was vocal about the notion that digital engagement with NII’s customers would be the only business model to survive in the future, and he was named to the digital leadership position. “The very fact that I had been named CDO signaled to the entire company that we have to move to a new business model,” says Truzinksi. “The CDO title represented the recognition that we could no longer do business in the ‘industrial age’ way.”

For Donagh Herlihy, the move into digital started during his interview for the CIO position at Bloomin’ Brands, which runs Outback Steakhouse, Carrabba’s Italian Grill, and other restaurants. During his executive committee meetings, “the conversation focused on the shifting world of restaurant technology, and how companies are trying to differentiate through digital,” says Herlihy, now EVP of digital and CIO at the company. “We talked about how marketing, technology, and store operations have to work together to create and deploy digital solutions to deliver a great customer experience. And while collaboration between these groups is critical, we all felt that we needed one member of the executive leadership team to be on the hook for ensuring we had a holistic strategy, roadmap, and investment plan.”

Get to know your CMO

While we can all acknowledge that digital encompasses much more than marketing, CIOs who don’t have a great relationship with their CMO will not have much of a shot at the digital leadership position. “How do you know when the CIO and the CMO don’t get along?” asks Jay Ferro, CIO of the American Cancer Society. “When the CEO hires a chief digital officer. The CDO role is a Band-Aid for two executives who can’t get along.”

This CIO/CMO relationship business is new. Fifteen years ago, marketing was not IT’s focus. IT grew up with finance, supply chain, and operations, while marketing went to their agencies for technology solutions. “To build a trusted relationship with your marketing function, you need to get out with your end customers,” says Herlihy. “Without knowledge of your customer, it will be hard to gain credibility with marketing, and without credibility with marketing, it will be tough to move into a digital leadership role.”

Making digital an enterprise capability

Your operational house is in order, you are thinking “digital,” you and the CMO are best buddies, and you have stepped into the digital leadership void. Whether you have “digital” in your title or not, it is time to make digital an enterprise capability. This is not easy work. If you are like most CIOs, you see digital innovation happening all over your company. You are happy to see this activity, but you wonder how to wrangle it into a core enterprise strategy that can scale.

The digital center of excellence

To Rhonda Gass, CIO of Stanley Black & Decker, the $11 billion diversified industrial company, “IT is no longer just about being the back-office provider or supporter of transactions. The world is so digital, we are now providing leadership in serving, winning, and retaining customers.”

To provide that digital leadership, Gass and a business unit president have jointly created the “digital accelerator group,” which identifies opportunities for digital products and processes across the entire company. “It was important that the digital accelerator group not just be led by technology alone,” she says. “We needed it to be run by someone accountable for delivering products to the paying customer, which is not something IT traditionally does. We need our business leaders to stop equating digital with technology and to understand that they need to develop digital capabilities within their own businesses.”

For Dave Smoley, CIO of AstraZeneca, getting the company’s business leaders to focus on an enterprise-wide digital strategy is a work in progress. “The reality is, we’ve got pockets of digital activity all over the place,” says Smoley, who has been CIO of the $26 billion pharmaceutical company since 2013. “Our commercial business is focused on social and content creation, global medicine development is working with sensors and smart devices, oncology is looking at digital injection technologies, and we have multiple groups using digital to improve the patient experience.”

Smoley loves to see all of this focus on digital but, as of yet, sees only individual strategies. “Everyone is chasing the same problem, but we are not talking to each other,” he says.

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