In the companies you cover, where did the CIO fit in the business strategy?
Champy: Traditionally, in half of all companies, the CIO reports to the CFO; in the other half, the CIO reports right to the top. In the companies I've written about, the CIOs report to the people at the top.
What's different about these companies is that the executives are hands-on managers. CEOs haven't delegated the important operating decisions deep into the organization. They're making a lot of the decisions about how the company will operate, so they want the CIO at their side.
The best-run transformational programs have the CIO reporting to the top executive, not to the CFO. Operational excellence is about making operational change happen, and you can't have that without a strong CIO who's integral to the program.
The companies that get in trouble with big transformation programs have the CEO delegating a lot of the systems application decisions too deep into the company. When that happens, you get expensive compromises: Every warehouse argues that it's different, every plant argues that it's different, and therefore should have its own set of systems and processes.
If there's nobody at the top making the call, the transformation project gets out of control. When you see IT-related projects that have grown from
$10 million to $100 million, it's usually because there was nobody home at the top. The executives who keep the IT function close to them are the most successful transformation players. But again, the people running the businesses I write about weren't transforming them--they were inventing them.
Ambition plays into transformation, but most CIOs are being dictated to. How can they overcome that?
Champy: The cultural tone is always top-down driven. It's typically the chief executive who sets the operating style. In the companies in my book, everybody played: It wasn't just the CEO who was important, it was everyone else, really deep throughout the organization.
It's very difficult to change a company from the bottom up. There's a possibility that you can demonstrate how IT can add value in some dramatic way. It'll happen in some cases; it won't in others. Some CEOs have a much different worldview of what's important for the business. CIOs should keep trying to demonstrate that IT brings value to the business and to customers, and maybe--maybe--someone at the top will recognize it.
I've been in this business for 30 years, and very little has changed in our ability to alter the beliefs and management styles of executives, especially someone who has been in a business for a long time. I'm not saying you can't. But if I look at the companies that have gone through some major transformation--operationally and culturally--I could count them on one hand, if that.
We have failed to develop the behavioral-change skills that companies thirst for. I see companies that are stuck. I know how to change them, but it would take five years of hard work--and it would probably require the change of a few people in the company.
When you go deep into a company, people are not necessarily risk- or change-averse. Many of them are actually thirsting for change, because they see that if there isn't change, they're not going to have a job.
But they also see that their job is at risk in a big change program. Still, they're much more willing to change than the people at the top are. The biggest issues around change at any enterprise have to do with the people at the top. What is their appetite for change? What is the nature of their ambition? What's their skill level in being able to bring about and execute change?
Whenever a company struggles to execute change, the problem isn't in the middle or on the factory floor--it's at the top. That's why you sometimes need a new team or a new leader.