Having viewed success from many angles, Robert J. Herbold now analyzes its perils. Herbold, a Ph.D. in computer science, served as senior vice president of advertising and information services worldwide during his 26-year tenure at Procter & Gamble Co., then as chief operating officer at Microsoft Corp. from 1994 to 2001. In his new book, Seduced by Success (McGraw-Hill, May 2007), he explores the pitfalls of corporate success: sticking with out-of-date business models and stale branding, allowing products to become outdated, and the triple threat of lethargy, timidity and confusion. In the following excerpt, Herbold discusses what he says is a common reason CIOs lose their jobs: organizational bloat and lack of accountability.
Success often leads organizations to hire more people than they should and to create a lot of managers and a lot of staff groups. This often results in overlapping and vague responsibilities. Even worse, the complicated organization is often burdened with excessive checks and balances that can make decision making very slow and complicated, with no one specifically accountable.
An area in which a lack of clear responsibility can really hurt is information technology. In many organizations, the IT group operates the central computing facilities, runs the telecommunications network, and has groups of people who serve the various business units. Often these business units grab hold of IT resources and take them over to such an extent that they are spending far too much money on information technology. But more importantly, these business units are building all kinds of systems that don't work together with other systems that the corporation runs and other systems that other business units build and run. That can make it extremely difficult to pull together reports that summarize the activity of selected business units or the entire corporation.
Often the chief information officer (CIO) is at the heart of this traffic jam. If that person allows all kinds of duplication to go on in the different business units and allows those units' budgets to continue to grow, spawning more developers and more systems, a major train wreck is guaranteed to happen.
What needs to happen in organizations is that the CIO needs to really be held accountable for the entire organization having first class information technology services. He should dictate what things are going to be organization-wide, and then he should allow business units to do certain things that are unique to a particular business unit. However, he should also demand that the business units participate in the organization-wide system in common areas such as financial reporting, procurement, and human resources systems.
Here's why many CIOs get fired. They tell their top management they will be effective in the information technology area; yet they allow the business units to do anything they want. Sooner or later, everyone is going to be disappointed. Management won't like the cost and won't like the fact that it can't summarize the business across the business units. The business units will want more and more autonomy and more and more independence from the CIO and will constantly be pulling that organization apart to gain control over more and more IT capabilities. I have seen this happen over and over again, and what it means is that you need a very strong CIO, backed by management, who sets the guidelines with regard to the company's information technology architecture, how systems will be built, which systems will be organization-wide, and what can be delegated to the business units to meet their local needs.
Clear responsibility and accountability can really simplify an organization, and they are an absolute necessity if you are to be able to constantly fight off legacy practices. Legacy people and legacy practices flourish in a world where consensus is needed to do things and compromises are common.
Excerpted from Seduced By Success: How the Best Companies Survive the 9 Traps of Winning by Robert J. Herbold. Copyright © Robert Herbold. Reporinted by permission of the McGraw-Hill Companies.