Groom or Recruit? - ' Page 2 '
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Out with the Old
Despite the success stories at companies like Georgia-Pacific, most companies in similar economic straits continue to bring in CIOs from the outside to make the tough decisions about costly IT installations and needed cuts in spending.
According to a recent CIO Insight survey of close to 500 top IT executives, two-thirds came to their current jobs from outside, while just 30 percent of the companies they work for have adequate succession plans in place for choosing their successors.
"We're seeing an increasing number of companies look outside for CIOs," says Marc Lewis, North America president for executive-recruitment firm Morgan Howard Worldwide. "There's a not-invented-here syndrome that can hold many top performers back, and make the No. 2 in line to the CIO highly vulnerable to recruiting calls from other companies."
When William Nuti, a former senior vice president at Cisco Systems Inc., took over as COO and president of beleaguered Symbol Technologies Inc., in July 2002, he turned the negative of a federal securities probe into an opportunity to redesign IT's governance, strategy and leadership team.
Preferring to hire an outsider, Nuti named a former colleague, John G. Bruno, then Cisco's vice president of technology marketing, to be Symbol's new CIO. Then Nuti redrew the lines on the organizational chart so that Bruno reported directly to him. And most unusual of all, Nuti took note of Bruno's business and technology background at Bristol-Myers Squibb Co. and United Parcel Service Inc., and gave Bruno a dual role: CIO and senior vice president of business development, charged with identifying and developing new market initiatives and business opportunities.
"Symbol had buried IT under the finance organization," Nuti says. "But I wanted the CIO to sit on the senior staff, to become operationally proficient and to understand how this company works."
With much of Symbol's former management gone as a result of the company's troubles with the Securities and Exchange Commission, Nuti and his new executive team represent a clean slate.
Still, the company continues to face regulatory and competitive hurdles. It remains under investigation by the Department of Justice and the SEC for its accounting practices between 1998 and 2001. Its mainstay bar-code business is under pressure from new technologies such as RFID. And a new set of regulatory compliance issues need to be addressed as a result of implementation of the Sarbanes-Oxley Act of 2002.
Bruno sees these problems as an opportunity to hold ongoing discussions about the company's business processes and how to rethink those processes to develop new products more efficiently.
"The CIO role now is no different from that of the COO or CFO," says Bruno, who joined the company at the end of 2002, after the SEC investigation was already under way. "They all use the tools of the day in order to cause business transformation and increase shareholder value. The tools of the day happen to be IT systems processing and tools."
Indeed, there's no one-size-fits-all model for hiring a new CIO. Where companies look, what type of leader they need and how they manage change have more to do with their corporate culture than with broader trends in IT operations. If breadth of external experience matters throughout the organization—at companies that typically look outside for other C-level executives, for instance—then looking outside for a CIO makes sense.
Some companies must also recognize that they simply don't have an adequate plan in place for growing future executives. Other companies fear that by promoting from within the IT department, they will get an executive who will only maintain the status quo—and not someone who can look critically at what the company has been doing for the past few years.
"It's this feeling that they will not be willing to shake up things that need to be shaken," says M. Eric Johnson, director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth University, which holds regular summits for CIOs and their business counterparts.
Johnson adds, "Here's the guy who has been part of the ERP implementation for the past five years, and now has to decide whether to kill it. If he or she has been inside this thing the whole time, how is that going to work? Are they really going to be able to make the tough decisions?"
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