Observations

By Edward H. Baker  |  Posted 10-15-2004

Leading Alignment

Last March, this magazine held an Alignment Summit in New York City to discuss and analyze, from a variety of angles, the causes and cures for the age-old gap at too many companies between business strategy and IT.

The usual suspects were lined up and examined: poorly communicated strategy, poorly designed IT financing and compensation procedures, poorly planned enterprise architectures. All in all, a rewarding day.

At the same time, however, the magazine's editors and writers, embedded strategically in the audience of CIOs and other IT executives, noticed a distinct undercurrent that something was missing from the discussion. Repeatedly, we heard it expressed that what really mattered was "the people" and "culture."

During the networking hour following the event, we took an informal poll of the attendees as to the relative importance of culture in the effort to align IT with the business. The results were conclusive: Virtually everyone ranked "people and culture" high on the list of issues affecting alignment.

That poll was the genesis of CIO Insight's third annual special issue on IT alignment, which we're calling "Culture Clash." Our goal here: to analyze the relationship between alignment and corporate culture and to investigate how companies create successful cultures of alignment.

To that end, the issue includes three case studies, each of which looks at how an IT department is helping change its company's culture in response to a particular business strategy.

Tyco International Ltd.'s new corporate-level CIO, Dana Deasy, is working to transform the $38 billion company from a holding company, forged from literally hundreds of acquisitions over the past decade, into an operating company capable of taking advantage of its global scale to increase revenue and pay down debt.

Similarly, MetLife Inc. is pushing to overcome opposition to the creation of a single customer file for its millions of customers in hopes of transforming its culture from a collection of mom-and-pop insurance agencies into a modern, data-driven financial services organization.

Finally, Harrah's Entertainment Inc., the winner of last year's CIO Insight Partners in Alignment Award, is on the verge of using its smooth-running culture of acquisition to capture its biggest prize ever: Caesars Entertainment Inc.

The issue also includes two Expert Voices. The first is with management guru John Kotter, whose work has helped define the critical link between leadership and corporate culture.

The second is with Marianne Broadbent and Ellen Kitzis, co-authors of The New CIO Leader (to be published in December), an analysis of what's required of CIOs if they hope to participate fully at the top levels of their organization's strategic planning process, rather than being relegated to the status of "glorified plumbers."

And as always, the issue contains in-depth research, based on surveys of more than 1,100 IT and business executives, that investigates the current state of IT alignment and how and why a company's effort to become aligned is so fundamentally affected by its overarching culture.

Observations

A few observations on what we learned as we put together this issue:

Collaborative cultures work best.

John Kotter defines clearly what's meant by the phrase "corporate culture": the "norms of behavior and shared values" that allow every organization's employees, at every level, to work together successfully toward a common goal. Some companies will be risk-takers, others more risk-averse. Some companies might elevate their top performers to "star" status, others might value a more team-oriented approach.

In our research, we asked executives to indicate whether their company's management style was autocratic, collaborative or indecisive: 60 percent said collaborative, 32 percent said autocratic, and 8 percent said indecisive.

Of those who described their company's style as collaborative, fully 93 percent also said their company's IT was well-aligned with business strategy, whereas just 74 percent of those who chose autocratic also said they were well-aligned (and 51 percent of those who chose indecisive).

This issue's case studies bear out this finding.

Built as a classic conglomerate, top corporate management at Tyco International was focused on one thing: milking the business units for profits to fund more acquisitions.

"They just wanted us to send money," in the words of one executive. Now, however, CIO Deasy is working to instill the confidence and the collaborative spirit it will take to make sure every business unit participates in the company's organic growth by sharing information and practices when possible.

But making such changes in a company's culture is never easy. One MetLife executive was particularly blunt about the problem: The switch to a single customer file—a move that would demand collaboration on the part of the company's sales force—was going to happen whether the company's various business units supported the initiative or not. Still, the key to making the change, he says, is to demonstrate clearly the business benefits of the changes, and make sure "people feel they have lots of room to maneuver, that they're not being forced into anything."

The culture clash may be deeper than you think.

In our research, we looked at the gap between the views and perceptions of IT executives and their business colleagues. In many areas it's wide, most notably when we asked about such issues as clarity of business strategy and mutual cooperation.

A telling example: 55 percent of business executives said business management should have more control over IT decisions that align to business goals, whereas 62 percent of IT executives said what was needed was giving IT management more control over those decisions.

Which of the following steps do you believe would significantly improve IT/business alignment at your company?
Give IT Management more control and authority over decisions involving how information technology is used to support business goals.
IT Executives
62%
Business Executives
45%
Give Business Management more control and authority over decisions involving how information technology is used to support business goals.
IT Executives
38%
Business Executives
55%

But the most startling finding involved the very real difference in points of view between CIOs and their deputies. When we asked why IT initiatives are not well aligned with business strategy, just 4 percent of CIOs pointed to "weak IT leadership." Yet an amazing 26 percent of IT lieutenants singled out "weak IT leadership."

Another instance: 93 percent of CIOs agreed that their IT departments are "very good at working with the business to adapt to changing business conditions." Yet only 73 percent of their deputies also agreed (the same percentage, by the way, as business executives).

This is not an encouraging finding. Unless CIOs address the serious discrepancy between IT leadership and its lieutenants, closing the alignment gap between IT and business may be next to impossible.

Leadership is everyone's responsibility.

The gap between CIOs and their deputies is wide, and making sure IT directors are on board will not be easy. As John Kotter observes, at every level, even the highest, people assume that leadership is the sole responsibility of someone else, someone above them.

"We need a lot more people at a lot more levels providing a lot more leadership," he insists passionately. This isn't just about getting IT projects done on time, or knowing your company's mission statement by heart.

No company can establish and sustain the collaborative culture necessary for enduring IT alignment without everyone involved taking an active leadership role in making that collaborative environment work. Like alignment, leadership is everyone's responsibility.