CIO: The Accidental Strategist

By Edward Cone  |  Posted 04-01-2008

CIO: The Accidental Strategist

Mike Gabbei says he's a tactical CIO, and he's okay with that. As the CIO at Celadon Group, a $500 million trucking company based in Indianapolis, Gabbei knows his focus on operational efficiency is considered passé at a time when business-tech gurus insist that CIOs need to be more strategic in outlook.

"I read the articles," he says. "But to be honest, I'm not the type that's going out and inventing new markets."

That doesn't mean Gabbei isn't pulling his weight. A 10-year veteran at Celadon, he reports to CEO Steve Russell and participates in the executive team's weekly meetings. Yet he sees his primary value to the company coming from his emphasis on the more traditional parts of the CIO job, and those are the areas on which he spends his time and energy.

"I'm constantly looking at the marketplace from a technology perspective, to see how we can drive efficiencies into our business," he says.

Judging by the research, Gabbei has plenty of company. Consultants, authors and the media--including CIO Insight--hammer on the theme of strategic focus, and most companies claim information technology is strategic to their business.

Despite that, just one-third of IT executives say they play a significant role in the strategic planning process at their companies, according to research by Diamond Management & Technology Consultants. Its study says that only about one-quarter of participating CIOs spend up to 50 percent of their time on strategic issues, with barely one in 10 spending more than half their time on strategy.

New research from CIO Insight provides somewhat different statistics but a similar message: A sizable percentage of CIOs identify themselves as more tactical than strategic in their day-to-day affairs. 

The data show that fewer than half of responding CIOs say they "create or co-create business strategy." Sixty percent say they "contribute" to their company's strategy, with the same number stating that they focus heavily on ensuring the reliability of IT infrastructure and environment. More than one-third say their jobs include significant commitments to less-glamorous jobs such as process improvement and ensuring data quality and access.

What accounts for the gap between expectation and reality? Several factors come into play. For one thing, tactical and operational jobs still matter--a lot--and getting them right is a good way to keep the boss and the shareholders happy. At smaller companies with relatively limited IT resources, these jobs often soak up a lot of a CIO's time.

It's also true that the nature of the CIO function can shift over time within the same company, and there are moments when a process-oriented executive is of particular value, such as when an acquired firm and its technology assets must be integrated with existing operations. So the tactical focus works for some companies and some technology executives, at least some of the time.

But there is more to the equation. A big part of the story lies in definitions: how observers define the strategic and tactical roles and the ways in which CIOs themselves use the terms.

"We're all tactical to some extent," says Merv Tarde, CIO of Interstate Batteries, the largest distributor of automotive replacement batteries in the United States, with estimated 2006 revenues of $1 billion. Yet Tarde, like many CIOs who spend considerable time on traditional jobs, also takes on functions that most people would define as strategic. "We come up with initiatives that are worthwhile taking on as an enterprise, and the executive team listens to us," he says. As an example, Tarde cites an e-commerce unit that IT suggested and tested, and which subsequently grew into a unique line of business.

Alex Cullen, an analyst at the IT advisory firm Forrester, has researched the CIO role and admits that labels can be misleading. "We paint extremes, because we want people to think about it," he says.

Chris Curran, chief technology officer at Diamond, says people can get carried away with the labeling game. "There are people who live in the operating mode and are great operating CIOs, and they are cool with that," he says. Still, he adds, "I don't know anyone who is happy thinking of him- or herself as completely nonstrategic. Everyone wants to be valued."

Defining the Terms

 

Defining the Terms

Before determining the value of tactical and strategic work, it's important to establish clear-cut definitions for these terms. Let's start with strategy, which involves planning for the broad scope of business activity and finding ways to spur growth.

"A strategic view includes the linkages along the entire supply chain, and understanding the consumer, the value you bring to the consumer and how value is contributed by a supplier," says Stephen Pickett, former CIO of transportation services company Penske and a past president of the Society for Information Management (SIM). "It's end to end and means using your knowledge of technology to improve all those things. The strategic CIO is going to set up the enabling forces for his or her people to be productive in those environments, and will create the measurements and metrics that allow individuals to be rewarded on those bases."

Tactics are means of executing on the projects that support all those activities. "A tactical view involves making sure all the engines that make the business work are functioning efficiently and effectively," Pickett says. "This is the operational part of the job, the springboard for clichés such as 'putting out fires' and 'keeping the lights on in the data center.'"

Forrester's Cullen prefers to use the terms change agent and general manager instead of strategic and tactical. A change agent, he says, "is a businessperson who works with the business to use technology to achieve business goals." This style of work does not preclude a focus on running IT well, but it does play a predominant role in the CIO's job. On the other hand, CIOs who spend most or all of their time keeping the machines humming fall into the GM category.

"Good CIOs try to make their organizations focus outward, not inward," Cullen says. "Making your own shop run well, and keeping its costs down and its goals met--those things are necessary, but not sufficient."

In the real world, however, these definitions and expectations begin to change with circumstances. The best use of a CIO's time can change within the same company at different points in its history.

"Pretty much every IT organization goes through cycles," says Diamond's Curran. "There's a strategy phase that generates the need for change, and then the phase of transformation and then the operating phase."

Each phase of the job requires different skills--and perhaps even different people--to lead the way. Curran says that's one reason why CIOs turn over relatively quickly, with an average tenure of about three years. "It's not that these people are terrible at what they do or that they're misunderstood," he says. "It's that different CIOs are good for different phases of the job."

A strategic type who knows how to engage the board with a vision for the future may not be a great project manager or operations person, for example. "If there's a seven- or 10-year cycle of planning, executing and then running big projects within a company, you could be looking at more than one person in the CIO job over the course of that cycle," Curran adds.

For many CIOs, though, the mix of strategy and support is not the stuff of cycles and career changes. It's just part of the job, in ways that make simple divisions hard to draw and even harder to hold within fixed parameters.

That's the opinion of Mike Jones, CIO of Children's Hospital and Health System, a Milwaukee-area organization that includes clinics and social services offices across a wide region. "I don't know that I'm strategic or operational, a change agent or a general manager," Jones says. "I'm probably in-between. You have to do both, and you never have enough time."

Jones attends a weekly staff meeting with the CEO, and he establishes priorities and budgets based on business needs instead of from an operational IT standpoint. "If our businesses aren't involved with a project, we're not involved," he says.

Yet, when Children's does something like its recent expansion into the health care insurance business, his focus is on the nuts and bolts. "We have to provide support and have a plan of action for operations," Jones explains.

Mixing It Up


Mixing It Up

Focusing on both strategy and operations is a reality of life for Chris Gillespie, CIO of Prestige Brands, maker of household products including Comet and Chloraseptic. He divides his time fairly evenly between the two areas--but that's an average over time.

"It's like bungee jumping," Gillespie says. "You go very quickly from a high-level discussion with the London office about an online marketing campaign, to troubleshooting problems with the firewall or working with a database administrator, and then back up again." Bouncing back and forth between functions can be frustrating, with systems problems sometimes pulling him away from commitments to business unit managers for days at a time.

Gillespie reports to Chief Financial Officer Peter Anderson and has worked to move beyond a strictly tactical role. He spends more time on strategy than he did when he arrived at Prestige's Irvington, N.Y., offices nearly a year ago. To expand his portfolio, the veteran of the IT services firm EDS had to understand the dynamics of the company, which focuses on paying down debt and is not inclined to throw money at technology.

"You have to dig into the financials and figure out the lay of the land," Gillespie says. But his investment of time and effort was worthwhile.

"If I weren't involved at the strategic level, I wouldn't have the backing of the businesspeople," he explains. "I'd be director of IT. You have to look at things from the perspective of the company and at an industry level in order to use technology to bring value to customers."

Tarde of Interstate Batteries also takes a strategic view. He is part of a leadership group that reports to the CEO at the Pharr, Texas, distributor.

"We put together a strategy to form an enterprise perspective that looks far down the road and is adjusted on a yearly basis, and we put tactical plans in place to support that strategy," he says. "My organization focuses on implementing the proper technologies to achieve our strategy, but we look a lot more at growing revenue than on cutting costs or keeping the lights on in the data center."

Yet, Interstate's large national account business often requires Tarde to provide IT support in areas such as electronic data interchange setup or online presence. For example, when an acquired company needed its legacy systems replaced to get up to speed with Interstate, it required a major commitment of Tarde's attention. So the mix of strategic and tactical jobs is an accepted part of his workday.

"As a profession, the CIO function has a good look at the entire enterprise, and from that perspective, we can offer a lot of value to the company," he says. "At the same time, we have to be tactical, to operate and deliver on time and on budget."

Determining whether a job is tactical or strategic can be in the eye of the beholder. Celadon Group CIO Gabbei sees the strategic role as "dreaming up new businesses."

He gives the example of an industry-buying group--open to small and midsize trucking firms and focused on essentials such as tires and fuel--that was organized and maintained by Celadon. The network provides the company with a fresh source of revenue. The idea for the group wasn't Gabbei's, but his group provides extensive technology support.

Gabbei says he played a tactical role on a project where he provided leadership, even though the project brought in new revenue. It involved an IT system that notifies customers when they are about to be charged for keeping a Celadon truck waiting too long at the loading dock--detention, in industry parlance. "Our emphasis is on getting the truck out," he explains. "Drivers don't get paid for sitting idle, and we don't get paid when they are not moving, so the company charges for detention."

When Celadon improved its tracking of arrivals and departures with an automated system, detention revenue went up and wait times went down. "I've brought revenue streams into the business, but it wasn't necessarily new business," he says. "I do that day in and day out--throw around new ideas for aligning with business."

In the estimation of Forrester's Cullen, that kind of work goes well beyond the tactical mode. Worrying about the packages on the trucks is not a general manager's job. A job that seems routine to an IT executive could, when applied to other areas of the company, take on strategic importance.

"If you're a CIO operating tactically in a non-IT area, is that strategic or tactical?" asks Pickett, SIM's past president. "Take a CIO at a manufacturing company who recognizes that engineering and manufacturing aren't communicating well, and then takes his or her knowledge of process and organization and applies it to the problem. That's strategic, although it looks tactical to the engineering and manufacturing groups."

In other words, you may be more strategic than you think. In the end, the rigid definitions don't always matter that much.

A CIO who is keyed into the mission of the business on a consistent basis probably is doing the job right, whatever the demands of the job may be at that moment.

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