Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Thankfully, after interviewing hundreds of CIOs, culling through reams of Gartner Inc. reports and surveys, and conducting in-depth analyses of the most effective IT leaders in the world, Broadbent and Kitzis have designed a field manual for IT leaders looking to sidestep this unsavory fate. In their forthcoming book, The New CIO Leader: Setting the Agenda and Delivering Results (Harvard Business School Press, Dec. 2004), the two Gartner veterans offer a lucid strategy for CIOs attempting to avoid irrelevancy at a critical time of change.
It's a subject the authors know a great deal about. Broadbent has spent most of the last decade working with IT and business executives looking to fuse their strategies and execution. Currently she is an associate dean at Melbourne Business School and a Gartner Fellow. Kitzis, a group vice president at Gartner, works with a team of over 2,000 CIOs through Gartner Executive Programs. In that role, she advises IS organizations on issues of business synergy.
But there is more to becoming a New CIO Leader than understanding the business and managing IT accordingly. IT leaders need to be flexible enough to change as the business does, a concept the authors refer to as the "Renewing CIO." And they need to have an understanding of "IS Lite," which focuses the IT department on strategic initiatives, outsourcing the rest.
Ultimately, the book will prove its value if it wakes up CIOs who have been going through the motions and helps create a new generation of IT leaders. Editor-in-Chief Ellen Pearlman and Editor Edward Baker asked Broadbent and Kitzis to expand on some of the concepts presented in the book and to put them in the context of corporate culture.
CIO Insight: What is new about this "New CIO Leader?"
Broadbent: It's critical for CIOs to realize that they are really at a crossroads. I realize that we've been talking about business and IT relationships for some time, but I think we are now at a point where there are two forces that require CIOs to make a decision about whether they're going to be strategic.
There are many business colleagues who are dissatisfied about what they perceive as investments in IT-enabled systems. But at the same time, they're absolutely convinced that technology is at the heart of the business processes and really at the heart of innovation. So they're kind of caught. It's a very hard balance to get.
Kitzis: We see it manifested in the turnover rates of CIOs in organizations, and you wonder sometimes why we have a life expectancy of 24 to 36 months for CIOs. A lot of that is organizations not knowing what kind of CIO they want. It takes time for an organization to figure out that the CIO they thought they wantedsomebody who was going to execute an SAP project, for examplewasn't, in fact, who they needed to think about innovation and growth.
For successful CIOs, is the difference the individual or the organizational culture enabling that CIO?
Broadbent: I think it's a combination. I think we see New CIO Leaders working with the culture. They can work on changing it, but, most important, they understand it and work with it. Paul Coby, CIO of British Airways, really has an understanding of the culture and the business focus of British Airwaysthat it's about enabling customers, but doing that in a very cost-focused way. And Bill Oates, senior VP and CIO of Starwood Hotels & Resorts Worldwide is very much engaged in the everyday decisions that Starwood makes. What we see in those CIOs is a deep and abiding commitment to communication, to listening, but also a vision. And that comes from understanding the corporate culture and working with it.
Kitzis: We also talk about breakaway enterprises: those that were maintaining competitiveness and those that were fighting for survival (see box). CIOs need to understand the enterprise they're in. An organization that's in breakaway mode tends to have a culture around growth and innovation and change and ability to adopt change. Whereas one that's fighting for survival may be struggling to make payroll, and so needs to focus on competencies and cost reduction.
|Which of these best describes your company?|
Fighting for Survival
Multiyear deep budget cuts; cancellation of new initiatives; multiple layoffs.
Fairly flat budgets from year to year; completion of existing programs and systems; caution about starting major new business initiatives.
Significant increases in business and IT budgets; aggressive steps to move ahead of competitors.
How often do companies find themselves with the right CIO at the right time? Circumstances change, and how do companies deal with that?
Broadbent: In talking about the Renewing CIO, we were keen to convey the notion that it's not about being new at all, but it's about the ability to renew. And that requires a different type of focus and behavior from CIOs. A good CIO will be able to sense what is appropriate at a point in time. Do I have to screw my costs down another 10 percent? Do I have to put more focus on responding to innovation?
How rare is this Renewing CIO today, and why are they so rare?
Broadbent: I don't think they're rare. I think it's a really tough gig. IT executives tend to be an artifact of the organization to some extent. If the organization has really recognized what it requires of its executives, then they might well have a CIO leader who is given the opportunity to do what's required of the business. But few companies are in that position.
Kitzis: The Thomson Corp., as an example, has a CTO program that identifies the emerging leaders in the IT organizations throughout the company. They put about a dozen people a year through a very intensive training program, and they identify them early in their careers. They use the business leaders as well as the current CIOs as part of the training process. They move through each part of the organization. And it's a recognition that if you want people who understand the business, then you've got to invest in that.
We're focusing on how CIOs need to be these new leaders. Do you also have to invest in some sort of program for business people?
Broadbent: I believe there is quite a gap in that area. And when we've worked with business executive teams, the outcome is terrific because the business executives really understand how to get the most from their IT executives and their IT team. What we see in organizations often is the CIOs gently leading this sort of design, perhaps bringing in a bit of external expertise, but really putting a big emphasis on the education of their colleagues.
What about a CIO in a company where there isn't that kind of supportive environment? How do they begin to make this all work?
Broadbent: I think it's important to realize that supportive environments don't just happen. There are two big factors there. One is the extent to which there is a sort of a collaborative environment already. But the second part of that is the CIO who has taken a very careful and gentle leadership role with their business colleagues.
Many organizations don't have what you might call supportive or collaborative environments, but they stay in business anyway, and they often have CIOs who are working quite effectively. Then you really do it by example. You show what can be done in one part of the business, in one process, with one product or service, when business and IT really do work together, and you take it from there. It's what I call the politics of envy. You start to make some of the other parts of the business envious of how well this product or service has developed because of the relationships between business and IT.
Is it easier to come into an organization as a new CIO and try to make change, versus, say, being in a company where perhaps you've already lost credibility, and you need to try to regain it?
Broadbent: If you've lost credibility, then the only way to regain it is to really deliver, deliver, deliver. It may be irretrievable and it might be better, in fact, to move on. When you first come into an organization, you are given a certain amount of credibility because, after all, the organization has selected you, and that's when you've got your real opportunity to show what you can do. So that's when you've got the most leverage, and you really have to use it within 90 to 100 days.
Our own surveys have shown that the percentage of CIOs that report to the CEO has dropped slightly. Are you seeing that CIOs, in general, are losing ground in terms of strategic and executive influence?
Kitzis: The shift we saw that was more prevalent was the shift not to CFOs but to COOs. And that's not a bad thing, because the COO has a pretty broad corporate umbrellarelative to a lot of the major change in operational aspects of an organizationand yet has independence from the CFO. So it can be a very good place for a CIO to end up.
Broadbent: Ideally, the CIO reports to where the action is. That might well be reporting to the CFO in some organizations. It might be reporting to the COO, it might be reporting to the CEO. If you are in a highly information-intense financial-services organization and you report to the CFO, maybe that's a misfit.
This chief operating officer position is relatively new in many organizations. It's a very powerful position. In fact, we have a number of CIOs who've become COOs. We had a number of CIOs who said reporting to the CEO has been a negative for them because they've lost another ally on the executive team.
Would you say that CIOs are gaining ground in terms of influence?
|What It Takes|
|According to Marianne Broadbent and Ellen Kitzis, these are the ten priorities the New CIO Leader must have.|
1 Lead, don't just manage. Leadership and management are not the same. You need to both manage and lead. Leading is about change and influencing others to change.
2 Understand the fundamentals of your environment. You need to know your industry and your competitive environment and be able to engage key decision makers and stakeholders on their terms.
3 Create a vision for how IT will build your organization's success. You must have a vision for achieving your colleagues' business goals using technology.
4 Shape and inform expectations for an IT-enabled enterprise. You need to work with your colleagues to identify the key business needs, strategies and drivers, then articulate the IT guidelines necessary to address those needs.
5 Create clear and appropriate IT governance. Effective governance enables you to weave together business and IT strategies and to consistently build credibility and trust.
6 Weave business and IT strategy together. IT strategy means developing and actively managing your IT portfolio to deliver success as measured by your colleagues.
7 Build a new IS organizationone that is leaner and more focused. Three primary issues here are introducing process-based working, strategic sourcing of IT services, and putting IS on a sound financial footing.
8 Build and nurture a high-performing team in your IS organization. You need to know the competencies required for the new IS organizationone that relies much more on internal and external relationshipsand to recruit and train for effectiveness.
9 Manage the new enterprise and IT risks. Business leaders have to be aware of these risks and need help managing them across the enterpriseand you as CIO will lead this process.
10 Communicate IS performance in business-relevant language. You must know and communicate how IT is contributing to shareholder value and the IT value indicators that are directly linked to business value measures.
Reprinted by permission of Harvard Business School Press. Excerpted from The New CIO Leader by Marianne Broadbent and Ellen Kitzis. Copyright © 2005 by Gartner, Inc.; All Rights Reserved.
Broadbent: I would say that, on average, they've gained ground. I would say that there has been some bifurcation though. We have seen some CIOs that lost organizational standing, but some of those are in organizations where there is no longer a substantial corporate center. I think there was bifurcation where some CIOs were seen not to deliver, and the role of CIO was given less status. On the other side, I would say we've seen increased importance, even though it hasn't been trumpeted, I think, as loudly as some of the earlier developments were.
I think too many CIOs decided that taking responsibility for delivering business benefits was a good thingthat it increased their importancewhen, in fact, they can't deliver on that. Business executives, the process leaders, they're the ones who deliver on that. I think now we have CIOs and business executives who are much smarter about how the business really achieves change, and that it's a combination of good IT-enabled initiatives with the right kinds of change management. And that these are the responsibility very much of the business sponsor rather than the CIO. Personally I think that's entirely appropriate.
So would you say that the New CIO Leader is more operationally oriented as opposed to strategically oriented?
Broadbent: Absolutely not. That's not what I'm saying at all. I did quite a bit of work with business executives on who should have responsibility for both making decisions and then delivering on them. The key is understanding what are the IT parts, if you like, of an IT-enabled business initiative. And for a new CIO quite a bit of their role and responsibility is helping envision that in the first place, but then being careful about what they're responsible for in terms of delivering those business benefits.
If the CIO becomes a visionary for a business idea, then wouldn't the organization expect that CIO to have some skin in the game?
Broadbent: The skin in the game comes with the combined sense of delivery responsibilities that you might have, and with being careful about what your responsibilities are. Maybe part of your responsibility is delivering on the education and training side and ensuring that many of the sales officials understand what's really required. But it's not about saying "Here's a great idea, I'm going to deliver on it to the business, and I'm responsible, and then here it is."
Let's explore the IS Lite concept a bit. Is IS Lite right for all companies, and how will this transition take place?
Kitzis: It doesn't happen all at once. We introduced this concept four or five years ago, and a significant proportion have made some shift to IS Lite since then. We hypothesized that they would do a number of thingsthey would move to process-based work, they would strategically outsource, they would move to competency centers or centers of excellence in terms of organizing their teamsto name a few. We found that some organizations did one, two, or everything. Most organizations did at least one thing, and a smaller percentage of organizations did everything.
Is there any danger of a New CIO Leader undermining himself through an IS Lite strategy?
Broadbent: It's really important to understand what is appropriate to source externally. And we have seen some organizations go too far with things that aren't consistent with the capabilities that they require internally, and with services that perhaps it would have been better if they had retained. So I don't want to give the impression that we're saying you should outsource everything. That's not what we're saying at all.
You talk in the book about the different skillsthe technology skills, the business skills and the behavioral skillsthat IS departments need. You say that it's harder to find people with the right behavior, so you might want to start there and teach them the technology or the business. Isn't that a huge cultural change?
Kitzis: It's happening in other areas of the organization as well. It's a recognition by enterprises that they need to focus not just on the technical or business skills, but you need to focus on the soft skills or the emotional skills. The research has shown, not just in IT jobs, but in many jobs, that having a combination and hiring with competencies in both areas makes a huge difference.
Traditionally, it was unusual to see people from the business side moving into an IT role and likewise the other way. Do you think some of those barriers between IS and business are beginning to change?
Broadbent: I think we've seen an evolution of executives, and we have about 30 to 35 percent, I think, of CIOs in Gartner Executive Programs who have a business background. I think it's a two-way shift as well. I work with executives who I'm surprised to find out actually have come from the IT area.
Kitzis: This is how culture changes. It may not be that a high performer is always being measured on technical skills now. They're being measured on a much broader range of skills. And if that's how you change the IT culture, then that's how IT has the potential for changing other parts of the culture.
What are the big pitfalls that you would warn CIOs about who are looking to become New CIO Leaders?
Kitzis: It's the arrogance of coming in and saying "I'm going to change them, I'm going to make them understand," without stopping to understand yourself first.
Broadbent: I think it's really taking the time to understand your business colleagues as people. Taking the time to understand what really makes them tick, to understand how they are rewarded, to understand what their vision is, and what they really want to achieve in the next 12 months. And I think if you take that time and trouble to really understand your colleagues as individuals, then you get a great payback from that. And you really can't go wrong if you do that.
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