The economic downturn forced many organizations into a sort of “safe mode”, whereby anything deemed as an unnecessary risk or expenditure was shelved in favor of the safe and mundane. The ability to control internal IT costs became a primary method by which IT departments were evaluated. However, while such a laser focus on IT costs might result in a short term win, such thinking comes at a major long-term cost, both in terms of real dollars and real opportunities. For a number a years, many Chief Information Officers have been forced into this box, which confines organizational regard for IT as just another cost center when, in fact, appropriate leveraging of technology resources can create organizational innovation that has massive bottom line impact.
Outside the box
A laser focus on IT’s bottom line leaves a lot of potential on the table. Even if a CIO manages to cut the IT budget by 20%, he’s only saving money in one area of the company and cementing his position as a cost cutter managing a cost center. Imagine, on the other hand, if that same CIO had sufficient resources to, for example, improve a key process across that organization that resulted in a 5% cost reduction or income improvement across the entire company. The net impact would probably be much more significant.
The fall and rise of the CIO
This potential has not gone unnoticed, as many now agree that it’s time for the rise of the Chief Innovation Officer, a role that should be fully embraced by the Chief Information Officer. A Chief Innovation Officer will have both business and technical responsibility and foresight to develop and embrace opportunities that may arise in a constantly changing landscape. Today, all kinds of areas of opportunity are ripe for positive exploitation, including abundant opportunities in big data, mobility, and cloud. A CIO – either kind – simply needs to have the vision and foresight to understand how to embrace emerging opportunities and the ability to translate that vision and foresight into action.
Organizational challenges abound
The unfortunate reality is that a great many organizations simply have no idea how to innovate or lack the willingness to do so. In my travels, I’ve seen many of these, and the results are often disheartening, as potential solutions to business woes seem well within the grasp of many yet remain so elusive due to organizational strife and executive leadership issues. All kinds of organizational strife can force CIOs – and everyone else – into defensive positions that preclude innovative thought. Such issues include:
- Unimaginative leadership: A CIO can’t operate in a vacuum and even when provided a shiny new title and responsibilities can only operate within the confines that the CEO provides. If the CEO isn’t savvy or isn’t willing to allow the CIO the operational breadth that might be necessary to reshape the organization around innovative ideas, the efforts will probably fail.
- Organizational structure: While a CIO in either form doesn’t need direct management responsibility for all organizational activity, if the organization is serious about innovation, he or she needs the ability to influence change across the organization. This is also an area in which the organization is at risk of failure due to bruised egos or turf issues. Even the most collaborative CIO can run into these issues, particularly if the business unit leader is insecure or inexperienced.
- Poor executive leadership: I’ve seen this in action… a leader who won’t make decisions, break stalemates, or embrace risk unless it’s forced by external entities. In essence, organizations with these kinds of leaders are at a standstill, unwilling to entertain the very thought of risk, lest it break the status quo.
- The CIO going it alone: What this boils down to is that the CIO simply can’t effect change alone. He requires the support of the CEO, some organizational leeway, and the support of the full executive team. Anything less spells failure. Simply naming a “Chief Innovation Officer” is the really easy part; an organization “walking the walk” means that the entire team is on board with the need to innovate and is willing to do their part to unlock cultural and other barriers that may exist. New thinking is required for organizations that want to go down this path.
The innovative organization thinks differently than the organization that focuses on the here and now or that on short-term cost control. Innovative organizations have CIOs who are fully business-focused but with a deep understanding of emerging trends. They also have executive leadership that is willing to trust the business acumen of the CIO in the efforts to use innovation to boost the bottom line or even reinvent the business.
In addition, such organizations have strong IT governance mechanisms that are respected organization-wide. These mechanisms help to prioritize what can be a myriad of possibilities and prevent the rise of shadow IT systems that can threaten the organization’s focus. CIOs of such organizations take a service-oriented approach to IT and understand that, while they may be considered the “Chief Innovation Officer”, good ideas flow from the entire organization, but the CIO and IT are uniquely positioned to bring many ideas to reality. In such organizations, IT acts as the middleman, or the broker, between the business and external service providers that may be able to provide turnkey solutions. In addition, these CIOs have crafted services and policies that enable business units reasonable levels of control over the services they consume but that are integrated behind the scenes in order to maintain high levels of efficiency.
The harsh reality is that many companies can’t stand the heat related to change. Cultural change of any kind is uncomfortable and can create angst in the organization. Weak CEOs will misinterpret culture-related angst as going down the wrong path and may pull the plug on efforts to rethink the organization in the hopes of bringing comfort back. Many CEOs and many companies have simply forgotten how to innovate and instead rely on the rote steps that they perform to do their business.
Action Item: Getting to a new Promised Land requires strong leadership, a willingness for organizations to rethink their strategies, and, possibly, some investment. Without these elements, organizations are left with IT departments that may do an admirable job of keeping the lights on, but that aren’t unshackled enough to help lift the organization to new heights. As a first step, CIOs need to help educate senior leadership on the possibilities. The right leaders will run with the identified opportunities and rise above the rest.