The job of Chief Information Officer has never exactly been easy. But massive disruptions in business models, technology, and the work force have been throwing up massive new challenges for CIOs and other technology leaders.
Their organizations face disruption from both traditional and non-traditional competitors, and constant change. If they work for a product company, it may be looking to services revenue for growth. If they work for a service firm, it’s probably seeking new revenue from information-based differentiation. Meanwhile, information-based businesses — which used to sell, you know, information — now sell outcomes and peace of mind. We are in the midst of a digital business transformation in all industries.
On the technology front, the CIO’s once-tight hold on the devices and software employees use has evaporated (except perhaps in the financial world, where regulation keeps legacy systems in place) as markedly better and more adaptable consumer tools have conquered the workplace.
Meanwhile, CIOs must cope with five generations of workers — digital natives, digital immigrants, digital vagabonds, digital voyeurs, and analog holdouts — must work side by side. These workers bring different values on how to work, where to work, what to work on, when to work, and even why they work.
Consequently, CIOs and business leaders with a technology focus face more cacophony and challenge than ever before. On the plus side, though, they can play an increasingly key role in orchestrating and driving overall organizational success. Despite outward differences by industry, organizational size, and geography, we’ve seen certain commonalities in those who successfully lead corporate IT amid rapid change. The persona of the next-generation CIO is evolving from Chief Infrastructure Officer through Chief Integration Officer and Chief Intelligence Officer to Chief Innovation Officer. Skill sets are changing and IT leaders must adapt or die (or at least go into another line of work).
Understand the three organizational building blocks
Many CIOs are of course already well aware of all this. Others in their organizations, however, are often less so. In our research and CXO panels, CIOs tell us there is a high correlation between organizational alignment and successful corporate IT. For a CIO or other technology leader to make the move successfully from infrastructure to innovation, three key building blocks must be in place.
- Organizational DNA. Market leaders and fast followers seek transformational change; cautious adopters and laggards dip their toe into incremental change. Market leaders and cautious adopters proactively seek change; fast followers and laggards take a reactive approach. (See accompanying chart.) CIOs in market leader and fast-follower organizations can move quickly and push for a great amount of change. In cautious adopters, the politics are trickier — but not impossible. And if you work for a laggard, good luck!
- Reporting structure. CIOs who belong to the executive management team can play the strategic role that’s key to success. As a member of executive management, a CIO can serve as both a utility and a strategic adviser to the business. Unfortunately, there’s a trend afoot to have CIOs report to the CFO, which relegates the position to a purely cost-centric, tactical role.
- Budget. At most corporations, infrastructure consumes anywhere from two-thirds to three quarters of the technology budget, leaving little over for integration, intelligence and innovation. Corporate IT success requires a reduction of infrastructure to 50% of the budget in order to fund the other, more forward-looking areas.
Having the right building blocks in place is essential to a CIO’s — and organization’s — success. Corporate boards should take note. It’s not just CIOs who need to evolve. Organizations need to change as well to ensure that their technology investments lead to successful corporate IT.
Reinventing Corporate IT
An HBR Insight Center
