Three game-changing steps CIOs can take to lead the enterprise

THE VERY NATURE of the enterprise is changing (see figure). This change is the result of rapidly accelerating shifts that have been occurring in the business world over the last few years: the commoditization of goods and services, the individuation of value, the blurring of cyberspace and real space, and the transformation of the workforce. To keep up with these changes and succeed in this environment, enterprises need to be socially enabled and operate as digital business ecosystems that offer innovative services and products quickly and inexpensively. As well, they must develop the mind-set that innovation is not optional — it’s the only real advantage.

Forces transforming the enterprise
This model is different from the way large businesses have operated for decades: as hierarchical, fixed, integrated, transaction-based and risk-averse firms whose purpose is to minimize costs and achieve scalable efficiency. A relatively small percentage of these large businesses have ever developed anything that was truly innovative. To be successful in the future, businesses may have a very different makeup, and chief information officers (CIOs) must transform themselves into chief innovation officers to effectively lead the charge.1

Dell is partnering with The Economist and Harvard Business Review to conduct research and panel discussions on the changing role of the CIO. Research suggests that CEOs think CIOs for the most part do not understand the business, how it is evolving and how to apply IT in beneficial ways.2

To help lead the enterprise’s evolution to a socially enabled environment and a digital business ecosystem, CIOs must become increasingly aware of changes in the business world and the enterprise and how these changes affect the C-suite and their own leadership role. They must then provide the right touch of technology to create platforms upon which innovation is encouraged, nurtured and manifested.

At the same time, CIOs need to avoid the technology trap. As they know all too well, simply changing technology won’t advance the necessary changes; management must also change. Consequently, the CIO’s role becomes one of catalyzing management change by shaping the vision, advocating the direction and then supplying the supporting technology. The key is not size, scale, technology, tactics or strategy — though each provides a transient advantage for a short time. Instead, adaptable, agile management sustains competitive advantage above all by enabling, facilitating and accelerating innovation.

Research on the changing role of the CIO makes it apparent that IT leaders need to redefine the value of IT by moving beyond efficiency and operational excellence to become business innovators (see figure on following page). The CIO is the one person who best understands how the organization operates, because every transaction passes through his or her systems. The CIO best understands where technology is going and how it can be applied, both to develop new methods for enhancing existing value and to refresh old methods for generating new value. As a result, the CIO is ideally suited to take the leadership role in guiding and mentoring the rest of the organization into its 21st-century form. Three important steps enable CIOs to begin repairing the dissonance between business and IT.

Insights into bolstering the impact of today’s CIO

Step 1: Find a voice in the C-suite
To put it simply, most CIOs are not engaged in strategic, executive-level decision making right now. That’s not surprising, because only 46 percent of CEOs think that their CIOs understand the business.3 To be fair to the CIO, CEOs have created this situation by emphasizing efficiency and cost-cutting over value creation. However, research shows that CIO and C-suite alignment drives financial success. Economic performance for organizations whose CIOs were part of the overall development of strategy outpaced that of other organizations by a scale of two to one.4

These findings make it clear that CIOs must lead their organizations in discovering, and then providing, balance between efficiency and efficacy. But they must also be careful that alignment does not turn into subservience — which would lose the value of technology to enable innovation.

Increasingly, CIOs and IT must be seen less as merely developing and deploying technology, and more as a source of innovation and transformation that delivers business value — leveraging technology instead of directly delivering it. CIOs must be held equally responsible if technology enables, facilitates or accelerates competition that the C-suite did not see coming, or allows the enterprise to miss opportunities because the C-suite did not understand the possibilities that technology offered.

CIOs must become an integral and vocal part of conversations on new ventures and resource allocation. The role and effect of technology should be an essential part of conversations on business decisions, and the CIO should have a pertinent and relevant point of view. To that end, it is imperative that the role of the CIO be strategic, not tactical.

Step 2: Define a strategy
To earn a role in the C-suite conversation, CIOs must develop a proactive IT strategy that identifies unproductive behaviors to abandon, innovative behaviors to adopt and stagnant behaviors to perform differently. This level of redesign means a lot of change for enterprise IT organizations. CIOs need to free time and resources currently dedicated to traditional IT responsibilities — delivering transactions, infrastructure, technology and code — to focus on facilitating and accelerating collaboration, choreography and orchestration as well as the provisioning, management, monitoring and securing of services. These activities heighten enterprise agility and create value for customers.

CIOs should start by standardizing and determining what they should be doing — what actions create value for customers, differentiate the enterprise’s capabilities and surpass the competition? Then, they can begin to modernize business processes in preparation for the evolving capabilities of IT. As for everything else, either quit doing it or find someone else to do it.

Begin doing things differently, simplifying to make sure that there is a single way to get things done. Whether virtual or physical, there should be only one version of the truth. Begin preparing for the inevitable adoption of cloud technology: virtualize everything possible, and for those things that cannot be virtualized, figure out why and start eliminating the obstacles. Extend the concepts of virtual and cloud to business processes and business models in anticipation of digital business ecosystems and the socially enabled enterprise.

Then decide which tasks need to be done manually instead of automatically. Future value comes from collaboration and creativity in solving problems or realizing opportunities. If a task requires neither of these, automate it.

Finally, get IT out of the way of the immediate, serendipitous opportunities that arise to create value, solve a problem or service a customer. Resources and customers should not be constrained by dependence on others to be able to do their work. Today’s organizations operate 24x7; work is done across organizational boundaries; and value creation is a function of the right people, resources and ideas coming together at the right time and in the right place. Consequently, creating self-service and on-demand solutions should be a first-order design principle for any IT offering in the future.

Step 3: Change the conversation
As new business models take shape through technological advances, older ones wither, and an enterprise’s ability to survive will rest on its capacity to innovate and adapt. CIOs must take the lead in getting other executives to understand that the game has changed. As well, they must lead the charge in exploring strategies and tactics to win the game and keep pace with global market changes.

Every time the C-suite decides to start a new venture — whether business or IT related — a CIO needs to ask three major questions:

 Does it create value for the customer?
 Is the enterprise — or could the enterprise
be — the best in the world at doing it?
 Is the enterprise required to do it for legal
or regulatory reasons?

Unless at least one of these questions is answered with yes, the venture should not even be considered for action. If there are no yes answers, then find a partner in the ecosystem to carry it out. Or build the necessary consensus to realize that it does not need to be done at all.

Then, guide the C-suite in identifying business behaviors to abandon, adopt and perform differently to make room for new strategies and processes that encourage collaboration, innovation and value for the customer.

Innovating management
for success
In his book “What Matters Now,” business strategist Gary Hamel maintains that the key to future success is management innovation. That must come before technological innovation, product innovation, operational innovation and all the other areas in which business eventually must innovate. The CIO — who knows both the business and the technology — is in the best position to understand what, where and how technology can enable, facilitate and accelerate management innovation. Therefore, the CIO is the leader who should guide the enterprise in its pursuit.

In a time of intensifying business and economic change, the role of the CIO and IT is being transformed in exciting ways. As innovation expert Seth Godin notes in his book “Tribes,” “Change almost never fails because it’s too early. It almost always fails because it’s too late.” The time to get ready for change is now.

“Reprinted with permission from Dell Power Solutions magazine”

1. For more information about the chief innovation officer, see “Transformative new role for the CIO: Chief innovation officer,” by Jim Stikeleather, in Dell Power Solutions, 2013 Issue 2, qrs.ly/2g3gwqi.

2. “The C-Suite Challenges IT: New Expectations for Business Value,” Economist Intelligence Unit, The Economist, 2012, qrs.ly/ss3gwqj.

3.,4. “The C-Suite Challenges IT: New Expectations for Business Value,” Economist Intelligence Unit, The Economist, 2012, qrs.ly/ss3gwqj.