Seven Key Steps for the Evolving CIO

Many CIOs have been invited into the C-suite to help transform their organizations and win competitive battles about all things digital. Unfortunately, many CIOs are unprepared for the unique challenges of the role, and survey data shows that they are often too deeply in the technology trenches to manage other priorities and aspirations.

As “digital” becomes the competitive priority of companies across every industry, CIOs must lead their companies in continuous digital transformation. While there are many definitions of digital transformation, the essence of the goal is to cost-effectively leverage current and especially emerging technology onto optimized business processes and even whole business models.

But transformation leadership requires much more than technology leadership. While the technical side of operations must run smoothly — communications networks must stay up, software applications must run, and data must be secured — CIOs must adopt new practices, missions, and modi operandi if they’re going to evolve into transformative digital leaders. There are seven key steps these leaders can take along their evolution.

1. Alignment to Some — But Not All — Strategies

Alignment with business strategy was, and remains, a priority for CIOs, though “only 23% of CIOs rate their organization as effective at business strategy and planning.” But which strategies matter most? Technology investments driven by long-term strategic assumptions are dangerous, divisive, and expensive. It’s just too difficult to predict the long-term future. Many CIOs still believe alignment means support for whatever strategy a business might generate. But savvy leaders understand that long-term strategic alignment is unlikely to satisfy today’s competitive requirements. Instead, they focus on nearer-term strategic priorities for which due diligence can be conducted. This means CIOs should focus on strategic priorities no more than three to five years out. Telling the board of directors that technology will be “ready” for whatever the company wants to do in five to 10 years will generate polite smiles but not much else.

2. Shadow IT Is Not All Bad

Most CIOs take umbrage with shadow IT — IT applications and infrastructure deployed without the knowledge of the enterprise’s IT department — and view it as rogue activity that must be driven out of their organizations. This seldom works, though, especially if there’s anything even remotely resembling a good business case for the rogue spending — which there often is. Shadow IT is about technology governance, where tightly centralized organizations control all technology spending (operational and strategic) — despite seemingly endless complaints from the lines of business (LOBs) about inflexibility and cost-ineffectiveness — which prevents IT from integrating new applications the LOBs need to launch to remain competitive.

But centralized technology governance inhibits innovation and can stifle revenue-generating autonomy. This isn’t to say shadow IT should reign supreme, but rather, leaders in IT must recognize when tightening of restrictions makes sense (such as, when enterprise infrastructure may be compromised) and when it prevents business growth (when systems support profitable revenue).

3. Expense to Revenue

A major legacy concern for CIOs is reducing technology spending. Leaders will often spend a large portion of their time creating elaborate total-cost-of-ownership models and determining which technology infrastructure services to reduce (like networks, help desks, databases, security, and applications support). But a newer financial mission for CIOs is enabling revenue generation. What products and services can be developed and sold from the office of the CIO? Today, platforms, applications, standards, and outsourced services can play a major role in driving revenue for organizations. CUNA Mutual Group, for example, developed a revenue-generating application that supports the comparison of loan rates.

CIOs are in a unique position to understand business technology trends and the products and services the trends enable, and identify acquisition candidates that can bring in new applications and platforms to the fold. CIOs should also lead the technology investment strategy of their companies through direct investments, side-by-side investments (with private equity venture capital firms), and partnerships with startups.

4. Innovation Through Faster, Cheaper Pilots

Another key role CIOs must take in their organizations is becoming champions of emerging technology adoption through faster, cheaper pilots. Here, it’s important for leaders to identify technologies with the most near-term potential and jointly own the innovation process, which can be formalized in an innovation lab or within a business group nominating pilot technologies. Today — and going forward — CIOs can rely upon their cloud provider’s ability to support fast/cheap prototyping through their platform-as-a-service (PaaS) capabilities, which permit companies to develop prototypes across the full spectrum of emerging technologies quickly and inexpensively.

High on the pilot list are robotic process automation (RPA), artificial intelligence and machine learning, blockchain, the internet of things, microservices-based architectures, and edge computing. The pilots should be fed by operational and (near-term) strategic requirements and technology trends, and conducted with a repeatable methodology that includes process/model improvement targeting, expected cost/revenue impact, and a senior project sponsor — and implemented on cloud-based platforms.

5. Pitch-Perfect Storytelling

Most CIOs insist upon developing strong, empirical business cases for the technology investments that they want leadership and their boards of directors to approve: They primarily communicate with evidence. While quantitative-empirical communications can be effective (especially with other data-driven colleagues), they often leave nothing to the imagination — precisely what CIOs need to feed.

CIOs are generally not happy-ending storytellers. While quantitative-empirical business cases are important, new initiatives are approved or rejected for reasons that extend beyond the “case” presented to the executive committee with voting power. CIOs need to tell compelling stories that describe the impact that the investment will have on business value, especially on the generation of profitable revenue. The most effective of these leaders are often good salespersons, who have a knack for crafting narratives. While this may not be the easiest persona for CIOs who’ve risen through the IT and engineering ranks, it’s imperative for them to learn how to manage stakeholder expectations as the digital agenda expands for most companies. By taking a cue from the communication skills of their counterparts in sales and marketing, CIOs and tech leaders can gain buy-in and support for their initiatives.

6. Reevaluate the Approach to Skills Assessment

CIOs — and most managers — are often incapable of performing objective assessments of the skills and competencies of their teams. Instead, they make assessments based on relationships, references from friends, direct and indirect experiences, and reputations, among other subjective variables. This allows many technology teams to become “tenured” — boasting obsolete skills acquired for political survival.

To avoid this, leaders need to get serious about assessing teams against an objective set of quantitative skills and competencies metrics. They should use third parties to make these assessments. They should manage their teams at arm’s length, not as the proverbial “good people” who defend team members no matter what the circumstances. Public accountability is a best practice, especially in a field that reinvents itself every few years. This new best practice will dramatically increase CIO credibility.

7. Shift From Projects to Programs for Business Value

For IT teams, project management is always a priority. But there are two ways to manage projects. The first — which most CIOs have perfected over the years — tracks project milestones, costs, and risks (or the software that supports them). The second tracks the usual metrics but also the overall business value of the projects underway. A project might involve the selection of a new learning management system (LMS) where lots of due diligence around multiple software vendors is conducted to determine which software is the best to train salespersons. But the same project would assess how the LMS system would improve training and therefore sales performance that increases revenue. Same project, two lenses.

Project management should focus on programs-of-projects — portfolios — focused directly on the support or improvement of products and services. The shift is about business value from programmatic activity from which performance metrics are identified and tracked. “Projects” are not approved unless they’re part of a larger programmatic plan to support or improve a business product or service, or create a new product or service. This is the additional filter through which all project business cases are evaluated. This means that many projects should be funded — or canceled — if they fail programmatic due diligence.

At the end of the day, CIOs are always responsible for technology infrastructure in their organizations. To transform their leadership to fit the needs of the evolving digital organization, CIOs must embrace two roles: keepers of infrastructure and digital facilitators of business value. When they cover both bases, these digital leaders will be able to help their organizations overcome roadblocks and achieve true transformative goals.