SPEAKING OUT

Sometimes it takes me a while to catch up with the new titles, and then the initials therefrom, that burst [...]

September 1 1989 by Robert W. Lear


Sometimes it takes me a while to catch up with the new titles, and then the initials therefrom, that burst upon the corporate scene. Back a generation, the letters “CIO” stood for a labor union; now they mean “Chief Information Officer.” And it is beginning to look like we may be completing the cycle from manager of methods and procedures to director of electronic data processing to vice president of management information systems to CIO -which leaves it right up there with the CFO and COO.

Perhaps a CIO is necessary, for there are still a number of CEOs, board members and senior corporate executives who have not yet totally embraced the managerial concepts of information technology and need to do so.

Practically all CEOs have by now gone partway through the computerization process. Like many technological changes, when newfangled things like computers come along, CEOs are quick to jump in and learn the rudiments, pick up the key words and phrases and try to measure the cost-effectiveness. Then, when more familiar CEO-type duties beckon, they back away and let the specially trained professionals handle it.

This worked pretty well when the primary use of the computer was to convert manual systems to electronic data processing. We built special computer rooms and hired programmers. We applied the computer to our payrolls, sales statistics, personnel records and a few other things that, when added together, became part of what we began to call our management information system. Most of the time, the computer gave us more and faster numbers, but it did not really change our CEO managerial style.

During the last few years, all this has changed. The transition to the next major stage has been in process and it is much bigger and more difficult to manage. Some of the mind-boggling exercises of today’s computers include: computer-assisted design and manufacturing programs; global cash management systems which instantly sweep money into high interest bearing points; on-line telemarketing techniques that incredibly speed up and simplify order and credit handling; consumer reports offering immediate, point-of-sale analysis of retail pricing and promotion emphasis; and planning, both short- and long-term, which can be modified to cope with and anticipate change. The list goes on and on.

The MBAs I teach at Columbia Business School-some of whom will be CEOs in the early 2000s-are living with computers in their classrooms as they deal with business cases. Any CEO who runs a wholesale or retail enterprise, a transportation line or a hotel chain, for example, will list another dozen things his company is doing that simply would not be manageable without a computer.

In truth, any CEO who runs any business today is finding that his company’s marketing, manufacturing, engineering, finance, control and personnel functions are being managed in an increasingly integrated and computer-dependent way. If they are not doing so, it is just a matter of time before they find that they must computerize or fail to be cost or service competitive.

Before, when a company made its first move into computerized management information systems, it was able to recruit outside specialists who could do the job in centralized locations. In the present phase, it becomes necessary to teach end users at all levels how to use the computer and to convert them to new management styles. Invariably, there are going to be some individuals who cannot adjust to this approach and who simply render lip service while trying to manage the same old way.

For those CEOs who have had to do a conversion job on themselves and who feel somewhat insecure in a computerized milieu, it is wise to take a couple of prudent managerial precautions.

First, place the CIO function at headquarters level to see that all operating and staff units work towards optimal effectiveness and are compatible in language and hardware. It is not mandatory that this executive be a computer professional; rather, a skilled manager who knows your business may well be a more effective coordinator.

The second is of equal, if not greater importance. That is to undertake periodically an objective survey of all users of your computer systems-both in and out of the company-to make sure they are getting the service they need and are utilizing the systems to maximum effect. This is a key responsibility of a CIO.

He may do it with an in-house task force, or it can be performed by an outside agency.

The Army learned how to convert from cavalry to automotive to airplanes, but it was a long and arduous and costly process. Today’s CEO has to move from hand records to electronic data processing to computerized management systems and do it all within the span of just a portion of his business lifetime. Maybe they’re right-a top-flight Chief Information Officer can help you make the transition.


Formerly the CEO of F.&M. Schaefer (1972-1977), Robert W. Lear teaches at Columbia Business School where he is Executive-in-Residence. He is an independent general partner of Equitable Capital Partners and holds directorships with Cambrex Corporation Inc.; Crane Company; Scudder Capital Growth, Equity Income, Development, International and International Bond Funds; Korea Fund; Medusa Corporation; WICAT Systems Inc.; and Welsh, Carson, Anderson, Stow Venture Capital Co. He authored the recently published book How to Turn Your MBA Into a CEO.