The German statesman Otto von Bismarck once noted that “those who like laws and sausages should never watch either one being made.” Until fairly recently, the same sentiment could easily have applied to the role of information technology (IT) at a company. Even CEOs who acknowledged IT’s import and relied on a CIO or CTO to make sure that everything happening down in the technology netherworlds did so according to plan would just as soon not delve into details of how it all came together—they just wanted the company’s technological needs and capabilities met without any gritty back-story or new requests for expensive hardware.
Times have changed. These days, technology doesn’t just support operations, it’s a key driver aligned with a company’s overall enterprise strategy. Computing power has steadily increased and new technologies—such as virtualization and cloud computing— have changed the way CEOs of both small firms and Fortune 500 companies view both information technology as a whole, and the CIO who runs IT. A department that once primarily served in a purely support role—upgrading systems, debugging PCs and managing telecommunications—is now at the forefront of optimizing costs, standardizing and streamlining business processes, assessing weakness and recognizing redundancies in global infrastructures, improving cost effectiveness and efficiencies and building out technical capabilities integral to delivering a competitive edge.
In other words, the CIO now sits in the C-suite as a key member of the executive leadership team, serving as a trusted advisor, valued confidant, and critical business partner of the CEO. At companies of every shape and size, CIOs are working with the heads of sales and marketing to grow revenue, deliver new products and extend brands via mobile technology and social networking, as well as partnering with CFOs to ensure a financial reporting system that delivers cleaner and more trustworthy data.
“The role has become more visible and more important, and this phenomenon has accelerated because technology is so vital to corporate well-being and success,” notes Mark Polansky, senior client partner and managing director of information technology officers’ practice at Korn/Ferry. “It can no longer be delegated and swept aside as a cost center that reports to a CFO or any other chair than the CEO or, perhaps, president or COO.”
Korn/Ferry anecdotally estimates that roughly 50 percent of all Fortune 500 CIOs now report directly to CEOs, and the firm expects that number to continue increasing. “We hear about companies that are looking to change how they use technology, and to do that effectively you have to elevate the strategic value of the person who oversees it all,” says Polansky. “These companies are trading out their legacy MIS director—who is probably working with 20-year-old technology and likely reporting in to the CFO— for someone far more strategic who reports directly to the CEO.”
To get the most out of your CIO, you’ll need to establish a mutual level of trust, says Mark Benaquista, who was co-CIO at Warner Music Group for two years with responsibility for WMG’s global transformation program before joining Thomas H. Lee Partners, the Boston-based private equity and growth buyout firm. “It’s not very different from any other successful relationship, whether you’re managing up or down. Communication, expectation setting, truthfulness, honesty, respect for knowledge and background… there’s got to be mutual respect for the role each person plays.”
CEOs need to demonstrate a willingness to hear the good, the bad and the downright ugly. “CEOs win the trust of their CIOs by expecting—if not demanding—candor and conviction,” says Benaquista, who is currently tasked with ensuring that technology and business processes are well understood before and after his firm makes investments. “They need to be willing to hear what they’re told, not just what they want to hear.”
During Benaquista’s tenure at Warner Music Group, Lyor Cohen, WMG’s CEO of recorded music, asked him to be a closer partner in the C-suite. “Lyor is an icon in the music business, someone with deep relationships, a great reputation, and an impressive track record in the industry,” says Benaquista. “He knew that the company couldn’t successfully achieve its goal of participating in 360 degrees of artist revenue (adding previously untapped areas like ticket sales and online store merchandise to the company’s revenue stream) unless he bridged a yawning technology gap. He knew he wasn’t a technology expert, but he appreciated the value of technology and also recognized that I understood where the business was going and knew how to leverage the technology the company needed to get its house in order.”
While Cohen needed a technology solution, he also needed a CIO who could contribute to getting the rest of the company oriented around the transition. Benaquista was charged with translating the streams of technological acronyms and Star Trek vernacular into regular business language that the entire C-suite would understand. “He let me know that I would need to be the kind of business partner who could have a business conversation in language he’d understand and still deliver the technology component,” recounts Benaquista. “CIOs earns their seats in C-suites by articulating how IT will forward the objectives of the company, the board and the shareholders. Any conversation the CIOs have about IT must relate in business terminology to how they’re making things happen… every IT program or project has to relate back to the CEO’s or the board’s perspective in business terms. If the CEO or board has to ask the CIO, ‘Why are we doing this?’ the CIO is wasting their time.”
As business technology has evolved from the world of mainframes to more flexible, less costly distributed systems, many CEOs have voiced concerns about feeling trapped by their CIOs and the technology they are deploying. That trapped feeling, says Benaquista, may be a sign that there’s a larger problem smoldering just under the surface. “If you’re feeling constrained by the technology your CIO has in place, and your business strategy isn’t being attained because of it, you might just have the wrong person leading IT.”
CEOs in such circumstances must assess both the CIO and their team to figure out what’s broken—and whether it’s fixable. “It’s the CIO’s responsibility, in large part, to make your business strategy achievable. If all you hear is, ‘We can’t do that,’ you probably do have the wrong person leading your technology group,” says Benaquista. But don’t confuse your CIO’s reluctance to be a bleeding-edge adopter of new technology as a sign of incompetence. Everyone wants the cloud, and everyone is rushing to adopt new technology, says Benaquista, but it’s prudent to question technology until it is proven to avoid undue risk. “Having the right leader of IT means having someone who understands where the business is going, what the right timing is, and how to make it work within the framework of your business strategy and the technology you already have in place.”
Confirming that the CIO has the right people on the IT team is equally critical. “CIOs are only as good as the people around them. You can’t possibly keep up on everything in the market place, so your team has to be robust in given domain areas,” says Benaquista. “If they don’t have the best people to help with transformative strategies, you’re wasting money supporting a situation where there’s a huge disconnect.”
CEOs need CIOs who are capable of assembling a team of individuals with varying expertise and aligning them around meeting the company’s strategic needs rather than micro-managing. “It takes multiple areas of expertise to come up with right solution set, so CIOs must be able to lead by getting out of the way,” Benaquista says. “There are lots of people in technology areas who are afraid to let go of things, but micro-management slows companies down.” The CIO’s domain expertise is very important, especially when one is building one’s own team and assessing competencies, but it needs to be used as a tool by someone who is equally, if not more talented as a leader and a manager.
It’s important for CEOs to support IT efforts by emphasizing the role it plays in the company’s overarching business strategy to the rest of the company. Today’s CIO should be capable of bringing that message home, says Benaquista. Ultimately, “it’s the CIO’s job to make sure their organization gets it, understands how technology supports it and feels empowered and yet accountable for that responsibility,” says Benaquista.
Competence, expertise and experience are obviously important in any role, particularly senior leadership roles, but according to Michael Haynes, CEO of American Precious Metals Exchange (APMEX), a privately held, leading online precious metals dealer, “given the way IT gets things done, and the way senior management makes decisions, the biggest challenge for making the CEO-CIO relationship work is about identifying a CIO with the right ‘cultural experience.’
“Technology culture of Apple is different from Google, which is different from Facebook, which is different still from Amazon,” points out Haynes. “Regardless of skill, [one of the greatest challenges] for a company is when the technology leader does not know how to lead in the specific culture of the organization. The primary reason that senior staff added in an organization fails is because of the mismatch of culture [between] the senior executive and the organization.”
This puts the onus on the CEO to innately understand whether the CIO currently in place has the right intangible makeup to succeed with the team—and the culture—that’s in place. Haynes, whose firm was conducting a search for a new CIO at the time this article was being written, has specific criteria for the role. “I need and expect our CIO to be my partner,” he says. “We’re very collegial, and no one makes important strategic decisions on [his or her] own. Our CIO will be part of the team that I rely on to help me make key decisions. I cannot choose someone who is only going to have a caretaker mentality—technology is extremely explosive, and we need our CIO to be tuned into what’s going on and how to leverage it for our needs so that we don’t get left behind.”
Ultimately, that’s what it’s all about.
The highest-performing CIOs are devoted to, and passionate about, developing the next generation of business technology leaders. They model the behavior they want and work to make sure their high-potential employees receive extensive experiential learning such as stretch projects and rotational assignments, all supported by mentoring. These leaders embrace the role of developing technology literacy across their enterprises.
Why do they do all this? Because if you focus on developing your people to the fullest extent possible, four things happen, all of them good:
You unleash the power of your organization.
As you know, it is neither a company’s physical nor its financial assets that provide true competitive advantage. It is the employees who use them. It is the organization’s people who are the value creation engine.
You increase the impact of IT.
All that power within your people is capable of creating value and making extraordinary things happen for the organization. In other words, you broaden your ability to effect change from the CIO seat by developing, empowering, and getting results through others.
Your job becomes more fulfilling.
While it is certainly satisfying to carry a technology project through to a successful completion, the CIOs we interviewed said they got more joy watching the people they were responsible for develop to their fullest potential and thrive as a result.
You build a sustainable legacy.
Twenty-five years from now, no one in your organization is going to remember who was in charge of the major system upgrade of 2010. But the people running the technology department will remember the bosses who made a difference in their life. Your business partners will recall the person who helped them better exploit technology for business advantage. And the people you have trained for and helped develop will have more of a lasting impact than any new system you install.
The result of all this is a dramatic increase in your capability and capacity to deliver results via technology—both today and well into the future. That’s why you want to switch your primary focus to building people and not systems.
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
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Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
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