Why aren’t CIO’s taken seriously at board meetings

Last week I looked at the skills of a CIO and how the skills that were critical in climbing the IT ladder and becoming CIO are now a big negative. I was discussing this issue with a CEO and veteran of the IT industry recently and he had an interesting take on the struggles CIO’s have to be taken seriously in the board room. He felt the problem lay in CIO’s not generally being in the same social circles both professionally and socially as your typical board member. They don’t belong to the same golf clubs, live in the same suburbs and did not go to the same school. Therefore while they may get to the board on skills and intellect they fail to ‘fit in’ as they live in a very different world to the other board members and lack the social skills and mores that are required.

He has an interesting point. I have no intention to take up golf or go and live at Killara and have never been to a party hosted by the Packers, so I am not sure how best to address this problem. Having worked for 3 Japanese companies being able to play golf sure would be handy. Sadly I just can’t get interested in chasing little white balls around a mowed lawn no matter how much skill is required (or perhaps because I have no golfing skill what so ever). 

The skills that got you to CIO are now your worst enemy

All those skills that we used to get promoted through the IT ranks to eventually become a CIO’s such as being detail orientated, methodical, structured and risk adverse are totally the inappropriate for a CIO who wants to lead strategy and transform their organisation and to have a seat at the executive table. I don’t mean these skills are not valued, just that they are not valued at the executive table. It poses a real problem especially for managers such as me who do not come from a sales or marketing background. To play with the big dogs you need to behave like them with big picture thinking, lots of blue sky and playing with ambiguous ideas and strategies.

It is critical to avoid being associated with the attributes of your craft such as structured and conservative decision making. One way to do this, is to bring one of your team into the meeting whenever there is a IT presentation or project to explain the “technical” stuff, allowing you to align with the rest of the execs in playing a high level game of review.

Now I can’t take credit for this idea, that goes to Linda Price from Gartner who made the observation during a roundtable discussion at the IT Management Program at the University of Technology Sydney, it does make great sense to me and is consistent with my own experiences. What do you think?

Adaptability – IT’s role in the “new competitive advantage”

In the latest issue of Harvard Business Review* Martin Reeves and Mike Deimler argue that a new source of competitive advantage is a company’s ability to quickly adapt to rapidly changing and turbulent markets. They say “in a world of constant change the spoils go to the nimble”. Building a company ecosystem that supports and nourishes adaptability is therefore crucial. They identify key skills of:

1.       Ability to read and act on signals – this is the skill of identifying external changes, quickly and accurately determining their impact and responding before competitors do

2.      Ability to experiment - experimentation, rapid prototyping, small scale trials, simulations and rapid scenario building are the tool box of adaptability

3.       Ability to manage complex multi-company systems – partnering with other businesses can increase flexibility and speed to market

4.      Ability to mobilize – take the successful small scale experiments and make them global quickly

While the authors do not stress the point, IT has a critical role in enabling all of these abilities (if you don’t use it effectively your competitors will). The challenge is to sell to management the acceptance of high level IT principles that acknowledge and support IT’s critical role in supporting organisational adaptability. CIO’s also have a responsibility to add adaptability to their fundamental design and to manage the trade-off with the traditional IT design principles of predictability and reliability, it is time to stop being IT accountants and become IT business developers.

* Reeves, M. & Deimler, M., 2011, “Adaptability: The New Competitive Advantage”, Harvard Business Review, July-August 2011, p. 135-141.

I hate IT because...

The Australian Institute of Company Directors (AICD) Linked-in forum recently hosted a thread entitled “I hate IT because..” it quickly reached 26 pages as managing director after managing director let fire at IT. It was all there, the fear, the loathing and the doubt about IT and specifically the value IT delivers to their organisations!

Also recently, on a well known CIO forum on Linked-in a thread was posted asking how members measured the business value and performance of their IT team. Apart from my short reply (as I was hoping see a good discussion) there were zero responses! Instead the hottest topics were “should the CIO report to the CFO” and “agile versus waterfall”?

What is it about selling our value as CIO’s and selling the value of IT to organisations that makes us all go weak at the knees? What is the point about complaining about who you report to if you cannot articulate why you should be employed in the first place? Come-on IT wake up to yourself and start focusing on the only thing that matters – delivering IT value.

IT dependent strategic competitive advantage

I promise this is my last page of theory for a while. Many writers and vendors use the term ‘IT value’ as a corollary for ‘competitive strategic advantage’ and assume that any benefit IT delivers an organisation is automatically strategic in nature. I thought I would dedicate this paper to defining the circumstances that give rise to ‘IT dependent strategic advantage’. The definition I like best is provided by Piccoli & Ives 2005* who define IT dependent strategic advantage as “identifiable competitive moves that depend on the use of IT to be enacted, and are designed to lead to sustained improvements in a firms competitive position”. A critical part of this definition is that the IT output must be the reason for the advantage not just an enabler (for example electricity may be critical to competitive advantage in manufacturing but it is not the source of the competitive advantage).

For a competitive advantage to be sustainable there must be barriers that make it hard for competitors to copy the company’s source of advantage. Barriers can be in a wide range of forms for example patents on designs or drug formulae’s or share options to critical staff members. The diagram below shows the relationship between competitive advantage and the barriers that develop and protect that advantage:

Response-lag drivers are features within a firm or its environment that makes it harder for a competitor to copy the strategic advantage. For example software developed in-house by a firm is much harder for competitors to copy than off the shelf software (hence Nick Carrs argument that competitive advantage is impossible to gain by using off the shelf software/IT components). Specific barriers (competitive advantage) that IT can provide are:

In summary, IT led sustainable competitive advantage is a very specialised and comparatively rare form of IT benefit. If IT is considered strategic by your organisation what barriers/advantage does it directly enable and how will you enhance and protect that advantage?  Of course IT can provide many other benefits to an organisation and these will be the focus of future posts.

* Piccoli & Ives 2005, “Review: IT-Dependent Strategic Initiatives and Sustained Competitive Advantage: A Review and Synthesis of the Literature, MIS Quarterly, Vol. 29, No. 4, p. 747-776

The business value of IT - bit of theory

What value does IT deliver to an organisation? This week I will look at the theoretical development in this area as it will provide useful background to later discussion and specific opportunities and challenges. This is a bit dry but stick with me. In March 2010 Saggi Nevo and Michael Wade* published the best explanation of how internal use of IT within an organisation provides value (or not) that I have ever read. In summary, they combine systems theory and the resource-based view of a firm to argue that IT assets when created/purchased have a potential to benefit the organisation. These IT assets are then combined with other IT and non IT organisational assets/resources and if the combination is effective they create a synergy that can provide benefits to the organisation including potentially operational improvements or strategic advantage. Note that these combinations of assets/resources can also fail to generate a synergy or even form a negative synergy that harms the organisation. The diagram below shows these relationships.

I particularly like this explanation because it shows that an IT asset does not automatically deliver any benefit. To deliver a benefit it must be used and often it needs to be used in combination with other IT assets and organisation resources such as people and processes. Also it only provides a benefit if the combined effect creates a positive synergy. The model also shows that a range of benefits are possible, strategic advantage being just one of them, it is also possible for the assets to generate nil or negative benefits to the firm.

* Nevo, S. & Wade, M, 2010, “The formation and value of IT-enabled resources: Antecedents and consequences of synergistic relationships” in MIS Quarterly, Vol. 34, No. 1, pp. 163-183

The search for the business value of IT

A few years ago I was in an executive meeting with 7 of my peer managers, the gruff and aggressive CEO was screaming at me “David you are the CIO, prove to me what value your IT team deliver to the business, how many millions have you made for the organisation, where is the bang for my buck?” I gave a lame reply that was shouted down, the meeting did not go well. It set me on a quest to really understand the value that IT delivers to an organisation. As a part time researcher and lecturer in IT Management at the University of Technology Sydney, as a qualified accountant with a degree in economics and as a senior IT executive I have a great deal of insight into the value of IT. This weekly blog will cover a wide range of technology management issues focusing on IT value, IT benefits, IT strategic competitive advantage and the information revolution and social computing revolutions.