5.1 Background on the Role of the CIO
In the mid-to-late 1960s a new title began to appear in the largest companies in the United States: Chief Executive Officer. Before this title began to emerge, the top title in companies was normally President or Chairman. By 1975, most of the largest US companies had adopted the Chief Executive Officer (CEO) title and with it, launched what is now known as the “C Suite.” The C Suite is the collection of the top executives (often all identified as a “Chief” of some discipline) in a company.
The second major C Suite title to emerge was the Chief Financial Officer (CFO). The CFO title emerged in the early 1970s and grew rapidly in popularity in the late 1970s.
The other common C Suite titles emerged later including Chief Operations Officer (COO), Chief Marketing Officer (CMO), Chief Compliance Officer (CCO), and Chief Human Resources Officer (CHRO).
The leading role in technology emerged in the early 1980s as the Chief Information Officer (CIO). The CIO role has become synonymous with the leadership of company’s technology organization.
The CIO role requires a unique blend of technology and business skills. A good CIO understands the intersection point of the business strategy with that of technology. As such, it is virtually impossible for a CIO to be successful without being very knowledgeable of the business direction (or vision).
Conversely, the CIO must be well versed in technology trends and their relevance to their company’s business. Using this combined knowledge, a good CIO can direct efforts to enable business capabilities through the appropriate application of technology.
A good CIO must understand the operational needs of the company and ensure the technology organization meets or exceeds those needs 365 days a year. The CIO ensures the company’s digital assets are secure, which is a growing concern given the current environment of sophisticated cyber crimes. The CIO must orchestrate the development, deployment, integration, and upkeep of a myriad of software and hardware solutions to drive profitable business growth.
In all, this is a complex and challenging role. The difficulty of the role is further accentuated as the pace of technology change continues to accelerate. CIOs are constantly forced to rethink what is possible and to purge themselves of biases that may have formed through their years of experience. Admittedly, this is not easy. Consequently, the tenure of a CIO is roughly 4.3 years according to a 2017 Korn Ferry Institute survey (Korn Ferry Institute, 2017).
By now you may be thinking, well this is all good, but why did you call this chapter Alphabet Soup? Ah, we are getting to that.
5.2 Emerging “Chief” Technology Roles
Technology C-level titles
Role | Primary focus | Commonly reports to |
|---|---|---|
Chief technology officer (CTO) | • Technology direction (R&D) • Commercialization of technology | CIO CEO |
Chief digital officer (CDO) | • Drive the adoption of digital technologies across the business • Digital transformation | CEO CMO CIO |
Chief data officer (CDO) | • Enterprise data management, strategy, governance, control, policy, and exploitation | CEO CIO CRO (Risk) COO |
Chief data science officer (CDSO) | • Data exploration (patterns and trends in structured and unstructured data) • Predictive modeling and data-focused R&D (such as AI) | CFO CMO CIO CEO |
Chief analytics officer (CAO) | • Driving enterprise insights through data-focused analysis • Promoting a data-driven culture | CEO CFO CIO |
Chief information security officer (CISO) | • Development and implementation of an enterprise data security program to protect corporate assets | CIO CRO CEO |
Chief innovation officer (CINO) | • Management and oversight of the Innovation and change management processes for the enterprise | CEO COO |
Hence, we have alphabet soup. Counting the CIO, there are eight prospective roles within the organization with some element of technology responsibility. While few (if any) companies will have all of these roles, most have at least one in addition to a CIO.
So, are these roles a good thing or not? Admittedly, this is a loaded question. It depends entirely on the organization’s culture, how the roles are structured, and the people possessing the titles. However, I must confess, after more than 34 years in industry roles, I have first-hand experience in a phenomenon I call “Title-itis.” No, this isn’t the golf ball (Titleist). It is something that commonly happens when you give a person an elevated title. My theory of Title-itis states the higher a role within the organization the more that person will work to justify their importance (and the importance of the role). Often, Title-itis leads to bold, unattainable proclamations, silo thinking, and lack of collaboration.
Remember earlier we noted only 34% of CIOs report to the CEO. Can you imagine eight “chiefs” with some form of technology reporting to different functions within the organization? Now can you imagine how this would work effectively?
We don’t see other functions inside organizations going through this level of churn today. These roles evolved to meet perceived needs of the organization. When the roles are created the organization believes there is a need for a senior executive to focus on the particular subject matter. However, creating and filling these roles is only part of the solution. Defining the structure of the organization and the governance of enterprise technology (inclusive of all of the new “chief” titles) is tantamount to success. Make no mistake about it; this is not easy. Which begs the question: why are these roles emerging?”
The first of the titles to emerge was the Chief Technology Officer (CTO). This title grew out of the original technology “labs” and gained popularity in the late 1990s during the dot-com boom period. Many technology companies use a CTO as the person responsible for technologies to be consumed by its customers (external focus), while the CIO is responsible for internally focused solutions. In some cases the CTO title is used to represent the most senior technology executive, replacing the CIO title. And finally, in many companies, the CTO reports to the CIO, with the CIO taking on a broader strategic role and the CTO managing the engineering elements of the organization. As there is no clear-cut standard reporting relationship, the CTO and CIO roles are often confused and used in different ways across companies.
As new technologies emerged, additional roles were created to add increased focus and vision. Let’s take the example of “big data.” Big data is a term meant to describe the collection of large volumes of data used in the analysis of patterns and trends and the discovery of insights that can translate to substantial business value.
As the concept of big data evolved, the respective roles of Chief Data Officer, Chief Analytics Officer, and Chief Data Science Officer emerged. These roles are very closely related, and not even the biggest data zealot would argue that a company would need all three. Some would state a Chief Data Officer is responsible for the collection and efficient storage of data, while the Chief Analytics Officer and Chief Data Science Officers are responsible for the use of the data to drive insights. Others may argue that one of the roles would suffice and would carry with it the overall responsibility for the collection, storage, and use of enterprise data.
The final three roles emerged due to functional focus within the organization. The growing concern over cybersecurity gave rise to the Chief Information Security Officer (CISO). This role represents the importance of having a senior executive focused on the protection of the corporate digital assets. According to a 2017 report by K logix more than 50% of CISO’s report to CIOs, while about 15% report to the CEO (Koegler, 2017). However, the report noted that the shift is towards more CISO’s reporting to the CEO or a senior risk officer to provide a level of independence from the CIO.
The Chief Innovation Officer (CINO) emerged as companies attempt to drive new levels of innovation in the enterprise. This title doesn’t always report to the upper levels of the organization. The person responsible for driving the adoption of formalized idea generation and development capabilities across the organization is often given this title. An offshoot of this title is the Chief Technology Innovation Officer (CTIO), which focuses solely on innovation through the application of technology. While the CINO reports to different parts of the organization, the CTIO typically reports to the head of technology (CIO or CTO).
Finally, the Chief Digital Officer (CDO) has emerged as companies across all industries embark on digital transformation. Of all the roles, the Chief Digital Officer seems to have the widest degree of variability in responsibilities and reporting structure company-to-company. Only 6% of companies had a CDO position at the end of 2015 according to a PWC study. The percentage of companies with CDO’s is slightly higher (5–9%) in larger companies and shrinks to 1–3% in smaller companies (Friedrich, 2015).
5.3 Fractured Technology Leadership
Now comes the part of the book where I must admit my own bias. I served as a CIO for 14 of my 34 years in the technology industry. In my first two CIO roles, I reported to the CEO of the company and attended CEO staff meetings. In my last CIO role, I did not report directly to the CEO but had regular meetings with the CEO on all things technology (and retail). My bias is not for any specific title; it is for a role within the organization with ultimate responsibility for technology. Readers need to understand this bias as it shapes my arguments for the remainder of this chapter.
As we look at the list of titles and review their focus, it is interesting to note many of the roles commonly report to either the CEO or the CIO. No other role is even close in mentions for prospective reporting relationships.
Example organization structure
In the structure shown in Fig. 5.1, the Chief Information Officer, Chief Digital Officer, and Chief Data Officer all report to the CEO. I chose this structure as it represents the conventional structure that prevails when all three of these roles exist in a large company.
Using this structure, let’s create a scenario where the CIO and the two CDO’s are not in agreement. The Chief Data Officer wants to leverage a set of open system tools to deliver a new set of performance dashboards to the company. The CIO is wary of the tools as they are somewhat unproven and there is no good security benchmark for the products. The CIO prefers to go with a more proven enterprise-class dashboard solution. The Chief Digital Officer disagrees with both the CIO and Chief Data Officer. The Chief Digital Officer wants to completely eliminate the dashboards by embedding artificial intelligence into the data workflow to automate decisions.
Now, assume our three senior-level executives can’t reach a decision. Who breaks the deadlock? The CEO or a committee appointed by the CEO would have to step in and try to decipher the technical/business merits of the issue. While this may sound a little far-fetched, I have supreme confidence there would ultimately be issues that could not be resolved by the three technical executives requiring a tiebreaker.
We trust a CFO to make the final recommendations on financial topics, we trust CMO’s to make final recommendations on promotions and marketing plans, we trust our General Counsel to make the final recommendation on legal issues, and we trust our COOs to make final recommendations on critical operational decisions. In other words, we defined clear lines of decision-making based on functional expertise. However, The finer the line is drawn in defining functional expertise, the more likely there will be confusion over roles and responsibilities. Confusion can lead to emergence of fiefdoms and silos.
The purpose of this chapter isn’t to disparage emerging titles, but to cast the light on the fact that structure plays a vital role in digital transformation. As we stated earlier, having an aligned view of transformation is the most significant critical success factor. Alignment is enabled and bolstered by the structure.
In Altimeter’s 2017 State of Digital Transformation, the digital transformation ownership was primarily with the CIO or CTO (28%), followed by the CMO at 23%, the CEO at 20%, and the Chief Digital Officer at 13%. Interestingly, this study noted that this was a shift from prior studies where the CMO had a much more substantial leadership role. Altimeter theorized the shift towards the CIO and CTO could be due to the maturing of digital transformation efforts that ultimately results in technologies to be managed by the IT organization. This belief is further supported by the survey results showing the IT department was leading digital transformation efforts in 33.7% of cases, ahead of marketing at 30.1%. No other department surpassed 14% in the survey (Solis, 2017).
5.4 Leadership in Transformation
What we learn from the Altimeter survey has been observed before in many companies. A transformational effort latent in technology often begins in a business unit, but as the project progresses responsibility inevitably shifts back to IT.
Let’s use a story to help illustrate this phenomenon. I was CIO at a large retailer. Our company was at an inflection point following the economic downturn in 2008. They decided a major transformational effort was needed. Several large “think tank” consultancies were brought in along with a consultancy known for its prowess in helping companies through transformation efforts. Journey maps were drawn in a multitude of meetings to illustrate the new “envisioned future” and to identify potential obstacles along the way. Interestingly, as the journey maps were drawn, technology capabilities, or more appropriately, lack of technology capabilities were identified as obstacles.
Sometimes we can identify the first sign of trouble in an effort merely by understanding the context in which the opportunity is presented. At the time of this work effort, our company was approximately six years into an IT portfolio governance process that placed the responsibility for what programs and projects to pursue in the hands of a technology steering committee. The CIO (me) chaired the technology steering committee. The membership included the CEO and his direct reports. In other words, the senior leadership of the company had sole authority in the prioritization and funding of all technology efforts. In the six years of this process, the IT organization had completed over 300 major technology initiatives, while dramatically improving on-time delivery.
Therefore, I was somewhat surprised that as our senior leadership team drew journey maps we classified technology capabilities as “obstacles” as opposed to “opportunities.” I understand it is purely semantics. However, that fine line of distinction immediately cast the IT organization as an impediment to growth.
As the transformation effort began to evolve, an extensive initiative formed. I volunteered to step away from my CIO role and lead the overall initiative. However, our CEO wanted the effort to be led by a non-technical leader.
The business selected a senior vice president from one of the company’s operational units to oversee the effort. We worked with the selected executive to verify and refine the scope of the overall effort.
The senior business leader for the initiative quickly assembled a group of business leaders to help oversee the effort. This included the creation of a senior management role to oversee the day-to-day activities of the effort. A member of the corporate strategy function was selected to fill this role. The business team drafted a high-level business case for the initiative enumerating the potential to add billions to the bottom line of the company.
The business case definition was my second warning sign. By establishing the business case at the initiative level, each program defined under the initiative did not have to stand the scrutiny of value. As such, we quickly began to see the corporate version of “pork barrel” spending evolve. As the business case was expansive and was already “baked in” at the highest level, soon every group was throwing their “pet” projects into the effort. The business team was quick to accept these efforts and continued to expand the overall scope of the effort. Consequently, the price tag quickly rose into the hundreds of millions of dollars.
I approached the CEO on multiple occasions and expressed my concerns that scope continued to expand, and much of the new scope did nothing to achieve or augment the original business case. While we had an open dialog, the CEO chose to continue with the path chartered by the business leader.
The proposed technology efforts crossed every major retail business process in the company. Having been with the company for over 18 years at the time, I had a solid understanding of how much change the organization could absorb. I felt the proposed effort was well beyond what the business could absorb in the defined implementation timeline.
The final straw for me in this puzzle came in a meeting regarding store technology. There were several disparate systems in the store that were used to build and process orders for customized products or products not available in the store’s inventory. We were presented with a couple of options. One would be to enable these systems to work with a new order management backbone, the other to eliminate these systems and replace them with a single, unified interface.
It is an odd position for the CIO to argue against technology projects, but that was the case in this instance. The initiative level business case was predicated on improving the overall close rate for customers who visited our stores and better execution of complex orders. The disparate systems, while not optimal, were well known by the store associates and worked adequately. The cost to connect them to the backbone was small in relation to replacement and would allow the company to begin achieving the business case in much quicker order (less than a year versus multiple years).
It seemed like an easy decision. Connect the systems and look to replace the older systems in a future wave of work. The senior business leader was adamant the systems needed replacing, and without doing so, we would not achieve the desired business results. I argued, to the contrary, that we would be placing the business value at risk for functionality that would add only marginal value at best.
For those of you expecting a hero story, I am sorry to disappoint you. I lost the argument. The steering committee voted (with two dissenting votes) to move forward with the riskier, unified option. To this day, it is the single moment of my career that still keeps me up at night. I was convinced I was right and thought my points were relevant, valid, and succinct. But while I had the hard facts right, I failed to grasp the nuisances and politics behind the decision.
As I mentioned earlier, the perception of IT was as an “obstacle,” not an enabler. Therefore, my arguments against the business direction were perceived as being reluctant to, or opposed to change. Also, the business leader for the initiative had lobbied other members of the steering committee before the meeting spelling out why he believed his approach was the only one that would work. I went into the meeting assuming it would be an open discussion. However, in fact, the decision was already made in many of the member’s minds. Finally, as I watched the way the meeting was going, I allowed my emotions to come out. My emotion distorted the facts in my message and came across as defensive. Consequently, much of my argument fell on deaf ears.
To this day, I still feel a strong sense of responsibility for the committee’s decision. An executive can’t rely solely on facts. The art of influence is a critical capability for any executive. In this regard, I didn’t use those skills appropriately to lead the committee down what I perceived to be the correct path.
This particular decision required political finesse, and I didn’t deliver it. It required pre-meetings and lab visits to educate steering committee members. We did not conduct these meetings or visits. I was so confident in the power of the facts that I didn’t consider the softer side of influence, coaching, and education.
Finally, when I saw how the meeting was turning, I allowed my emotions to get to me. I was incredulous that the company would consider a decision that put hundreds of millions of dollars at risk and my emotions overshadowed the facts I was trying to present. It was a very tough lesson to learn, but I learned it on that day.
Shortly after this meeting the company and I decided to part ways. The last week I was in the office I spoke to the CEO again on a variety of topics. You will recall one of the topics from Chapter 3 regarding the store system. The other big topic I covered with him and the incoming CIO (appointed from the business) was the state of the large transformation initiative. My most significant concerns were the ever-expanding scope, especially on efforts not adding value, the ability of IT and the business to scale to the number of resources needed effectively, and the ability of the business to absorb the proposed level of change. The CEO and the new CIO politely listened to my concerns, but it was obvious they were going to choose a different path.
My last statement to them was one I still recall. “I have had my foot on the brake, not the gas for this effort. Much of what is coming out of the business does not add to the benefit case. If you don’t throttle some of the unneeded scope, this effort will cost more than double what you expect.”
You may be wondering how this turned out. Not good. Shortly after I left the new CIO opened the floodgates and the level of spend for external labor on the initiative skyrocketed by more than 500% per week. The company overspent the original budget for the effort by more than one billion dollars. That is not a misprint, one billion dollars. The company never achieved the anticipated business case. The store system I argued against was never deployed chain-wide. The store system component was eventually abandoned with the cost well into the hundreds of millions of dollars.
The senior business leader for the effort, being the astute politician, moved off the initiative before the associated projects began to slide and fail. IT went through three CIOs and over 30 new IT vice presidents in the 5 years after I left. The leadership for the initiative eventually fell under IT, but by then, the damage had been done.
Recounting this story is extremely painful for me. However, I am hopeful this story illustrates some of the points we have been discussing in this chapter. First, the right leadership for a transformation effort is essential. Two, aligning the business and IT on the true drivers of business value is critical. Leaders need to understand what are “non-negotiable” requirements and which are optional. This may require joint education for all leaders. Ideally, the leadership for the transformation efforts will be educated similarly as a means to produce common grounding and alignment. Finally, if technology is central to the transformational effort, the eventual turnover to the IT for on-going support should be part of any up-front planning. This transition to IT can’t simply “happen.” The transition must be planned and executed in an orderly fashion.
Having discussed leadership, we are now ready to discuss structure. As I mentioned previously, it is highly doubtful any company would have all eight of the CXO positions that have elements of technology as part of their responsibility. However, it is highly likely a company would have 2–4 of these titles. As the previous story highlighted, alignment and directional disagreements can (and will likely) occur in any effort.
In the story, we had a single leader, a single governing organization, and a single head of IT. I.E., the structure seemed right. The core problem was overzealous expectations without understanding organizational capabilities or the inherent risks of certain types of technology. The massive cost overrun and the resulting failure to achieve the business value were not due to technology. This was a leadership failure.
5.5 Choosing the Right Leader for Technology
As I mentioned before, I am an advocate for a single technology leader within the company. It doesn’t have to be a CIO or any other specific title. I have seen organizational structures with a Chief Digital Officer leading all technology, with a CIO and CTO reporting to them. I have seen the CIO play the role of Chief Digital Officer and have a CTO, Chief Data Officer, and CISO report to them. There is a myriad of reporting relationships with a single leader at the top that can work. However, the person at the top of the technology pyramid must be part of the executive committee of the company. In other words, they should report to the CEO.
Technology is remaking companies across all industries. The Altimeter study states: “Faster and faster, all types of businesses are becoming technology companies” (Solis, 2017). If digital transformation is a real business priority and technology is altering the landscape, the time has come for the technology leaders of companies to be at the table (if they aren’t already).
Saying that, the spot at the table must be earned. If you don’t have the right person at the helm of your technology function, then you need to begin recruiting.
Your technology leader should be well versed in your business and understand trends and challenges impacting your organization and your competitors. The leader should be technically broad, able to understand and speak on a variety of technical topics and their relevance to your organization. They must be curious on many levels and willing to address and shun biases as technology changes occur. The leader should be an excellent communicator, able to speak about technical problems and opportunities in a manner understandable to a layperson. The leader must be a skilled influencer with the capability to lead others to an envisioned future state.
The leader must be an excellent recruiter and developer of talent. The fight for top technical talent is becoming more pronounced and having access to this top talent is essential for success. And finally, your technology leader must be able to articulate a vision and rally a team around this vision. If your technology leader can’t do these things, you probably don’t have the right person in charge. Thought digital transformation isn’t only about technology, technology is a crucial element. Having the wrong person in the technology leadership role will significantly increase the risk of failure on your digital journey.
Deaf Diagnostic
While digital transformation is not a technology project, technology plays a significant role in its success. Having the right leader and the right structure for your technology organization are critical enablers for success. Fragmentation of technology responsibilities will make it more difficult to align and coordinate execution. The right leader for IT should earn a seat at the CEO’s table.
This focus of this book is for all leaders, not just technology leaders. Business leaders must grasp the importance of their role and influence in establishing the correct organizational tone to prepare for a digital journey in the appropriate manner. These leaders must also be open to listen and to learn, as there are significant risks associated with digital adoption.
Technology leaders should understand they are under pressure to become more than just the “tech guy or gal.” They must become progressive thought partners for the business. They must work tirelessly to achieve the vision of the company, but must also have the courage to speak up when things are not working.
As the earlier story illustrated, structure is not the answer by itself. Having the governance, the right structure, the right talent (be it internal or external), and an aligned vision and expectations will get you on the path to success. However, even with all of those elements in place efforts can fail.
Why do they fail? Ah, we get to discuss that in more depth in Chapter 6.