CIO Leadership: Preparing the Enterprise for Realities of Today’s Business
When I was in graduate school taking a Master’s in Business Strategy, I got to take a class in futures research. I walked away from this class with a number of rather sobering insights about the future. Many of them are just about to happen. Not since this class, have I gotten so much thinking about the future of the enterprise as I did from the November Issue of Fortune Magazine. Let me take you through the key points made in this issue and then discuss how IT leaders tell me that they trying to respond to them for their businesses.
- We are finally in the early stages of the Third Industrial Evolution. Or what Alvin Toffler labeled “The Third Wave”.
- The third stage will be based on entirely different economic logic. And will cause fundamental changes in the structure of businesses.
- Third stage businesses will be built for the sweeping new realities that change the rules of success.
- In contrast to internationally economic theory that I also studied in graduate school, this stage will not be based upon the scale of one’s organizations or the size of one’s population.
- Marketplace friction which has been the justification for giant companies is melting away. Being large on its own is not an advantage as large companies are discovering.
- The new economic model is based on the fact that everyone and everything is connected all the time, in a vast web of interactive data.
- The third stage will belong to enterprises who master this model. This stage will belong to those who embrace the disruption rather than fight it.
- The big theme will be a friction free economy. Here labor, information, and money move easily, cheaply, and instantly. Here there are more fluid relationships with customers, workers, and owners.
- Winners will find ingenious ways to take the friction out of their industry and businesses. They will be able to seamless connecting with buyers with sellers, and enabling new, nearly capital free business models.
- Third stage businesses will be increasingly idea based business. This means their life span will be for the ideas that an enterprise is able to derive.
- The average life span of the S&P has gone from 61 years in 1958 to 20 years now and will be even less in the future.
- Barriers to entry are down as well. The most valuable assets now openness to new ideas, ingenuity, and imagination.
- Those that do not respond will lose their markets and their future potential.
What do CIOs think of this vision?
In a recent discussion with CIOs on this topic, they tell me that the third stage is all about data. You can’t just assume the innovation required for a friction free enterprise will happen. Being successful is seen as requiring a deeper business understanding combined with the creation of a skillful team between IT and the business. CIOs claims that IT needs to play both a driving and supporting role in order to make the above changes happen. IT needs to drive the marrying of IT with the business opportunity. IT needs to take a supporting role in making frictionless change happen. Clearly this realizes that frictionless business requires people, process, and technology. IT with the businesses involvement can deliver technology with the potential to drive the friction out of the system, but process and people are required to make that potential reality.
From a technology point of view, CIOs say this means that they need to have Big Data integrated with their critical apps and that this increasing about being able to feed from a variety of new end points. As well, CIOs see constant innovation as being required to stay ahead of the curve rather than just building barriers to entry. CIOs feel that they can help their enterprises disrupt by being more agile in adopting new strategies and capabilities. They say at the same time that friction can be measured a number of ways, but agility and being locked into business objectives can help remove friction. They say that data is necessary to drive the business decisions which lead to friction decisions. In this process, they see lots of opportunities for IT to lead with agility and flexibility. These include well-defined infrastructure to enable data sharing, partner portals, SSO, MDM, etc.
What steps do CIOs need to take with their organizations?
CIOs stress the importance of establishing a governance model. If this is not in place, then the company is not ready think about the opportunities here. This means that CIOs need to become four things, according to David Chou, CIO for the University of Mississippi Healthcare.
- Be a business transformer
- Be a technology visionary
- Be a customer expert and advocate
- Be a culture warrior
To do these things, CIOs say that CIOs needs to be a business leader first. They need to enable transformation and technology by putting change agents in leadership positions instead of status quo managers. Part of this interesting can involve seeing if they can convert “status quo managers” into positive change agents. Clearly, change can start by putting in the right reward systems. Sometimes, CIOs tell me that they need to lead by example. Sometimes they need to start by disrupting the broader `organization and IT itself. The biggest disruption often is creating a culture of innovation. CIOs suggest as part of this includes enabling “no risk” pilots. CIOs say as well that a culture of innovation includes accepting that a pilot isn’t a failure if you ensure organizational learning takes place from the pilot. CIOs say finally that IT organizations and the business need to adopt Google like practices that allow 20% of a knowledge worker’s time to be spent on innovation.
So enterprises that have the potential to continue further into this century are not only going to be about transforming themselves but also fostering new big ideas. Part of this involves making sure that their enterprises can use data to take the friction out of their businesses. Otherwise, they will feel the pain of a reduced enterprise life–20 years and getting smaller. The time is now to change. The consequences of not acting are just to dire.
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