Executives are starting to be bombarded with books on how they need to lead in tough times. One of the first is from the influential author Ram Charan, noted consultant and co-author of Execution (with Larry Bossidy). Charan has just come out with a new book, Leadership in the Era of Economic Uncertainty: The New Rules for Getting the Right Things Done in Difficult Times.
My apologies to Abbie Hoffman, but I hope the title got your attention.
Charan’s book will be passed around the CEO/Board Circuit and the basic message – cut your costs faster and farther than your customers – will resonate with many managers and executives.
CIOs need to get this book and read it because of what it completely leaves out – IT, operations, operational improvement. Charan is advocating a financial response, cost cutting across the board to the current economic challenges. He either ignores or is silent on the operational changes needed to achieve and sustain efficient operations.
CIOs need to get ahead of this book and have answers on the following issues:
1) How IT is reducing the cost structure of the company, by making processes, decisions and the workforce more effective and productive.
2) How the CIO is reducing the cost structure of IT, by raising its own resource productivity, removing duplicative applications and renegotiating contracts
3) What is the measure of relative improvement in the business versus reductions in IT cost
For many keeping the IT budget flat and focusing those resources on business based operational improvements will generate 2 to 5x more value, than just cutting IT expenditures.
CIOs need to be making this argument, because Charan does not. He treats IT as a functional administrative cost that does not influence core operations or their productivity.
I wrote a full review of the book on Amazon site that I will not repeat here but here are a few choice points. Charan spends 127 pages talking about cutting costs and only four paragraphs – that’s right four paragraphs on page 113 talking about IT. A few choice sentences from these paragraphs include: (italics are mine for emphasis)
“As the leader of the information technology function, you should assume your IT budget will be cut. Your first priority will be to make a sound argument that projects related to compliance … should be fully funded. Your second priority with be utility oriented projects: the things that keep the lights on.”
“After those two are funding you may find that your budget is nearly depleted. …”
“Still, you will be told to reduce your organization’s cost and will have to start thinking about how many technical people to keep and which ones to take out.”
IT does have to be cost conscious and look to preserve cash, but the book as a whole sees leadership in terms of financial leadership, implying that operational managers are either inept or unable to control themselves.
CIOs have worked hard since 2003 to keep tech spending on a business footing, get ahead of this book and show your CEO how IT and operations are the way to ACHIEVE AND EXTEND leadership in an era of economic uncertainty.