Mark McDonald

Great CIOs understand IT’s leverage points in their business model.

Information and Technology create leverage.  That is their primary contribution in any enterprise.  Enterprises create leverage by using IT to multiply their results either by raising the productivity of their people or the power of their solutions.

• Automation creates leverage by performing work previously done by people.
• Information creates leverage through supporting more complex processes and products.
• Technology creates leverage by multiplying human physical power or the reach of communications or decisions.

You get the picture.

Good CIOs know these sources of IT leverage.  Good CIOs seek to apply leverage to solve business problems.  They know the limitations and applications of technical solutions and how to implement them.  They see and can explain the application of technology to business.

Great CIOs know exactly where to put them to drive the performance of the business model.  They know where no amount of technical leverage will work as well as places where technology is the only way to gain speed, scale or performance across the enterprise.  Great CIOs see and can explain the business and how its operating model rests on information and technical leverage.

Great CIOs recognize that each application of technology is unique to the enterprise, its business model and source of competitive advantage.  They can explain the company’s business model first; their primaries levers, and then discuss how technology enhances those levers.

For example:

Wal-Mart’s everyday low prices rely on the application of technology in the supply chain as well as vendor management.  These back office systems that no one sees are leverage points for the world’s largest retailer.

Dell’s build to order business model for PC’s is based in part on technology that enables it to receive individual PC components rather than buying and inventorying parts in bulk.

HSBC’s business model rests on providing a consistent customer experience at scale.  That service rests on technology as a service delivery platform working in harmony with bank staff, call centers and other channels.

Southwest Airlines business model as a discount airline rests as much on a single aircraft platform as it does its point-to-point routing system or use of secondary airports.

The Virgin Group’s success with Virgin Airlines, Money, etc rests on systems that manage the holding company for these disparate and multi-sourced operations.

Notice that in each of these and other cases the impact of technology is indirect.  A supply chain that customers never see delivers everyday low prices.  The indirect contribution of technology investment illustrates IT leverage in the business model rather than matching individual solutions to specific problems.

Good CIOs can tell you how the solution works and the value it creates to individual processes, activities or products.  They can describe the money saved from new supply chain systems or the move to product lifecycle management.  They can discuss the enhanced customer service created by a new CRM system.

This is all well and good.  In fact its necessary to become a good CIO on their way to becoming great.  But the transition from good to great comes from seeing the larger picture and how information and technology leverage the business model.

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Category: CIO Leadership     Tags: Business Leadership, CIO Leadership, IT Leadership

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