Collins work is a place to start in answering this question.  Collins in fact invited CIOs to assess their leadership skills and get materials from his web site http://www.jimcollins.com.  There you will see the characteristics of Level – 5 leadership which are essential to any executive and probably more so for the CIO.

No one can know if a CIO has gone from good to great without working with him or her in depth and seeing their track record.  All of us are great for time-to-time, but sustained greatness is something different.  Building on those thoughts here are a few others more around signs that are indicative that a CIO might be great in no particular order:

Great CIOs have great teams.  This is often the last thing mentioned in lists comparing good to great, but it should be the first thing.

Great CIOs are business leaders and see business results. How you introduce yourself says much about your focus and self-identity.

Great CIOs understand IT’s leverage points in their business model. They describe their company in terms of its fundamentals, the things that drive earnings per share, market success and customer choice.

Great CIOs communicate clearly. They take complex issues and speak about them without over simplification.

Great CIOs ask good questions. They recognize that they do not have all the answers and that every answer or plan can be strengthened with good questions.

Good CIOs have many of these same characteristics, but there is something different about the ones who are great.

Greatness in a CIO is not a function of the company they work for, the salary they earn, the size of their title or other factors.  There are great CIOs at small companies and not so great CIOs at big companies.

The points raised above require some additional explanation and therefore the subject of additional blog posts.  However, to get the conversation started.  What else makes a great CIO?

In a sign of how tough 2009 is retailers around the country have jumped the gun on Christmas.  Traditionally Christmas decorations and sales began with Black Friday – this year November 27^th.  But the Thanksgiving holiday is late this year and retailers are understandably nervous.

So that is why I saw Santa Claus in the mall when I went to buy my Halloween Candy.

This says a lot about concerns about consumers in the economy and it should inform us as we think through the economic data that will come out of this holiday season.

First, extending the Christmas shopping season by almost a month will probably not increase holiday sales.  It will look that way when people report November monthly numbers, but overall it seems that people are either spreading out their planned purchases over a longer period of time, or simply waiting until the traditional start of the season.

I can think of a few reasons why retailers would want to bring out Santa before we are finished with Jack Skellington.  First they are nervous about consumer demand so starting early is not such a bad idea.  Thanksgiving is late this year as mentioned before.  Finally having sales now may postpone the desire to purchase gift cards in anticipation of deep deep discounts in the ‘after Christmas’ season.

In either case, retailers seem to be simply moving future sales forward in the year.  Such a move does not generate more demand/sales, but rather has them occur now rather than latter.  Sound familiar?

It seems like retailers are taking the wrong page out of the car company’s strategy book.  Remember after the terrorist attacks of 9-11, car companies came out with 0% financing for 60 months and other incentives to keep the economy running.  The result was dramatic with car sales leaping to all time highs.

Executives and economists saw this as a sign of economic strength and overcoming fear, etc.

Unfortunately you do not need a new car every year and before long it became apparent that all of these incentives had just moved purchases people would have made in 2003 and 2004 up a year or two.  Given the durability of automobiles, sales fell as much because consumers had met the need earlier than anything else.

Moving future sales forward does give you earnings now, but it strips future demand creating a relative wasteland where there are few sales and in the short term less of a future.

Investors, consumers and everyone needs to understand that buying today what I planned to buy next spring makes this year look good.  However it makes the spring season look terrible.

Fortunately many of the items purchased, as holiday gifts are not as durable as automobiles, so we can hope that the trough created by moving future sales forward will be short term.

However, remember Christmas in October when first quarter earnings are slow or consumers seem to be tardy in participating in the recovery.  Could be they are finally getting around to eating their Halloween candy.

Take a look at your org chart and you can see not only how work gets done, but also gain insight into the company’s culture, its overall efficiency and the structural risk it is looking to protect itself against.   There is truth behind the term ‘reorganization’ as a proxy for change.  Because if you change any one aspect of these things and chances are you will need to alter your organization chart.  That is the reason I bring this document to your attention as many of use will need to change our structuring in 2010 and successful change starts with knowing your current position.

An organization chart telegraphs how work gets done in terms of the names and descriptions of the organizational units.  An org chart consisting of functional groups hints as the need for strong process flows and collaboration between groups.  An organizational chart based on geography, product or major business process indicates that work is contained within unit with lower collaboration and communications needs.

The number of levels and the average ratio of leadership to associates provide clues about an organization’s efficiency.  Count the number of sub groups reporting to the next level up, or the number of groups shown at the next level of detail within a group and you get an idea of the ratio of managers to associates.  The more groups, the more management as each team needs a manager.  The more managers, the more hand-offs in company processes and the potential for greater efficiency improvements.

The names of groups within an organization and their explanation provide hints about the deep risks the company seeks to insulate itself against.  In general, functional organizations – which include most IT organization – exist to guard against a risk that they do not have enough skills.  Process or divisional oriented groups hint at concerns over local autonomy and an inability to collaborate.

Why bring all of this up?

Simple, many of us have changed the way we work, our staffing levels etc in order to meet the demands of 2009.  More of us will look to reorganize the enterprise or IT in 2010.  Consider the organizational impacts of a change whenever executives ask, how is this going to work and who is involved.  Beware changes that promise significant improvement without an organizational impact.  While both are possible, they are more difficult without coordinating operational and organizational changes.

Knowing what an org chart tells us about the company or group helps us create sustainable and successful change.  Without this understanding, we can implement point solutions – a new infrastructure management approach for example – without addressing the organizational aspects.  This creates a mismatch between how we want to work and how we are structured.  Mismatches lead to friction and inefficiency expressed in terms of higher costs, greater degrees of management and governance, turf battles, or heavy organizational staff.  When these or other symptoms arise, take a look at your org chart to understand what it says about you and your company.

Seems that they did not see IT’s health based on the capital replacement cycle as something that was sustainabl

That got me thinking, what if we have an IT-Less Recovery?

Everyone is looking for signs of economic recovery and wondering what the recovery will look like.  Economists are talking about the shape of the recovery.  Will it be “V” shaped, “W” shaped, “U” shaped or “L” shaped?  By the way the last shape means that there is no recovery.

Executives are talking about where growth will come from in terms of increased consumer spending, business investment, export demand, etc.

Most people believe that the recovery will be jobless, particularly in its early stages as investment and hiring lag an uptick in economic activity.

The same thing can happen with IT, particularly this time around for the following reasons:

• IT investment levels generally lag an economic recovery by a year in a normal cycle.  This may be the case particularly this year as CIOs predicted the recovery to come in the third quarter of 2010 – which means that investments in growth will not play into the IT budget until 2011 or 2012.

• Companies have most of the core IT systems they need to transact business in a growth environment – this limits the need for IT investment in new systems to support growth.

• IT organizations are virtualizing their IT infrastructure to gain greater capacity  – limiting the level of required infrastructure investment as server capacity utilization increases.

• Companies have the option to acquire new applications and functionality through alternative delivery models like Software as a Service, which shifts resources from IT and to service providers.

Not all of these things will happen at the same time, with the same intensity for every organization.  But its clear that IT is in a different state at the edge of this recovery than its been in the past.

The possibility of an IT-less recovery needs to figure into CIO and business plans and reshape the nature of IT investment and its role in the enterprise.

The leading IT journalist is right, IT investment will increase because infrastructure will wear out, capacity consumed, and failures occur.  CIOs should not wait for an upturn in the infrastructure investment cycle.  That re-enforces the view that IT is a commodity and begs the question when the infrastructure should move to more scalable solutions.

The potential for an IT-less recovery is real and its potential to persistence into 2011 will confound IT leaders looking for traditional IT investment cycles.

Do I believe that the relationship between business growth and IT is broken?

No,

But, it is changing based on the evolution of technology, the success we have achieved over the last 10 years, and increasing business leverage of information and technology.

Understanding these changes will be crucial in defining the next stage in enterprise and IT evolution.

All business is a people business to one extent or the other. Business effectiveness or dysfunction results in part from the strength of relationships across the enterprise, its customers and suppliers.  Relationships matter more than process, finance or money.  As one of my customers once told me, “People write checks, not systems.”

Weak managers base their relationships on the past and use that experience to brand people and put them into individual pigeon holes.  They blackball people based on these associations in much the same way that Senator McCarthy became to symbolize the “red scare” of the 1950’s.  In that environment, guilt was by association.  The same holds true for companies with weak management.

Cliques, groups, being one of his/her people are among the symptoms of this type of management.  Avoiding cross-functional teams, working only with your friends, those your are comfortable with, the ones you understand, or requiring people to be your friend are indications that you are weakening your management potential and power.  Despite what you say publically, your actions tell everyone that you only want to work with people who like you or are like you.

The cost to the enterprise in terms of innovation, diversity of thinking, employee motivation, workforce engagement are well-documented elsewhere.

Management by McCarthyism is a personal trap.  Weak managers need to recognize this tendency within themselves and remedy it on their own.  The remedy is simple.

• Start taking people for who they are now, not what they have been.  Past experience is important, but its not the only thing.  Recognize people who have worked their way stupid by having the same experience year over year.  Be open to the fact that people are different and that is ok.

• Value them for what they know, how its different and how they will compliment the work you are doing—even though they will complicate the process.

• Listen to what they say, remind yourself that there must be a nugget of wisdom there and its your job to find it.  Think about what they know, their training, their position in the organization, the knowledge that they have.  They are there for a reason, remind yourself of that and take it as a personal challenge to find that reason,

• Verbally recognize them, restate what you think the takeaway is and the action going forward.  Show people who think differently that you are trying to understand and validate their contribution.  Remember that validation is not necessarily agreement, but it goes a long way to building a functioning diverse team.

• Be aware of the zealot, the one whose opinion is different but cannot seem to accept the opinions of others.  Chances are that they are McCarthy-ites as well.  Give them a change to get along and be willing to remove them from the team when they demonstrate that they are not willing to consider alternatives.

Branding people for their past and only working with people who are like you is a sign of weak management that cannot stand diversity or debate.  Recognize this potential weakness in the managers you work with and this potential in the way you manage.

Recognize that in this complex world, no one of us is as smart as all of us.

Seems that they did not see IT’s health based on the capital replacement cycle as something that was sustainable

That got me thinking, what if we have an IT-Less Recovery?

Everyone is looking for signs of economic recovery and wondering what the recovery will look like.  Economists are talking about the shape of the recovery.  Will it be “V” shaped, “W” shaped, “U” shaped or “L” shaped?  By the way the last shape means that there is no recovery.

Executives are talking about where growth will come from in terms of increased consumer spending, business investment, export demand, etc.

Most people believe that the recovery will be jobless, particularly in its early stages as investment and hiring lag an uptick in economic activity.

The same thing can happen with IT, particularly this time around for the following reasons:

• IT investment levels generally lag an economic recovery by a year in a normal recovery cycle.  This may be the case particularly this year as CIOs predicted the recovery to come in the third quarter of 2010 – which means that investments in growth will not play into the IT budget until 2011 or 2012.

• Companies have most of the core IT systems they need to transact business in a growth environment – this limits the need for IT investment in new systems to support growth.

• IT organizations are virtualizing their IT infrastructure to gain greater capacity  – limiting the level of required infrastructure investment as server capacity utilization increases.

• Companies have the option to acquire new applications and functionality through alternative delivery models like Software as a Service, which shifts resources from IT and to service providers.

Not all of these things will happen at the same time, with the same intensity for every organization.  But its clear that IT is in a different state at the edge of this recovery than its been in the past.

The possibility of an IT-less recovery needs to figure into CIO and business plans and reshape the nature of IT investment and its role in the enterprise.

The leading IT journalist is right, IT investment will increase because infrastructure will wear out, capacity consumed, and failures occur.  CIOs should not wait for an upturn in the infrastructure investment cycle.  That re-enforces the view that IT is a commodity and begs the question when the infrastructure should move to more scalable solutions.

The potential for an IT-less recovery is real and its potential to persistence into 2011 will confound IT leaders looking for traditional IT investment cycles.

Do I believe that the relationship between business growth and IT is broken?

No,

But, it is changing based on the evolution of technology, the success we have achieved over the last 10 years, and increasing business leverage of information and technology.

Understanding these changes will be crucial in defining the next stage in enterprise and IT evolution.

Process is a four-letter word at companies that value independence, creativity, personal accountability and entrepreneurship.  These companies, often highly decentralized, view process as a means of control, a dampener on innovation and the reason why not to focus on customers and the market.

There is some merit in this view, particularly when we look the brief history of process from Frederick Taylor to today’s Lean Thinking and Six Sigma.  Go back to Taylor and you will find that process was seen as a means to prevent “ the ignorance of employers as to the proper time in which work of various kinds should be done.”

Go forward to today and examine Lean Thinking or Six Sigma and you will find similar focus on eliminating waste, reducing defects and eliminating variation in the outcome.  All of these things raise quality, improve customer service and are clearly needed in this environment

Companies allergic to processes point out the following:

Just because there is nothing wrong with a solution

Does not mean that there is anything right about the solution.

Process allergic companies, those that see process as a four-letter word, point out that:

• In the variance is innovation,
• In the individual the inspiration,
• In the waste that the accountant sees is the invention

No organization wants to loose its innovation, inspiration or invention.  That is not the reason to avoid process because process oriented companies are innovative (P&G), inspired (Southwest), and inventive (GE).  The challenge for managers is to resolve the convenient but unnecessary paradox that process and innovation are incompatible.

Returning “Process” to a seven letter word

It is important to recognize that even chaotic companies have processes, so a process allergy is a belief rather than a reality.  It is just that those processes are embodied in people, the culture and other social systems rather than being embedded in corporate policy and information systems.  Once you recognize that you do not routinely generate sales by doing a set of random things, you have crossed the first hurdle.

The challenge is in how to use process to generate innovation, inspiration and invention.  Those outcomes come not from imposing control but creating an environment for the aggregation of ideas, the accumulation of information and acting on insight.

To do this, processes need to concentrate on informing behavior and the company culture by creating greater transparency in how things get done – by people rather than by policy.  With that knowledge becomes a means to innovate at speed while operating at scale.

To do this, processes cannot be a mindless menu or activities and actions, a script that sucks the soul out of work.  Rather processes need to have enough structure to manage the outcome with enough slack to enable people to find better ways to do things.

To do this, processes need to be managed not in terms of compliance and conformity but as a way to identify demonstrated best practices that can be shared across the enterprise.  This form of ‘collaborative competition’ fuels the earnings of companies like P&G, CEMEX and GE who share what works and rapidly adopt it around the enterprise.

Process can be a four-letter word in the hands of weak managers.  However, in the hands of skilled managers it is the means for coordination, engagement and management.  In the hands of managers concerned with creating wealth rather than conforming to rules, process is not a four-letter word and certainly not the antithesis of innovation, customer service or new ideas.

The person did not give their name so I hope they see this post.

Question: In a world where we are faced with throwing away our people through outsourcing, how can we make people our top priority?

The question is a good one as people are a significant factor in the IT and enterprise effectiveness.  Outsourcing creates at least an “arm’s length” relationship between the retained IT organization and outsourcing staff, many of whom used to be your employees. This creates a conundrum, as people are my most important asset, yet I no longer control that asset, its development nor its investments.

Here are a few thoughts and observations.

Invest even more in the people you have

It sounds harsh, but concentrate on the retained organization first as their performance is the most important in an outsourcing relationship.  The retained organization, ala IS Lite, can be an after thought or those ‘left behind’ after the outsourcing.  The exact opposite is true.

The retained IT organization is the remaining significant point of leverage responsible for directing and managing outsourced services.  Andy Kyte at Gartner points out that often these people are out-manned; out-skilled and out-gunned in relation to the outsourcing account management resources they work with.  He is right.  So here are some ideas:

Concentrate on building key skills in the retained organization in vendor relationship management, architecture, service management and the like.  Make them the enterprise experts so they have the knowledge and confidence to connect what you enterprise needs with the services provided by the outsourcer.

Retain the responsibilities that drive your enterprise economics and performance.  Responsibilities for deployment, benefits realization, business process management and others unique to your operations need to stay inside rather than moving to an outsourcer.  Outsourcers may provide the army to do the work, but you need to be the generals and officers directing their work.

The retained organization needs to be the A+ team, not the leftovers from the outsourcing deal.  This means that they should get upgraded positions, pay and investment.  It should be a promotion to be in the retained organization and not a group of people who feel that they were picked last at dodge ball.

A rule of thumb is that the retained organization should have a budget of between 15 – 20% of the outsourcing contract.  For every $1 million outsourced an investment of $150,000 to $200,000 in the retained organization.  It is just a rule of thumb but it gives you an idea of the level of investment required.

Recognize that the way you contract does not have to be the way you work

CIOs who report having success with outsourcing see having “one team” as a reason for that success.  A one team approach is based on how we work together, which is as one team, rather than how the services are contracted.

This concentrates mostly on the program/project and portfolio aspects of day to day working that the I will admit that having one team is rare, but if you can establish that as part of the foundation of the outsourcing relationship you are in a better position.

Ensure your outsourcing partners are living up to their people investments.

Your outsourcing contract should have skill and training requirements for the people working on your account.  Make sure that they are living up to that part of the bargain, that the people are qualified, receiving training and most importantly being oriented toward your account.  Raise the issue if they are not and take corrective action.

Do not expect too much from outsourced resources or their management.

It is easy to expect too much from the outsourcer, particularly when they hire many of your people.  Recognize that outsourcing economics derives from standardization and scale rather than customization and service.  Outsourcers value the interchangeability of skills as they can move those skills across accounts.

Outsourced staff are not “thrown away” unless you choose to dismiss them and their skills.

You can and should seek to work with them as one team, ensure they have the right skills, but you cannot expect too much.  This is why you need to invest more per person in the retained organization, as those are the people you have and the future of your organization.

To the person who put the paper in my hand, please let me know if this answers the question, if not happy to add to this response.  And thanks for asking.

IT metrics concentrate on reporting IT value in a point in time.  This is a fundamental weakness in current IT metrics approaches.  Point in time reporting concentrates IT on financial and status measures that fail to capture the changes in performance and productivity created by information technology.

The value of IT at any one point in time is essentially zero at best and often negative.  Take the IT assets on you balance sheet and mark them to the market to see their value. Turn your attention to the IT investment portfolio and you get a similar story as expenditures on active projects that have not completed outweigh the value of completed projects in a given year.

IT creates little value at any one particular point in time.  IT metrics that concentrate on point in time measures naturally have trouble communicating value.  Instead they focus on demonstrating that IT is not wasting money and not disrupting the business.  That is the essence behind reporting project status, systems availability and budget based statistics in IT scorecards.

Enterprises see the value of IT over time.

IT value comes from a sustained change in business performance rather than a single transformation.  You cannot see this performance via point in time measures.  You only see this impact by comparing performance in the current period with past performance.  This enables you to see the impact of new business capabilities on business performance.

A control chart provides a way to see the changes in business performance over time.  Highlighting the release of new capabilities on a control chart gives executives the ability to see the impact of IT and other changes on performance over time.  The figure below illustrates this type of control chart.

A control chart illustrates the relationship between business performance and new IT based capabilities.  Ideally new capabilities would establish a new process performance profile, shown as the new upper/lower limits in the figure above.  The point here is that I can see the value of IT because I can see the change in performance only over time.

A caution when using this approach.

There is a fallacy of “false precision” where business and finance leaders will say that IT cannot take all the credit for these improvements.  They are right.  No one person can take credit for performance improvement because it’s the result of coordinated and collaborative changes not any singe change.  The same goes for when performance deteriorates and falls outside the lower control limit.  The point here is that you want to demonstrate that business performance improves when IT creates new capability over time.

You may want consider a collection of other comments about management pitfalls in this other post  Signs of Weak Management

There is more to showing the value of IT than we can discuss in this single post.  Demonstrating the business value of IT starts with recognizing and reporting on the source of IT value which is changes in business performance over time not IT performance at any one particular point in time.

Reflective reciprocity sounds like a complex process – perfect for a consultant – but its pretty straight forward.  The principle is this:

You cannot lead people to a new future, until you understand their shared history by honoring their past.

The reflective part concentrates on understanding peoples past.  Allowing them to reflect on their history, their accomplishments, the events and stories you allow them to tell you what makes them who they are.  By listening and paying attention, you show your interest and give that past value.

The reciprocity part is the implicit promise that if you listen to who I am, then I will be willing to listen to you about how we move forward together.  Building from that shared past you can now take the organization forward.

Applying reflective reciprocity

Apply reflective reciprocity in workshops, focus group or even 1:1 interview situations.  The technique is simple.

• Let people know that you are interested in understanding the company, their role, their successes and how they overcame challenges.

• Hold a session to discuss the current context and invite people who are the key influencers of company culture and experience.  If everyone listens to bob, then make sure bob is there.

• Start the meeting by asking the group to share their successes going back over a period that is at least equal to the duration of the change initiative.  A one year change initiative probably involves going back 3 – 5 years, a three year change go back 10 years.

• Sit back and listen, ask questions, seek stories and show people that you want to understand who they are and how they got to where they are today.

Two other things I have experienced using this tool.  First the farther back you go in terms of understanding the history the farther forward the group is willing to go in envisioning the future.  The other point is that the deeper the analysis you do of the past – the more radical the audience is willing to be about the future.  The combination of honoring the past and understanding it sets the stage for innovative and forward leading thinking.  The graphic below illustrates this concept:

Where to use reflective reciprocity

Reflective reciprocity works because you first seek to understand who they are and why they are that way.  This understanding matters in situations where there is a deep resistance to change based on one of the following situations:

• A historically successful company that is facing new challenges.  For example traditional market leader facing the need to change.

• A company with experienced and deeply tenured employees who have a vested interest in the current state.  For example a public sector agency or not-for profit.

• A company with culture based on consensus and group decision-making.  For example a company moving from decentralized business units to centralized operations or shared services.

• A company facing the need to make deep changes in its culture and business model.  For example a products company extending their model to include services.

I have found reflective reciprocity particularly effective in situations people are heavily invested in past success and any change represents an implied threat to themselves or more importantly their beliefs and assumptions.

Reflective reciprocity demonstrates that you are interested in who they are and you are willing to take the time to understand them before you look to change them.  It also can create recognition that things need to change without every having to talk about the ‘burning platform’.  Here is how.

As people discuss their past, their successes and their accomplishments they will invariably recognize things that did not work so well.  While these will elicit a chuckle or a ‘remember when …” they remind the audience that everything was not perfect and that there is a need for change.

Effective leadership requires more than a vision of the future it requires an appreciation of the past.