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The return of strategically inventive IT leadership – at last.

by Mark Raskino  |  October 24, 2013  |  Comments Off on The return of strategically inventive IT leadership – at last.

With enormous relief, over the course of this year I have come to the conclusion that we are at last returning to the idea of truly, strategically, inventive IT leadership. It’s an idea that has been so suppressed for a decade or more, that I was almost giving up hope.

A few weeks ago, I was privileged to be asked to present some Gartner Research perspectives at an event for the awarding of the Fisher-Hopper prize. This award was created, late in their lives,by Max Hopper (founder of American Airlines SABRE)  and Don Fisher ( CEO co-founder of clothing company Gap ).  Both men shared a vision of CIOs as inventive leaders within their organisations – discovering and applying whole new methods of business organisation and optimization, using the power of computing. It won’t surprise you that this year’s winner, from the retailer Kroger, spent time in his acceptance speech acknowledging his years at FedEx and the influence of its founder Fred Smith  – another true IT believer.  But Fisher and Hopper felt an unease at the turn of the century – that the CIO was becoming too much of an order-taker / service-provider. There had to be more to the role than simply implementing the next standard business application software package, followed by a series of incremental adaptation requests from “the business”.   So they set up a lifetime achievement award to recognize great CIOs, who have made strong original technology enabled business contributions to their organisations and to the evolution of the role. Interestingly, the judging panel consists of  serving and ‘renaissance’ CIOs –  retired executives who knew what it was to create moderately enduring competitive advantage, through inventing new IT enabled business methods. I am convinced Fisher and Hopper were right to create this important award. The leaders from a decade or two ago, have a lot to teach the current generation by mentoring.

In the period 2002 through 2007,   I believe many business leaders sent IT to the strategic “dog house” –  because it had generally swaggered, threatened, over promised and under-delivered.  In the 4 years 1998 to 2001, those business leaders had invested a lot of net new money, to get past Y2K and to buy into all the new big packaged IT business ideas – CRM, ERP, Supply Chain Management, E-Commerce, Collaboration etc.   For too many, the experiences were nightmarish. Major business applications projects took many years to pay back, not 18 to 24 months as the e-business bulls mislead them believe. Sometimes, the consequences of late and failed major IT projects cost CEO’s their jobs. And all the money spent on Y2K,  won companies only a rushed and expensive desktop refresh, but not much else. Dark doubts lingered that the whole thing was some sort of IT industry scam in which CIOs had been complicit. So IT leaders were asked to clean up their act. We standardized and consolidated systems, we outsourced and off-shored, we secured and cost-controlled, we professionalized with COBIT and ITIL.  We learned to manage demand, optimize portfolios, create shared services, perfect SLAs, partner with vendors, and recently even to support BYOD.  In fact, despite initial howls of protest, in many ways CIOs did their level best to demonstrate that Nicholas Carr was right with the sentiment of his 2003 bombshell HBR article title: “IT doesn’t matter“. Collectively it seemed that IT leaders were being asked to standardize to the point where there was little or no chance of competitive differentiation using IT.

In the mean time, business leaders found easier paths to to profit glory. They fed on cheap money, whether it was directly lent by banks to fund corporate investment led expansion – or lent to the Western consumers at the end of every value chain, driving binge and bubble growth. In parallel they pursued high risk, high reward M&A strategies or setup shop in the BRICS countries to sell to the rapidly expanding emerging markets middle classes, while milking fatter margins from cheap labour cost-cutting.  Frankly, business leaders didn’t need much deep IT enabled business innovation they just needed more of the same kind of IT at the same or better marginal cost – to fuel cookie cutter business recipes for expansion. But as we all know, in 2008 the debt fueled global party stopped.

Of course the last 5 years since the Lehman crash, have held everything back. Business leaders first had to slash back operations and that included deep IT cost cutting.  Only by 2010 could they even start to think about post great- recession growth mechanisms. But in 2011 and 2012, aftershocks and secondary factors – like the Euro crisis and the ‘fiscal cliff’ fear delayed still further the opportunity to act on new strategic insights.

Now CEOs are ready. Many recognize that behind them lie 10 years of fallow-field opportunity. Technology has been completely revolutionized in that time, but it has been very under exploited. They have relatively done little, with dynamic BPM, mobile, social or cloud  – in business strategy terms. They have barely started to understand the richness of opportunity the emergence of big data and the internet of things could bring. But they know it matters. Because companies like Amazon, Apple and Google have applied these capabilities to take a big chunk of control of the destinies other people’s industries – from music to movies and books to cars.

When CEOs turn to their own current IT organisation capabilities, they find them wanting. The IT function is perfectly tuned for for the job they have designed it to do – passive incremental order taking – but not for strategic innovation and direction setting. So the CEO tries to hire a new kind of CIO, sets a new technological outlook ambition for the firm and may also be prepared to fund higher risk models of internal innovation – all to catch up.  The inventive CIO is reborn.  This new CIO takes one look at the long list of dull-edged technology provider contracts supporting a long list of uninspiring incremental back office system maintenance and minor changes – and immediately recognizes a basic fact. We can’t get where my CEO wants to go with this level of semi-detached IT capability.  Significant re-internalization and technology core competency building is inevitable. We see this starting to happen in automotive and retail already. We’ll see it in Pharma, CPG and others next.

The inventive CIO will strive to develop unique new technology capabilities for competitive advantage, using a powerful and creative  internal technology resource base. If your company wants to remain a leader in your industry, information and technology must become a core competency again.

 

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Mark Raskino
VP & Gartner Fellow
15 years at Gartner
30 years IT industry

Mark Raskino is a vice president and Gartner Fellow in the CEO Research group. Mark creates advice and analysis for CEOs on technology related and digital business strategy and change Read Full Bio




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