My View: The CIO And The CEO

February 27, 2007
My View: The CIO And The CEO
by George F. Colony

Throughout my career, I have watched the “odd couple” of the chief information officer (CIO) and the chief executive officer (CEO) try to live together. Back in the 1980s and for most of the 1990s, their paths rarely crossed — the CEO didn’t think much about technology and the CIO rarely interacted with executives beyond his boss — the chief financial officer (CFO). With the exception of some techie leaders like Ned Johnson at Fidelity, Fred Smith at FedEx, or David Glass at Wal-Mart, CEOs perceived IT/BT (I now refer to information technology as business technology or BT) as an important underpinning of company operations, but not as a critical strategic tool. Added to this general ambivalence were the high-profile cases of CEOs having their reputations and budgets scorched by IT/BT projects gone awry: Perpetual IRS systems overhauls, Citibank’s futile effort to create a “single customer view” in the mid-1980s, and early-1990s’ SAP R3 “kitchen sink” leaps of faith come to mind.

Then the dot-com collective insanity hit and CEO panic set in (Amazoning, etc., etc.). In those days, I ran a tech session at the Harvard Business School for CEOs. To prepare for the session, I surveyed 25 large-company CEOs. When I asked them how much time they spent on technology issues, the response was “25%.” They were lying: No CEOs — not even the techies — could afford to devote a quarter of their time to systems. But they were certainly spending more time on tech then they had five years earlier — even Jack “I’ve never used email” Welch, on his way out the door at GE, got religion and started to preach about the digitization of business. Michael Porter, every CEO’s favorite academic, got into the act with a naïve Harvard Business Review piece on the Internet in early 2001, just as the curtain came crashing down on The Web, Act One.

Fast forward to 2007. How’s the odd couple today? Forrester just surveyed 75 global CEOs and here’s the punch line:

1. 60% of CEOs are satisfied with the overall performance of IT/BT.

2. But only 28% see IT/BT as a proactive leader in innovation.

3. And only 30% see IT/BT as a proactive leader in process improvement.

Now, you can analyze this data simply and conclude that CIOs are in pretty good standing with CEOs, but they have not stepped up to the plate as innovation and process mavens. I interpret the results quite differently.

The fact that 60% of CEOs believe that CIOs are doing a satisfactory job is bad news, not good. Think comparatively: If only 60% of your top executives were satisfied with the performance of the CFO, that would signal meaningful distrust in the financial operations of your company. CEO satisfaction in IT/BT has certainly risen through this decade, but 60% is still too low.

And the fact that CEOs are not looking to the CIO to be a proactive leader in innovation and process is not bad news. Rather, it is a frank assessment by the CEO that the CIO should not be, indeed cannot be, the driving force in these two areas.

Why? In most firms, the CIO is too busy keeping the ship’s engines running smoothly to come up onto the command deck and make suggestions to the captain on course changes. Leading business innovation and process change is not in the skill set of most CIOs — nor should it be.

Does the CIO have a role in process change? Absolutely. IT/BT typically supports and manages the process backbone — think ERP — of most firms. When technology is injected into a company, the effort will fail unless it incorporates process change (the way you do work) and organizational change (the way you are organized to do work). I call this the critical triad — technology/process/organization — and the three must always be viewed collectively and as acting in concert. While the CIO brings technology to the table, business executives (especially the CEO) must spend political capital to change process and organization. This is a collaborative effort, with the CIO working with the business people to get the right mix.

How about innovation? Obviously the CIO is always working on systems innovation — that’s part of keeping the engines running smoothly. But when it comes to business innovation, he is again not the proactive driver, but rather the steady partner with business executives who are chartered to lead business innovation.

Here’s the key: For business executives to effectively drive process change and innovation, they must have a solid understanding of technology. They must be, to coin a term, technology knowledgeable business people (TKBPs) able to adeptly bring the potential of technology to bear on business change. The goal is to field VPs of marketing, EVPs of strategy, and presidents of divisions who know how to apply technology to get the company to achieve its goals. The CIO must be in the business of educating and teaching the businesspeople so that they can make the leap. IQ (intelligence quotient) and EQ (emotional quotient), must be joined by TQ (technology quotient). And teaching TQ is the province of the CIO.

If that happens, CEO satisfaction with CIOs will head into the 70% and 80% range — where it belongs. And boards of directors will come to praise the CIO if he can work to develop a TKCEO — a technology knowledgeable CEO. And that’s when the odd couple will see eye-to-eye — to the benefit of the organization and shareholders.

George