Having spent almost two decades working closely with senior IT executives, Martha Heller is today one of the most widely followed voices in the CIO community. She is the founder and President of Heller Search Associates, a recruiting firm specializing in CIO, CTO, and other senior IT leadership roles across industries. Her blog Movers and Shakers, on CIO.com, offers career advice, perspectives on the changing role of the CIO, and best practices from in-the-trenches IT leaders. The Heller Report, a weekly newsletter on issues facing IT leaders, goes out to thousands of CIOs and rising technology professionals.
Heller’s first book, The CIO Paradox: Battling the Contradictions of IT Leadership (Routledge, 2012), describes the often competing demands facing modern CIOs and offers pragmatic guidance on how to deal with them. Her second book, Be the Business: CIOs in the New Era of IT (Routledge, 2016), grew out of in-depth interviews with more than 40 CIOs from mostly Fortune 500 companies, across a wide range of industries. It describes the top 10 skills, or competencies, that CIOs need to develop and then leverage in the new world of IT. One overarching message of Be the Business”: Technology leadership should no longer reside solely in the IT function but needs to be distributed across the entire organization.
The following is an edited conversation Heller had with CIO Straight Talk Editor-in-Chief Paul Hemp.
Which of the 10 competencies described in your book comes as the biggest surprise to CIOs when they see the list?
Let me answer the question a little differently. I’ll tell you what annoys them—and maybe that comes as a surprise to them, as well. It is the ability to “turn IT consumers into co-investors.” What do I mean by that? Successful CIOs are able to educate their business partners about the true costs of IT, so that executives will stop thinking of IT as either “free” or “a tax” and instead start looking at and helping to manage the company’s IT investments as a portfolio.
When I talk to CIOs about creating a business community where their business partners are as knowledgeable about the costs of IT as they are, and where they take an IT investment portfolio management mindset, CIOs tend to get their backs up a little bit.
Why does that seem to irk them?
Budget ownership can mean power. And because we are used to having control over our own budget, the thought of creating an investment management culture and a pool of resources that the business has some control over and accountability for makes CIOs nervous. There’s a fear that business partners will run amok and buy technology that the company doesn’t need, that isn’t secure, that goes against the concept of enterprise cost and scale.
What’s your advice to CIOs who feel this way?
Purchasing decisions have to happen very close to where the value from those investments will be realized. So if the investment is for a new supply chain system, then the decision about investing has to made not solely by IT but at least in part by the people who are managing the supply chain. And in order to make those people informed investors, you’ve got to educate them about what they’re really spending.
So I think part of the reason CIOs push back is a question of control. But it’s also a lot of work. How do you decide how much of data center capacity this part of the business is using versus that part of the business? Getting everybody on the same page about costs is very difficult. The companies that have been able to get a handle on their costs and communicate them in a way that everybody in the company understands are the ones changing the conversation in IT from one of cost to one of value.
Can you explain the mechanics of getting IT and the business to “co-invest” in technology?
You know, it’s different in every instance. The mechanics has a lot to do with whether the company is centralized or decentralized. One way of co-investing is actually to set up an IT investment committee in which all the major stakeholders of IT come together and present business cases for their own investment requests but, in the end, make decisions as a group about what’s best for the company.
Steve Gold, the CIO of CVS Health, talks about something he calls the CIO “theory of reciprocity.” Say that the Head of Sales comes to you and says, “Hey, if you build or buy for me this new inventory management system for $50 million, then I will be able to increase revenue by $500 million.” What Steve wants to see in this investment management culture is that the Head of Sales will go ahead and bake that $500 million right into his forecast. That’s investment management accountability rather than a “spend now and worry about returns later” attitude.
In your book you say that the CIO not only has to share responsibility for investment decisions but also share, or distribute, responsibility for technology innovation, development, management, and adoption.
Let me give you an example of that. Kathy McElligott, the former CIO of Emerson Electric, who is now CIO and CTO at McKesson, knew that her IT strategy was aligned and integrated with Emerson’s business strategy. But then she thought, “You know, we’ve got sensors that are collecting data in all our electronics products, but we don’t have a business model or a business strategy to capitalize on that. We could create a brand new revenue stream by selling information about the use of our products.”
So she set up a “Business-IT Strategy Board” that met regularly to discuss big questions concerning the impact of technology on the business. Now Kathy didn’t go in there and say, “This is our technology strategy, and I own that, and I’m going to hand it over to you, or rain it down upon you.” At the same time, she wasn’t relieving her fellow executives of the responsibility of thinking about the impact of technology on the business. What she did was get all of these executives, who were used to focusing on their own vertical or functional piece of the pie, to work together. In the digital economy, teams need to work together to think about how the company should respond to fundamental changes and pivot accordingly. Yes, technology is at the heart of these changes, but they go way beyond technology.
In creating that strategy board, Kathy was sharing the responsibility for technology/business strategy among the executives on the board. The responsibility no longer belonged to IT alone.
What about “shadow IT,” where there is no sharing, where the business goes off and purchases technology on its own?
In my book, Jim Fowler, the CIO of GE, says, “People graduating from college and joining our companies don’t even think they need an IT function. They’re going to create their own digital tools and algorithms and databases and whatever they need.” Rather than think of shadow IT, as a nuisance, CIOs should re-conceptualize it as end-user innovation. In fact, if they can create a development platform that allows everybody in the company to be an innovator, but to do it in an environment that’s secure, scalable, and cost effective, the entire organization stands to benefit from it.
It’s not just that IT needs to be the business and be in business meetings and be proactive and shape business agendas. We’ve been talking about that for a long time. Actually, IT has to let the business into IT. Development, delivery, and maintenance of IT cannot all be the responsibility of IT anymore. That wall has to come down.
Are we heading toward a time when there is no central IT function?
A divisional CIO at a very large company I talked to recently said the company has decided to do away with the corporate CIO position. They’re embedding finance systems and HR systems right in the functions that use those systems. They still have divisional CIOs in a business-facing role, but the big enterprise CIO position is gone.
Despite this example, I don’t think the corporate CIO role is going anywhere soon, given big-ticket corporate-wide issues like information security. But I do think that CIOs have a chance to step into the opportunity that digital provides to drive the business forward with technology. Otherwise, they’ll be relegated to the sidelines, where they’ll keep things secure and cheap, where they’ll look after email and networks, while some other “technology executive” comes in to do all the cool, fun, innovative stuff. I see the most forward-looking CIOs—and my book is filled with them—thinking through how technology is changing the fundamentals of their company, their growth strategy, their customer engagement. These CIOs are taking the lead in driving digital as a capability across their companies. As a result, some of them are taking on new titles, like CIO and SVP of Innovation or CIO and Chief Digital officer.
What other competencies that you describe in your book seem to get a response from CIOs or other technology executives?
Let me back into this with a story. Rob Lux, the CIO of Freddie Mac was in a computer club in high school. You know, they took apart computers, that kind of thing. And one day this guy from Microsoft comes to see them. He had written to them and said he had something he wanted them to demo. So they said, “OK, fine.” And he shows them this product, and it’s Windows.
Rob, recalling the meeting, says: “It was terrible! It only had three colors. The tiled windows wouldn’t overlap. And meanwhile, the Mac had just come out, and it was gorgeous.” So Rob told this rep from Microsoft, “You don’t want to ship this. You’re good at DOS. You’re good at Basic. But you’re not ready to ship this product. You’ve got a lot to do before it’s going to work.” And the visitor said to him, “I think you’re wrong. We’re going to push this out now. We’re going to revise. We’ll do a lot of revisions. But Windows is going to be a success.”
Years later, Rob Lux remembered the conversation, and realized he had been wrong. So he wrote to the guy—who was, of course, Bill Gates.
Nope. So Rob emailed Bill Gates and said, “You were right, and I was wrong.” And he sent Gates the demo disk, so that Gates could sign it, which he did. Today, the disk hangs on Rob’s office wall. Next to the disk Rob has written. “Ship product early and often.”
It’s not about being perfect and having every feature in the product in every release. If you have bugs, communicate them. But ship software, because if you’re not getting software into users’ hands, you’re failing. And this has a lot to do with Agile Development, which uses concepts from product development and R&D to deploy minimal viable products. It allows customers, internal or external, to give you feedback right away.
So how exactly does “ship early and often” apply to the IT organization?
Rob wants his IT organization at Freddie Mac to think like a product company—to “think product,” which is one of the 10 capabilities I discuss in my book. CIOs are restructuring IT so that they don’t have people working on applications, financial systems, infrastructure, or a database. Rather, they have product teams. The product doesn’t need to be for sale to a customer. The product could be Citrix or SAP. But CIOs are setting up product teams composed of representatives from various departments—infrastructure, database, analytics, the businesses—who are convened as a team accountable for making sure the product delivers what it needs to deliver to the customers, external or internal.
As Jim Fowler, the CIO of GE, says, when you organize by product teams, then you don’t have to get seven people from seven different departments on the phone together to figure out what went wrong. Everybody is a part of the same group moving forward with that product. That’s an entirely different way of managing technology.
What’s one thing would hope a CIO might remember after reading your book?
The CIO role has traditionally been an enabling role. CIOs have been how executives not what executives. The CFO is a what executive, because she knows the way the numbers need to move to create shareholder value. The head of sales is a what executive, because he brings the unique perspective of what customers want. These what executives are at the table saying, “This is what we should do as a company.” And then you’ve got a bunch of “how” executives saying, “Great, thanks for that. Here’s how we’ll get it done.”
With IT moving away from enabling business strategy to defining business strategy, CIOs need to shift chairs. They can’t let go of the how, because they still need to execute. But they need to bring their unique perspective to the table, and that unique perspective, believe it or not, is not technology. The CIO has an end to end view across the company. The CIO is a horizontal executive in a sea of vertical executives. So the CIO’s job is not to be the technology leader. It’s not to support business strategy. CIOs need to be the company’s critical capabilities champions. They can use their horizontal perspective to free their business partners from their vertical prisons, so that they together can look up and out at the future of the company.
So, instead of being how executives who are enabling the business, they need to be what executives who are who are defining business strategy.