Monday, February 22, 2010

Are Boards ready for the CIO ?

Every now and then, we come across the question, “Is the CIO ready for the Board? Can they do justice to a position on the Corporate Board?” This issue has been debated ad infinitum, as some CIOs have already made it to the boardroom — even as others continue to passionately drive the IT agenda within their enterprises. Although certain CIOs are yet to evolve to a level where they equal other CXOs within their companies, the majority of CIOs have already reached a level of maturity to directly or indirectly advise their management on strategic and operational issues that have a strong dependency on the IT systems that enable their company.

While addressing a group of CEOs in an event recently, Ram Charan, the renowned management guru discussed the purpose, functioning and effectiveness of Boards. According to him, the following characteristics differentiate good Boards:

1. Boards should be competitive.
2. They should review the external environment, and not remain inward focused.
3. Board members should know other CXOs within the company, as they drive the company agenda and deliver the company’s vision to the stakeholders.
4. Global Boards have to balance growth and resources equally well. Resource allocation is a key to Board management.
5. Boards should continuously review internal and external relationship building by CXOs, and ensure that the CEO also creates a pipeline of leaders.
6. Boards should have a very clear 12 month agenda, apart from a strategic roadmap.

Now let’s look at the typical CIO and the role that he plays in the company. He provides the information infrastructure that enables his business to interact and transact with customers, suppliers as well as within the enterprise. He also analyzes, presents, protects and disseminates information assets across the ecosystem. A day without IT is unimaginable across most business units (as well as industries).

The CIO is not just the information infrastructure’s custodian or provider. Today the CIO challenges business processes, influences outcomes, and works with all stakeholders across the enterprise to automate, rationalize, and optimize. The CIO’s view of the company has better breadth and depth than that of other CXOs. Their interactions and ability to switch from Marketing to Finance to Supply Chain with ease during different meetings demonstrates their comfort levels with multiple domains. This led to an observation by a leading thinker, “IT is too important to the organization to be left to the IT staff”.

Last week, I had interactions with two mid-market CEOs. A generation gap separated them in terms of age, experience as well as mindset. The younger CEO challenged the CIO and encouraged him to challenge other CXOs within his enterprise. This initiative helped in the CIO’s integration into the management team, as well as a position on the board of directors. His words were bitter-sweet music to the ears of the CIOs he addressed. Some CIOs wistfully wished that their respective CEOs quickly reach this level of understanding. The younger CEO’s enterprise used IT and information better than peer organizations — an impact demonstrated by the company’s financial metrics.

The older and much respected CEO (also on many boards, as well as the founder of an IT company) admitted that his CIO did not have a position on the management table, forget the Board! He put the onus of this challenge on the CIO, and did not believe that he was required to provide any impetus towards the CIO’s career progression. As this Q&A with the CIO gathering progressed, it became evident that the difference in mindsets (and thereby the organizational culture), would have made it challenging for any CIO to migrate to the management team. His contention was that Boards discuss people and money issues, but not IT issues. He felt that this was the result of how his CIO has not created visibility with the Board. He found it difficult to accept that most Board members appreciate the need to be aware of how technology impacts their enterprise or can provide unique competitive advantages.

Considering that experience and wisdom (that comes with age) plays a significant role in the Boardroom’s composition, a majority of directors or independent directors belong to the latter classification. Until Boards transform themselves and induct fresh young leaders who are comfortable with technology, use it daily for normal tasks, and worry when they hear about competitors implementing new technological innovations, it will remain an uphill task for the CIO to find a chair in that room.

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