Monday, November 25, 2013
If CIOs became Tech company CEOs
Before the turn of the millennium there was a trend with many conglomerate and large corporates wanting to hive off their IT departments to become independent companies. Some of the companies scaled up well and grew to become fairly sizable and tech services or product providers in their own right. Few retained their niche and did well for a while; in most cases the Head of IT or CIO equivalent became the CEO of the start-up. Then the CIO moved on and the reins were taken over by typical IT sales persons from the outside.
The past decade saw the economy on a roller-coaster ride triggered by black swan events; technology hype drove irrational behavior; acquisitions saw the small and mid-size companies being gobbled up. Quite a few leaders of the past too struggled to survive and sought white knights; in M&A most of them lost their identity, some went off into oblivion. The CIO typically the customer was challenged to keep balancing contracts and budget escalations triggered by the larger company wanting to improve bottom line.
With competition heating up and start-up companies innovating to gain market share, the companies of yore created Customer Advisory Boards (CAB) to seek input from CIOs towards the product road-map. They used these forums to stay connected to their customers which did not necessarily always impact their ability to squeeze every cent they legally could from the same customers; product engineering and development was far detached from commercial and sales divisions.
Through challenging times, quite a few tech companies saw CEOs being fired, sales structures redrawn, and alignments change from products to industry to logical groups to key account management, and many more. Consulting companies reformulated strategies to sustain market share and retain customers; beyond tactical results this did not deliver to promise. All through the process, customer frustration continued its organic growth faster than the growth realized by the tech company.
So companies hired domain experts across industries and sometimes also across roles within a function; for example a Warehouse Management Solution company hired warehousing experts who would be the users of the solution. Similarly across Retail, Pharmaceuticals, Banking, Finance and Insurance, or for that matter depending on the industry focus, it was deemed important to have subject matter experts to connect with the CIO and other CXOs to facilitate the sales and adoption cycles.
I often wondered as to why CIOs rarely joined technology companies ? There have been rare instances where a CIO transitioned and started selling products or services. These individuals were CIOs representing their past industries or a specific solution set; I remember one instance where the only thing such a CIO wanted to talk about is how her company had implemented a specific technology and she had lead the team towards creating the success story. She was not very successful in her pitch but told her story wherever she went.
Why is it that companies never think of taking on a powerful or marque CIO as their CEO ? Wouldn't it be better to have someone who uses their solution or service and knows how to take advantage of the technology also drive the company ? Aren't CIOs adept at selling technology internally to their users, management and the Board ? They also have their eyes and ears to the ground and connect to strong social groups within the industry where some influence opinions and drive adoption.
Discussing this trend with a few friends I realized that most CIOs love their position of power over the vendors; they do not see themselves in the same position where they normally end up putting their tech partners. The game has gone on too long now with boundaries being defined and roles cast. Their cynicism coupled with reputation of some vendors does not make this an attractive value proposition for CIOs who would rather join consulting companies or take up academic roles; join a tech vendor ? No way !
I personally believe that IT companies would immensely benefit from such a move; who knows the pains, opportunities and challenges of CIOs better than CIOs themselves. Sales cycles nowadays follow a predictable pattern of technology analysis and negotiation linked to period end. I think that while the broad design may not change, there would definitely be higher traction based on mutual empathy. Maybe this is the trend for the future; taking CIOs as independent directors on the Board could be a starting point.