Engaging the Board (of Directors)

If you want to get a seat on the Board of Directors, then you have to think like them; understand what drives them and how they take decisions. BoD is not interested in the micro details of various initiatives or specifics of the technology solution. The discussion is about how IT furthers the strategic direction and helps the company achieve its long-term goals and objectives. Does it improve revenue or bottom line such that it creates shareholder value ?

So went the discussion to which I had the privilege of being invited that was debating the need, process, and models to engage the Board of Directors by the CIO. The panellists comprised a consultant, a CEO, and a couple of CIOs. The audience of CIOs were keen to learn from the experience of the panel, tips, insights, any pearls of wisdom that would help them forge ahead. So what does the CIO need to do to get the attention or when s/he needs to present a new initiative, how to make a case compelling enough to attain approval quickly ? Do BoD really get into the detail ?

Over the last decade or so I have observed that they do balance the strategic and the operational. Depending on the context, they have a tendency to drill down all the way to the transaction or root cause; the next discussion could be about the next 5 year growth or an acquisition. The latitude of debate varies; the composition of most Boards is normally diverse with complementary skills to cater to such swings. So is there a checklist that helps in getting an audience to begin with and then a permanent invite ? Is there a timeline that can be cast ?

Few insights that did come across were that in new age high technology companies the CIO is indeed included by design. Younger CEOs are more likely to invite the CIO to the table considering their familiarity and usage of technology. Conventional and old age industries with a legacy or history are less likely (there are exceptions though). Despite constraints that may be cultural, evolutionary, or due to lineage, there are steps the CIO can take which are listed with some input of my own.

• If you report to the CEO and s/he is not tech challenged, then take his/her help to get exposure with the Board
• Engage with other CXOs who are already working with the BoD
• Cultivate relationships with one or more Board members who are sympathetic to IT
• Create an IT Annual Report that is also circulated to the Board
• And the obvious one, talk about business and not technology even if you are the CIO of an IT company

 Despite this it is likely that your Board may be bored or uninterested in what IT is doing or how you the CIO plans to transform the business. You are walking the talk, you could keep pushing hoping that the message will get through or you convince your CEO make the pitch. But if none of this is happening, start looking where the grass is greener or be satisfied with what you have, you can always make lemonade out of it.

 

The Elastic CIO

Last week I happened to be in a panel discussion with some CIOs who were expected to debate on “Improving Enterprise Efficiency”. The sponsor management personnel on the table listened attentively and sometimes also asked intelligent questions to the CIOs. The expert moderator balanced the discussions well jumping from one to another keeping everyone engaged. Unfortunately the enticing headline inevitably focused on server virtualization, private cloud, and VDI as the key theme.

How do you create a link between responsive IT systems to Enterprise efficiency and Business IT Alignment ? The question had everyone stumped and the answer emerged as the lack of responsive systems would imply time wasted by the employees; thus response times are important to efficiency. Intuitive and elementary, so what is the debate ?

Taking another element of research over the last decade on significant portion (estimates vary from 50 to 90%) of IT operating expense is expended on maintaining the lights on or business as usual. So reducing this piece of the pie will presumably shift the budget towards innovation and not as savings. This shift of expense to investment if prudent and allocated to virtualized servers will improve the efficiency of the enterprise. And we will all live happily ever after !

If through some magical process or non-empirical derivation two unrelated pieces of research can be correlated, then as suggested by the Chaos theory, anything can influence the outcome of what the IT organization creates, manages or improves upon. It could be sun spots, or a butterfly in eastern Asia; or global warming might provide insights.

Above is just a sample; simplistic evaluation models defined to justify generic technology investment have almost become the norm. Even when the specific context may not apply, the push to sell is discomforting and creates an auto pushback. Confused, the CIOs have been struggling to divert the discussion to their technology team which is better equipped to discuss alternatives and how they align to enterprise architecture.

The elasticity of hypothesis amuses and at the same time frustrates. Nowadays the headline proposed at any event or by a consultant or vendor speaker has rarely any connect with the subject. The stretch of imagination belies conventional and sometimes unconventional wisdom. However, despite repeated occurrences, the bait still works in getting CIOs excited to come and participate.

The elasticity expected from the CIO goes against the business aligned IT leader with a dialogue that is expected to straddle server provisioning or data centre cooling to improving customer service with process redesign using video analytics, or complex transport management. The diversity of expertise with deep levels of understanding creates a superman like persona who is discussing code optimization with the programmers and engaging the board on shareholder value.

The latter is still rationale and achievable with some hard work, some help and coaching, but the former in which unconnected factoids create an opportunity for specific technology breaks the rubber band.

Justifying IT budgets and the bicycle stand syndrome

A long time back during a budget meeting, one of my CEOs narrated a story (or maybe a fable) on Boardroom discussions on budgets. This story has stayed with me for a long time, and the memory was refreshed last week in a discussion with some industry leaders. Here’s the story:

In the Board meeting of a large and successful company with multiple manufacturing plants, two agenda items were tabled; first to discuss $400 million investment in a new manufacturing facility, and the second the layout including employee amenities of the same manufacturing plant. The second agenda item was unusual for the board to discuss, but found its way into the chambers since the Employee Satisfaction Index at one of the older plants was low. The financial proposal was tabled by the Head of Manufacturing, with added guidance from the CFO. The resolution was passed unanimously, and done with, in about half an hour.

However, the discussion on amenities took almost two hours — with the longest time spent on the location, structure and type of the bicycle stand. Everyone had an opinion, and disagreements continued until the Chairman of the Board decided to put the debate at rest by appointing a committee headed by the HR Head to review other plants (including those of competitors) and table the recommendations in the next meeting.

Last week, the meeting with fellow CIOs and a few marketing heads veered towards budgeting and ROI. Snide remarks aside, the debate on how these distinct functions justify their million dollar proposals took an interesting turn. When the CIO presents a business case for an enterprise wide system that potentially benefits everyone but requires significant participation and change, it takes immense effort and documentation in order to get everyone to listen, review and agree. Multiple iterations are the norm, and a chain of signatures essential before the grant of even a tentative approval. Whereas, the CMO sails through in a jiffy citing brand building, customer touch and impact on sales, even when most of them are not necessarily attributable to the discussed campaign or idea.

Why is it so difficult for CIOs to get funding for new projects as compared to, say CMOs? The difference is, I would guess in many parts. To begin with, the language in which these proposals are put across. Another is the change that IT purports to create in a change-averse world. It could also be that marketing as a function always focuses on the end customer, while IT initiatives are predominantly inward focused (though that is changing fast now). The conversation initiated by CIOs when they connect to stakeholders and customers does find traction. So maybe peer learning has to be gained on how to pitch right the first time, every time, and win when every function is competing for the same precious resources.

Scott Adams (of Dilbert fame) in his unique manner put across the marketing formula, “It’s just liquor and guessing”. I have yet to find a good enough one on IT budgeting.

Types of CIO and CIO longevity

My Sunday morning breakfast with a CIO proved to be quite an interesting discussion. He was wondering whether it is time to change now, since he will be completing almost five years in the current company. “Renewal is necessary to keep the learning going”, pronounced the person sitting across the table, as he mulled over his toast. It’s not that he was underperforming, or that the company had suddenly decided to defocus on IT spending. The diversified enterprise enjoyed healthy above market growth. It was recognized as a strong company on the leading curve of technology adoption. Curious, I dug more.

The CIO’s reminiscence of his journey proved to be very enriching and rewarding. Industry recognition and internal appreciation from across business units helped with continued investments and new initiatives. So there was no adverse impact in overall sentiment during 2008-2009’s difficult times. I could not uncover any recent or past incidents that may have even triggered the thoughts of movement to pastures unknown.

Global surveys generally indicate the CIO tenure to be between three to five years depending on industry, geography, and personality. There are some who move like clockwork every three to four years. Compulsions vary for most of them, while words imply, “no new challenges to address … or no new opportunities”. Analysis indicates the existence of a well defined pattern across these movements.

Now, I am not outlining the type who has spent over a decade in a company and done very well. They are a small breed, who are either cherished by their companies or work in public sector enterprises or equivalents (yes, there are many enterprises where the culture, urgency and behaviors are akin to a public sector enterprise). Nor am I including the IT Managers with CIO titles—people who are called upon (and indeed enjoy fixing) the board room’s faulty projector.

Many CIOs are recognized as successful leaders who specialize in implementation of ERP solutions. Once these missions are executed, their interest in sustenance or alternative solutions diminishes quickly. These are the ERP specialists who get into enterprises with struggling legacy systems. They are masters in the implementation of a specific ERP that brings some efficiency, who then move on. They are extremely useful to set a foundation of technology; average longevity is in the range of three years.

Another type of CIO flirts from company to company. He is able to communicate effectively hide his ineffectiveness with a choice of phrases and jargon. Thus he impresses upon the CEO why he is their man Friday. With strong political skills, such a CIO uses the three envelope process quite effectively to last anywhere from two to four years in the organization (depending on how political the company is). With little to demonstrate as delivery, their networking and communication skills save the day with amazing consistency.

The last category consists of CIOs who are aggressive, consistent, demanding, and articulate. They get in, transform, create the next line of leadership, and move on to the next challenge—typically achieving this within a three to five year timeframe. It dawned upon me that the person across the table was such a leader who had completed the wave of innovation. In the pause that came after addressing all the discussed challenges and opportunities, he had a crisis of “What next?” These leaders grow from strength to strength, are not tied to any industry or technology, and are truly business leaders who understand how to effectively leverage the tool.

As the discussion progressed, it was evident that the question was rhetorical. It’s just a matter of time before the CIO finds another large enterprise to host his quest for innovation.

Are you happy being a CIO ?

It doesn’t matter which conference you go to, or who is the person at the discussion’s other end — Whenever the CIO’s evolution is examined, the other person always has a view on what should be a CIO’s next role. Multiple propositions get discussed, including that of the COO and CEO. Sometimes, the lateral inclusions are in supply chain, logistics or human resources, rarely in finance or marketing. But is the CIO an interim position that has to evolve into some other role? Why can’t CIOs be happy being good CIOs?

A few weeks back, a reporter called me. She said that I was one of the few people she knew who was happy being a CIO. She had not come across too many such people within her contact book despite having hundreds of listed CIOs. So this discussion continued on whether a CIO should necessarily move on to another role. If yes, which one?

I wondered a bit as she continued her excited chatter — what’s wrong in being a CIO, and that too a good one! Why is the world interested in my evolution to another CXO’s role (as if other CXOs would be extremely delighted to fill in my shoes)?

Apart from technology expertise, CIOs by virtue of providing technology enabled systems and processes across the enterprise have unparalleled visibility in terms of what happens across each function. They are expected to “know” the business, as well as understand the domain specific challenges and opportunities. Such a knowledge level is essential to provide new technology solutions, whether it’s marketing, sales, warehousing, finance or any other. Typically, this gets referred to as the wonderful world of “IT-business alignment”. Such opportunities give them an advantage over others from the CXO domain who may not have this opportunity (or the interest). Best of all, other CXOs do not get measured for knowing other functions and their ability to engage, let’s say the head of supply chain, in a discussion on the best put-away process.

This advantage and ability to influence business outcomes opens up possibilities. Maybe, just maybe, the CIO could take on additional responsibilities beyond “mundane” IT. In all possibility, he can bring about the best while improving the present. Analytical abilities come to the forefront at this point, whereupon the CIO typically challenges status quo, seeking a better tomorrow. So the question of whether a CIO is ready to take on the role of another CXO or a COO becomes irrelevant. If we push the envelope a bit further, he even has a remote chance of being a CEO. So pressure starts to build upon the CIO to get on with it.

So what’s wrong in being a good CIO? Why can’t the CIO remain in the current role and evolve it into a meaningful contributor to the organization (a difficult task to consistently execute)? At this point, the Board may benevolently grant a seat in the Boardroom’s hallowed chambers with other CXOs, executive and non-executive directors. The CIO then reaches the pinnacle of success within his role’s dimensions. Sustaining this peak position obviously requires as much effort as it took to get there. It’s at this juncture that the CIO can be deemed ready to challenge any CXO and succeed in the new role. Of course, this requires the ecosystem to at least be neutral (if not positive) towards the CIO. A negative or a non-conducive environment will be a challenge for any CXO, including the CIO. (See Are Boards ready for the CIO?)

Time to get back to the question “Are you happy being a CIO?” If you are, great! Build upon your success, challenge the organization, and keep on asking the question, “What do I need to do to get to the Boardroom?” If you aren’t, you are probably a CIO by accident or unable to find the magic formula for success (the magic formula is for another day). If you face a personal crisis on your role as a CIO, you should find yourself a mentor or coach who can help. Otherwise, go and find the right job for yourself !

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.