By Steve Andriole, Founder & CTO, TechVestCo
Leadership Challenges - Then & Now
Two major business technology leadership challenges occurred in the 1990s. The first was regressive. The Y2K remediation problem - which turned out to be not much of a problem at all - scared just about every technology project off the docket that wasn't focused on keeping the machines running. As companies invested millions of dollars to keep things working, they also fanned the fire of resentment about how thousands of computers might actually shut down on January 1, 2000. Many senior managers suspected that the techies really didn't know what they were doing when they wrote all that COBOL code way back when and - worse - really weren't sure if they could fix it all by the new millennium. It was a tense time for all sorts of reasons. While senior management leaned on technologists to lead the Y2K compliance effort, it was a leadership exercise focused directly on the past - past mistakes, that is.
While the Y2K problem was playing out, another leadership challenge emerged. But this one - eBusiness - was positive, and focused on the future. But the early Web site development projects were managed not so much by technologists as marketing professionals. Of course, the technologists had to be involved in the process, but many of the early Web sites were actually hosted by some of the new application service providers (ASPs) such as Exodus Communications (now gone). Arguably, technologists failed to lead the initial development of Web-based "brochureware" or transaction processing-based Web sites. At best, these projects were co-managed by technologists and marketing managers (in much the same way that marketing often owns current customer relationship management [CRM] projects).
Long before Nickolas Carr published his now famous "IT Doesn't Matter" article in the Harvard Business Review, technology leadership was changing. The technology heroes of the 1970s and 1980s were different from the heroes of the 1990s, and the heroes of the early 21st century wouldn't even recognize their 20th century counterparts. However, successful career management requires that we understand how heroes - and heroic behavior - are defined.
So where's leadership headed now?
Five years ago leadership could be defined around desktop operating system upgrades; today that same project would probably require leadership around the development of the RFP and SLA necessary to outsource the activity. As supply chains compress, leaders are necessary to optimize the business technology partnership.
Impact and influence are changing as well. In the 1990s it was more than enough to report on a successful implementation of a back-office accounting system; today the only meaningful performance metrics are business value metrics. Did the project increase our market share? Our profits? Are our customers happier now that we invested in CRM?
Communications are changing. Business cases must now be in the language of business, not techno-speak.
Does all of this mean that operational technology is unimportant? Or that there are no leadership opportunities below the line? Of course not. But business technology leadership is about above-the-line excellence, not below-the-line efficiencies - which are expected, just as compliance to Sarbanes-Oxley is expected.
Another way of thinking about 21st century leadership challenges is to ask yourself - and your staff - if they think that the jobs they're performing today will persist into 2010. In a recent survey I took among over 100 technology professionals across three companies (one public, one private and one not-for-profit), not one director-level (or higher) technology professional believed that he or she would be doing the same thing they're doing today just five years from now. If this anecdotal data is correct, we'll all have new jobs by 2010. What will they be? This report looks at these emerging leadership challenges and provides a wake-up call of sorts to any of us still stuck in the 1990s!
What Leaders Do …
In the midst of all these changes, what should business technology "leaders" do? Among other things, they should:
- Build Collaborative Business Scenarios
- Track (Only) Technology that Matters
- Identify Business Pain & Pleasure
- Organize Adaptively
- Manage Infrastructure
- Communicate
- "Market"
They do these things because they all - one way or another - connect them seamlessly and holistically with the business models and processes that determine competitive positioning, market share, growth and profitability.
Build Business Scenarios
In the 1990s when I was CTO of CIGNA we engaged IBM to develop a set of business scenarios that described where the insurance and financial services industries would be in the early 21st century. My group at CIGNA was The Technology Group which was responsible for setting technology standards, defining the overall computing and communications architecture, maintaining security, and managing the research and development (R&D) process. In order to develop credibility with the CIGNA lines of business, we suspended all talk about technology and instead focused on current and emerging business models and processes. Needless to say, in the mid-1990s this disarmed the business executives, since their image of "systems" was that we were always late, always expensive and always a little arrogant. Realizing this (I was well coached by Bob Zito, my Senior Technology Officer and a CIGNA veteran), I used business scenarios as a friendly Trojan Horse. It worked well. Why? Because all of the effort was about the business, not technology.
Business technology leaders should focus on business models and processes before they focus on technology infrastructure or applications. Macro business trends should occupy their time, trends like eBusiness, customization, personalization, and supply chain planning and management - all suggested by Figure 1. Leaders get their companies in the upper right hand corner of the cube.
Scenario planning identifies the drivers of change, their velocity and the confidence we have in their validity. Good scenarios also quantify the uncertainties that complicate planning.
But what good scenarios really do is profile marketplaces and profitable transactions. They also identify constraints. They are compasses that influence the direction that strategic decisions take.
Figure 1: Emerging Business Models
Business technology leaders develop, package and "sell" business scenarios. They work with the business to profile "as is" and - especially - "to be" business models and processes. They become champions of the scenario development process; they brand themselves as business-models-first-technology-second heroes.
Is this to say that business models and processes should be developed independently of technology-enabled opportunities? No, but they should lead the process. There will be times when new business models are difficult if not impossible to imagine without technology knowledge. Since business technology leaders understand technology, they're in a good position to exploit the business technology intersection.
Track Technology that Matters
Leaders also track technology trends - especially trends that matter to the business. Trends that matter include all technologies that can impact business, not technology "concepts" or even "prototypes." Examples? The semantic web - the intelligent Internet - is a tremendously interesting concept - but it's a long way from implementation. Real-time synchronization (and real-time computing generally) are also fascinating concepts but, again, we're some years from away from productive implementation.
Utility computing, on the other hand - the technology acquisition and support model that uses the electricity model to describe it's pay-by-the-drink approach to technology acquisition - is emerging as a prototype with some potential - though it's way too early to commit to a major investment in whole technology subscription models. Similarly, grid computing is showing some promise as is Web Services technology, thin clients and the newest voice recognition technologies. These all bear watching so long as they map on to the business scenarios that the same business technology leaders develop.
Technology "clusters" are real and powerful - and ripe for exploitation. Clusters are proven technologies with large supporting casts of developers and support vendors; they're also supported by well-funded vendor R&D infrastructures.
Figure 2 organizes all this in a picture. Business technology leaders should focus on the chasm between prototypes and clusters - the thick line between the two in the figure. They should track the more interesting concepts but resist temptations to hype technologies that are still in the early stages of development: the last thing that a business executive wants to hear about is how "cool" a technology is, or how great it's going to be (in five years). I am forever amazed at how enthusiastically technologists describe technologies that are largely irrelevant to the business for the foreseeable future, and how indignant technologists become when the eyes of the executives glaze over after five minutes of over-hype. Figure 4 helps us understand the relative value of technologies and how to allocate our tracking resources.
Leaders understand the differences among technology concepts, prototypes and clusters and never over-hype technologies because of their elegance or potential. Instead, leaders play the role of technology gatekeeper making sure that the business never invests in technologies before their time - before they're able to contribute directly, cost-effectively and profitably to the business. Leaders are able to generate enough credibility so that the business believes they're acting in the best interest of the business not technology.
Figure 2: Technology Distinctions - & the Chasm that Leaders Track
Leaders also track dominant technology standards. Would you have invested heavily in Bluetooth wireless communications technology two years ago? Would you have done the same in Web Services in 2001? Are you tracking service oriented architectures, or have you already moved to event driven architectures? Who's watching RFID standards? Leaders do a couple of things here First, they watch the standards power brokers. Can any of us deny the impact that IBM's decision to support Linux had on the adoption of the operating system? Wal-Mart will yield tremendous power over RFID standards (as it has in the collaborative forecasting and replenishment, inventory and supply chain management areas). As the technology industry continues to consolidate, the number of companies with standards-setting power is actually shrinking, which is good news for leaders searching for direction. The second thing that leaders do is map the trajectory of standards onto their business scenarios. How will Wal-Mart-influenced RFID standards affect your business? How will IBM's support of Linux change the way your company thinks about server OSs?
Identify Business Pain & Pleasure
Business technology leaders should see the world through the eyes of the business. They should speak the language of business. But most importantly, they should focus on the pain that business managers feel. The really good ones keep a running list of the most difficult problems - the sharpest pain.
Business pain comes in many forms. Some comes in the form of cost control, such as headcount and overhead cost reduction. Other pain relief comes in the form of improved business response and control, such as improved management effectiveness, employee productivity and supplier relations.
The search for business pleasure should also occupy a leader's time and energy. Some pleasure includes revenue generation, up-selling, cross-selling, organic growth, acquisitive growth and - of course - increased profit.
The whole pleasure/pain exercise focuses on business success. It also focuses on what individual business professionals will personally find exciting - and rewarding. Leaders understand what makes people heroes, what the organization values.
Figure 3 identifies three paths in the alignment-to-partnership journey. We have to appreciate business pain and pleasure, we have to become more than just credible, and we have to define business value around strategy. If you understand these paths, you can redefine the business technology relationship - redefine it, in fact.
Figure 3: Paths to Business Technology Partnership
Let's assume that you understand where the business feels pain, and how it would define pleasure. Remember that the business expects technology to reduce its pain - almost always defined around cost reduction. But it's more than that. Business managers worry about their supply chains, their competitors, their manufacturing, distribution and, of course, their margins. The technology agenda needs to speak directly to their pain points - which, when relieved - can become the sources of wide and deep pleasure. If you become a dispenser of pleasure as you reduce pain, you're credibility will rise - which will reveal the second path to business technology partnership.
Hopefully when technologists walk into a room the business managers don't run for cover or - worse - attack them mercilessly for their sins (network crashes, Web site debacles … you know the drill). Nirvana here is influence - defined in terms of how the business thinks about how and where technology can help. Does the business respect you enough to confide in you, to commiserate with you, to invite you to brainstorm about its strategy? Who do you drink beer with?
If you're influential, you can shape both operations and strategy. If you get operations straightened out, you can spend most of your time - with your new partners - thinking about competitive advantages, revenues and profitability. There's no better place to work, no better way to spend your time. Leaders seek this partnership, this influence.
Organize Adaptively
Lots of companies are decentralized these days, though the number that are re-centralizing is increasing. The essence of the centralization/de-centralization dance spins around value of shared services. But it's also about discipline and governance. Many companies have had a difficult time standardizing their infrastructures and processes, so difficult in fact that they've resorted to extreme outsourcing.
But the wild card is governance. If your organization is without unambiguous governance your chances for effective organization are pretty much non-existent.
The key going forward is to define the business technology organization as though there's one - not two - organizations. Below-the-line infrastructure should be managed transparently, almost as though it doesn't exist. While this is not to say that it's unimportant (see below for just the opposite argument), it is to affirm its relative unimportance compared to above-the-line projects, programs and impact.
The governance around all this should be clear, consistent and unambiguous. This will be the toughest battle you fight, but once the governance is set it becomes easier and easier to get things done. If you handle governance poorly you'll find it nearly impossible to organize business technology effectively.
Reporting relationships are always complicated, especially in decentralized organizations. Flexibility is essential, since the business technology relationship is fluid and continuous - not defined around a number of discrete "rules." This point is important for leaders to understand. In years past, especially when there was relative chaos in our technology organizations, we defaulted to sets of rules and regulations which more often than not were used to hit non-compliers over the head with: in our desire to create "order" we ended up offending our customers! In extreme cases, the business technology relationship was defined around a set of internal service level agreements written to trap clients into draconian consequences for less-than-egregious offenses. This kind of organizational authoritarianism is what explained the lack of business technology "alignment" for many years.
Reporting relationships should speak to business processes. CIOs and CTOs should report to the CEO or the COO, not the CFO, whose incentive is only to hold costs down. CIOs and CTOs should organize their organizations around the five layers, but should also make sure that they organize around hardware, software and processes.
Business technology leaders organize around business processes and - especially - objectives, not around self-contained best practices around, for example, data center management. In other words, data center management, desktop management, storage area network management, and the like, should all be organized purposefully, that is, with a clear connection to the business models and processes that they serve. When problems arise, solutions are sent through business filters first and foremost, and then filters that focus on other factors.
Manage Infrastructure
Leaders make certain that the computing and communications infra- structure works. This means that it's secure, reliable and scalable. This also means that it's cost-effective. Leaders understand that there are alternative ways to acquire, deploy and support computing and communications infrastructures. They optimize the alternatives with reference to their organization's core competencies, culture and evolving business strategy.
The ability to write diagnostic request for proposals (RFPs) for infrastructure technologies and processes, as well as the ability to craft effective service level agreements (SLAs), are two indispensable leadership skills.
Leaders manage their infrastructures cost-effectively. This is the commodity side of the business. The trends are clear here, so leadership will increasingly be about the acquisition and measurement of reliable, flexible and secure infrastructures.
Communicate
Leaders communicate. They understand that the essence of communication (and its cousin, influence) are hard and soft facts, and hard and soft communications skills.
Communication is based upon the wide and deep understanding of your audience and your own specific strengths and weaknesses. Some people are natural communicators (or salespersons), while others find it hard to connect with colleagues or "customers." If you have natural talent here build upon it through practice, executive education and coaching. If you're hopelessly terrible at it, find someone on your team who's an effective communicator and give them the responsibility for your team's communications duties.
Communication is a continuous process. When things are relatively quiet, leaders still need to communicate what they're doing, the status of their projects and their strategies. When things are bad, they can call upon a deep continuous relationship with their partners and stakeholders to jointly solve problems; and when things are good, leaders can exploit their communications investments to make sure everyone understands the significance of the victory at hand.
Leaders communicate good news, bad news and no news in a predictable, timely, digestible way.
Much communication is routine - about how well the infrastructure is performing, technology costs, technology total cost of ownership (TCO) models, and the return on investment (ROI) of business technology projects and programs.
Project/program/portfolio "dashboards" are also a good idea: everyone likes easy to read status reports on key projects and whole programs. It's also a good idea to develop some form of "scorecard" that communicates the overall impact that business technology is having at the company.
Market
Leaders think about who creates, distributes and maintains the technology "message" inside and outside of the company. Business technology leaders are sensitive to the need to internally and externally market their business technology accomplishments and strategies.
So what are the pieces of a good technology marketing strategy? First, consider what you're "selling." You're selling hardware, software, services, image, perceptions and strategies. When everything goes well everyone thinks that the technology people are really pretty good, that things work reasonably well - and for a fair price. If the hardware and software works well, but the image is poor, technology is perceived to be a failure, just as bad hardware and software - but good perceptions - will buy you some time. Like everything else, you're selling hard and soft stuff, tangible and intangible assets and processes.
Next consider who you're selling to - noting from the outset that you're selling different things to very different people. Yes, you're selling hardware, software and services (along with image, perception and strategy) to everyone, but the relative importance of the pieces of your repertoire shifts as you move from office to office. Senior management really doesn't care about how cool the network is or how you've finally achieved the nirvana five-9s for the reliability of your infrastructure. They care about the 20% you lopped off the acquisition project you just launched, or how company data is finally talking to each other and that you're now able to cross-sell your products. The content and form of the message is important.
Public companies have a unique challenge. Increasingly, technology is included as a variable in company valuation models. This means that the analysts that cover public company stocks look at technology infrastructures, applications and best practices in order to determine how mature a company's technology acquisition, deployment and support strategies are. CIOs and CTOs talk to these analysts, fielding their questions and otherwise molding their understanding of the role that technology plays in the current and anticipated business.
What's the brand of your technology organization? If you were a professional sports team, what would be a good name for your organization? Would you be the Innovators? The Terminators? Put another way, if you asked the analysts who cover your stock to word associate technology and your company, what would they say? Disciplined? Strategic? Weak? What about collateral materials? Does the technology organization have its own Web site? It's own brochures? Case studies? White papers? Referenceable "accounts" (internal customers who are happy with technology's services)? Are there newsletters and technology primers? Is there information about the competition?
Is there a technology "road show"? A consistent message about the role that technology plays in the company, how technology is organized, what matters most, the major projects, and technology's contribution to profitable growth - among other key messages - is essential to running technology like a business.
What Next?
Without question, the nature of business technology leadership is changing. This short article tries to profile the trends and the leadership requirements that will be rewarded in the early 21st century. Hopefully, over time there will be near-perfect synergism between business and technology in your organization.
Steve Andriole is the Thomas G. Labrecque Professor of Business at Villanova University where he conducts applied research in business technology convergence. He is also the founder & CTO of TechVestCo, a new economy consortium that focuses on optimizing investments in information technology. He is formerly the Senior Vice President & Chief Technology Officer of Safeguard Scientifics, Inc. and the Chief Technology Officer and Senior Vice President for Technology Strategy at CIGNA Corporation. His career began at the Defense Advanced Research Projects Agency where he was the Director of Cybernetics Technology. He can be reached at stephen.andriole@villanova.edu or at steve@andriole.com.
