CIOs lack skills for growth

Organisations are increasingly waking up to the power and potential of technology as a force for growth and innovation but professor N Venkatraman, of the Boston University School of Management, questions whether CIOs and IT departments have the skills and competencies to take up the challenge of this expanded mandate.

In 2007, there is renewed excitement about the role of information technology but this very excitement also poses some difficult questions about the future role of the IT department and the CIO.

This excitement around IT isn't about the dot-com-style Nasdaq valuation euphoria, venture capital investments and IPO fortunes. It is about the potential role of IT in growth and innovation, and some astute business managers realise they need to better understand the powerful technology forces that could contribute to new pathways to growth and profitability.

Some companies will find their CIOs have adapted their competencies and skills and are well-armed to take on the challenge but many will find their current IT organisation is better suited to support the efficiency agenda but not the expanded growth mandate. In those cases, senior executives need to evaluate how best to inject the IT skills and competencies that address the age-old disconnect between business needs and IT capabilities, and between business aspiration and IT competence.

Growth and innovation

The new business landscape is global, technology-intensive and networked. This is brought about by three forces - namely faster-and-cheaper computers (Moore's Law), pervasive connectivity (Metcalf's Law) and greater bandwidth speed (Bandwidth Law). Each force is powerful by itself but, taken together, they have unleashed a new powerful infrastructure that challenges managers to rethink their business strategies, transform their operations and examine the viability of their business models against the onslaught of new breed of competitors.

Look around you: personal laptop computers, mobile phones, iPods, BlackBerrys and videogame consoles are visible manifestations of how people live, work and play. Google and Wikipedia have become the new ways to access information, and YouTube may well be the standard for the new television channel. Underneath these products and services is the powerful reshaping of the geography of business processes, with China and India emerging as global factories and back-offices supported by impressive global logistics networks.

At the same time, there is a profound disconnect. Discussion of growth through innovation occurs in business circles often without any serious understanding of IT expertise. Business managers still often see their IT counterparts as experts in running the infrastructure and far removed from any intricate nuance of business. And in many companies, IT managers are tasked with the efficient operations of the current business processes and do not aspire to elevate their role any higher. Precisely when business strategies are shaped by technology functionality there is a gap between what business managers expect from their IT counterparts and what IT managers can actually deliver to business.

Innovation versus 'keeping the lights on'

Too many companies are failing to address the important question of how IT is managed within corporations. Many senior managers were schooled at a time when IT was seen as a specialist resource and organised as a support function. Business cases and challenges often involved recognition of functional implications of marketing and operations but not necessarily IT and systems. When IT came into business discussions, it often involved huge investments - and expense - in upgrading of hardware, software and network infrastructure. Managers saw - and often still see - IT purely as a cost centre to be managed for efficiency.

Now, there is growing realisation the role of IT is too pervasive and too complex to be treated as one homogeneous bucket labelled 'cost centre'. Some forward-thinking business managers also see the need to separate the role of IT in supporting today's operations from the deployment of IT to shape tomorrow's possibilities. Efficiently running current IT operations is necessary but not sufficient to craft powerful business models for future operations.

But some difficult questions need to be answered by senior managers if we are to assume IT has an important, albeit untapped, role in shaping tomorrow's business strategies in addition to its traditional functional role in 'keeping the lights on' and supporting business operations. Managers need to ask themselves:

What proportion of management attention should be devoted to IT's role in innovation versus implementation?

What should be done to rebalance IT competencies and skills for shaping future business strategies versus IT's traditional operational competencies?

What is the role of external IT alliances, partners and vendors in this new environment of growth and innovation?

How best to organise the IT function to ensure balanced attention to future opportunities versus current operations?

What portfolio of performance indicators are needed to balance IT's contribution to future versus present?

New IT-driven business model innovations will only appear when organisations achieve the right balance of the two key roles of the CIO - one as 'chief innovation officer' and the other as 'chief implementation officer'.

Both innovation and implementation lenses are required to achieve growth and profits. Neither alone is sufficient.

N Venkatraman is the professor of management and chairman for the IS department at the Boston University School of Management, which is running a 'pocket' MBA course for CIOs in London in June 2007. For more details on the course click here.