By Professor N Venkatraman, 4 May 2007 15:27
COMMENT
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:
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.
Comments
There are 3 comments. Join the discussion
1. Brian Murray
As a basic principle, I think resting the responsibility for such a broad characteristic as ‘innovation’ on one person’s shoulders may be inappropriate. Now, more than ever, innovation should be integral to corporate behaviour and led from board level. Perhaps the Chief Executive Officer (CEO) of an organisation should be responsible for ensuring all of his team are driving and rewarding innovation within the organisation.
All in all though, as with most things, a review of the fundamentals may shed some light on the subject.
Surely, the primary role of the Chief Information Officer (CIO) was to ensure the company had access to appropriate information at the relevant time and, as a more recent concern, in the relevant place. Most companies have since relegated this role to be more akin to technical resource manager, which is the root of many of the issues we see today.
In this context, the time has come to evolve the CIO role. Knowledge, more than information, adds true value (Intellectual Capital) and this is still much more within the domain of the human resources than the technical ones. The importance of the Chief Knowledge Officer (CKO), so often overlooked, should be recognised. Perhaps we will even grow to realise that this should be the true function for what was long ago de-valued and restricted to an administrative remit as ‘HR Director’.
That is not to say that the importance of relevant information, reporting and processes are not critical. This applies equally across IT, finance, procurement, marketing, sales or personnel for example. Appropriate measurement, analysis, compliance and modelling (i.e. Governance) should be ensured. In this context we may come to recognise the role of a Chief Governance Officer (CGO) in managing all core process-orientated functions.
As highlighted in the article, I think an equally important message in lies around the need to recognise and exploit the ability of technology/trends to drive innovation and growth in your business. The scope of the technology in question has become highly IT dominated, but that is not to say we should restrict our focus to IT alone. As part of this realisation we may see a resurgence of the Chief Technology Officer (CTO) role. It is under this remit that ‘implementation’ should fall, but with diligent handover to the CGO.
So – who manages the IT? … With IT being simply a fundamental day-to-day tool in corporate functionality now, isn’t it sensible to manage it as such and re-focus on the objectives and deliverables?
Under this new business model, we would have innovation driven by the CEO, core intelligence/expertise structured under the CKO, technical awareness & implementation led by the CTO with the CGO managing the means by which we measure the overall effectiveness & efficiency. This model delivers both innovation and growth from the perspectives of expertise and technology, as well as ensuring good practice and manageability.
It may have dawned on us that the traditional roles of the Chief Financial Officer (CFO) or Chief Operating Officer (COO) now become delegated to more administrative functions (probably under the CGO) … Perhaps the question we should really be asking ourselves is – What value does a CFO or COO actually bring beyond this, is it actually these roles whose time have come?
2. Nick Cole
A well presented article. Clearly outlining what the issues are. To add to this first and foremost the CIO/IT Manager or whatever must be given the space and resources to examine innovation and future trends. He/she must be encouraged to innovate and test, but obviously not with the live system. Innovation requires research and time to examine the possibilities but also more crucially the flaws.
In traditional business models there was often time to remedy flaws by providing minor tweaks to design over the production life-time. Nowadays with demand for instant perfection and much shortened lifetimes or cinsumer demand everything must be right first time, otherwise commercial suicide. In old models the persistent critic was usually sidelined, but nowadays assumes a significant importance. The critic identifies areas where failure could occur which need to be remedied, not dismissed.
All of this requires time and space to carry out the pro-active work. All the while, currently, that the CIO is expected to minimise immediately unproductive proactivity, and respond reactively the conditions for innovation and forward thinking are lost. It is not as simple as telling an MBA or business leader that they must learn more about technology and excluding the already possessed expertise but to allow the CIO/etc to participate fully in all areas of the business. The CIO cannot magically assume the fount of business knowledge without being immersed in it.
3. Nick Cole
A well presented article. Clearly outlining what the issues are. To add to this first and foremost the CIO/IT Manager or whatever must be given the space and resources to examine innovation and future trends. He/she must be encouraged to innovate and test, but obviously not with the live system. Innovation requires research and time to examine the possibilities but also more crucially the flaws.
In traditional business models there was often time to remedy flaws by providing minor tweaks to design over the production life-time. Nowadays with demand for instant perfection and much shortened lifetimes or cinsumer demand everything must be right first time, otherwise commercial suicide. In old models the persistent critic was usually sidelined, but nowadays assumes a significant importance. The critic identifies areas where failure could occur which need to be remedied, not dismissed.
All of this requires time and space to carry out the pro-active work. All the while, currently, that the CIO is expected to minimise immediately unproductive proactivity, and respond reactively the conditions for innovation and forward thinking are lost. It is not as simple as telling an MBA or business leader that they must learn more about technology and excluding the already possessed expertise but to allow the CIO/etc to participate fully in all areas of the business. The CIO cannot magically assume the fount of business knowledge without being immersed in it.