Transformative New Role for the CIO: Chief Innovation Officer - by Jim Stikeleather


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Fundamental changes across the modern enterprise are reshaping the way business is conducted and how IT must operate as a result. Now, 6 key trends indicate the time is ripe for business-savvy CIOs to take their place among the other C-suite leaders.

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Transformative New Role for the CIO: Chief Innovation Officer - by Jim Stikeleather

  1. 1. Reprinted from Dell Power Solutions, 2013 Issue 2. Copyright © 2013 Dell Inc. All rights reserved. | 2013 Issue 02 27Many businesses arebombarded by apreponderance of dataon tap for analysis. Atthe same time, the quickening pace ofhardware and software advances at theirdisposal is enhancing the efficiency ofIT operations. These developments arecreating opportunities to transform theway organizations meet the needs of theircustomers. But they are also calling upon ITand line-of-business decision makers to makesignificant transformations of their own.During the last two years, considerableresearch has focused on understanding howthe roles of the chief information officer (CIO)and the IT department are changing (see figureon next page). CEB, formerly the CorporateExecutive Board, provides one example. Theadvisory organization recently updated itscomprehensive “Future of Corporate IT” study,1which augments other research in which Dellis engaged to study this transformation. TheDell global survey, for example, comprisesresearch from Dell, Intel and TNS Global;Harvard Business Review; and The Economist.The survey questioned CIOs about theirexperience in the workplace and whatchanges were surprising or bewildering them.A top-level summary of the worksuggests that CEOs believe CIOs are notin synch with the new issues CEOs face.Moreover, the survey analysis indicates thatCEOs believe that CIOs do not understandthe direction in which the business needsto go, and that they do not have a strategyin support of the business for pursuingopportunities or addressing challenges.Key indications from the researchsuggest that almost half of CEOs surveyedfeel IT should be a commodity service that ispurchased as needed. Almost half of CEOssurveyed rate their CIOs negatively in termsof understanding the business and how toapply IT in new ways to the organization.Fundamental changes across the modern enterprise arereshaping the way business is conducted and how IT mustoperate as a result. Now, 6 key trends indicate the time isripe for business-savvy CIOs to take their place among theother C-suite leaders.By Jim StikeleatherTransformativenew role for the CIO:Chief innovation officer1 The CEB “Future of Corporate IT” study was completedin 2010 and updated in August 2011. To read the report, the business of IT
  2. 2. 28 2013 Issue 02 | the business of ITReprinted from Dell Power Solutions, 2013 Issue 2. Copyright © 2013 Dell Inc. All rights reserved.For example, 57 percent of the executivessurveyed expect their IT function to changesignificantly over the next three years, and12 percent predict a complete overhaul of IT.Only a quarter of executives surveyed feel theirCIO is performing above his or her peers.2The main observations from the survey revealthat CEOs are demanding an increase in visiblevalue from their CIOs, in terms of generatingrevenue, gaining new customers and increasingcustomer satisfaction. Increasingly, CIOs andIT must be seen less as merely developing anddeploying technology, and more as a sourceof innovation and transformation that deliversbusiness value — leveraging technology insteadof directly delivering it. CIOs must be heldresponsible if technology enables, facilitates oraccelerates competition that the C-suite didn’tsee coming, or if they allow the enterprise tomiss opportunities because the C-suite did notunderstand the possibilities technology offered.In short, CIOs today must adapt to these changesor risk being marginalized.6 business trends CIOs cannotafford to ignoreAs the survey data was analyzed, the why elementwas shown to be clearly missing: Why is thisdissonance between the CIO and the C-suitehappening? The rapid pace of technologicalchange could be the reason, but historicallythat factor only facilitates or accelerates changealready desired or underway. Seemingly, animpasse had been reached until changes thatwere happening not in IT but in business becameevident. To understand the future of enterpriseIT, the evolving future of business itself must beconsidered (see figure).1. Traditional products are simply becomingwindows into information-based, services-delivered value. The value of a cell phoneis based more on its app ecosystem than itsfunction and features. Running shoes aredifferentiated by their sensors, supporting webanalytics and user networks. Many 3D printersemail themselves updates, which they thenprint out for an end user to install. Even gameshave become comprehensive ecosystems ofinnovation, collaboration and adaptation.2. Value is becoming highly individuated.This evolutionary consideration for businessis a consequence of introducing thehorizontal enablement of social media, forwhich value is a function of time, place,participants and other factors beyond thecontrol of supplier individuals or organizations.Value is not just financial; it is also socialand emotional. Witness the apps marketplacesthat generate new, instantaneous worth andprofits through collaboration — for example,Comprehensive research to validate changing roles for CIO and ITDell, Intel andTNS Global: TheEvolving Workforce• No business isolation• Digital businessecosystems• Identify, assessand manage riskHarvard BusinessReview: Innovationfrom Efficiency• Efficiency isparamount andcomes first• Create specificcustomer andbusiness value• Drive revenueThe Economist:The C-SuiteChallenges IT• A strategy fortomorrow• Business enablement• Customer, staff andpartner engagementCEB: The Futureof Corporate IT• New technologyfor old processes• New processes• New businessmodels• New opportunities,products andservicesBusiness changes contributing to dissonance between CIOs and the C-suiteLowCEO value of CIODiminishingCIO role in the C-suiteRisingbudgetsCIO irrelevanceEfficiency of scaleHow well it worksEffective at the momentAchieves the desired resultScaleEfficiencyDisciplineToday and the pastAdaptabilityEngagementInnovationTomorrowOrganizations need tofocus on being effectiveat the moment tocreate new value.FreshmanagementinsightsSimply put, innovativeinformation and communicationstechnologies help organizationssucceed. Read ManagementInnovation eXchange blogposts from Jim Stikeleather toexplore strategic applications fordigital infrastructure, emergingtechnologies and “The C-Suite Challenges IT: New Expectations for Business Value,”Economist Intelligence Unit, The Economist, 2012,
  3. 3. | 2013 Issue 02 29Reprinted from Dell Power Solutions, 2013 Issue 2. Copyright © 2013 Dell Inc. All rights reserved.the act of liking on Facebook may causefive friends to visit a new restaurant forlunch that day.3. The nature of competition is changing. Withthe evolution of cloud computing, even asmall, least-funded organization in a remotelocation or rural town can appear to be alarge enterprise and deliver like one. Today,anyone can have a new idea, sketch it outusing world-class design software through thecloud, and then find and route it to the bestpossible prototype manufacturer anywherein the world. In turn, the manufacturercan produce plans for the prototype using3D printers and deliver those plans to thecreator’s door in an overnight package. If theidea gains momentum, the small entity cando everything from crowdsourcing businessplans to turning customers into a superiorsupport organization through companieswith self-service websites — all from thecomfort of a desk and with a personal creditcard. The organizations that enable thesecapabilities — such as InnoCentive, Tongal,99designs, TopCoder and Kickstarter — arebeing used by enterprises large and small.This way of business is great for consumersworldwide: Just about any need or demandcan be met faster than ever, but which inturn is a significant challenge for manyestablished enterprises.4. Goods and services are becoming rapidlycommoditized. Products are being createdand distributed with diminished economicfrictions, and supply-and-demand curves areapproaching equilibrium. These changes arecausing decreasing margins, so executives aredesperately seeking fresh ways to differentiatetheir company, products and services. Still,even though they know they must innovate inresponse, they don’t know how to do so in thecomplex global market.5. Barriers to entry have been destroyed. Thesame diminished economic frictions, alongwith emerging business models, organizationalstructures and enabling technologies, haveaccelerated the appearance of advanced,unanticipated competitors. Their fresh valuepropositions — or their spin on the oldvalue propositions — are presented faster, betterand cheaper than they were once portrayed. Asa response, business leaders relentlessly drivedown costs to maintain market share.6. The nature of the workforce andmanagement is shifting. The businessand economic landscape has shifted fromindustrialization and its focus on reliability,predictability, discipline, alignment, control,repetition, scale and efficiency. Now, theemphasis is on value creation with a focuson originality, adaptability, innovation,engagement, collaboration and efficacy. As aresult, the nature of work and the workforceis changing. Many assumptions about whatmotivates and dissuades people are wrong —especially when knowledge, creativity andinnovation are desired. Management is trying toadapt to these new workforce realities.Ripple effect throughout the enterpriseAs a reaction to these business changes, theenterprise is beginning to respond in a numberof ways, including outsourcing, partnerships,customer focus and structure.Large organizations are beginning tooutsource or break themselves up into smaller,more agile enterprises to perform services suchas payroll and IT support. Interestingly, even“Organizations are starting torealize that they should zeroin on what creates value forcustomers, and along with thisfocus on customers they shouldconcentrate on what they dobetter than anyone else.”
  4. 4. 30 2013 Issue 02 | the business of ITReprinted from Dell Power Solutions, 2013 Issue 2. Copyright © 2013 Dell Inc. All rights reserved.employees are starting to pursue this path, withmany preferring to be independent and focusedon delivering value rather than feeding anorganizational structure.Increased partnerships and risingnumbers of relationships are forming amongorganizations, and even among competitors,to enhance customer service. For example, aninteresting ecosystem has developed amongorganizations such as Apple, Amazon, Google,Yahoo and even Microsoft with their mobilitybusinesses, apps and services to better engageand serve customers. Making a commitmentto be highly focused and utilize other highlyfocused firms — even competitors and othercustomers — to service customer needs isbetter than trying to go it alone. Otherwise,flexibility, agility and adaptability can be lost,and even scale economics begin to reverse.Finding other enterprises that can add value toa company’s worth is the key to responsiveness,individualization and meeting the market’s needsin a moment.Organizations are starting to realize thatthey should zero in on what creates valuefor customers, and along with this focus oncustomers they should concentrate on whatthey do better than anyone else. As managementconsultant, educator and author Peter Druckersaid in his classic book, “On the Profession ofManagement”: “There is surely nothing quite souseless as doing with great efficiency what shouldnot be done at all.”Future successful enterprises are expectedto be socially enabled, and they will operate asdigital business ecosystems. Structurally, theseecosystems are very different from today’scontemporary hierarchical, fixed, integrated andtransactional entities. Both of these characteristicsare necessarily but not sufficiently driven by theCIO (see figure).Unlimited potential to drivebusiness valueThe role of the CIO is changing beforeour eyes. Not only are there emerging systems,business and delivery models; types ofinformation; technologies; and the like, butthere are also entirely new roles for ITin the enterprise ecosystem. These newbusiness insights, tied to the emergenceof new technologies, are creating anopportunity for IT to lead transformationalefforts — especially in this challengingeconomic environment.CIOs must be aware of the changes in thebusiness world and the enterprise, and howthese changes are affecting the roles in theC-suite along with their own leadership role.How companies are run today can best bedescribed in a well-repeated phrase: Maximizeefficiency by minimizing deviations fromstandard practices. But to succeed in the newbusiness environment, enterprises must bemore than well-oiled machines; they must beadaptive and innovative.Learn moreThe evolving Stikeleather is chiefinnovation officer for Dell Services,where his team enables, facilitatesand accelerates advancedtechnologies, business modelsand processes to address evolvingbusiness, economic and socialforces for Dell and its customers.He has more than 30 years ofexperience designing, developingand implementing information andcommunications technologies.Socially enabled, digital business ecosystems necessarily driven by the CIOTwentieth-centuryorganizations minimizedtransaction costsand achievedscalable efficiency.Twenty-first-centuryorganizations acceleratecapability buildingand effectively apply itto innovation to createnew value.New view:Socially enabledenterprises operatingin a digital businessecosystem