201202 Insurance News Network: CIO Stepping Stones to Success
http://www.insurancenetworking.com/blogs/cio-technology-business-success-29875-1.htmlCONSULTANTS CORNERCIO Stepping Stones to SuccessSteven CallahanInsurance Experts Forum, February 8, 2012Insurance Networking News post, “Insurance CIOs Vary in Value Proposition Views” published Jan. 12th, 2012, offers some interestinginsights into the contributions CIOs see themselves making according to Novarica’s recent study “Creating Enterprise Value as a CIO.”Despite the relatively small sample size of 111 cross-industry leaders, I suspect the responses are representative of what a largersurvey would indicate as they are consistent with the findings of many articles and priorities published over the past few years. Giveneconomic conditions, there has been an intense focus on costs, efficiency, effectiveness and legacy system adaptations. Faster, better,cheaper have been the buzzwords for at least a decade, as noted by approximately one-third of the respondents as well as someportion of the 45 percent whose “strategic initiatives” no doubt include some form of efficiency improvement and cost reductions.The flat growth curves, lower investment returns, diminished product margins, increased reserve requirements and frequentcatastrophic events have put added pressure on increasing cost ratios, bringing them into the spotlight of strategy for most companiesregardless of program label. At the bottom tier of responses were the 2 percent who marked their primary source of creating value as“identifying growth opportunities.” The focus remains, for the vast majority, on the bottom line instead of the top line.There are two ways to reflect on the implications of these findings. First, there is the "what should be" approach that focuses on what aneffective CIO could do to add to their company’s value proposition, probably a measure for which the survey was attempting toestablish a current baseline. Unfortunately, the far more prevalent counterpoint measure of value is represented by "what is” beingbrought to the role, which recognizes the inevitable reality that what really drives a CIOs ability to succeed is their superiors view ofwhat they should be doing and their annual goals.In other words, especially in today’s economy, while innovation may be an excellent value proposition within which CIOs can offer upenabling solutions and empowering technologies, most find themselves being given a tacit acknowledgment of the importance of thesestrategies while performance is first and foremost still measured by their ability to drive down costs, improve efficiency and keepsystems performing. CIO-driven innovation is still often interpreted as a “stepping outside their role” activity that results in losing focuson the manufacturing mentality of operational efficiency. Information technology remains such a large portion of any company’s budgetand critical business-sustaining asset that to allow looking beyond the caretaking of that beast brings fear to the heart of many of theeven most forward-thinking executive teams.Yet, layering the CIO under tiers of governance, project thresholds, planning sessions and steering committees creates a vast barrier tothe ability to truly generate innovation, thought leadership and organizational empowerment. As a result, our industry continues to lagmany others in the adoption and full leveraging of technological advances. Speaking in general, of course, as there are always theexceptions – and those are the ones that stand out.
Far too many exceptional CIOs capable of bringing innovative value and new thought leadership have been discarded, reassigned oreffectively muffled because of legacy thought processes, overly simplistic goals of efficiency and deep-seated fears of disruption thatprevented the acceptance of fresh perspectives and paradigm-breaking ideas. Even today, to some extent, our industry continues tosuffer from a traditionalist mentality that inhibits true innovation, regardless of recent commentary to the contrary. The very nature of therisk aversion industry forces an almost culturally genetic tendency to resist disruption in favor of transition, to avoid revolution in searchof gradual evolution.Along these lines, it is with great interest to note two other recent articles published by Insurance Networking News that cover some ofthe same territory from a different perspective. January 27th, 2012’s “Insurance CIOs Sound Off” does an excellent job summarizing arecent Celent CIO panel also discussing what it takes to be a successful CIO. During the session, Senior Analyst Mike Fitzgeraldintroduced the concept of three distinctly different points of focus that had to be blended in the exact right mix for success – operational,strategic and disruptive. Simply put, run the business, help change the business based on future trends, and innovatively disrupt thebusiness by acting almost as an entrepreneur in autonomy. The first two are no real surprise, but the introduction of the concept ofdisruption is relatively new and a foundational element to organizations being able to nimbly adapt to a constantly changing competitivelandscape. Although the panel tended to rate the percent of time to be spent on disruption as low, and the likelihood of rapid turnoverhigh, it introduces a new element to not only the CIOs role but to leadership as well. The second article, “Emerging Technologies:Placing the Right Bets,” maintains the concept of disruption. Here, the focus was not on leadership, but on “outer-edge” technologiesthat are currently undergoing very low adoption rates due to their disruptive nature, but that represent significant upside potential to theindustry. Here, the focus was on how leadership could prepare an organization’s culture to be ready for game-changing technologiesthat would truly disrupt, in a positive way, the manner in which business is conducted. Clearly disruption is becoming a focus forleadership, moving one step beyond innovation.Disruption, change or innovation, can all bring great risk as well as potential for growth and competitive advantage. As stated byVoltaire and FDR, with power comes great responsibility. Given an open, collaborative organization, a CIOs ability, or any leader’s forthat matter, to succeed as an innovator and a bringer of disruptive change, is directly influenced by the depth of their understanding ofthe business, products, channels and the organization’s value proposition. An innovative CIO is many levels beyond the traditionaltechnician who holds the keys to the plant. Innovation is based on both deep knowledge and vision, and a CIO must possess bothbefore taking on the responsibility of attempting to generate profitable disruptive change. And since disruptive innovation must beculturally supported, that means that the management team as a whole must be equally prepared and positioned for handling the shift.This is no small adaptation from today’s scenario, particularly given the years of a more traditional, conservatively based foundation ofexperience and expertise at the core of today’s industry leaders. Yet recent trends, conferences and articles have all made it clear thatinnovation will drive business growth and success in the coming years — crossing technology, product, service, talent management,distribution and operations. And now, the amplifying adjective disruptive has been added to the equation for necessary future successand growth. Developing a management team and an organizational structure capable of generating and supporting such change willtake new forms of intense talent management, focus, flexibility and resilience.Returning to the original Novarica study, and taking into account the other articles based on the Celent panel discussion, one commentstands out as potentially inconsistent with the overall flow of disruptive innovation and CIO leaders:"Those “innovators” are more likely to ascribe their ability to deliver innovation to their technology knowledge/skills and project/teammanagement rather than their ability to align with the business side."Based on a review of the literature being published across analysts and practitioners, it does not seem likely that understandingtechnology will rest at the core of the innovator’s value proposition. Instead, a CIO should surround him or herself with technical expertsbut play the role of the translator of options into opportunities, leveraging the vision gained by looking out from the metaphoricalorganization’s mountaintop. The secret is not in the technology, whether legacy, emerging or disruptive, but in understanding thedrivers of success, the enablers of growth and how to synthesize the new technological capabilities into the overall operational andcultural environment. The future successful CIO must match deep business context to technological subject matter expertise,organizationally integrate it, and then leverage it to generate unique and competitively advantageous solutions. Simply “supporting newstrategic initiatives” is reactive and will define those who lag the market as the dynamics change as support is a passive verb. Changeleaders, who by default will define tomorrow’s leading companies, will be proactive, generating and championing innovative and evendisruptive initiatives that effectively blend technological advances, cultural maturity, and business needs into cohesive and appealingmarket solutions.Steve Callahan is Practice Development Director for the Robert E. Nolan Company, a management consulting firm specializing in theinsurance industry.Readers are encouraged to respond to Steve using the “Add Your Comments” box below. He can also be email@example.com.This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from InsuranceNetworking News.The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.