The document discusses the role of the CIO and how they can create value for their organization. It summarizes a study that found CIOs focus primarily on cost reduction and efficiency. However, the author argues CIOs should play a more strategic role, focusing on innovation and disruption. To truly succeed, CIOs need a deep understanding of both business and technology so they can champion initiatives that blend new technologies with business needs. They must act as translators who leverage emerging technologies to generate unique solutions and competitive advantages for their organization.

1. http://www.insurancenetworking.com/blogs/cio-technology-business-success-29875-1.html
CONSULTANTS' CORNER
CIO Stepping Stones to Success
Steven Callahan
Insurance Experts' Forum, February 8, 2012
Insurance Networking News post, “Insurance CIOs Vary in Value Proposition Views” published Jan. 12th, 2012, offers some interesting
insights 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 larger
survey would indicate as they are consistent with the findings of many articles and priorities published over the past few years. Given
economic 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 some
portion 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 frequent
catastrophic events have put added pressure on increasing cost ratios, bringing them into the spotlight of strategy for most companies
regardless 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 an
effective CIO could do to add to their company’s value proposition, probably a measure for which the survey was attempting to
establish a current baseline. Unfortunately, the far more prevalent counterpoint measure of value is represented by "what is” being
brought to the role, which recognizes the inevitable reality that what really drive's a CIO's ability to succeed is their superior's view of
what 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 up
enabling solutions and empowering technologies, most find themselves being given a tacit acknowledgment of the importance of these
strategies while performance is first and foremost still measured by their ability to drive down costs, improve efficiency and keep
systems performing. CIO-driven innovation is still often interpreted as a “stepping outside their role” activity that results in losing focus
on the manufacturing mentality of operational efficiency. Information technology remains such a large portion of any company’s budget
and critical business-sustaining asset that to allow looking beyond the caretaking of that beast brings fear to the heart of many of the
even most forward-thinking executive teams.
Yet, layering the CIO under tiers of governance, project thresholds, planning sessions and steering committees creates a vast barrier to
the ability to truly generate innovation, thought leadership and organizational empowerment. As a result, our industry continues to lag
many others in the adoption and full leveraging of technological advances. Speaking in general, of course, as there are always the
exceptions – and those are the ones that stand out.

2. Far too many exceptional CIOs capable of bringing innovative value and new thought leadership have been discarded, reassigned or
effectively muffled because of legacy thought processes, overly simplistic goals of efficiency and deep-seated fears of disruption that
prevented the acceptance of fresh perspectives and paradigm-breaking ideas. Even today, to some extent, our industry continues to
suffer from a traditionalist mentality that inhibits true innovation, regardless of recent commentary to the contrary. The very nature of the
risk aversion industry forces an almost culturally genetic tendency to resist disruption in favor of transition, to avoid revolution in search
of gradual evolution.
Along these lines, it is with great interest to note two other recent articles published by Insurance Networking News that cover some of
the same territory from a different perspective. January 27th, 2012’s “Insurance CIOs Sound Off” does an excellent job summarizing a
recent Celent CIO panel also discussing what it takes to be a successful CIO. During the session, Senior Analyst Mike Fitzgerald
introduced 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 the
business by acting almost as an entrepreneur in autonomy. The first two are no real surprise, but the introduction of the concept of
disruption is relatively new and a foundational element to organizations being able to nimbly adapt to a constantly changing competitive
landscape. Although the panel tended to rate the percent of time to be spent on disruption as low, and the likelihood of rapid turnover
high, 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” technologies
that are currently undergoing very low adoption rates due to their disruptive nature, but that represent significant upside potential to the
industry. Here, the focus was on how leadership could prepare an organization’s culture to be ready for game-changing technologies
that would truly disrupt, in a positive way, the manner in which business is conducted. Clearly disruption is becoming a focus for
leadership, 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 by
Voltaire and FDR, with power comes great responsibility. Given an open, collaborative organization, a CIOs ability, or any leader’s for
that matter, to succeed as an innovator and a bringer of disruptive change, is directly influenced by the depth of their understanding of
the business, products, channels and the organization’s value proposition. An innovative CIO is many levels beyond the traditional
technician who holds the keys to the plant. Innovation is based on both deep knowledge and vision, and a CIO must possess both
before taking on the responsibility of attempting to generate profitable disruptive change. And since disruptive innovation must be
culturally 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 of
experience and expertise at the core of today’s industry leaders. Yet recent trends, conferences and articles have all made it clear that
innovation 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 success
and growth. Developing a management team and an organizational structure capable of generating and supporting such change will
take 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 comment
stands 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/team
management 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 understanding
technology will rest at the core of the innovator’s value proposition. Instead, a CIO should surround him or herself with technical experts
but play the role of the translator of options into opportunities, leveraging the vision gained by looking out from the metaphorical
organization’s mountaintop. The secret is not in the technology, whether legacy, emerging or disruptive, but in understanding the
drivers of success, the enablers of growth and how to synthesize the new technological capabilities into the overall operational and
cultural 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 new
strategic initiatives” is reactive and will define those who lag the market as the dynamics change as support is a passive verb. Change
leaders, who by default will define tomorrow’s leading companies, will be proactive, generating and championing innovative and even
disruptive initiatives that effectively blend technological advances, cultural maturity, and business needs into cohesive and appealing
market solutions.
Steve Callahan is Practice Development Director for the Robert E. Nolan Company, a management consulting firm specializing in the
insurance industry.
Readers are encouraged to respond to Steve using the “Add Your Comments” box below. He can also be reached
steve_callahan@renolan.com.
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