Sunday, February 17, 2013

CIO in Board Room: Are you at the Table, or Are you on the Menu

IT has to become a key ingredient of business growth, and the CIO also has to become a key contributor to the corporate board.

A good CIO naturally sees the organization as one integrated system and is positioned to identify organizational inefficiencies, threats, and opportunities. It would be a mistake not to include his/her input in strategic discussions and planning. But with more and more CIOs have been invited into the boardroom, are they well prepared for business governance, and should effective CIOs master the corporate board-level politics? How can CIOs exercise effective IT leadership without being involved in “negative” politics? The CIO’s tough choice for leadership: Be a CIO who masters organizational culture and leadership - or be a technologist who simply provides the "IT plumbing" and catches the flack when it breaks?

1.   Understand Three “Powers” & “Power Brokers” in Business

When the Greeks defined politics was about governance (govern on behalf of the people), it was in a democratic background. Today’s politics and corporate politics diverge somewhat from this concept, making the whole thing quite confusing. So...if this is about the CIO contributing to the success of the company (increasing strategic stance in the marketplace) and the welfare of the employees, then definitely he/she should be involved.

  • It often comes down to who you know and not what you know”: In many organizations, the CIO still plays an inferior role to other C-level positions. For this reason, he or she should definitely become active and effective in senior level politics. As this level of communication and leadership is essential to walk the talk. "What you know" may not as "matter" as what you can contribute via your knowledge to those who you know, to win trust and power of connection. 
  • There are three powers either as visible or invisible hands in an organization: Structural power ( the position with the organizational hierarchy), expert power (business and technical knowledge), and prestige power (connections) impact the business-IT relationship. Structural and prestige power were positively related to the business-IT relationship while expert power is controversial. Does “what you know” really matter? The key point is communication, business and technical knowledge would help a CIO understand business priorities, opportunities, and the strategic need for IT; but more importantly, the CIO should more effectively communicate the strategic importance of IT to the executive team. 
  • To wield political power, one has to be able to influence others: To influence others, one has to build as many productive relationships as possible with others who have power in order to create coalitions. Are the expert and structural power important? Yes - but they will never be sufficient on their own, because the "smartest guy in the room" needs to be able to influence and lead others to make a difference, and that's about people and relationships. Drivers of organizational performance lie with the right alignment of decision-making power, information flow, employee motivation, and boxes and lines of the organizational structure. 
  • It is important to understand the power brokers and how to influence them. CIOs need to be able to manage politics at any level; however, the underlying approach should be more related to proper board-level communications. Keeping in mind that the purpose of the Board of Directors is to review and recommend the company strategy, as well as protecting the value of the organization, they will/should be very interested in the contributions of IT in driving the corporate strategy and goals. CIOs need to know those formal or informal “power brokers,” make an influence on them in order to do the job more effectively. 

2. Are you at the Table or Are You on the Menu

The CIO needs to function effectively at the Board level (Corporate Board of Directors) and also with the other C-Level members of the team (Executive Committees, etc.). The CIO is positioned to identify organizational inefficiencies, threats, and opportunities. CIO’s active participation is essential, especially where there is a goal of organizational transformation. 

  • At the Table or on the Menu: As CIOs are usually the only exec tasked with being a direct service provider to all of the business peers and to the board. A CIO that doesn't engage in the governing process (known on the street as politics), will miss many opportunities to match organizational needs with organizational resources - which is the core discipline to good governance. Most successful organizations know that IT has to be at the table. And the old saying is: "if you aren't at the table, then you are on the menu" is true. 
  • Empower CIOs: Many firms are trying to give IT a more central role in their business strategies in an attempt to combat the economic downturn. As such, they want to empower CIOs to manage the process but don’t want to upset the existing power balance of the executive team. the CIO's formal position in the firm, the CIO's business and technical knowledge, and the important connections the CIO has established are attributes that may influence the shared understanding of the business and IT executive team members and, in turn, financial performance. 
  • A CIO must take an active part in company and industry politics: They have to compete with other departments for resources within the company. They have to fight to win respect for the IT team from other departments. They have to fight competitors and suppliers to gain control of the technology standards used in their industry. But it doesn’t mean the CIO just becomes a reactive follower, they need become a change agent to really make a positive influence. 
  • Oversee Business Governance: Who better than the CIO to engage, inform and influence the organizational business decisions. Most Boards do not have a technology background and need that presence to understand the value which technology delivers. As technology has become the central pillar of enterprises, IT has to become a key ingredient of business growth, and the CIO also has to become a key contributor to the corporate board. He/she shall be influencing the key decisions on all aspects of the business and therefore being required to understand the politics. That being said, IT is at the menu, but the CIO needs to sit at the big table. 

3. How to Handle such Complex Level of Politics?

Perhaps politics is not so scary - it’s only about "how people interact." Managing board level politics is really just another name for managing relationships. The CIO must be a change agent which requires understanding the stakeholders and what motivates them.

  • Understand board members and their mindsets: The CIO should be able to sway the board to get his/her projects moving, for that he/she might need to understand the board members and their mindset. Call it politics or networking, it’s a must do for the CIO to work with them individually first and then collectively to move forward. So staying dedicated to the principle and learning your company's political avenues will provide the influence needed to improve IT of the organization. 
  • Doing “homework” before sitting there: Regarding communications with the Board, understand your time in front of the Board will be brief, focus on what they are interested in and be sure to devote the effort to prepare in advance. Provide a brief summary of the purpose, how you want this to conclude and what you are asking from the Board. Provide reference materials, don’t concentrate on technical minutia. As C-suite, the CIO must understand the business so that you can make appropriate strategic recommendations with respect to the use of technology to achieve business goals.  
  • Perform the Dual Roles: The CIO faces the challenge of educating, mentoring and coaching peers and board level executives on what information technologies are and what they can and cannot really do in terms of delivering a measurable return on investment. At the same time, the CIO has to deliver the solutions that are promised and assure that the expected value is obtained from these solutions. To perform this dual role, the CIO has to be as effective at managing key relationships with peers and board members; effective at both formal and informal communication and more importantly, able to interact with and communicate with other members of the executive team in business terms. 
  • “Politics” and IT have something in common: CIOs may often see politics as a 'necessary evil' or some sort of 'game' to play. While many C-level executives including the CEO believe that IT is still just a necessary evil, not as the game changer, and therefore discount the knowledge/expertise the CIO brings to the table. As much as the CIO may be respected for their technical or business knowledge, it is their ability to play politics that actually gets things done. Essential to know how to sell your ideas, who to get on your side in different instances etc. Unfortunately, it often comes down to who you know and not what you know. Just a fact of life in modern business. But don’t give up, with a positive attitude; CIOs may well master politics game, just like they can manage IT into the game changer. 
  • Capture the business needs and direction and translate this into IT Strategy and plans: Whether you are at the top table or not, the most senior IT position within an organization needs to understand their stakeholders, what pushes their buttons, what drives them,.... understanding this is what allows you to influence the decisions/outcomes and that is what politics is in an organization. 
  • Change the rules of the game: Any C-level position is about governance (politics). Lots of people are frightened by politics and think it's only a dirty business. Real leaders should be able to change the rules of the game they're playing (firstly, of course, understand them). Any CIO should influence on core politics of company (minimally as restriction factor). 
In summary, governance is known as politics, on the positive side, board level politics takes a professional relationship, which will help enforce accountability and collaboration. Taking part in politics should be seen as leadership style and effective tactics to achieve positive results and not a way to spread negativity or to take an action of rubber stamping, effective governance practices require thinking, requiring asking questions, bringing unique viewpoint and shaping innovative business culture, the CIOs need first understand the rule, then change it for goodwill, the goal is to improve the board effectiveness and overall business maturity as well. 



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