Sunday, December 30, 2012

The CIO’s Tough Choice: Be Proactive or Reactive, and When?

CIOs' proactive in trying new things shall not get confused with spontaneity or do things without a plan.

Organizations large or small on the journey to digital transformation, IT plays a critical role as an enabler to drive changes. From IT leadership perspective, why are some CIOs reactive, rather than proactive in trying new technologies? Are they just reluctant to change a working system, or are they not empowered enough?

1. CIOs are not Empowered Enough

  • The Business’s Attitude to IT: It all depends on how IT is treated as a cost center or a strategic partner to the business. Is the company willing to take the risk that involves the adoption of new technologies? Does new technology contribute to the business objectives? Is the new technology aligned with the IT strategic plan or is just a whim of the vendor?  If IT is considered just an executor and a follower of business leads and their decisions, then the CIOs are not empowered enough to take decisions which obviously lead them to be reactive, but not proactive. 
  • From the leadership/management perspective: CIOs are not part of business planning and strategic decision makers in most of the organizations and they get the decision from someone who is part of the strategic decision maker. Since CIOs are not part of the strategic decision maker hence, resistance to change is just a lack of clarity. CIOs are not empowered enough to take decisions which obviously lead them to be reactive, but not proactive.  If IT is considered a strategic partner, innovator and business enable, then CIOs are given a seat at business strategic plans and meetings. This obviously gives them the power to make and break decisions in a proactive manner and to best apply new technology to help accelerate the success of the company. 
  • “Maintaining” Mindset: Many CIOs graduated from IT management where their job was to maintain. The transition from a maintenance mindset to a value creation mindset is a stretch for some. Boldness is often not part of their personality profile. It may not be so fair to only have CIO shift the mindset, from boardroom to front desk, new thinking means new learning attitude, from business side, it means to show the constructive dissatisfaction, understand the risks and potential bear traps; for CIOs, from "No" to "Yes", it takes positive thinking as well as enterprise-wide supporting.  
  • Silo Thinking: It is, however, very common for the business to think that they understand how to implement IT, but, in the end, create a silo for their own section of the business. Also, many organizations still treat IT as a backend function that enables them to do day to day tasks. Business and IT working in silos will just not help. It just happens that daily operation grind takes precedence over value-driven changes in the system. 

2. Fair Reasons for CIOs to be Reluctant to the new Technology

  • CIOs have to balance real technology needs against the risk tolerance of the enterprise: Is the technology proven or is it so new that it presents undue risk to the organization? The number of circumstances that require a CIO to be a trailblazer in technology adoption is few. Being a fast follower give a CIO time to see how the technology actually stands up, usually, IT is accountable for potential risks, that's why the CIO feel cautious of new technology trends; be aggressive and cautious at the same time. 
  • From a finance perspective, does the CIO have the budget? Most of the budget is allocated to cost/value proven tech and projects rather than new technology where this aspect is yet to be estimated or where this aspect is at not acceptable levels. Senior IT leaders weigh the risk/reward / ongoing maintenance (labor) equation all the time whether conscious or not. - budget cut, priority changes, resource reallocation, technology diversion, etc - which force them to be reactive and be more mechanical!
  • Does the organization have a need for new technology? The CIO must reflect his/her employer's needs, and sometimes this means not following the herd and waiting out the cycle until the investment capital is available. In other words, is the new technology table stakes for the industry or does it provide the organization with a competitive advantage in generating revenue? Many times neither of these are true. If it doesn't represent innovation in a direction that supports the most critical business initiatives it may not be a priority for the CIO.
  • CIOs should not rush to new technologies without exhausting the benefits available on the existing technology: They should try new technologies when there are clear returns that can't be found in the existing technologies, of course with great care on the potential risks. CIOs who will not disrupt something that is effective, and will induct new technology only when it shows clear business benefit.
  • CIOs become reactive from experience: Being proactive can many times turn into "changing for change" sake. Any decision needs to be made in a deliberate, informed manner. They need to be introduced to the nuances of technology and how it helps before they can become proactive. Sounds easy but takes a while to reach there in such cases. Ultimately, if the CIO can convince the business to really want a change then it is a good idea to proceed, otherwise, it may not be a bad idea to stay with the status quo (perceived to be reactive).
  • Reaction vs. production is also situation-driven: Although being proactive is an excellent attribute, there are limits, and it's not the ultimate objective of every situation or challenge. Reaction vs. production is also situation-driven, part of the strategy, in order to move faster, one may need to slow down, in order to leapfrog, one may need crouch down first, in order to turn around, one may need practice upside-down first. Don't ignore that it could also be a deliberate technology adoption strategy. There have been enough abysmal failures to prompt some caution.

3. How to Make IT a Real Business Catalyst

To be reactive is not a good position for a CIO. And maybe the word "reactive" as itself induces to think that the CIO is pushed to act as a result of external pressure. It’s not a matter of being reactive or not. It is not a matter of being fearful or brave. It is a matter to add value to the business or not. Does new technology produce a relevant value to the company? 

  • To make IT a real enabler and compliment the business road-map, IT management must get a feeler of the business view: IT must be measured from a business viewpoint. That should help in trying new technologies. A CIO needs to first understand their business and industry, then evaluate technology based on the value or competitive advantage it brings to the business. Secondly is the CIO's ability to "sell" the business value at the C-Level.
  • Understanding the technology is one thing, understanding the impact of the change to the business is another thing entirely: The CIO can only create a value-driven strategy if they have the data available to them though it might not be the role of the CIO to find that, CIOs should proactively understand businesses and customers first to avoid changing for the technology’s sake.

  • Demonstrating the full reasoning behind the proposal: Only if CIOs have opportunities to oversee businesses and be able to take a reasonable plan to the board to discuss the latest and greatest, they could be able to demonstrate the full reasoning behind the proposal, to shift to proactive mode smoothly; and that needs a strong team, and a full understanding of the business and how IT underpins all elements of it.

  • CIOs have to make a priority choice based on ROIs and risks: if a new technology emerges that needs to be incorporated and has not been forecasted reactively. All that being said, the CIO is responsible for new technology adoption, the CIO's role is more than strategy implementer and more into strategy maker or at least with the influential power to shape and keep in harmony the business, market, products, and resources.
  • Every risk has opportunities: If CIOs can understand deeper with business's support: every risk has opportunities, then IT can add more value to the business's strategy. The key here is to gradually institutionalize and communicate innovation throughout the organization. It's also important to note that a 'firefighter' can't just leap into being an innovator; it takes gradual steps and phases to slowly institutionalize such a practice. 
  • CIOs' proactive attitude in trying new things shall not get confused with spontaneity or do things without a plan: From returning the organizational structure to optimizing business processes, all need to be well aligned in order for CIOs to make effective decisions timely, be optimistically cautious, CIOs’ positive tones can amplify collective human capabilities in organization and takes calculated risk in gaining business competitive advantage.
  • There are risk/$$ sharing models to experiment new technologies: But organization leadership should have a culture to set a goal/metrics that every year this innovation center has to incubate and foster emerging trends and apply them to their business. Small initiatives will earn large credibility. A CIO needs to be forward-looking to see where relevant technology, and their industry, is heading. Technology can be efficiency-driven, or it can be disruptive - changing the industry. It is the CIO's job to discern the difference and make a business case. 
  • Why do the innovations happen and who are the strategic partners to drive innovation:  Innovations happen because of specific business needs. Unique challenges become more apparent as we push the limits of the available technology, which pushes us to find a solution to the problem at hand. The role of the CIO is to drive the corporate vision and strategy through effectiveness and innovation in the knowledge and information channels. The CIO has to look forward and actively position the business in the right place to take full advantage of opportunities. DRIVING is not a passive activity.
IT is now permeating into every corner of the business, the CIO's leadership penetration is about the depth of thought leadership as well as the breadth of enterprise knowledge upon understanding business as a whole. CIOs can take the most proactive approach and make a difference. Good CIOs have negotiation and people skills and use these to add to the vision of the business. They are dynamic and productive.

More Tough Choices for Business to Make: 


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