Friday, January 11, 2013

The CIO’s Journey: Transactional IT vs. Transformational IT

In its best form, leadership is about creating a powerful future that is compelling in the present.

The majority of businesses today are on the journey to digitalization and globalization. The reason is that the world is becoming smaller every day and as a consequence, every successful business has to sooner or later go beyond borders. At the same time, the global business landscape is only becoming more complex due to varied factors. And it is in this context that organizations build business verticals within to manage the complexity. So the logical concerns could be: What kind of IT leaders are in demand? Transformational or transactional? What're the differences between Transformation vs. Transaction? How would you define differences between Transactional and Transformational CIOs?

1. Why do Some Transactional CIOs Meddle in the Middle? 

In its best form, leadership is about creating a powerful future that is compelling in the present, that utilizes the best talents, capabilities, and resources of their people and organization to produce meaningful and valuable results. This is more than a positional approach, and having a CIO title will never be enough to make this real. However, given the hierarchical nature of most of the organizations, if the modeling of leadership doesn't start at the top, it will likely be little valued anywhere else. Thus, a frank self-assessment and a bit of situational evaluation would help in analyzing the effectiveness of leadership.

Why do some transactional CIOs meddle in the middle, seems losing the focus & leadership influence:

  • Set prioritization: Leadership includes prioritization of what is most important and valuable, not just driving tons of activities - which often have minimal long-term value. This issue of clarity of vision about what IT can be (not just do) separates the leaders from the managers
  • Examine the IT Maturity: The IT status/maturity within an enterprise determines the focus and priorities of most CIO's. Therefore, the right approach needs to be evaluated depending on where IT is and also where IT would be able to be in the future... the same sort of dilemma exists around the CIO business & technology skills
  • Further assessment: Is it because:
    - Lack of a world-class team that does the magic or lack of access to that pool of talent?
    - Lack of true partners instead of contractually-bound inflexible suppliers?
    - Lack of charisma?
    - Lack of business-savvy?
    - Lack of Business leadership/vision?
    - Poor IT governance?
    - Poor cost/budgeting?
    - Inadequate portfolio management? 

2. Transaction vs. Transformation 

Transactional" refers to operational transactions, taking input at one end and churning it out at the other with processes in between. "Transformational" means redesigning existing transactions to something new, being innovative/ creative and also introducing completely new transactions hopefully with a strategy that serves the organization well. It's easy enough to churn out the same old things even with minor modifications but to undertake real transformational change requires leadership, know-how, and confidence
  • A transaction is to do things right; a transformation is to do the right thing.
  • A transaction has a short-range view; a transformation has a long-range perspective.
  • A transaction is about how; a transformation is what and why.
  • A transaction focuses on a bottom line; a transformation is on the horizon.
  • A Transaction seeks continuity. A Transformation seeks to change.
  • A Transaction focuses on goals for improvement. A Transformation focuses on goals of innovation.
  • A Transaction is tactics,  A Transformation is a strategy.
  • A Transaction follows standard operating procedures. A Transformation needs strategic guideline & policy.
  • A Transaction needs plans, budgets, and designs detail steps. A Transformation develops vision & strategies to achieve it.
  • A transaction is inside a box; A transformation might need work cross box.
An effective leader needs to have both levels and styles of thinking, behaving and acting. Becoming a CIO or being given the CIO title requires technical and adaptive skills, just like any other c-level executive. It doesn’t mean we should say that being transactional is bad and transformation is good, in the absolute. Any c-level executives have to carry on a conversation in their discipline AND have discussions with their peers. However, the pace of changes in IT would force more CIOs into transformation-oriented roles...creating business value is what is expected from CIOs. Further, IT leaders shifting from transactional managers to transformational leaders take thought leadership, transcendent wisdom, and trans-disciplinary skill. And, just transactional running the systems is going to shrink with cloud and digital technology, once IT is seen as strategic rather than tactical, IT can be transformational when the opportunity arises and it is appropriate to seize it. Until then, the rest of the business will feel that if the transactional CIO is talking, it's because there are problems, not opportunities, and won't want to listen.

The CIO requires being confident to create and manage changes: It requires a leadership substance of vision & style that more closely matches the action-oriented style of senior executives and also has some of the analytic & synthetic qualities that are commonly associated with successful executives. The CIO must adopt the attitudes and styles of strategic leadership (transformational way), and also, must be willing to engage in conversation with his/her staff on some occasions on details (a transactional way) so the staff believes the CIO is not that far away from reality. As many organizations are at an inflection point in digital transformation, the transformation-driven, effective CIOs can help to orchestrate such change in organizational structure (vertical), working structure (horizontal) and social structure through the latest digital technology. It doesn’s mean transformational CIOs are superior to transactional CIOs in every perspective, and both attributes - transactional and transformative - are needed in a CIO, otherwise, you will either end up with static uncompetitive technology or with the completely loose cannon who can throw the organization’s technology into turmoil.  

3. Five Attributes of Transformational CIOs 

Most CIOs are now managing IT delivery to a multitude of business. And that means they play a transformational role in the organization per se. By 2020 not only will the technology transform but also the behaviors and attitudes of the new workforce will change dramatically. IT will not only be extremely embedded in all business operations, but it will also be extremely hard to silo - like it is today. The skills that the workforce will need or would have acquired will be dramatically different from what we have today.

The reach of the CIO and the IT organization offers a nearly unprecedented opportunity to take the lead in an organization - in the best sense of the word. It requires real vision, a sense of mission, an ability to foster a collaborative clarity of focus with clients - even when they are not clear, and willingness to go beyond being even a very high-end service provider. Much is possible for transformational kind of CIO Leaders. Transformational IT teams must have the following five attributes:

  • Alignment: IT and the business must be partners, must be able to finish each others' sentences and feel like members of the same team; Governance - The most powerful process for creating a high level of understanding of business/functional areas and IT is governance. This is the "playground sandbox" where business/functional areas can explain what they are trying to accomplish, give a priority to the hundreds of initiatives that they are trying to undertake, and IT can ask questions and explain their constraints. - Align the 5 P's (People, Process, Product, Partner to realize the 5th P - Performance)
  • Architecture: IT must have an over-arching vision of what the firm is trying to achieve. The point of architecture is to enable consistent choices when evaluating alternative designs (which design better fits the architecture?'). So start with the vision, define and agree on the core values of IT and use this to create a shared focus. The CIO along with his/her IT architects and developers must know what the enterprise is trying to accomplish.
  • Adaptability: The days of 'waterfall' development, inflexible specs, and long lead-times are long gone. The new mantra for IT: Better, faster cheaper, and doing more with innovation. In addition, there is a number of ways to promote a better understanding of the business perspective, but they start with a will to change the mindset. Also, measure wisely in order to lead more effectively,  focus on the key transformational areas, doing a few things well to create business value, from shaping mindset, to measure result, the transformation is a journey.
  • Attitude: Corporate culture plays a large role in hampering any CIO from affecting the change needed. Boards and executives understand and will verbally commit to the need for change, but when the meeting adjourns, it's back to the status quo. Having a good attitude to effectively, efficiently communicate. All good IT people are also evangelists and teachers; able to bring a human element to technology and make it less intimidating.      
  • Manageability: You don't get to play the transformation game if IT isn't transacting business well. IT governance structure and capability ensure there is strong and appropriate involvement by business managers in IT decision-making, it can also be a means of enhancing everyone's grasp of IT strategic nature and so increase the CIO's influence on the organization's overall strategy. In any case, it should foster understanding on both sides and improve IT respect for business needs and priorities. Build a Good Team - CIOs must develop their people into professional, good communicators, customer service oriented, project management driven, risk-reducing agents, innovators, and all-in-all good people.
  • Agility: See the world through the lenses of change, and put emphasis on three “I”s: Interaction, Incrementalism, and Improvement. It is not only the methodology for software development which largely resides in the stochastic or empirical domain, but a philosophy and a set of principles to run IT and business as a whole.  The correct level of management control needs to be in place - essentially governance, reporting and change management"
There are connections among Alignment, Architecture, and Agility: If you don't understand the business you can't deliver relevant results except using slow, clumsy processes. If you don't have Architecture, you can't easily decide whether a business request maps to your technical capabilities and Agility can result in chaos. If being transformational is leadership style, then, the leadership substance underneath is the vision, effectiveness, and adaptability. In order for CIOs to be more proactive, influential, and transformational, forward-looking organizations should empower their IT leaders, invite them to the big table, initiate in-depth conversation, set a positive tone for IT's stability and long-term strategy.


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