Talking Strategy

Talking Strategy

John Henderson, chairman of the Department of Information Systems at Boston University's School of Management, gives tips for CIOs who need to start thinking strategicallyStep into Boston University's brand-new, superslick $US100 million-plus School of Management building and you know that somebody made some right decisions.

John C Henderson, director of the school's Systems Research Center, thinks a lot about decisions and how they are made -- especially decisions about information technology. In 1975, as a PhD candidate at the University of Texas, Austin, Henderson made his earliest mark by completing his dissertation on decision-support systems. At MIT's Sloan School of Management in the late 1980s, he teamed up with N Venkatraman to develop a strategic alignment model for enterprisewide IT. Since then, Henderson has come to regard knowledge management systems and leadership initiatives as key strategic tools that can help bring that model to fruition. To ask some strategic questions about strategy, CIO (US) contributing writer Tracy Mayor met Henderson in his fifth-floor office overlooking the Charles River.

CIO: For a time, strategic planning was hot. Then people seemed to back away, and now there's renewed interest. What's going on?Henderson: When information technology people came into planning, they came into it with a history of design, with a culture and a history of provably correct and zero defects managerial models. But in the role of businesses, those models are unrealistic. There's too much uncertainty. Strategic planning from the business side evolved into more of a strategic thinking process of trying to establish principles, visions, directions and major initiatives.

Nevertheless, IT people continued planning to develop architectures and well-defined three- to five-year plans. But in the last couple of years, we've seen IT people change. Today you see many more IT plans drawn as road maps, just as on the business side you see IT plans connected to vision, principles and initiatives.

CIO: Is the idea that if you can articulate your principles and your vision, then you can change products without having to completely revamp every time?Henderson: Right. What CIOs have to do is build a strategic plan that puts in place a framework and a direction for IT. That way, the products we produce aggregate. They add to the value of the firm, and they enable us to learn and create new competencies and understandings.

CIO: How does a technology strategy align with the business strategy?Henderson: A business strategy has both an external view that determines the firm's position in the market and an internal view that determines how processes, people and structures will deliver on that position. In the work I did with my colleague, N Venkatraman, our fundamental position stated that a technology strategy should also have those same external and internal components. Historically, the IT strategic plan has focused only on the internal IT infrastructure-the processes, the applications, the hardware, the people and the internal capabilities.

CIO: Most IT people see those internal concerns as part of their job descriptions. But the external considerations are new.

Henderson: We now begin to see that part of IT strategy must be external positioning. For example, if your IT strategy as a retailer is to move aggressively in the area of Web-based channels of marketing, [you need to decide if] you want to form a strategic alliance with a technology firm to help do this or if you want to keep all those competencies internal. If you are going to do a strategic alliance, you need to decide with whom you will do it.

Will it be small companies, start-up companies with which you may have leverage? Or will it be Microsoft? That choice doesn't change the business strategy, but it can have a huge impact on how that business strategy unfolds over time.

CIO: This external element adds a new layer of responsibility for IS. You have to know your technology but also the companies and the market structure.

Henderson: And how that market can affect your business. It means you have to understand who the players are and how the dynamics of the market could create both opportunity and risk for your firm. And you have to find a way to engage the line executives in understanding those issues. Therefore, IT strategy is not about data definitions; it's about thinking through what's happening in the IT marketplace and understanding how that creates both opportunities and threats.

CIO: If a CIO needs to think externally, manage the internal concerns and address interpersonal communication concerns, can the strategic planning of IT become most, or all, of the job?Henderson: Strategic leadership has a strong contingency base. If your basic systems are broken, you've got an operational problem and you had better go fix it first. I remember when [Louis] Gerstner took over [as chairman and CEO] at IBM; he was quoted very early on as saying, "The last thing IBM needs is a vision." Everybody went nuts. My response was, "This guy's got a lot of insight," because IBM needed to deal with reality. Once you've got credibility and people who can make the place run, only then do you have the opportunity to be a strategic leader. At that point, the CIO's role becomes strategic.

CIO: What are some of the dangers of strategic planning for IT? What should CIOs keep in mind as they plan?Henderson: The notion of keeping a balance between vision and operations is a classic one. The other classic is making sure you're always connecting to the business, that you're not becoming so focused on the dynamics of the technology market that you forget that that's not how you're making money. Third, remember that at the end of the day, strategy is a people-intensive process. It's about ideas and facts and markets and competition, but it's also about people.

Strategic thinking can be thought of as leadership development rather than a problem that one has to find an answer to.

CIO: Any quick advice you can offer CIOs about strategic thinking?Henderson: Yes. We desperately need to think about IT strategy as knowledge creation and knowledge management processes rather than as singular events that occur at specified times on annual calendars. I see some very exciting work going on around the notion that the strategic planning process is actually creating a community of people who are sharing knowledge -- books they've read, events they've held, stuff going on in the marketplace, actual plans, projects, schedules and so on.

CIO: How do the experiences of different people turn into a strategic plan?Henderson: Think about it this way: Here at the university, we constantly develop our strategy for what courses we teach, what research we do, what knowledge we want to have. But when I get ready to teach a class, I need to know what case I am to teach, who has taught the case before, what presentation he or she made, if we have any videos, if there are any teaching tips and what questions the students have asked before. None of that used to be available to me unless I happened to be in the room with somebody who taught the class before. But we've put in place at BU a knowledge management system that allows a professor to get access to that knowledge through the Web and with videos, audio, documents and lessons learned.

CIO: Can't that kind of knowledge base become just a big laundry basket of information?Henderson: Well, that happens when there's nobody thinking about planning as a process. First you need to think about strategic planning as a thinking process, then you've got to put in place the systems to support that process.

The current state of strategic planning practice -- where knowledge is stored either in document form or in the heads of individuals-- is a bloody disaster.

You're not learning from what you did the last time. So every strategic plan is like a new beginning. Until we change our ability to manage knowledge effectively, we are not going to have a substantial impact on a firm's ability to think strategically. What's the life of a strategic plan before significant change happens? What's the shelf life --18 months? If it takes me two years to communicate the plan to my organisation and the shelf life of the plan is 18 months, I'm in deep trouble.

CIO: So should a CIO go out and buy some brand-new fill-in-the-blank software system? Can anything be done right now?Henderson: Certainly. Increasingly, you need hyperlinked technologies because no one document is useful by itself. It's the web of content that I can explore that makes the knowledge system useful. A strategic plan is the outcome of a very long series of discussions and analyses, and we need the ability to trace the line of reasoning, to get down to primary evidence, to find out quickly and easily who had this idea. Those kinds of links weren't in the document in the past because the document wasn't seen as part of a knowledge network. It was seen as an end product.

CIO: So when you talk about the need for a dynamic strategic plan, you're talking about it being physically and technically dynamic as well as philosophically dynamic?Henderson: That's exactly right.

The Seven Habits of Highly Effective IT Steering Committees 1. Secure executive-level support.

2. Maintain high-level, broad-based membership positioned as a unifying group with an enterprisewide focus.

3. Have a clear purpose and focus and measurable objectives.

4. Constantly reiterate the committee's vision on how technology can fulfil its potential.

5. Have a CIO who knows how to win friends and influence people.

6. Involve enterprise leaders with organisationwide stature and perspective (preferably not the CIO because the temptation to dictate initiatives to technophobes so often proves irresistible).

7. Instigate and enable long-range planning efforts.

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