CIOs hunger for a strong dialogue with their CEOs. Trouble is, their CEOs don't always reciprocate. Beverley Head explores the unrequited relationship.
Point one: "The personal relationship between the CIO and the CEO is always important, usually broken and generally hard to fix."
Point two: "Improving this one relationship might be the cheapest and most valuable change that an IS department could make. Unfortunately it is also one of the most difficult changes to achieve - and possibly the one IS is most poorly equipped to implement."
Point three: "Almost half of all CIOs will be fired from their present position largely for failing to establish good working relationships with the CEO and the rest of the board."
Such are the grim pickings in the recently released report from CSC Research Services: CEOs are from Mars, CIOs are from Pluto: Enhancing the IS-Business Dialogue. The perceived clash between the CEO and the CIO has become something of a cliché, rolled out when one side or the other does not get what they want. Clichés however are the offspring of truth.
Francis Hayden is one of the authors of the report, and a member of the team of 12 researchers CSC employs around the world to explore the strategic importance of information technology to business and how that can best be leveraged. Hayden describes the small team as "working at the intersection of theory and practice of business and IT. We are in the ideas space rather than in the information business." During a recent visit to Australia Hayden explained that exploring the business-IT relationship had been on the group's agenda for years. Why?
"Because," he says, "when business makes the strategy and IT implements it, it doesn't work." Another cliché. Another truth.
One of the most unpalatable ideas emerging from the report is that almost half of all CIOs are likely to be fired from their present position. Hayden qualifies this, saying that when the 140 CIOs were asked what had happened to their predecessor, it turned out that around 47 per cent were fired for one reason or another. And the most often cited reason for that firing was that IS had failed to establish good working relationships with senior management.
As the report notes, fixing the relationship once it has started to break down is extremely difficult. "Formal mechanisms, like improving operational performance or making a compelling business case will not work. Informal structures such as personal relationships can only be influenced by changing the informal aspects of their (the CIO's) own behaviour. For many this is a black art that they are ill equipped to practise - and uninterested in doing so," the report says.
Hayden believes there are techniques that can help improve a crumbling relationship, or even better, if implemented at the start of an assignment will stop the relationship going bad in the first place. This, according to Hayden, involves "shifting the perception of the CIO role toward objectives and away from responsibilities". That doesn't mean the CIO should suddenly try to seize a highly strategic role in the organisation, he says. Instead a CIO should earn his or her stripes on the daily battleground of business. A series of small wins should engage the interest of the CEO, and ultimately earn the CIO a place at the table when strategy is discussed. Getting to that table is a question of the CIO successfully navigating a way through the maze of organisational politics and perception.
"The CIO will have an explicit and formal contract of employment but there is also a further, usually unwritten, agreement with the CEO about what each of them should do and how they should communicate their activities to each other. This contract, which is more likely to be implicit and informal (and which is therefore more prone to misunderstandings), comes in two styles: the 'responsibilities contract' and the 'objectives contract'," the report says . The report argues that when a CIO has a responsibilities contract they are required to manage the IS function or to provide IS services of a certain standard. CEOs use this type of contract to shield themselves "from the impact, the cost and especially the organisational consequences of information technology development". That's not an optimal environment for the person looking for a strategic CIO role because, as the report says: "A responsibilities contract gives the position of CIO to whoever will make the least fuss - in effect, to the lowest bidder."
The report recommends that instead of accepting such a contract the CIO should work towards creating an objectives contract, which defines the CIO quite differently. Such a contract "sets out targets that have to be achieved and the reasons why they need to be hit. It focuses on the value that IS must deliver to the business and this may well include new value that has to be discovered or created." It's not a role for the faint-hearted. "CEOs use this sort of contract to push the CIO into leading the search for new technology-enabled business opportunities and into organising their implementation," the report says. "Such a role is not for yes-men [or women] and it cannot be performed in isolation.
"The CEO who signs up for the highest value will be looking for the CIO for continual challenges to the organisation's view of technology use and to their business models. The CEO who goes for the lowest bidder may expect loyalty and subordination, ever improving productivity measures and a long, comfortable slide into obscurity."
According to Hayden, CIOs who are searching for more than the long comfortable slide with the CEO, and really want to contribute value to the organisation will require a fair degree of political nous in order to fulfil their contract. He says that rather than attempting to engage the CEO immediately, CIOs ought to identify potential collaborators within the business who are willing to work together with IT to demonstrate how technology can improve the business.
Nothing succeeds like success, and once demonstrated, securing the attention of the CEO is far more likely. Most of the current generation of CEOs are not going to seek out the company of the CIO unless they can swiftly identify something that's in it for them Hayden says.
Going Nowhere Fast
The report notes that many CIOs feel that their relationship with the CEO is stalled. "At best they are left in a position of benign neglect and while some are quite happy to be overlooked, most say that the inability to get their issues onto the executive agenda remains their chief frustration." Although the CIO wants to secure the CEO's attention, the report says, "the CEO is unlikely to feel the same pressure. For him or her the relationship with the CIO is episodic; they work together when the need arises, when there is something on the CEO's agenda that requires it, and otherwise they just get on with their jobs."
"The CEO is not interested in cultivating a relationship for the longer term," says Hayden. "So for the CIO cultivating a relationship for the sake of it is not the way to go. It's a lost cause. You need to discover why the CEO would be interested in working with you."
One thing which guarantees the CEO's interest is the bottom line. If a CIO demonstrates through a well-defined project that the bottom line can be improved with the judicious use of IT, the CEO will be interested. Clearly the CIO cannot achieve this bottom line breakthrough in isolation ("When business makes the strategy and IT implements it, it doesn't work."), hence the need for business collaborators.
There is also a trick to finding the right business collaborators says Hayden; the collaborators who have clout. "You have to identify how the power is structured in the business. This is mainly a question of watching and listening." He believes that during meetings the CIO would do well to identify any decisions that are being discussed and then work out when that decision was actually made, and by whom, as very few real decisions are actually made during meetings, rather they are ratified during meetings.
The report states that "the myths of management are very different from the reality and they are no help to the CIO in establishing and maintaining a useful relationship with the CEO". It identifies four myths that should be dispelled:
CIOs make decisions.
Decisions are made in formal meetings.
Funding decisions are made in presentations Decision processes are logical.
"CIOs need a more realistic picture of their job; one that conveys the reality of organisational politics and which is more useful in working out how to do the job better," the report says. By studying the internal politics of an organisation, and those individuals who do make decisions, Hayden believes it is possible for the CIO to identify the most valuable collaborators. "Find the real players and then help them meet their objectives," he says.
If it all sounds a little Machiavellian then that's because it is. As the study notes, "Businesses are profoundly political institutions and any CIO who seriously wants to influence the thinking and behaviour of the CEO and other senior managers would do well to study them." CIOs must be prepared to play the political game or retreat to ivory towers where they can lock themselves away until the pink slip arrives.
Assuming that the CIO does decide to play the game, and identifies a suitable powerbroker in the organisation as a willing collaborator, he or she needs then to workshop an information system that will benefit the business. "You lift IT out of an operational and into a more strategic role," says Hayden, adding that this is only possible when there is a pull from business and a push from IT. Once a project has been successfully completed, he says it is up to the CIO to "advertise your success. And particularly those successes that will interest business people."
Not all successes will be judged equally however. The degree of difficulty, which a CIO will face in gaining the ear of the CEO, will vary according to the nature of the business itself. Hayden says that in what he describes as a value chain type organisation - for example, a traditional manufacturer where supplies come in, are formed, and onsold - the CIO will have the lowest prestige and the least penetration at a strategic level.
In a value shop - generally a knowledge-based business - the CIO can expect to be seen as a subject expert or systems integrator, and hence win a little more respect, and win it more easily, by delivering systems that will help the business succeed. In a value network, such as a telecommunications or financial services company, where information systems are a prerequisite to delivering the service to customers, then the CIO will enjoy a high level of prestige as the business is seen to depend on the infrastructure.
This will also affect the ease with which willing and powerful business collaborators can be found. Operational managers in manufacturing companies are, for example, likely to be focused purely on their segment of the business and less likely to wish to experiment with new IT systems. But there are tricks that can be used to make even these seeming recalcitrants into valuable collaborators. "The trick IT people miss is to give technology to senior managers," Hayden says.
The report recommends, for example, "providing gadgets like PalmPilots or mobile phone-based e-mail for home offices and travel". The theory being that the manager takes the new toy away, plays with it, and suddenly realises how it could be used to help them, and how it could then be more widely deployed. "If they come back and say there is something that they can do with it, [they become] good technology champions," Hayden says,.
Will You Still Love Me Tomorrow
All this suggests that the CIO must for some time at least play corporate wallflower, casting glances at all business executives in the hope for a dance with a collaborator that might finally get them noticed by the CEO. Often times this will be the case, particularly for the entrenched CIO. There is one opportunity to get directly to the CEO according to the report, but it's short-lived and must be exploited to the full.
That's during the CIO's honeymoon phase. Often brought in to fix a mess, or take IS to a new level, the new CIO is seen as a very attractive dance partner by the CEO. Interestingly, this freshly ensconced CIO often has a far better personal relationship with the CEO than does a long-term CIO who has had years to work on the relationship.
"One hypothesis that we set out to research was that successful CIO-CEO relationships take time to develop and that CIOs of long standing are therefore more successful," the report says. "What we found was the exact opposite. In fact, with a few very notable exceptions, successful CIOs change jobs frequently."
The advantage of the short tenure is that the CIO has "a honeymoon period during which they have all the kudos that comes from managing a department and none of the blame for the mess it is in". In addition, being seen as a newcomer often enhances the credibility of the new CIO, for a short while at least, thanks to the curious phenomenon of external IT specialists often being viewed as somehow more savvy than entrenched internal IT specialists.
"During this period, the CIO can afford to be entirely candid - and indeed, has a responsibility to be so - because your own reputation can only be enhanced if you start from a low threshold," the report says.
It's important the CIO uses this opportunity before the credibility wears off. Because over time, the once-focused relationship and idea exchange that the CIO and CEO engage in during this honeymoon phase dissipates. CSC refers to the phenomenon as "dialogue entropy", where the relationship degrades and moves way from tightly managed discussion of projects, targets and strategic concepts, and towards issues such as cost control and performance. In other words, the CIO has moved from an objectives-based contract to a responsibilities contract.
To avoid dialogue entropy, the CIO needs to play the political game and actively manage the interaction with the CEO, constantly bringing it back to the negotiated objectives contract. That said, no CIO can afford to let slide basic IS infrastructure and service. As the report notes, "A common approach to the CIO-CEO contract is to try to separate out the strategic objectives from the operational responsibilities. Most CIOs have experienced how the best strategic insights can be utterly ignored and even mocked just because the e-mail system crashes or the network won't stay up . . . Losing operational responsibility is not a reliable way of improving the CIO-CEO relationship because it is tackling the wrong problem."
The provision of a robust, well run and efficient information IS infrastructure is to the CIO what the provision of a good accounting and payroll department is to a CFO: a prerequisite. Engaging the CEO at a strategic level will only happen for the CIO or the CFO once such basic foundations are in place. "Although you want to shift away from the responsibilities type contract and towards the objectives contract," says Hayden, "certain things have to be done, and have to be done well."
The provision of many of those fundamental IT services may well be outsourced, some may be provided by ASPs. Some responsibilities may be assumed by other IT managers who report to the CIO. Some IT functions may even have devolved into the business units. Ultimately, however, the CIO has to put in place the systems and people to make it all happen, taking on the role of ringmaster to ensure that the corporate computing and communications circus keeps on rolling.
In a report that is packed with advice for the CIO (and by early this year CSC hopes to have packaged up many of its recommendations into a workshop that can be used by businesses wishing to improve the CIO-CEO dialogue), what about the CEO? Hayden offers the following message: "Think about things that are at the top of your agenda and bring in your IT people earlier to think creatively about those issues. Otherwise there will be opportunities that will get lost."
Some CEOs will heed the message. Others will not. Some CEOs have seen the IT light, others remain dim. CSC's final counsel to CIOs who really want to play a strategic corporate role puts them squarely in charge of their own dance card. "If the CEO won't dance, find another partner. If no one will dance, find another party," the report advises.
Already many CIOs report to the CFO, and while some record this as a less than favourable reporting structure, others find a supportive and enlightened CFO ally a preferable report than an agnostic CEO. The report also suggests that managers of a corporation's key knowledge resources can prove valuable allies in terms of delivering a strategic benefit to the organisations.
For some CIOs, however, there is no way through the political fog. No business collaborators can be found, and eventually opportunities are missed, or worse, exploited by the competition.
Then, says the CSC report, it's time to move on - in search of another honeymoon. VContract CharacteristicsResponsibilities Contract Objectives ContractContinuous Goal-driven and time-boxedGeneral SpecificOperational InnovativeCost-driven Value-drivenInward-looking Outward-lookingIsolated CollaborativePre-defined NegotiatedTechnology focused Business focusedSOURCE: CEOs are from Mars, CIOs are from Pluto, CSC Research ServicesBehind the ScenesThe CSC Research Services team responsible for CEOs are from Mars, CIOs are from Pluto: Enhancing the IS-Business Dialogue had a hunch that maybe the personal relationships between CEOs and CIOs counted for more than was previously credited and this was what it then sought to explore. The basis for the report is a survey of 140 CIOs from around the world.
Astoundingly, the researchers did not survey CEOs before writing the report. Francis Hayden, a member of the team, justifies this by saying that CEOs are notoriously difficult to get to, so they relied on what CIOs told them about their CEOs. "CEOs are much harder to reach. All that we could do was infer what the CEO would be thinking. That's what we were told by the CIOs," Hayden explains.
Admittedly the CIO perspective of the CEO is fascinating, but it remains that: a perspective. It is a very significant flaw of the report's foundation, and is akin to a marriage counsellor trying to patch up a marriage by speaking only to the wife and getting her opinion, and then her opinion of her husband's opinion.
Which brings us to the other omission. Although the report makes much of the fact that it is the personal relationship between CEO and CIO that counts for so much, it has not attempted to take a cut of the results by gender, which is surprising since it even borrows its title from one of the popular recent titles exploring inter-gender communications, Men are from Mars, Women are from Venus.
With those caveats, the report does still offer thought-provoking reading and in its defence CSC Research Services makes no claims to be an empirical analyst, but an ideas factory.
CIOs with operational accountability need not be swamped with day-to-day crises. A CIO can avoid midnight calls and boardroom sniggers by taking three steps:
1. Establish clear responsibility along organisational lines - product development, operations, and marketing - rather than by geography or technology.
2. Outsource the elements of IS that are well understood and measurable. This step often moves IS up the organisational ladder because top management has traditionally taken care of external vendor relationships and it will manage and outsource service at a higher level than an internal service - even though the budget may be the same.
3. Recruit management talent (from inside or outside the organisation) and have these young guns present to and interact with top management. This has many positive effects: it makes the IS department visible, creates a channel for articulating an IS point of view and helps IS acquire the business point of view. The indirect advantage to the CIO is that IS gets a reputation as a smart place for young managers to get their technological background and organisational understanding.
SOURCE: CEOs are from Mars, CIOs are from Pluto, CSC Research Services.
Look Who's Talking
So what can the CIO do to initiate and maintain such a fruitful conversation with the CEO and other business managers?
CSC's recipe for success comes down to four points.
1. Stop screwing up. Good strategic dialogue will be impossible unless the technology works. Making it work properly is not sufficient in itself but it is necessary, so make sure there are operational managers in place to make it happen.
2. Start speaking. Talk to senior managers about technology and force them to talk to each other about it - and about the business opportunities it creates. CIOs do this by:
Providing gadgets like PalmPilots or mobile-phone-based e-mail for home offices and travel, thereby turning the executives into technology champions.
Introducing new technologies that illustrate specific capabilities, such as videoconferencing walls.
Hosting luncheons where speakers from industry or practice share their experience in areas relevant to the company.
Setting up study tours for senior managers, giving them a chance to turn their whole attention to technology and to discover new strategic opportunities for the company.
3. Sell your successes. British Telecom often uses products from its research labs in advertisements to raise the profile of the company. Peter Cochrane, head of research, makes sure they get recognition by keeping track of how often they do it.
4. Stay smart. Don't get caught out by the CEO who has seen something in an industry journal on an aeroplane and wants to know: "What are we doing about this?" When senior managers want to start a dialogue, make sure you are the natural person to come to - and make sure they are pleased that they did.
SOURCE: CEOs are from Mars, CIOs are from Pluto: Enhancing the IS-Business Dialogue, CSC Research Services
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