CIOs Share How They Made the Leap to CEO
- 25 September, 2013 13:06
Kevin Horner was a damn good CIO.
At the helm of IT at Alcoa for three years--and as CIO of various divisions for 11 years before that--Horner led the $23.7 billion company to numerous honors, including two CIO 100 Awards. He ran IT like a business, showing the cost of the technology and services each internal group consumed. He met with key senior leaders to understand their needs. He did a two-and-a-half-year stint in Europe, gaining global experience. He sat on an outside board of directors.
Horner did the things CIOs are supposed to do to be strategic, to be game-changing, to transcend IT. So in October 2011 when he was offered the CEO position at Mastech, an IT staffing company, he was ready.
Or so he thought. His first 18 months as CEO revealed gaps in his skills and experience.
"I was a pretty good CIO, and still there's a bunch of stuff I was just absolutely missing," Horner says.
The CEO job has never looked more attainable to CIOs. In today's business climate, the monster forces of social media, mobility and analytics technology are moving tectonic plates beneath traditional C-suite roles. CIOs are bumping up against fellow officers as IT becomes the number-one tool for building strategic advantage. A CIO who can make clever use of data and technology to create new revenue may be well-positioned to lead a company.
It's no tidal wave, but it is happening. In July, former Burger King CIO Raj Rawal became CEO of Fresh Diet, a small meal-delivery company. Also that month, Guy Chiarello quit as CIO of JPMorgan Chase to be president of First Data, a $10.7 billion financial services powerhouse. At Cisco, CIO Rebecca Jacoby is one of five executives said to be in line for the CEO job. Companies in real estate, oil, services and healthcare have also appointed CEOs who are former CIOs.
"We may not be commonplace, but there are some kinds of businesses crying out to be run by someone with a big tech background," says Kirby Slunaker, president and CEO of Metrolist, a privately held real-estate listing ser-vice. He used to be the CIO at Visa USA and eBags.
These CEOs show how far a talented CIO can go. Their personal stories also reveal some basic truths about the top job--truths that may make it impossible for many CIOs to cross over. Some revelations were surprising, such as the relentless storytelling that's required to get and keep employees supporting a common vision.
The pressure of profit-and-loss responsibility is intense, especially for CIOs who haven't been exposed to it. Delegating is no longer just a nice idea; it's a necessity. These CEOs felt the full weight of accountability--for strategy, profits, other people's livelihoods--immediately.
And, in the end, CEO is a singular, sometimes lonely job. "You can interact closely with your CEO. But you don't have a full appreciation of what subtleties and demands go with the job until you sit there," Chris Lofgren, CEO of Schneider National, and once its CIO.
Paving the Way
There is some precedent for today's moves. A handful of high-achieving CIOs rose to become CEOs about 10 years ago, as the Web began to rearrange business. Dawn Lepore, for example, was CIO at Charles Schwab at the time and helped invent online trading for everyday investors. She eventually gained the title of vice chairman. In 2004, she quit for the CEO post at Drugstore.com, a pure-play Web company she led for eight years. Now she's a venture capitalist.
Maynard Webb was CIO at PC vendor Gateway, then technology president at eBay, and, later, its COO. After that, he held the CEO job at customer-service vendor LiveOps for five years. Webb is now an investor in startups.
John Boushy is known for his trailblazing work in customer intelligence in the early 2000s while leading operations and IT at what was then called Harrah's Entertainment. He went on to be CEO of rival Ameristar Casinos from 2006 to 2008.
These executives were true pioneers. Surely some CIOs today are CEO material, Boushy says, but they may not be positioning themselves well. He had his sights set on being CEO early on in his career. "Things didn't just happen to me. I managed them to happen to me," he says.
Like Boushy, some who have recently become president or CEO planned their ascensions. Others took unplanned leaps. From their current vantage point, both kinds of CIOs-turned-CEO offer insights about what they had to learn while they led.
Born to Lead
Doug Haugh says he always knew he wanted to lead. He was captain of his high school football team and president of his college fraternity. In his professional life, Haugh has systematically undertaken the experiences necessary to bring him to top management at Mansfield Oil, a private fuel distribution and delivery company with an estimated $9 billion in revenues. He was Mansfield's CIO for four years before being named president in 2011. Before that, he was an entrepreneur, president of a real estate developer and a marketing manager at Exxon.
CIO, he says, was a step on a journey. He wanted to understand technology management and try to apply what he'd learned in other roles to the IT group. Indeed, he was a dual-hat executive at the time, also holding the title of head of business development for Mansfield. His IT team developed profit-and-loss statements and created products that brought in revenue. They sold supply-chain systems to a fuel company in Canada, for example, even sending staff there to work as on-site consultants. "The best way to know if you're great is to see if someone else will pay for it," he says.
Before all that, however, in 1999 he cofounded a company that made supply-chain systems for fuel retailers--an experience that seared powerful lessons about decision making into his brain, he says. Each day was vital to ensuring the company would be alive the next. "When it's you and a handful of guys at a card table, you very quickly get strategy."
The nature of the decisions made by a president or CEO differs from those made by a CIO, he says. For example, in May, Mansfield acquired part of a fuel transportation company in Chicago in a deal that means an extra $1 billion in annual revenue. The company's CIO worked during the due diligence phase to figure out the costs of supporting more employees, combining remote offices and serving new customers.
In contrast, as president, Haugh worked with the CEO and other top executives to decide the larger question of whether to do the deal at all. Would the company gain new competitive capabilities? How valuable were they? Could it retain inherited customers and employees? Was it the best way to spend Mansfield's time and money?
Haugh advises CIOs to get exposure to how choices are made by running a division, advising a startup or serving on an external board. Such experiences teach banking, investing, marketing and human resources skills. "Even if it's small-scale, it's so valuable," he says.
Personally, the skill he works on most as president is effective storytelling and motivating others. A leader cannot repeat his message too often, he says. "It might be the eleventh time you say it that a person gets it." He uses casual one-on-one encounters, large forums, email and various other methods to talk to his team. "They have to decide [whether] to support your mission or not with every decision they make."
You're CEO. Now What?
Kevin Horner never intended to be a CEO. He was in Florida with his wife in September 2011, just before retiring from Alcoa after 30 years. He was weighing a couple of manufacturing CIO positions when he got a call from a director at Mastech, where Horner was also on the board. The CEO left "unexpectedly," Horner says, and the board needed to find a replacement. As a board member, he helped with the search in the following weeks, with no success.
Then his fellow board members asked, What about you? "I'm probably the only CEO who got it without [submitting] a resume," he says.
The IT spending of up to $500 million a year that Horner oversaw at Alcoa is almost five times Mastech's total 2012 revenue of $102 million. Horner may be at a much smaller company, but his professional growth has been huge. "I wasn't scared, but it was maybe a little humbling."
For example, he says his initial efforts at setting strategy fell short. As a CIO, he defined strategy for his own area and helped shape strategy for the company. But as a CEO, he realized right away that "strategy was mine and mine alone."
Soon after taking over Mastech, he and the board changed how profit-and-loss was managed and eliminated two executive leadership jobs, among other changes. He and the board also developed a three-year plan for growth that de-emphasized acquisitions and focused on "organic" growth, such as improving recruitment. Sales increased 14 percent in his first year.
"I didn't worry whether I was 100 percent right, just directionally right," Horner says. "I made changes and got on with it. Doesn't mean everything we did in the first 18 months has been right."
The constitution to deal with risk--and to make decisions without all, or sometimes even most, of the facts--helps make a CEO effective, says Boushy, who is now a consultant. Lacking those traits will hold a CIO back, he says.
Horner ran IT as a services business at Alcoa, which helped prepare him for the nuances of measuring employee and customer satisfaction as a CEO. But, he says, he soon realized that as exacting as he was at Alcoa, it wasn't "real P&L with real customers." It was important to please Alcoa's internal customers and to price IT services competitively. But his customers were essentially captive, he says. "They could go somewhere else, but what was the likelihood?"
Now his customers can easily switch IT staffing companies if they're unhappy with Mastech, he says, which he is acutely aware of every day.
Other advice from Horner: CIOs should delegate as much day-to-day duty as possible so they can spend time with customers, both internal and external. He estimates he spent 8 percent to 10 percent of his time with internal customers, but that should have been at least 30 percent. "I would have known a lot more about what problems they were trying to solve."
Even when CIOs visit external customers, they don't have the same experience a CEO does when he's there, says Lofgren at Schneider National. "When you go as CIO, they appreciate the fact you're there," he says. "But a customer who is unhappy won't push it as hard as they do to the CEO." CIOs should try to see customers on a trip with the big boss and listen closely to those conversations, he says.
Overall, Horner is happy as a CEO and is satisfied with his performance. Jumping in, he knew he'd have some learning to do. But he describes himself as someone who takes charge when tasks need to be done. He doesn't stand still, waiting for direction.
Such a "leadership personality" is key to being a successful CEO, says Ernest von Simson, co-founder of advisory firm Ostriker von Simson, which runs the exclusive CIO Strategy Exchange. The catch is that some executives think they have it when they don't. Part of the trouble is that, generally, CIOs are internally focused, von Simson says. That is, they concentrate on how systems run, how technology is installed and how data is analyzed.
CEOs, though, "are about the future and the outside world," he says. That includes customers, yes, but also critical areas such as government, the economy and foreign relations. And they think ahead in terms of decades. Von Simson saw that capacity in Horner and told him so when he called for advice about the Mastech offer. "I told him to take it and don't look back."
Chris Lofgren has been looking back lately. Not with regret, but with a certain wistfulness and self-knowledge that comes from many years of experience. He has made a 20-year career at Schneider National, a privately held trucking and logistics company. He joined the logistics business in 1994 and rose to CIO in 1996. In 2000, he was named CEO of the logistics subsidiary, then COO of the whole company in 2001. The following year, he became CEO.
His progression was natural, Lofgren says, because a logistics company is built on technology. But he never intended to be CEO. When the son of the company's founder asked him to take the job, however, Lofgren agreed. He likes the breadth of issues he encounters as CEO, including building Wall Street relationships and the corporate chess of laying out a plan with complex interactions to be played out over time. Most satisfying, he says, is talent management, when he can open up opportunities for people to take on more responsibilities and advance in their careers.
These were all skills Lofgren improved with each of his professional stints.
But he misses being a CIO, "the most fun job in my career." He likes the cause-and-effect and immersing himself in technology and whatever's new. "You deliver something and the world changes," he says. As CIO, your impact "is not just measured in financials."
In the rough-and-tumble world of the CEO, sometimes things don't go the way you want. Last year, Ron Thieme was promoted from CIO to president and CEO of AIT Laboratories, a privately held medical test company, when company founder Michael Evans stepped down but remained chairman. Seven months later, however, Evans was back and Thieme had resigned. Thieme declines to talk about the details of the reversal. But he says that because he had approached the CIO job from a business viewpoint and was a motivational leader, he was well suited to being CEO.
In his short time as top leader, Thieme recognized he needed a wider mind-set. "Rather than being a partner with all the other functions, they are your direct reports," he says. "You look at how they all work together to improve our position in the marketplace."
Now he is working on a startup company: a poultry and beef farm focused on the local food movement. But he's still on the lookout for a CEO position.
Aspiring to the Corner Office
Metrolist CEO Kirby Slunaker predicts that more CIOs will rise to the CEO job, citing the fact that, perhaps more than any other officer, CIOs see all parts of the business. Many CIOs aspire to be CEOs. One industry survey found that 42 percent of CIOs worldwide say they have the necessarily skills for the job. But just 4 percent of existing CEOs among the world's biggest companies are former CIOs.
Boushy, for one, is disappointed that more CIOs haven't arrived in the CEO office in the last decade, perhaps because many IT leaders are still too tactical and risk-averse. "The CEO's role in most organizations is about as broad a role as you can have," he says. "One's ability to be prepared for what comes your way--despite the fact that maybe you've never had that experience before--is a very important commodity."
Horner says the portion of potential CEOs in the CIO ranks is "a small percentage."
He laments the "disservice" some CIOs do to themselves and their IT groups when they tolerate their staff being too focused on in-the-weeds technology in discussions with colleagues outside of IT. "They behave like technical nerds instead of business-improvement folks who happen to know technology," he says.
Now he doesn't tolerate it. "I will stop people mid-sentence and say, 'I don't need to know that.'"
If Horner hires a CIO--and he sees no need for one yet--it'll be someone of a new mold. He'd want someone to spot emerging IT and train professionals on those hot technologies so that Mastech will be out in front of staffing needs. Or the CIO would advise him on smart acquisitions. "They wouldn't be taking care of PeopleSoft and our outsourced email," he says. "They would be helping me grow my business."
Kevin Horner, CEO of Mastech and former CIO of Alcoa, offers advice for CIOs who aspire to the top job.
- Create time to focus on strategy-setting and customer issues by delegating as much of your daily operational tasks as possible and developing potential CIO successors.
- Develop a network of executive peers and mentors inside and outside your company so you can learn some of the nuances of performing C-suite jobs other than CIO. Volunteer internally to run a large acquisition integration or advise an external nonprofit.
- Work up the org chart to build relationships with key internal customers. Then help them solve the problems of their external customers.
- Make IT strategy your personal objective. That is, don't delegate it. Spend your newly freed-up time living and selling that strategy.
Kim Nash is managing editor of CIO Magazine. Follow her on Twitter @knash99.
Read more about leadership/management in CIO's Leadership/Management Drilldown.