CIO’s With Ambition!

Since the advent of IT, organizations and institutions have changed radically. New organizations tend to require new CEOs. Given the nature of change, CIOs could be suitable CEO candidates. However, this career move of CIOs is not yet common thinking. Therefore, in this post, five pieces of advice for ambitious CIOs to accelerate the process.

In an article in The Wall Street Journal, entitled “Defining the Duties of the American CEO,” Peter Drucker[^1] defines, based on two tasks, the role of the (American) CEO:

• Define the meaningful Outside of the organization
• Think through what information regarding the Outside is meaningful and needed for the organization

The first task concerns the positioning of the company: in which (sub)markets and in which way to operate is a decision that belongs to the CEO. The second task, according to Drucker, is mainly about selecting and structuring information relevant to the positioning issues. The CEO also bears responsibility for the realization of the chosen positioning. In addition, the CEO is distinguished from his management by his responsibility for fundamental change. To this end, he sets the direction, builds coalitions among people, and motivates and inspires them to realize strategies[^2].

The entry of IT has caused organizations and institutions to change radically in recent years. This is because IT makes it possible to set up business processes in completely different ways. At the same time, IT is changing customer needs and customer interactions. And as if there weren’t enough dynamics at play, new competitors are emerging worldwide because old barriers to entry have been overcome by IT. If an organization adapts appropriately to these IT dynamics then a strong competitive advantage can be gained. If an organization is too slow to change or makes the wrong choices when changing, then it could potentially spell the (quick) end of the organization.

The “Chief” of these changes is the “Chief Information Officer” (CIO). He is ultimately responsible for the IT discipline, including an annually growing project portfolio. Moreover, management sees the CIO as the one who signals in time which ICT opportunities the organization should respond to and which ICT hypes the organization should let pass by.

Therefore, it seems that the CEO in his mentioned tasks (positioning, selecting & structuring information and driving change) can be ideally supported by the CIO. Therefore, with the dominant role of IT in today’s business world, the current generation of CIOs stands a good chance of producing the new CEOs of the future. Yet this does not yet seem to be common thinking, as was evident during a workshop with CIOs at the 2007 National CIO Day, among others. During this workshop, the question of whether and why the CIO is “CEO’s next top model” was discussed. We substantiate in this article with ten reasons the premise of said workshop that the new batch of top CEOs will also come from the CIO corner. Because, as the workshop also showed, this step is not yet obvious to all CIOs, we also give five tips for CIOs who have the ambition to become ‘CEO’s next top model’. Or less popularly put: how a CIO becomes a possible successor to the CEO.

Ten Reasons  

Reason 1: CIOs are Skaters  

Modern CIOs are “skaters”: between strategy and operations, between technology and application, between external and internal interests, and between retention and innovation. The CIO is also described as a “corporate navigator” who can take on various roles: from strategist, advisor, portfolio manager and architect to trend watcher[^3]. To create strategic enterprise value, the CIO must move back and forth in the arena of strategy development and realization. Thus, the modern CIO should engage in “pipeline management” by continuously actively proposing innovative ideas and technologies, only some of which will result in value- creating investments. Success is largely determined by the availability of technology and the agility of the IT discipline, but also by the adoptability of the organization, market, employees and management.

The acceptance of IT-initiated innovations is further limited by external interests among shareholders and other stakeholders and by applicable regulations and rules, for example in the context of IFRS, Basel2 or the Sarbanes-Oxley act. Finally, every CIO will regularly make decisions about the deployment of people, knowledge and resources to maintain and renew existing information provision and technology Because the CIO is structurally under pressure from cost control, risk management and expectations of innovation, he is accustomed to weighing internal and external interests and making balanced decisions.

Reason 2: CIOs are Transformers  

Many of the IT projects important to the company are only partly about technology, and largely about business transformation. For example, the “travel and hospitality industry” has fundamentally transformed itself by turning its reservation systems, so to speak, inside out to consumers. The consequences for travel agencies and traditional tour operators are enormous. The media industry is undergoing a transformation from print to digital, and from business models based on professional preselection to businesses in which the consumer is also a producer of content. Many of the classic large administrative bureaucracies such as government organizations, benefit agencies and utility companies are transforming from an internal and product-oriented focus to an external and customer-oriented focus. In the process, they are downsizing in such a way that the trend of annual rate increases is capped or even turning into rate reductions. Other industries may be transforming less fundamentally, but every modern CIO manages a portfolio with a sizable business transformation component.

Reason 3: CIOs are Entrepreneurs  

CIOs are used to weighing and taking risks. They have to. Because technology and its application in organizations change rapidly, and they often have to decide on new technologies or their applications before they are fully proven. Taking risk implies an expectation regarding the return on risk: the more risk, the more expected return. One of the main challenges for a good CIO lies in managing a balanced porfolio of investments and risks that collectively results in a net present value (NPV) that more than makes up for the cost of capital required for it. Ultimately, the success of a CIO is determined most by the extent to which he manages to achieve above-average corporate returns on his investment portfolio (“excess return”).

Reason 4: CIOs are Bridge Builders  

IT bad Chinese walls in organizations. With the help of information and technology, business units can collaborate where previously they could not. Even across the borders of countries and continents. This type of innovation entails that people and groups of people have to change or even let go of existing practices and achievements. As a result, the modern CIO has extensive experience in bringing different disciplines together and bridging classic internal gaps between functional and between centralized and decentralized business units. In addition, the CIO has extensive experience in bringing together and keeping consortia of external partners together to accomplish complex projects or execution contracts. Many CIOs have even formalized the integrative knowledge of their discipline into separate functions, such as that of architects or variants thereof.

Reason 5: CIOs are Market Merchants  

CIOs are negotiators. In fact, they work a lot with contractors. The field of sourcing (strategic decisions regarding doing it yourself versus outsourcing and controlling its execution) pretty much originated in IT. Contracts and contracting come in many forms: long-term outsourcing of activities based on results agreements, secondment, turn-key projects where the CIO shifts the risk rather than managing it himself, “leasing” and “sale-and-lease back”-type constuctions et cetera. A modern CIO behaves in this market as marketing and sales do in their market. It is not for nothing that this is also referred to as “reverse marketing.

Reason 6: CIOs are Globetrotters  

IT is internationalizing at a rapid pace. Technology no longer adheres to national boundaries, and, increasingly, neither does knowledge. High-quality concentrations of knowledge and technology are emerging in countries such as India and China, as well as in Central and Eastern Europe. Internationally linked networks are opening up these concentrations to companies in Europe and in other countries. New combinations of local and international activities are attractive in financial terms and, increasingly, also because insufficient expertise is accessible locally. In addition, many international organizations are increasingly positioning their IT activities at the corporate level. As a result, the need for cooperation between decentralized units and the central IT discipline is increasing. Thus, many CIOs are working with consortia of suppliers and internal partners, international or otherwise. This applies to projects as well as operational maintenance and operations. For all these reasons, CIOs have experience in managing teams and services with components from different corporate cultures and also different international cultures.

Reason 7: CIOs are Networkers  

A modern CIO has an extensive and high-quality network of contacts. On the one hand, to speak with peers about the rapidly succeeding innovations in technology and its applications in organizations. New developments are often marketed by suppliers using seminars of all kinds to introduce CIOs to the new products and concepts. Naturally, the vendors concerned have commercial interests in the content of those sessions. For that reason, CIOs feel the need to exchange knowledge between peers, academics and the professional IT market (see the last paragraph on CIOnet.com  ). In addition, CIOs need to be able to meet the continuously shifting need for knowledge, expertise and people at any mo ment. Organizations in the IT products and services market regularly renew their strategies, focus areas and R&D. It is vital for a CIO to follow the movements in his own company, in other organizations and in the professional IT market and choose his own positioning in them.

Reason 8: CIOs are Communicators  

IT has a high inherent difficulty. The field employs its own jargon that is often difficult to access for the uninitiated. This is often efficient for professionals among themselves, but no longer at the level of the CIO. The latter must be able to communicate complex concepts, technologies and cross-functional projects to others clearly and understandably. In doing so, he uses simple images, anecdotes and understandable diagrams. A good CIO uses enthusiastic images that entice people to join the adventure of the innovation to which the image relates. The importance of this cannot be underestimated, because at the CIO level IT projects almost never involve only technology, but also and perhaps primarily organizational change.

Reason 9: CIOs are Chess Players  

CIOs know the complexity of the organization and know how to deal with it at different levels and with different styles. They must constantly think in terms of the medium to long term. This is necessary because organizational changes using IT are now difficult, intensive processes that in most cases require the necessary lead time. The most profitable projects are also those that improve chains of activities from customers to suppliers. To find these, a CIO must know his company thoroughly in all its complexity. To achieve the intended optimizations, the CIO needs this understanding of the complexity in order to face the resistances that arise during realization with insight and strategic perspective. A modern CIO often knows his company in all its complexity better than many of his peers, who focus primarily on their own functional discipline.

Reason 10: CIOs are (Little) Einsteints  

Most CIOs have a track record in analytics. Studies that train for careers in IT, such as Business Informatics, Administrative Information Science, Technical Informatics or information science graduate programs, are almost all part of STEM departments. CIOs must also possess a hefty dose of analytical skills in order to unravel, understand and make “manageable” the complex issues of technology and its application in organizations. In addition, it is essential for a modern CIO to become proficient in investment analysis and related analyses from the ‘finance’ discipline. Indeed, IT’s value-creating ability depends primarily on the CIO’s ability to identify and realize value-creating investments. To do this well, a CIO must select and structure a great deal of unstructured external information for strategic decision-making.

Five Pieces of Advice to the Ambitious CIO  

Thus, modern CIOs are accustomed to dealing with positioning issues and selecting and structuring information. In addition, modern CIOs excel at strategy realization. We conclude that the profile of a modern CIO eminently meets that of a potential successor to the CEO. Yet in practice, we see few CIOs advancing to CEO. While there is a great need for top CEOs. Apparently, the path to the CEO position for a CIO is not paved. We have the following five pieces of advice.

Advice 1: Make Sure CEOs Recognize the Importance of IT  

Research by PriceWaterhouse- Coopers[^4] and The Economist[^5], among others, shows that by the current generation of CEOs, the value of IT is primarily seen in facilitating and improving back-office processes such as Finance, HR, Support et cetera. The added value of IT as a ‘business driver’ is apparently less easily recognized by many incumbent CEOs. In addition, the position of CIO is a relatively new profession. It dates back to the 1970s. In addition to the short duration of the CIO profession’s existence, IT is experiencing very dynamic development. It seems logical to assume that for these reasons many of today’s CEOs do not yet consider the CIO as a logical successor. For that matter, there are also CEOs who actually want to identify more with their CIO’s portfolio; because of the major impact of technology on the business or from a risk management perspective[^6]. This “upswing” should be used by every CIO to ensure that a CEO recognizes the importance of IT.

Advice 2: Make Your Claim-To-Fame (a little more often)  

Many CIOs have grown up in the tradition that IT is subservient to the other business functions. In many companies, however, that situation is no longer the reality (see the ten reasons mentioned above). In line with said tradition, they mostly adopt a subservient and sometimes to some extent introverted attitude. Among themselves, they discuss their position in professional literature and at conferences and seminars. The CIOs do not yet form a strong group that confidently claims a position as a potential successor to the CEO. Let alone that they propagate their positioning as a logical career path toward final responsibility. However, the claim-to-fame can usually be made easily as evidenced by the ten reasons listed above.

Advice 3: Move in the Right Circles  

A CEO is appointed by SBs and by shareholders, supported by lobbyists and headhunters. This is a group a CIO does not find himself in on a daily basis. Nor in the slipstream of the CEO. After all, that’s where the CFO already sits, explaining the numbers on behalf of the CEO. For this reason, the career prospects of a CFO are generally viewed differently. Whereas the CIO has every reason to seek out and inform stakeholders. The tricky thing is that a CIO does not yet come from the same old boys network of stakeholders. In fact, a CIO does not yet have a unified background or title either. For many other positions at the CIO level, there is a preferred training path, and value is assigned to specific institutes. For a CIO, no such preference exists yet. This threshold is bridged by some by getting a leading MBA, which does involve assigning value to the institution where the MBA is taken. What matters is that a CIO builds the right network in order to be in the stakeholders’ sights at the decisive moment.

Recommendation 4: Become Multidisciplinary  

CIOs generally have little experience in functional areas outside the IT column. Whereas leading up to the CEO level it is common to gain experience in multiple disciplines, today’s CIO is often one-dimensionally developed. Although technology is generally accepted as a connector between different disciplines, this is not seen in the profile of many CIOs. He does have an overview of business processes but has never ‘stood with his feet in the clay’ as the person with final responsibility in areas other than ICT. Possible broadenings of the CIO’s experience include Finance, Operations or Marketing. For the example of Finance, many CIO resumes lack experience with investment analysis, financing and valuations. These are

precisely topics ideally suited for a CEO. Of course, people with responsibility for IT can count, but they may lack the depth in ‘finance’ that is required for successful performance in a CEO role. A discipline that can be acquired, however, based on analytical skills of an average CIO.

Advice 5: Pay Time and Attention to Your Career As Well  

All the aforementioned markets organizational developments have a strong influence on information management within organizations. Many IT disciplines today are expected to be agile, in terms of content, responsiveness and time-to-market of solutions. However, many of today’s IT departments have a strong foundation in management, maintenance and technological standardization. In order to still keep up with developments, there is a great pressure on corporate IT organizations. Both in technical perspective, in organizational perspective and also in terms of Human Capital. In this situation, the CIO has his hands full with transforming his own department, which is after all a strongly internally focused and operational issue. In other words, the ICT organization is often not mature enough for a CIO to serve as a springboard. Make sure that time and space are created to work on other strategic issues as well.

CIO’s Next Step  

The ten reasons show, in our opinion, that many a modern CIO is well equipped to aspire to the next step. But unfortunately, not all factors can be influenced by CIOs. For example, there is the “unknown makes unloved” effect. However, this is expected to decrease naturally over time. After all, the field will evolve over time, like any new field. In addition, it can be expected that once more publicity comes out about CIOs who became successful CEOs, more may follow. CIOs themselves can contribute to this development, though. In order to break through the glass ceiling, it is necessary for a CIO to clearly position himself as a potential successor to the CEO. He must also radiate and convey this ambition. It is also desirable for him to broaden functionally and gain experience outside the field of information technology. Finally, it is advisable for a CIO with ambition to seek opportunities to enter, from within the relatively safe world of his field and department, into the arena of strategy development and realization. So the question is not whether the CIO can take on a CEO role, it is much more a question of whether the CIO is willing and will actually claim the opportunities for the next career step. This is good news for all CIOs willing to overcome the barriers to appointment.

[^1]: Peter F. Drucker, “Defining the Duties Of the American CEO,” The Wall Street Journal Online, January 24th, 2005. [^2]: R. A. Heifetz and D.L, Laurie, “The work of lead- ership,” Harvard Business Review, May-June 1997, pp. 124-134. [^3]: R. Maes, “Information management mapped,” University of Amsterdam, 2003. [^4]: PriceWaterhouse Coopers, 10th Annual Global CEO Survey, PWC, 2007. [^5] Economist Intelligence Unit, the, ‘CEO Briefing. Corporate priorities for 2007 and beyond’, The Economist Group, 2007. [^6]: Harvard Business Review, ‘The end of delegation? Information Technology and the CEO. Perspectives from the Editors, Harvard Business Review, May-June 1995.

By Wouter Haasloop Werner, Theo Huibers and Tjibbe van der Zeeuw