Technology is woven so tightly into the fabric of business today that it’s risky to make a judgment call without a firm grasp of both the technology and business issues involved. Managers are struggling with the sudden rise of the empowered consumer, forcing them to experiment with new tools and new technologies as they race after consumers who are skipping across channels and between times. Managers are also smashing together supply chains to support pop-up stores or, along with digital product development processes, to speed the introduction of new products and services.
While these managers have a firm grasp of the business issues involved, technology (for many of them) is something that they’ve used, not something they’ve managed. There’s a difference between having experience using solutions, and in understanding the opportunities and risks inherent in the technology that underpins those solutions.
The success of all businesses now rests on their ability to astutely use technology to engage customers and nimbly craft solutions. Managers that can successfully straddle both business and technology are thriving. Those that can’t are struggling, and their firms are suffering with them.
CIOs, too, are struggling to define a role for themselves and their IT department in an age when everyone considers themselves to be an IT expert. However, there is a clear need that remains unfilled in many businesses. Someone, some group, needs work across the business and bring sense to the chaos.
While the IT department can no longer claim a monopoly on IT knowledge, it is still the group best positioned to work with the lines of business, across the organization, helping stakeholders to step back and see the broader context, and to ensure that the solutions the lines of business are using enable the firm to meet its compliance and reporting obligations.
Technology is not someone else’s problem
I’ve heard more than one CEO claim that “the reason I hired a CIO is so that I don’t have to worry about IT”. In their view technology was something to be dealt with by technologist, allowing the CEO (and the rest of the C-level) to get on with the challenge of running the business.
The most recent version of this seems to be the announcement of a newly hired Chief Digital Officer (CDO), someone who will come in and transform the business, tossing out all the old and crufty non-digital stuff and replacing it with shiny new digital stuff. McKinsey is so bullish on the idea of hiring a CDO that they published a recent report called “Bullish on digital” which concludes that firms need to “Find the right digital leaders. Leadership is the most decisive factor for a digital program’s success or failure”.
Setting aside the question of why the CIO or CTO isn’t leading the transformation, the rise of the CDO hides a bigger problem that executives need to address.
Hiring a CDO might be a symptom, rather than the cure
Technology is now a general business skill, and not a specialist skill like it was in the past. Going forward, all executives will need a solid understanding of technology, along with how it can be used to create opportunities, and its limitations. If not, then they should find a replacement who does.
We live in the age of the empowered consumer. Consumers have grabbed control of their relationship with merchants. Wielding their smartphone with both thumbs they can buy what they want, when and where they want, and obtain the best price. They can also use social media to peer into a firm’s operations, and they’ll take their business elsewhere if they find something objectionable.
Firms are scrambling to respond as they watch their traditional revenue streams leak into other channels. A key strategy is to take a holistic and customer-centric approach that enables the firm to follow consumers as they skip between places, times and trends. Doing this means investing in programs who’s benefits are not easily qualified. These programs are either enabled by, or rely heavily on, technology.
We don’t have “digital programs”: we have “programs”, since they all use digital technology. Similarly we don’t want “leaders” and separate “digital leaders”. We need “leaders” who understand both the business and the digital worlds, as the two are the same.
Amazon, for example, was born digital. Technology is not treated as something separate from business; interactive and social media are commingled with traditional media, and the merchandising team is responsible for wholesale, stores and web.
How we measure value has changed
Managers trying to paper over knowledge and experience gaps by hiring in the expertise will soon find that it’s not enough. The person accountable for a firm’s (or a department’s) performance will need to understand the trade-offs they’re making. Increasingly these trade-offs cannot be captured by return on investment (ROI) or net present value (NPV) calculations, as the key factors in the trade-off are intangibles. Tim Cook has even famously disparaged “bloody ROI” when he explained at a shareholders meeting that Apple does “a lot of things for reasons besides profit motive”.
Trying to make judgment a call without an intuitive understanding of the trade-off being made is fraught with danger. If the factors that will sway the decision are not easily quantifiable then it can be challenging (if not impossible) to separate the technical and business expertise.
Management need to straddle business and technology
Management, from line management on the shop floor up to the executive and the board, need to have both a firm understanding of the business the firm is in, and the technology that is woven into the fabric of the business. In the lower ranks the focus is on identifying opportunities and solutions that can drive up firm performance. Higher up, the executive through to the board will make the judgment calls on where to direct resources. They must also be capable of defending these judgment calls to the owners.
Hiring in technical expertise will allow a firm to modernize its infrastructure and operating model. It will not, however, solve the more significant challenge of constantly evolving the firm’s business model in response to the evolution of the technology environment around it. Companies that have made this cultural shift do not have, nor will they probably ever hire, a CDO. Nor will they see IT as something they hire a CIO to worry about. Younger firms, such as Amazon, achieved this by being born digital. Older firms, such as Burberry, have hired or developed digitally savvy executives.
IT is not the high priest of technology anymore
As I’ve pointed out before, the role of the IT department is not carved in stone. The growth of empower consumers has also given rise to the empowered manager, a manager who understands technology, knows what they want, and (thanks to Software as a Service) has the ability to source it without the help of the IT department.
IT is a general business skill, and not the specialist skill it was in the past.
However, business, your business, still needs someone to play the role of intellectual bumblebee. Someone who can buzz between stakeholders and cross pollinate ideas, and someone who can ensure that the parts operate as a coherent whole.
The IT department can no longer monopolize IT knowledge. Nor can it expect to monopolize IT management. (Shared services have a patchy track record at best.) The lines of business have grabbed control of the technology they use, which is as it should be. It’s the lines of business that have the problems which need solving and – as was pointed out earlier – solving these problems will require knowledge of both business and technology. They’re also choosing to use service providers that operate outside the four walls of the traditional IT department.
A new relationship between IT and business
The IT department, however, is the group best positioned to work with the lines of business, working across the organization, and make sense of the chaos.
Business stakeholders need help stepping back and seeing the bigger picture, and to understand the broader implications, of the technology choices that they are making. It’s great to improve consumer engagement and shift more product, but this needs to be done in an environment where solutions deployed by the the various lines of business work together, and not at cross purposes, and in a way that allows the firm to meet its compliance and reporting obligations.
While the IT department needs to stop acting like an IT monopoly, the flip side is that managers in the line of business need to also take responsibility for the technology decisions they make.
How far along the journey is your organisation? Is technology still something only the CIO worries about about? Has your organisation started to try and transform into a digital business? Or are you already there, and technology is a general business skill?