Are CIOs Ready to Lead the Digital Transformation?

Digital Strategy


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Are CIOs Ready to Lead the Digital Transformation?

Techedge | Nov 28, 2016

The CIO has the possibility to become the predominant source of next generation CEO’s in the Digital world... so what’s holding them back?

 Are CIOs ready to lead the Digital Transformation?

Traditionally the largest source of candidates for the CEO position has been individuals with a Finance background, in fact more than 30% of CEOs started their careers in Finance. 

In a global survey in 2015 by Amdocs revealed that senior service provider executives believe that CEOs in 2020 will most likely have CFO qualities, followed by CMO qualities, then COO. CTO ranked fourth and CIO leadership qualities ranked seventh.

However, today Technology has moved from being a support function to being the main driver of innovation, new customer propositions and future growth, making it increasingly more essential that the Leader of the company really understands technology - and thus, opening the door to CIO succession.

"If you went to bed last night as an industrial company, you're going to wake up today as a software and analytics company," - Jeff Immelt, chairman and CEO of General Electric

Over recent years there continues to be a shift of the CIO/CTO towards the boardroom. 

Where historically the CIO reported through to the CFO, it is more and more common to see the CIO reporting directly to the CEO as the CIO role becomes increasingly more strategic. Technology executives are being empowered to transform their organisations and invest in digital initiatives.  CIO Magazine in June 2016 reported that of the top 100 companies CIOs, 56% were reporting directly to the CEO which was an improvement of 7% from 2015.

Digital is changing the needs of the organization in terms of technology - it is no longer just about keeping the locomotive running, it is fundamental in establishing whether the locomotive will run, which direction it will go and what services it will offer to it’s customers.

This represents a huge opportunity for IT Careers in general and the CIO role.

IT needs to have a seat at the decision-making table

It is too important an area to not report to the CEO.  But, in order to do that IT needs to be able to add value throughout the conversation.  Not just as an "order taker", the common "we’ve figured out what we need, it’s time to call in IT now…’  No. It’s time for IT and the CIO to be helping shape the future, defining and leading these conversations.

In a world where new software and technology is coming to market at an exponential rate IT is the key to being able to help the organization evaluate and understand the impact to their business.

In April 2016, CIO Magazine had the following to say about the role of the CIO:

"The CIO must see the entire value network and manage IT on a platform or network basis. They should be a salesperson, an innovator, a mini-CFO and a great ­collaborator."

But there are gaps in the CIO’s traditional capability portfolio which are key to fill, not only to become a great CIO in the Digital Age but to be able to reach the CEO spot.  And sometimes in the desire to fill these gaps, enterprises have opted to hire CDOs (Chief Digital Officers) in order to bring technology closer to the business.

“Being a CDO is what a good CIO should have always been doing: putting together business and technology in a way that helps the business take a leap forward.” - Carolyn Brown CIO Durham University.

So what is missing and how can talent in technology be nurtured to develop these skills in order for future CIO’s to have what it takes to be ready for the CEO positions of the future? According to Matt Graham-Hyde’s book the Essential CIO, the CIO needs to act more like a CEO.

We have identified four key behaviors which need to be developed to fill the CIO to CEO capability gap:

  • Move from an Internal focus to External focus
    Most CIOs are usually internally focused, focused on how systems run, how technology is installed and how data is analyzed.  They have often grown up through the ranks of the IT organization from programming and project management.

    CIO’s must leverage the opportunities next generation software provides to simplify the running of the business so that they can spend more time understanding how future innovations can provide competitive advantages for the business.

    They should ensure there is an Innovation Process established which not only maintains an observatory role but has a role in influencing and collaborating with the business to monetize new ideas or technologies.
  • Communicate and Storytell Relentlessly
    Often a natural introvert, used to communicating downwards and often not across the organization, the CIO must evolve into a relentless storyteller and communicator across the organization: motivating others and encouraging open dialogue and collaboration between IT and Business.

    Set up an on-going Digital Innovation Communication framework, in collaboration with HR or Internal Communications, to recount how the future is influencing today and the opportunity for the Enterprise.

    ‘Walk the Walk’.  Or, in other words, demonstrate Digital leadership in your Persona.  Be the first to use new devices, be active on Social Media and create a Persona which is connected to being on the leading edge of Innovation.
  • Engaged Decisioning
    Great CEOs are usually great because they have learned to leverage the team’s capabilities.  They are often generalists who turn to their boards to come up with decisions and stimulate their management team to work together to come up with the right solutions and ideas.  Leveraging others talent becomes more and more important in the Digital Age as technology offers opportunities for new business propositions and approaches which will only be possible with the combination of insights from multiple stakeholders, not just technology accelerators.  CIO’s on the other hand are usually specialists and are less accustomed to delegation and collaboration inside the enterprise, relying heavily on external sources such as Software Vendors and Analysts for answers.

    Creating cross-LOB governance frameworks to identify Digital Transformation opportunities together with the business can really help this process and ensure ideas are developed together from the start with the business being involved and influencing the technology choices and IT stimulating and contributing to the business ideas.
  • Get more comfortable with the P&L and Cashflows
    One of the key weaknesses highlighted in the capability gap for CIO’s to make CEO is their inexperience with the relentless pressure of P&L Responsibility. Traditionally CIOs are used to managing a Cost Centre which is fundamentally different from the pressures faced by the CEO.

    Digital Innovation in the Businesses and new Service Opportunities offer the ability for CIOs to take more responsibility for growth and revenue, thinking more like a CEO or CFO, to take leadership for new offerings enabled by technology.  CIOs should leverage this opportunity to gain experience and fill the P&L capability gap.

It is a great time for CIOs who have the desire, ambition and courage to take on the CEO top spot.  Digital is driving change and opening opportunities to transform businesses, and the opportunity is there for the taking.