An Existential Threat

A message for CEOs:  You are slowly going out of business, and many of you don't know it yet.

Your customers demand reliable and compelling experience, enabled by your business technology (BT). If that technology fails, or if you fail to provide that technology, you will lose customers and market share. Your company will be acquired, broken up, or stagger into oblivion as an irrelevant zombie.

Early evidence? Store closings at Wal-Mart and Macy's are exhibit A, but stress fractures are appearing in financial services (Bank of America), telecommunications (Comcast), and the travel industry (United). Now none of these companies are going to disappear in the near term. But the pressure and time of "Customer geology" spell long-term trouble.

The threat is not understood at the top of most companies. In my years attending the World Economic Forum in Davos, I never once encountered a session on how technology should be deployed in large companies.  CEOs aren't engaged, board members don't care, and most investors and analysts can't see beyond the quarter. 

The way forward is complex, but here are a few hints on how you should manage now. 1) Ask your CIO to parse out how much of his or her budget is IT (internal technology) versus BT. Depending on your industry, you should be in the 70/30 range, with a long-term plan of moving to 50/50. You will drive revenue and customer experience with BT -- guaranteeing your company's future. 2) Assess your CIO as to whether he or she has the capability to actually build and manage BT. If he has a high operational IQ but a low customer IQ, you may have the wrong horse for this race. 3) A noxious idea in the tech space is increasing your risk -- "Bi-Modal IT." This philosophy mandates slow change in core systems -- a risk that could ultimately sabotage your customer-facing systems, as we have seen recently in the Delta Air Lines outage. If your CIO is espousing this approach (versus a speedier strategy), your antennae should go up.

Above all, don't play dumb and don't duck your responsibility to oversee your company's growing asset -- business technology. Push, probe, prod your CIO as you do with your CMO and CFO. Your company's existence is at stake -- winter is coming.

Comments

Director cluelessness & technical debt

George:

Do Directors not care because they don't generally have the backgrounds to properly understand the types and magnitudes of risks (and perhaps more importantly, opportunities) presented by IT?

Boards worry about many types of risks, and have pointed conversations with management when things smell bad. But it's hard to get your mind around IT arcana without a decent grounding in first principles. Digital Directors, folks with true IT executive backgrounds, would help close this gap.

The other issue you raise is an outcome of the accumulated technical debt legacy firms have piled up over years and decades of neglect. These off-balance-sheet liabilities need to be acknowledged (at the CEO/Board level) and addressed as the serious problems they are. It is said 'the first step is admitting you have a problem.'

The right CIO with Board support may not have sufficient time or money to fix every such firm. But absent both, success is far less likely.

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