Isn't It Time CEOs Were Held Accountable For Technology?

I realize I'm posting two rants in a row here (my last one was on marketing being a dirty word), but this is important! I just read in the WSJ that it's time more CIOs report to the top... my initial reaction was "oh come on, really, are we still on with this old chestnut?" -- the thing is, I couldn't agree more. But here's what gets me -- we were saying this in the '80s. The hope back then was that, as more CEOs stepped up who had grown up with technology, things would change and more CIOs would report into the CEO. Clearly this was pie-in-the-sky optimism ... so what went wrong?

Traditional wisdom (aka analysts) suggests that it's up to the CIO to "earn" a seat at the table by demonstrating leadership, delivering business value from IT, and lots of other hoops to jump through. While my colleagues and I work diligently on research to help CIOs achieve this, I can't help feeling there is an alternative perspective we are missing, and that's what drove me to write this blog post.

So what's the alternative? When new CEOs take on the role, they must make a decision as to which roles are strategic enough to have as direct reports. This decision isn't based on the performance of the incumbents (or the new team they will hire) -- instead it's based on their preconceptions of what they should focus their attention on. So if the CIO isn't on the executive team, it's because the CEO doesn't see technology as important enough for the success of the company. And in today's digital economy, any board of directors that hires a CEO with such backward thinking should be fired by the shareholders (my opinion and not Forrester's). So it's perhaps fair to say that at least 50% of the problem lies with the CEO. But why not 100%?

Well, the other 50% falls on the CIO because the CIO has to agree to work in the reporting line dictated by the CEO -- they always have a choice. When I was a CIO I was on the executive board --  I truly believe this had a significant impact on my ability to lead the organization through multiple technology transformations that delivered significant bottom-line results. But I also went through a number of CEO transitions while in my role. I was fortunate enough to work with three CEOs who could see the potential for technology to be used as a competitive weapon. But then came the fourth CEO. His approach was that IT was "data processing," and the role of the "IT manager" was to keep the costs down; his approach was to change the reporting line and have IT report into the CFO. He clearly had his preconceptions, and I had a choice to make: accept his narrow vision and spend energy on convincing him he was wrong, or move on -- I chose to move on. This is a choice every incumbent CIO must make upon the arrival of a new CEO. If the CEO doesn't get it, i think it's time for a good CIO to move on. So yes, I think the CIO is also 50% responsible for where he or she reports.

Unfortunately the problem with this is that good CIOs move to good CEOs and bad CIOs remain with bad CEOs -- which perpetuates the thinking of these CEOs that IT is not strategic. Perhaps that's a good thing -- they get the CIOs they deserve? Of course it's not as black and white as that, and I know many great CIOs who report into the CFO or COO even though they deserve to report to the CEO. It seems to me that the only way to break this cycle is for the board of directors to begin asking potential CEOs about their perceptive on IT. If they don't understand the strategic importance of IT in 2011, it should be a signal to move on to another CEO.

So what do you think? Have I finally lost it or is there something to this? If you are a CEO or on the board of directors, what's your perspective? If you are a CIO, have you had to make this choice?

Comments

The first decision is always how to make the decisions

You make a great point, one that reminds me of an old (but still relevant, at least in sentiment) Harvard Business Review article entitled "Six IT Decisions Your IT People Shouldn't Make" which similarly puts the responsibility for key business decisions at the top of the organization, where they belong.

The first decision is about how to make decisions, and organizational structure (as you point out) is one of the most fundamental. But there are many more - committee structures, governance models, budgetary authority, program management, etc. - and they can be changed over time.

Good post. Thanks for sharing your thoughts on this.

Tom

The first decision

Thanks for the feedback Tom, much appreciated. And if anyone is interested in the article Tom mentions by Jeanne W. Ross and Peter Weill, you can find it at
http://hbr.org/2002/11/six-it-decisions-your-it-people-shouldnt-make/ar/1

This flip side of this – of

This flip side of this – of course – is that CEOs and boards have to stop dodging responsibility on failed IT transformations. If you hire a CIO and give them the bulk of the organisation's CAPEX, and then it all evaporates, then the blame shouldn't just land on the CIO.

The flip side

I agree Peter, there's enough blame to share around for transformation failures ... Including vendors who promise unrealistic returns and undersell the cost and effort required to succeed. I wonder how many executive teams would approve "transformations" over other investments if the true cost, time and risk were known in advance.

I'm not against these large projects, I'm just against large projects that fail.

The other side of the coin

Great point, Nigel. But let's look at the other side. The CIO might really not care about being at the strategy making table. All he may care about is keeping the IT lights on, so as to speak. I see this attitude in a lot of CIOs who have risen up the technology ranks (I am one myself, so I know). Unless CIOs are ready to put in more of their drive into earning their place at the strategic table, expecting to be invited to it is going to be wishful thinking.

I think the onus of getting the CEO up to speed with technology is with the CIO. Thats the partnership. Yes, moving is always an option, but not without attempting to change the CEO's outlook.

The other side of the coin

I agree Navin, the CIO has some responsibility to help educate the executive team on the strategic potential of technology. In fact good business technology communications is a fundamental skill for all IT leaders who aspire to drive strategy. And yes, there are plenty of CIOs who simply want to keep the lights on ... But I predict this will be a shrinking pool over time as CEOs need more strategic thinkers in the CIO role for their organizations to succeed in the future.