Archive for the ‘ceo’ Category

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What To Do When Everything That You Know Is Wrong

Thursday, September 4th, 2008

CIOs can be responsible for leading a company in to an economic stall
In most IT departments, everything is fine until it isn’t. Sometimes this is a result of actions that the IT department has either taken or not taken, sometimes it is a result of what’s going on in the company as a whole. No matter, everyone in IT is personally impacted when a previously successful company enters an economic stall and starts to streak towards the ground. How does an IT department end up in a situation like this and what can they do about it?

We’ve talked about some of reasons the companies and IT departments collude to enter a stall, things like being trapped by having a premium product, abandoning a core market segment too early, or just flat running out of good talent with which to lead the IT department. Some of you might be thinking that such strategic matters are beyond the scope of the IT department; however, I’d disagree. IT is an information collection and distribution organization and because of this we need to be the ones who fully participate in the company’s strategy discussions.

Studies done by researchers at The Executive Board, an executive think-thank, have shown that one of the leading causes of an IT department’s failure to notify a company of an impending revenue stall is IT management’s failure to align changes in the company’s external environment to the existing company strategy. This failure rests squarely on the CIO’s shoulders.

Just to drive this point home a bit more, it turns out that the assumptions that IT leadership teams have held for the longest period of time (or currently hold the most deeply), are the ones that are going to come back and bite them the hardest. One of the reasons that this happens is because during the annual review of the company’s strategic plan the CIO does not challenge the “assumptions and risk” section – he/she is willing to treat it as so much boilerplate and just let it go.

So what can a good CIO or IT manager do to help the company avoid an economic stall? It turns out that research in this area has reveled four best practices for detecting the red flags that signal that a stall might be coming up. We’ll talk about them next time…

Have you ever been working in an IT department where the CIO was an active player in planning the company’s strategy? How did the IT department support him/her as they did this – just collecting info or did you actually process it in order to turn the information into knowledge? Was the CIO accepted by the rest of the company or was he/she treated as an outcast? Leave a comment and let me know what you think.

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Posted in business, ceo, CIO, it strategy, profit, revenue stall | No Comments »

Out Of Time, Out Of Talent – Why IT Departments Fail

Monday, September 1st, 2008

IT Departments Need To Hire From Outside To Avoid Business Stalls
A business stall can hit a company / IT department at any time. There can be many reasons for what causes a stall including having a premium product or abandoning a good market segment too early as a company goes looking for greener grass. If that was all that could happen to a company, that would surly be enough. However, there is one more key contributor that can cause an otherwise successful company to lose forward momentum and go into a tailspin: they run out of talent.

In this day of IT layoffs and downsizings, it doesn’t seem possible that a firm could run out of the IT talent that they need. However, it’s having a lack of IT leaders and their associated staff who have the necessary IT capabilities and interpersonal skills that are so desperately needed in order to execute the company’s strategy.

We’re not talking about not having enough SQL knowledgeable programmers here. Rather what we are discussing is a lack of specific required capabilities that are needed by the firm. These capabilities can include such things as the ability to sell complex IT solutions, or perhaps some special skill in marketing IT solutions to a given market segment. This lack of talent becomes most glaring when it occurs at the executive level within the company.

How Do Talent Shortages Happen? It turns out that most internal shortfalls in skills are a result of a company’s too strict adherance to a “promote from within” policy. What’s interesting about this is that this situation is most often seen in company’s that are lauded for their strong sense of corporate culture. This internal promotion policy serves the company poorly when the company’s business environment presents it with a novel challenge or when their competition suddenly increases.

What Role Does Experience Play? A big one it turns out. Rapidly developing events in a company’s market place require the company to quickly respond by modifying how it does business. Having a narrow set of experiences in the executive suite means that the company’s ability to quickly respond to such changes can be severely limited.

So What’s The Solution? Quick question – does your IT department have any program in place to formally monitor the balance between both company lifers vs. those who have been brought in from the outside both in the executive team and lower on down the management ladder? It’s the outsiders who are going to bring in fresh approaches and perspectives. Even if the firm does bring in outsiders, does it incorporate them into the company? Studies show that between 35%-40% of senior executives don’t make it past their first 18 months. The correct way to solve this problem is to set up a formal IT department policy that states that HR will work to ensure that there is a mix of management. A good suggestion for a mix ratio that seems to work is to ensure that there is between 10% – 30% of management that is from the outside.

Where does your IT department’s management talent come from – inside or outside? Does your company actively hire from the outside? How long do new senior managers seem to last? Why do they leave? Leave a comment and let me know what you think.

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Posted in business, ceo, CIO, leadership, leadership training | 5 Comments »

A New CIO Job: Panning For Legal Gold

Monday, August 25th, 2008

A CIO who prepares for legal lawsuits before they happen is valuable indeed
One of the worst things that can happen to a modern company is to for it to get sued. Here in the 21st Century more often than not, lawsuits require that the firm being sued produce electronic documents early on in the whole messy legal process. Good examples of how tricky this can get are the White house’s attempt to retrieve firing emails, Intel’s fight with AMD, and Morgan Stanley’s issues with the SEC. As the Morgan Stanley case shows, if a firm can’t produce the email and electronic records that are asked for it can end up costing the company a lot ($10M in the case of Morgan Stanley). What does all of this legal stuff have to do with a CIO?

Michael Lunch is the CEO of Autonomy Corp. and he does a good job of describing how the search for electronic documents is currently done:

“The old-fashioned way of doing this was having a lot of lawyers doing a lot of simple things, you would literally have lawyers reading though things saying ‘there was chicken for lunch.’ You don’t need lawyers to know that it’s a lunch menu.”

Ouch – what kind of hourly rate does a firm have to pay to have lawyers read old email? This is exactly the type of situation that begs for the IT department to step in and lend a hand. Recognizing that this is an issue, the good folks at HP, Xerox, and IBM are getting ready to jump in and offer products and services.

This new reality of living in an electronic document lawsuit-happy world opens a unique door of opportunity for forward thinking CIOs. When a firm gets sued, everything has to shut down as it relates to documents while the requested material is searched for. If an enterprising CIO had already set up a system to track and categorize the firm’s electronic records, email included, then a lawsuit’s requests could be easily handled. Being able to produce the requested material the next day instead of weeks or months later and being able to do it for much less than a roomful of lawyers would cost would enhance the CIO’s standing among the company’s senior management.

Careful – there’s a right way and a wrong way to go about doing this. The wrong way is the classic IT way: I don’t need anyone else, I (and my department) can do this all by ourselves. Discovery of records as a part of a legal proceeding is really the domain of the company’s legal department. This is clearly a case where the IT team needs to work WITH the legal department. Since any sort of automated search process will be taking cash out of the pockets of outside law firms who traditionally supply the human resources to do information searches, the CIO is going to need to have the full support of his in-house legal team. The moment the lawsuit is filed, the outside firms will be whispering into the CEO’s ear that he/she really needs their pricey assistance. Without the support of the in-house legal team any IT created solution will be discarded in favor of going with a “sure thing”.

Having a solution in place before it is needed is the key to ensuring that the IT team looks good. If a CIO is running around after the event trying to find a solution, then expensive mistakes are going to be made. Finally we have found one area where a CIO can once and for all show the company the true value of the IT department.

Have you ever worked at a company that got hit with a lawsuit that required electronic documents to be produced? How did it go – was it quickly and easily handled or was it an ongoing nightmare? Did this event have any lasting impact on how the firm handled and tracked its electronic documents? Leave a comment and let me know what you think…

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Posted in business, business alignment, ceo, CIO, document discovery, it strategy, lawsuit | 4 Comments »

W.W.N.M.D.?: What Would Nelson Mandela Do?

Friday, August 22nd, 2008

Nelson Mandela avoided a civil war. IT Managers can learn a lot from how he did this
So what’s a CIO or tech manager to do when they get plopped down in the middle of a battlefield? No matter if internal strife has caused different sides of the house to stop playing together or if a merger has physically brought together teams but not made them members of the same department, a new IT leader has his/her work cut out for them as they try to make the correct judgment calls and forge a single unified department before their time runs out and they are shown the door.

Nelson Mandela found himself in a similar situation in 1994 after South Africa held its first free elections. Mandela’s party had won the election and he was now the president of South Africa. However, he had been elected by the black voters and this meant that the white voters felt alienated. This created a dangerous situation for South Africa because the whites retained both money and weapons and they could rise up and take down Mandela’s fledgling new government if they felt threatened.

In his new book, “Playing The Enemy“, John Carlin talks about what Mandela did to diffuse this volatile situation and I believe that it contains a number of lessons for IT managers who find themselves in the middle of a business civil war.

In Mandela’s case, the game of rugby was a game of the white minority that blacks had pushed for the world to boycott while the previous government was in power. Now that Mandela was president, he reached out to the country’s rugby establishment and offered to host the 1995 World Cup rugby games in South Africa. Mandela then worked to associate himself and his personal charisma to the game of rugby and by doing this he hoped to get all of South Africa excited about trying to win the world championship. It was in this way that Nelson Mandela was able to get both sides to take the first few tentative steps together away from chaos and towards unity.

It was Mandela who said “You don’t address their brains, you address their hearts.” IT managers can learn a great deal from all of this. When placed in a situation where there are multiple warring sides, a good manager needs to move quickly to diffuse the situation. Any time, energy, or effort spent on fighting an internal war will take away from the goal of the IT department which is to help the company move forward. The longer that the department spends battling within itself, the the greater the risk that the rest of the company will determine that it is more of a burden to the company than an asset.

So a great discussion so far, but what’s an IT manager to do? Here are three suggestions for tackling a civil war situation head on and coming out a winner:

  • Do It The Mandela Way: Identify which side is the weaker side (perhaps the purchased company’s IT department). Then do some research and find out what unique event, process, or reward that department used to have which unified it before the civil war broke out. Finally, take that unique identifier and apply it to the entire department so that they can all share in it and come together as they do.
  • Identify A Shared External Threat: Nothing forces teams to come together better than the perception that they are under assault from the outside. If you can identify and describe a valid external condition that could severely impact the IT department then the civil war activities will be forgotten as everyone mobilizes to fend off the threat. By working together to save the department, the civil war issues may be forgotten.
  • Cross Populate: In order to resolve civil war situations, communication between the different sides needs to start. One way to ensure that this will happen is to switch managers: management from one side is placed in charge of workers from the other side and visa versa. Although this will cause a great deal of grumbling at first, over time everyone will settle into their new roles and the distinction between “us” and “them” will become blurred and eventually go away.

There you have it – civil wars can be avoided. Nelson Mandela lead South Africa through its most dangerous time and emerged victorious on the other side. IT managers who find themselves in volatile work environments can learn from Mr. Mandela and, hopefully, follow his lead.

Have you ever found yourself caught in a business civil war? What caused it? Did one side win or did Sr. management need to step in to solve the conflict? Leave a comment and let me know what you think.

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Posted in ceo, CIO, conflict resolution, Nelson Mandela, rugby, World Cup | 1 Comment »

IT Driving Lessons: How To Avoid A Stall

Saturday, August 9th, 2008

Just like for airplanes, stalls can be deadly for a company

Once upon a time in my career I had a chance to work on a fighter jet program. Talk about your ultimate IT project! During this time I learned a great deal about planes and how they work. I finally realized why during airshows a stunt airplane will often start going very fast and then pull up into a straight vertical climb – it turns out that this is very hard to do. If the pilot can’t keep the plane going fast enough, then what you’ll see is the plane start to shudder, come to a complete stop, and then the nose will pull to one side and the plane will start to hurtle towards the ground. This is all great stuff for an airshow; however, it can be disastrous for a company.

A revenue growth stall can cause even the strongest, most high flying company to come crashing down. A perfect example of this is the jeans company Levi Strauss & Company. Back in 1996 business was going gang-busters. Their sales had just popped over $7B and things were looking great. Then it stalled. By 2000 sales were only at $4.6B (down by 35%).

Not to pick on Levis Strauss. The same stall has hit Apple, Caterpillar, 3M, Toys “R” US, etc. Why should we care if we don’t work for these companies? Ultimately IT needs to be the lookout that is in the crow’s nest of the company and is able to detect a stall before it overtakes the company. If we are unable to do this critical job, then there is a good chance that we’ll have confirmed that IT just doesn’t matter any more.

Why are stalls so deadly to a company? Since things are going so very well just before a stall hits, many companies, just like an airplane in an air show, are actually accelerating as they enter a stall because all of the metrics that they normally use to tell them how things are going are telling them to spend, spend, spend. Senior management often never sees the stall coming.

How bad is a stall? Some very smart guys over at the Corporate Executive Board (Matthew Olson, Derek van Bever, and Seth Verry) have done some research and what they’ve uncovered is that companies lose about 74% of their market capitalization (measured against the S&P 500) in the 10 years after the stall. Of course, the CEO and his/her senior team are replaced (hear that CIOs?).

Why do companies stall? If stalls were unavoidable then there would be little for CIOs to do except to prepare defensive strategies. Research has shown that most stalls are a direct result of choices that a firm’s senior management makes about either strategy or the design of the organization. What is even more damning is that 50% of the identified root causes fall into one of 4 categories:

  1. Being held captive by a premium position.
  2. A failure in the management of innovation within the company
  3. Abandoning a core market or product too early.
  4. Talent Management failures.

What’s a CIO to do? We’ll take a look at each of these four root causes and provide some suggestions on how the CIO and the IT department can make sure that the firm doesn’t get stuck in a stall that all to quickly turns into a death spiral.

Have you every worked at a company where things switched from being great to being horrible overnight? Why did this happen? Did your IT department play a role in causing the problem or did they help the company restart its engine? Leave a comment and let me know.

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Posted in business, ceo, CIO, economic failure, growth, stall, strategy | 7 Comments »

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