Council Post: Is Experience The Enemy Of Innovation?

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Positioned correctly, the chief information officer is a critical strategic advisor to the business. Staying on top of ever-evolving technologies allows the CIO to both reduce costs by automating business processes and exploiting new revenue sources. However, as these technologies are coming to market faster than ever before, many CIOs are left to worry about keeping up.

A recent study published by Edelman, “CIO in Focus,” surveyed more than 400 CIOs across four major global markets. The study uncovered a relationship between the CIO’s experience level and their feelings on the pace of innovation — and perhaps not the relationship you might assume. The study found that experienced CIOs are more concerned about the pace of innovation: 71% of them think it’s too fast, compared with only 55% of their less-tenured counterparts.

That’s right. The more experienced the CIO, the more concerned they are with the pace of innovation.

This is not an insignificant observation, but what does it mean? Does it mean that innovative companies should hire less-experienced CIOs? Are more experienced CIOs less capable of driving innovation? Probably not. There is a more likely conclusion to draw from the Edelman study.

First, let’s assume for a second that the pace of innovation is accelerating. Personal experience as a CIO with several companies over the past several years allows me to accept this as a basic premise. Even five years ago, migration to cloud technology was a goal; information security was important, yet less evolved; and artificial intelligence was an idea far from most boardrooms. Now, integrated cloud technology is reaching maturity, InfoSec is a career discipline, and practical business applications for AI and machine learning are now commonplace. The next five years will undoubtedly see change at an even faster clip.

Second, we also know that established companies (at least the ones that are paying attention) live with a constant fear that nimbler upstarts will enter the market and disrupt their businesses. There is, of course, good reason to worry about this: We routinely read about, attempt to mimic the practices of and even glorify the successes of these new companies.

In many cases, disruptors emerge with a clever new application of technology as a centerpiece of their competitive offering — delivering some combination of better convenience, speed, lower cost or some other flavor of enhanced customer experience. These disruptors can also emerge quickly, with the advantage of being able to build new businesses from scratch, launch big and be largely unencumbered by the inherent inefficiencies of larger businesses and the demands of established financial stakeholders.

It is perhaps expected, then, that if new applications of technology are at the root of established companies’ fear of market disruption, that these companies will turn to in-house technology leadership to fight back. Indeed, the fact that the Edelman study asks CIOs in particular about the pace of innovation is evidence of this very idea. But there is a larger question implicit in this question: Are CIOs responsible for innovation?

In truth, successful market disruptors enter into competitive markets with new business models that are enabled by new applications of technology, not defined by them. It’s a subtle but meaningful difference. For example, Blockbuster was not killed by broadband and streaming media technology, but rather by competition that developed a business model capable of delivering a better customer experience using that technology.

Even if Blockbuster would have been able to anticipate how quickly streaming media would catch on with customers, diverted the requisite funds and organizational support to develop a competitive technology, the company would have also needed to develop new pricing and marketing tactics, along with new sales, customer retention and monetization methods. While the consumer markets are the same, the underlying business structures are completely different. Successful innovation is necessarily a team sport, and experienced CIOs are right to be nervous when the mantle of innovation is, even by implication, placed on their shoulders.

Try that last paragraph again, but replace “Blockbuster” with any brick-and-mortar retailer you might have shopped at a few short years ago. I believe the exact same concept applies across both business-to-business and business-to-consumer models. While technology plays a critical role in business model enablement, it cannot by itself bring a successful new business to market.

Lastly, larger businesses tend to have more experienced departmental leaders. This makes intuitive sense, as it generally requires a different level of expertise to run a larger, more complex function than a smaller, simpler one. Large-company CIOs have more systems to select, build, integrate and maintain, not to mention more internal teams, stakeholders and vendors to manage. Larger companies are also more likely to pursue more aggressive merger and acquisition strategies to achieve growth goals, further complicating the labyrinth of systems, networks, people and vendors to manage. This complexity and pressure to deliver operational efficiencies take time, further complicating the role of CIO as chief innovator.

Based on these three factors, then, it is quite clear as to why more experienced CIOs are more concerned about the pace of innovation. More experienced CIOs tend to run larger, more complicated legacy IT environments. Because these businesses are larger, they are also slower to react, making them a juicy target for disruption.

However, while technology might be a key enabler to fight market disruption, placing the responsibility for innovation on technology is too simplistic. The key insight from the Edelman study is this: Hire the level of experience in your CIO that’s appropriate for the size and complexity of your business. Live in constant fear of disruption. Develop an innovation mindset, and take measured risks among your entire leadership team. Leverage your technology function as an enabler, not as the solution itself.