The CIO’s innovation agenda: ‘Evolve to win’ – CIO New Zealand
More and more enterprises recognise if they want to be a market leader by 2025, they have got to change their culture now
While most CIOs are viewed as tactical trusted operators of traditional technologies, leading CIOs are repositioning their ICT departments as modern tech evangelists and tech-driven innovation leaders, notes Forrester vice president James Staten.
“Be a change leader,” says Staten, on this critical agenda for CIOs today.
“Demonstrate that you are investing in future technology, customer experience, and employee experience,” he adds.
Taking on this challenge is important not only for the CIO role, but also for the future of the company.
“We see a lot of companies feel that they are the market leaders right now in delivering their current products. They ask, “Why would we expand into new markets and create new things? We are the best.’”
He says this is where the CIO needs to partner with the CEO and CFO to help communicate within the company that being the market leader today does not guarantee they are going to be the leader in the future.
Staten cites how Forrester compared the 1955 Fortune 500 companies to the 2017 Fortune 500. Only 60 companies remained market leaders in 2017 and nearly all focused investments on future market needs.
A lesson from this constant turnover in the Fortune 500 is this: “Evolve to win,” says Staten.
“You have to be prepared to be disrupted.”
He acknowledges the shift will not be easy as CIOs are used to managing historical IT in the organisation.
“You have to change the perception of other departments that you are not just managing tactical operations, and that you can be the engine for digital transformation,” he advises.
In a recent interview with CIO New Zealand, Staten shares ways CIOs can achieve this.
CIOs need to demonstrate better business knowledge, and not just be “tech aware”.
They should help the organisation “cross the line”, and show them where the business is going and how technology can help.
They need to understand the business and what customers are asking for.
According to Staten, a lot of customer experience centric people in large companies are either in marketing and sales or in other groups.
“The CIO should not say, ‘give me all your data and I will [provide] the takeaway value’. What you can do instead, is say ‘I can be the aggregator of everybody’s customer insights data and help everybody see insights’.”
This, he points out, is where the CIO can use their can use their investments in database and AI to “take things to the next level.”
Shift from being customer aware to customer obsessed
“Go deep into what your customers are looking for,” he says.
“Think about your customer experience totally. Don’t get too heavily focused on what customers are telling you they want from you now. Concentrate more on what your customers are ultimately trying to accomplish.”
“You are shifting from [being] customer aware to customer obsessed and when you understand what the broader values your customers are looking for, make sure you build your roadmaps and innovations to fulfill those intentions,” says Staten.
He notes that these insights also apply to CIOs in the public sector.
“Forward thinking government CIOs are looking at this based on the regulations and the services they provide.”
They pose this question: “How can we change what we do to align to what the citizens want, so citizens will find higher value in our agencies?”
Staten shares best practices for being “innovation centric” CIOs.
“They need to be investing in emerging technologies, on proper staff, and through partners, to make sure have enough technical capability in order to build up prototypes using these emerging technologies.”
He further explains that, “They should show the value of tech-driven innovations, and make sure they are prioritised around what they are hearing from customers, not just around the technology.”
According to Staten, digital transformation and innovation are critical to ensuring your company is properly positioned for the future.
“You need to have an innovation portfolio,” he declares, which goes beyond providing “incremental changes” and includes disruptive innovations.
He says most people think it is only hi-tech companies doing this.
“We are seeing more and more enterprises recognising if they want to be a market leader by 2025, they have got to change their culture now to get there.”
Staten emphasises the importance of CIOs and digital leaders knowing how to overcome internal blockers when undertaking innovation projects.
He notes, as an example, how 100-year-old companies not known for being innovative continue to provide the same products.
“The problem with those kinds of organisations, as the customer needs change, is that customers start using their products less and not see the value of this firm expanding with their changing needs.”
Clothing company Levi Strauss, which started in 1853, broke this mould by integrating disruptive technology with its classic denim jacket.
Their CEO hired a clothing designer who had a technology mindset to be chief innovation officer. The latter partnered with Google and they created a prototype that can take IoT technologies and tie these into a jacket.
Levi’s wanted to bring the jacket to the market, not to the traditional buyer of jeans, but to an adjacent market – people who cycle to work.
You have to be prepared to be disrupted
The result is the Commuter X Jacquard, which allows users to access, with a simple brush of their cuff, online services, apps, and information without handling their mobile device.
The jacket, however, needed different training for sales, inventory management and marketing. The internal teams asked why they have to spend 20 per cent of their time for this. They point out, “It is just a single product, whereas we have been focused on selling many products.”
This, he says, is how the company explained it to these teams: “You need to understand if we are successful with this product, it is not going to be like the rest of the products where the customer buys and wears them maybe once every three weeks. This is something that ties to their commute. They will wear it every single day, and their loyalty and need for us will go up dramatically.”
After they made that argument, they got the marketing and sales to invest in the project, as well.
The robotics quotient
Staten is cognisant CIOs also have to factor in their BAU responsibilities as they push through innovation projects.
Thus, Staten believes CIOs need to separate the IT organisation between those who continue to focus on the tactical aspects of technology, and those who will be part of digital transformation and emerging technologies.
“It is important for CIOs to understand who among their staff want to be part of digital transformation and those who do not.”
He further points out: “Make sure the tactical teams understand the business is already doing a variety of technology capabilities. If they do not make these applications cloud enabled and consumable by these other applications, then the value they bring is going to go away.”
“They have to get the tactical team to do that stage and the most common implementation of that is to do a private cloud and make sure all those applications are accessible via APIs.”
But whether the company plans to be a market disruptor or a fast follower, Staten says overcoming these types of internal barriers should be a top priority.
He adds that one of the important concerns in the digital economy is the future of work.
“As we start adding in robotics and AI in so many roles, there are so many employees who fear that they will be terminated as their jobs are being automated.”
Staten says, however, that in most cases that is not going to happen because AI will be applied for the job that is repeatable.
“The employee needs to see this has taken the boring part of their job, and if the employee can understand how the technology works, they can be the engine of changing the algorithms so it can be more effective. They can then take insights from this data and combine it with their other skills and deliver higher value to the company.”
“We need all of them to understand this, and we are asking CIOs to partner with the chief people officer, the head of human resources, and make sure they put in place some quadrants and training for all employees that we call the robotics quotient,” he explains.
Staten says the robotics quotient can help assess who in the company are on board with this, and would be willing to be trained candidates for these new skills.
CIOs can partner with marketing to help reposition IT as a digital transformation engine
“We need to be conscious of how we get them on board or recognise they are not going to be with us in the long term if we continue down this path.”
He stresses that there is also another reason why CIOs need to partner with HR.
“HR might push back on when CIOs want to promote the use of new technologies,” says Staten. A staff that undergoes training gets a certification, for instance, on understanding AI capabilities.
Now that the employee is back on the job, he or she gets to work on this new technology only 10 per cent of the time.
“What they will do is take that certification into their resume and will look for a job,” says Staten.
So HR concludes that training them will just give them more power to leave the company.
“It is important for HR and IT to work together to discuss what kind of investments they are going to do, and whether they are really going to change people’s roles so that 70 to 80 per cent of their jobs will be done using these new skills,” he says
Staten also notes that CIOs can partner with marketing to help reposition IT as a digital transformation engine.
“Marketing can talk about the emerging technology they are investing in and how that is creating higher value,” he says. This information will not only be valuable to their customers but will also help CIOs hire additional talents and skills they need.
He further explains that, when people see that CIOs are creating roles that use those technologies, the ICT staff will want to work for their companies, not just for a startup or a cloud vendor.
He also encourages CIOs using emerging technologies that are open source to promote what they are doing on GitHub.
“Technology and engineering students participate in GitHub,” notes Staten.
“When they see your company listed there, they will be interested in working for your company.”
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