A few weeks ago, I co-hosted a meeting with Gamiel Gran of the venture capital firm, Mayfield Fund. It was held in New York, and it included a dozen leading area CIOs. The executives offered thoughts on topics that have them excited and others that keep them up at night. Ultimately, there were five topics that rose to the top of the minds of the gathered CIOs:
- Driving innovation at scale
- Adapting to a multi-cloud world
- Making technology a board-level conversation (beyond security)
- Balancing cost savings while driving revenue
- Maintaining relentless customer focus
Managing innovation at scale/creating a culture of innovation
CIOs continue to transform people, processes, and technology as they work to enable more nimble organizations. That includes a broad shift to agile, adopting new technologies such as cloud and microservices, increasing competence around data analytics (and data governance), and driving cultural change throughout the organization. There was widespread recognition from the group that these changes are not one-time events. CIOs are preparing their organizations to be continuous learners that can adapt to near-constant change.
CIO TrendsCredit: PH
Enterprises are rewriting their entire technology stacks as they adapt to the rise of cloud, software containers, artificial intelligence, and other trends. The goal for CIOs, then, is to create a culture across the company that embraces new ideas and has a clear process for shepherding innovation from idea to investment.
Gran noted three major buckets to innovate better, a concept he has coined as the 3 I’s of Corporate Innovation:
- Ideation: Creating an environment that allows for new ideas both inside and outside. Leadership from the top should both give attention to innovation and set priorities. Gamiel notes that volume of new ideas matter, and should be sourced both from inside teams and outside from VCs and peers outside the firm.
- Incubation: New ideas can be disruptive to current operations, so there’s a need to have a person/team who shepherds these ideas through the company. Don’t just hand things off to the procurement department; have someone (or a group of people) dedicated to nursing the idea. Perform some trials over 30/60/90 days to see which ideas are viable.
- Investment: Decide what level of investment makes the most sense to the business, and over what timeframe. It is typically best to start small, but over time, new innovative solutions or technologies can have meaningful impact with very strategic funding. Sometimes investment can be in the form of advice – early stage companies benefit greatly from customer advisory input.
This framework resonated well with the gathered CIOs, but the CIO of one of the hottest venture backed startups in Silicon Valley – he a former Fortune 500 CIO – noted that an issue is getting innovation adopted by the enterprise. Culture remains a major issue. As a result, CIOs are in part responsible for driving a mindset shift.
A major pharmaceutical company CIO noted that achieving a culture of innovation is just one piece of a much broader transformation effort that includes a shift to Agile processes, adoption of APIs and microservices, greater focus on data security and governance, and a shift in the company’s operating model.
A major business process outsourcing CIO agreed completely, adding, “Companies have to start now and make innovation like ‘muscle memory’ rather than treating it as a one-time event. Also have to learn to be OK with trial and error.”
Adapting to a multi-cloud world
While all CIOs were in different stages of their shift to cloud, there was broad agreement that we are in a multi-cloud world, spanning public and private cloud environments as well as on-premises systems. Many CIOs are figuring out how to work with new cloud platforms and vendors, as well as how to optimize their cloud deployments to drive efficiency and control costs. They have a mandate design architectures that allow their companies to realize all of the benefits of the cloud while maintaining sufficient governance.
CIOs have to navigate each cloud provider’s strengths and weaknesses to create an architecture that works best for their firm. One may have superior data analytics capabilities, for example. The most popular cloud providers, in order (and not surprisingly) were Amazon Web Services, Microsoft Azure, and Google Cloud Platform. As the shift to cloud continues, CIOs work with various parts of the enterprise to educate them about cloud and optimize the cloud footprint for both efficiency and financial benefit. One CIO says he spends lots of time with the Finance department to explain cloud accounting and economics, and the capital versus operating expense implications. A couple of the gathered CIOs spoke about the importance of tackling board-level concerns about avoiding cloud lock-in as well as general education around new technologies.
Making technology a board-level conversation, for the right reasons
Boards are taking a broader interest in technology, but often do not have the technical experience to understand how new solutions can strategically impact their company. CIOs are stepping in to bridge the gap, translating technology into clear business terms and showing the board the art of the possible.
The CIO of a major retailer who has attended National Association of Corporate Directors meetings says board members are asking more questions about the latest technology and cybersecurity trends. “What is this blockchain thing again, and why does it matter?” This is a good sign of growing interest among directors in a wider range of technology topics.
While many C-suites and boards may take a trip out to Silicon Valley and come back ready to implement “two pizza teams” and other trendy initiatives, they do not always ask the probing questions about the technology itself and the cascading impact new technology decisions will have on the company. CIOs can continue to gain ground here by asking those important questions and translating into business terms.
Nevertheless, CIOs noted that many directors still think of IT as the group you go to when a system goes down or a security incident occurs. CIOs continue their work to change this mindset and become more of a strategic partner on technology matters.
Balancing the mandate to cut costs and grow revenue
CIOs say driving revenue is now a mandate, not an option. That means many executives continue to juggle traditional orders to drive efficiency and cut costs while simultaneously spurring innovation and driving new revenue.
One CIO in attendance noted that his company’s revenue base was growing, but the cost base was increasing at the same rate. To remain competitive, his team had to deliver cost savings and efficiencies while boosting productivity and driving margin expansion. His team created an innovation lab and made the decision to invest in a single strategic platform on which to build applications. Part of a major technology transformation that has led to the development of new products while streamlining infrastructure. He noted that cost savings had to be found in order to fund future innovation.
Obsessing over customer service
In the age of Amazon, customers’ definition of service has changed. Customers want one-day product delivery, and would rather not talk to human customer service agents when they have an issue. CIOs have to ensure their company can keep up with fast-changing customer preferences and constantly improve the services they offer.
To maintain customer engagement, another retail CIO who was present noted that his company is using augmented reality and other technologies to create “surprise and delight” moments to keep customers coming back. The company is also using advanced data analytics to enhance its product distribution strategy and understand customer wants at different points during the buying cycle. It signals the growing role of personalization in business, where troves of customer data allow companies to craft tailored experiences for their customers. That requires updating IT systems to be able to do this.
I also noted the remarkable story of Domino’s, a company that realized they needed to engage customers in ways they wanted to be engaged. The company’s executives not only improved its product (the pizza itself), it rethought things using the customer’s point of view, rather than dictating wants to the customer. One way Domino’s did this was to become radically technology agnostic. They also launched new initiatives that positively impacted both workers and their customers, such as repairing potholes on roads.
Opportunities are endless for firms who do this well. CIOs noted the potential for retailers, restaurants, airports and others to create more personalized services for their customers. Tools like facial recognition, while beneficial for security purposes, could also help improve customer experience by, say, automatically ordering your preferred meal when you walk into a sports arena.
Thanks to Steven Norton for his help with this article.
Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Forum on World Class IT podcast series. He speaks at conferences around the world. Follow him on Twitter @PeterAHigh.