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.


Tags: business, leadership, CEO, CIO, leadership training

Businesses and IT departments can be going along just fine when all of a sudden, the business goes into what is called a "stall". Just like being in an airplane that goes into a stall, this is by no means a good thing! When a business goes into a stall, more often than not it won't recover. The most dangerous part about a stall is that you don't see them coming - everything is fine until it isn't. We've talked about some different causes of stalls including having a premium product; however, there's another reason and the IT department plays a big role in this one.

Most companies have a small set of products or markets that they currently serve. If the company is successful, then they are probably doing a good job. The IT department has probably become optimized to support both the products and the teams that are serving these markets. All is good. Then the "... grass is greener on the other side of the fence..." syndrome strikes senior management and they decide to take the company in a new direction in order to pursue more profitable markets. Of course what this means is that you need to abandon the core markets that are currently serving you so well. By doing this you won't be able to exploit any future growth that occurs in your existing markets.

Now lets be honest here, these kinds of right hand turns made by businesses rarely show up all that dramatically - at first. Instead they have a habit of sneaking in from the sides as purchases of other companies or top down mandated growth initiatives in brand new areas of business that seem to have nothing to do with the company's current customers, or products, or partners (can anyone say "Ebay buys Skype?").

If you are looking for proof that this kind of abandonment of successful markets still goes on in today's modern business environment, just open the paper and see all of the articles that are talking about public companies being bought out by private equity firms. Clearly something went terribly wrong and outsiders were able to step in. In almost every case when this kind of takeover happens, the new owners of the firm will implement a strategy for returning to what originally made the company successful and growing the core again.

Why do companies and their IT departments make these mistakes? There are two primary reasons. The first is that the company mistakenly believes that their core market(s) has become saturated. This belief is due in part to the information that the senior management is receiving from the IT department. It's the CIO's responsibility to evaluate the data that his/her department is producing and understand what it is saying. Just because it looks like a market is all tapped out, does not necessarily mean that it is so. Instead, this is when the CIO needs to work closely with the marketing team to find different ways to measure the market.

The second cause of a firm leaving a successful market is because they feel that there are operational impediments in their core business model. This happens when senior management just despairs of being able to solve business problems that are currently confronting the company. Instead of trying to solve them, they instead decide to move to other markets which won't have the same problems. Once again, the CIO and the IT department play a big role in this decision. There should be no business problems that the IT department can't help the rest of the company come to grips with. Whether it's tracking sales and who is buying products more closely or collecting data on how the competition is doing, the IT department can help to create solutions to almost any business problem.

Leaving a successful market is never a good idea. IT staff should be on the alert whenever they start to hear the word "mature" being used to describe the company's business situation. IT has a role to play in making sure that the company sticks with markets and customers that will serve it for a long time.

Have you ever worked for a firm that left it's successful market in search of greener pastures? How did this all turn out in the end? Has a IT department in which you worked ever been able to stop a company from making a bad business direction decision? Leave a comment and let me know what you think.


Tags: leadership, CIO, business, business opportunity, new profit

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...


Tags: CEO, CIO, business, it strategy, business alignment, lawsuit, document discovery

Although working in IT can be a tough job at times, I must confess that working in the American car manufacturing industry sure seems like it is probably a much rougher place to work right now. I'm always interested in what's going on in the car biz because once upon a time I almost ended up going to the General Motors Institute (now known as Kettering University) and probably would have ended up going to work in the car industry.

We've talked before about what IT management can learn from the people who brought us the subprime mess. Now it's the good folks at Chrysler are starting to do some interesting things that have caught my attention and I think that they may now be in a position to teach us something. First, just a bit of background information for anyone who hasn't been keep up with current events. The private equity firm Cerberus Capital Management bought Chrysler for about $7.4B just about a year ago. What this means is that Chrysler is no longer a publicly traded company - Cerberus can do pretty much whatever they want and don't have to answer to anyone. Except the people who put up the $7.4B. Who want to see a return on their investment as quickly as possible.

So why did Cerberus buy Chrysler. In short, they think that they can do a better job of running Chrysler than the previous management did. If they are correct, then they can make the company profitable and take it public and make much more than $7.4B. The trick is to do this as quickly as possible. If they can't pull this off, then they could end up shutting Chrysler down and just walking away from their $7.4B investment. Got that? Ok, so now we move up to current time. Robert Nardelli is the CEO of Chrysler and he was brought in from after being the CEO of The Home Depot. What this means is that he's not a "car guy" and he's not limited in his thinking by how things have been done in the past.

Last week new stories started circulating about Chrysler having talks with Nissan about partnering to jointly produce midsize cars. This is a possible fundamental shift in how Chrysler makes and sells cars. Basically, Nissan would design, engineer, and manufacture the cars and then Chrysler would sell them under their own name. This could save Chrysler the billions of dollars that it takes to create a new car. Not content to put all of its eggs in one basket, Chrysler has also entered into a partnership with China's Cherry Automobile Co. who will be making small cars for them.

News reporters were quick to point out that this model has worked well for others such as Dell and Nike who really don't do engineering and manufacturing, but rather focus on marketing and selling. This approach has been tried in the auto industry before; however, these efforts have not panned out well for a number of ill defined reasons.

So what does this all mean for IT executives? Perhaps it's time to slay some of our sacred cows and stop doing software development and stop doing routine support activities. Instead, perhaps these activities should be completely outsourced and our IT shops should retool to focus on what we should be doing best: supporting the business. Specifically, if like Cerberus we would be motivated by the need to have the business turn a profit quickly, we could focus on working with the business units and try to understand what their issues are and how IT tools and technology can be used to solve these problems.

What would happen if Cerberus took over your IT shop? Just imagine if the job of an IT shop was to create very detailed product requirements and to perform testing on products that were created based on those requirements. Can you imagine just how close the IT shop could get to the business? The invisible wall between IT and the business side of the house would come crashing down. When old ways of doing business ("everything is invented here") are torn down and replaced with new ways ("we focus on only what we do best and outsource everything else") then that can truly transform the way IT does business.

Tell me what you think. Do you think that an American car company has lessons to teach IT shops? Is the concept of having a private equity firm run your IT shop something that fills your heart with joy or fear? Leave me a comment and let me know what you think.


Tags: Chrysler , Cerberus, outsource, business, strategy

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.


Tags: business, strategy, growth, economic failure, stall, CIO, CEO

Q: What's wrong with IT departments today?

A: They don't look or act like any other department in the rest of the company.


One glaring example of this rears its ugly head when business users ask for company information and the IT team responds with a discussion about the technology that either interconnects it or simply collects it. It turns out that there is a big difference between information (a.k.a. knowledge) and data. IT departments do a great job of collecting a lot of data; however, that's not what anyone wants. What everyone wants is information - what you get when you process data. Somehow we need to come up with a way to get IT departments to shift their focus from gathering more data to providing more information services that will help the business do better.

Three professors, Arik Ragowsky, Paul Licker, and David Gefen have spent some time studying this issue and asking question such as what is the real job of a CIO? It turns out that a CIO should be spending his/her time managing the information that the company depends on in order to be successful in its business. What this means is that CIOs have to find a way to change their thinking and move away from worrying about how to deliver more data and start to think about how to provide more information services.

How did IT end up being a plumber and not an architect? Back in the old days (1960's), all computers were mainframes and business folks had no idea how they did what they did. However, they appreciated what the Information Systems (IS) department produced and were more than willing to pay for them to keep doing it. When PCs arrived in the early 80's, suddenly everyone knew more about how computers worked. IS was renamed to Information Technology (IT) and the IT folks started to focus more on the technology and less on the information that the technology was delivering. Vendors helped things along by starting to sell directly to end users. This is when things got all messed up!

Who's to blame for the current situation? Well, we IT departments have more than our fair share to bear. All too often we interact with business customers using technology terms. When we do this we are seen as the "geeks" that we really are instead of business partners. What we should be doing is talking business with the business folks and reserving our technology discussions for when we are back within the IT department and talking with our teammates.

Final thought: hide the technology and the data from the business customers. Instead, talk with them about information systems and the types of information that they need in order to help the company be successful.


Tags: data, information, technologies, CIO, business

In the past, the IT department was left alone and was only noticed if something stopped working (like email!) However, in the 21st Century IT has become a critical part of how business competes. The problem is that very few firms have figured out how to evolve from treating IT as a simple cost center to using it as a competative advantage.

If you are looking for a quick and easy solution, sorry -- it just doesn't exist. However, there are some very specific, concrete things that innovative IT departments are doing that can dramatically change how a business thinks about IT. The key is to align what the IT department and its staff do with what the rest of the business does in order to create a more powerful firm. Sounds easy doesn't it? Well it's not. But now you've found this blog and we can spend some time talking about how to make what seems impossible to happen.