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

Way back in my young & foolish days I had the opportunity to work at a couple of startups. I came to them after having worked for very large firms such as Boeing, Siemens, and Alcatel. Needless to say the environment, attitude, and overall energy level at the startups was completely different from the large established firms.

One of my friends from those days, Charlie, has moved on and the startup that he's working for can no longer really be called a startup: they've got 800 employees and have been around for almost 10 years now. Thanks to LinkedIn we've reconnected and we got to talking about the "good 'ol days". What caught my attention is that Charlie told me that he's been put in charge of a project to rekindle the "startup spirit" within his company. When I asked him how he was going to go about doing that, he said that he had no good ideas.

Charlie's firm is struggling with the same issue that Microsoft is just starting to deal with: how can a large firm with lots of resources learn to operate like a smaller, more nimble firm? Everyone realizes that Google, Facebook, Salesforce.com, etc. weren't born inside of a large firm. Instead, they started life as a startup and because they had a great product and lots of employee energy, they got lucky and have become successful. Just about every large company would like to find a way to infuse itself with that kind of "startup energy" (a.k.a. innovation).

Janet Rae-Dupree wrote a piece dealing with this topic for the New York Times awhile back. Some interesting observations came out of this article. The first is that just about everyone agrees that when it comes to IT and innovation, bigger is not always better. Specifically, smaller teams that are made up of staff from different departments seem to be able to move much quicker than larger traditional organizations. Specifically decisions get made much faster and so the entire team is able to move on to the next-next-next thing. I can hear collective HR and Legal departments gasping at the thought right now!

I almost hate to say it, but the TV show Survivor has proved this point. When forced to, people can work together to solve complex problems in unique ways. Yeah, yeah - there will always be backstabbing and alliances formed; however, when the team's survival depends on its success this can overcome many of these personality issues.

As Charlie and I wrapped up our talk, I pointed out the Survivor analogy to him. He pushed back and said that he liked the small team idea but didn't want to be kicking employees off of an island each week. I told that he didn't need to do that, but what he could do is limit the resources available to a team (time, money, etc.) and tell them that they need to reach a milestone before one of their resources ran out. If they didn't then the team would be disbanded. Everyone works better under startup-like pressures.

So what do you think? Was my advice to Charlie any good or did I send him down the wrong path? Can the best parts of a startup (innovation, sense of ownership) be replicated within a large company or is this a fool's quest?


Tags: innovation, teams, Microsoft, startup, nimble

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

Q: What do you call a business executive who doesn't get any respect?

A: CIO


Ok, so the joke is a little bit lame; however, the point is clear: all too often the CIO is a non-player when it comes to whose in charge in the executive suite. He/she will spend their time trying to put out IT fires only to discover that they don't have a seat at the strategic planning table.

The Digital IQ survey came out awhile ago from Diamond Management and it pretty much confirmed what we all know. Although 80% of the companies surveyed said that IT is strategic to their company, only 33% say that their CIOs are deeply involved in their strategic planning process. Why is this? In short, I believe that the IT department is viewed as being a collection of weirdos and outcasts that do a lot of things that have no bearing on helping the rest of the company to succeed. The CIO, as the leader of the IT department, is seen as a weirdo executive by proxy and since nobody really understands what he/she does, they don't invite the CIO to the strategy planning party.

So what do CIOs spend their time doing? The gut answer would be playing solitaire and shopping on eBay; however, I'm hoping that is incorrect. The survey says that CIO spend less than 10% of their time managing IT operations. Since CIOs aren't spending their time dealing with strategic issues, they end up spending it on tactical issues and then justifying their tactics. What a waste!

One of the reasons that the CIO is in such a bad situation is because the survey reports that in only about 66% of the companys did the CEO advocate IT as a strategic asset. Without this support, the IT department has no support at the strategic level of planning.

What is really interesting about this survey is what the financial firms have to say - they get it right. They involve both the CIO and their IT departments in the strategic planning process.Why you ask? It's simple: financial firms set themselves apart from their competition by the functionality and the quality of their IT tools. They are required to develop these tools themselves in order to stay ahead of the pack.

So where does this leave us? If CIOs want to start mattering to their firms and being invited to participate in the strategic planning part of the business, then they are going to have to change themselves and their departments. They are going to have to remake their department over in the image of the rest of the company. Instead of being viewed as a group of loaners, they need to be seen as a part of the process. The CIO needs to build an IT department that walks, talks, and looks like the rest of the business. Only by doing this will he/she finally be able to fully participate in the business planning process.


Tags: business strategy ,CEO, CIO, strategic planning

No holding back this time, I'm just going to let it all come out. I just got done reading my 1,000th article on how to improve an IT department and it was as worthless as most of the others that I've read. For way too long I've been listening to gurus, consultants, and other so-called smart people who have proposed band-aid after band-aid to stop the hemoraging that is going on in IT right now. As an industry we seem to be going through CIO-of-the-month scenarios, my friends and colleagues are burned out and fed up, and now we're learning that the next generation of kids don't want to have anything to do with IT.


What's Wrong With IT?
In a nutshell, we're too different. Yeah, yeah, I know that we treasure our late start times, all night work sessions, flip-flops at the office and multi-screen desktops that sit in front of our original Star Wars posters, but it's killing us. Foosball tables in the hallways, SQL command hierarchy charts on the wall, and action figures lined up on top of cube partitions don't do a good job of saying "we're part of this company". Instead, they say "we're different". That's the problem.

I'm not sure how this all started, but I blame air-conditioning. The early mainframe computers could only operate from within well air-conditioned rooms and so naturally the technicians who maintained and programmed them were placed in the same room or near by. This allowed them to be hidden from the rest of the company. Out of sight, out of mind. The action figures showed up, the dress code got thrown away, and the MIS team stopped trying to fit in.

Who Cares?
You do. Your career is going to be very short and you are going to be quite bitter when your IT job goes away. The company views you and your department as a cost not an asset and they are even now looking for ways to reduce the expense that is known as you.

The CIO cares because he/she just doesn't seem to understand why none of the other executives really want to play with them. The reason is simple, the IT department is weird and so by extension the CIO must be weird and who really want's to play with a weirdo?

What To Do?
In the immortal words of the hair removal lady in the movie The 40 Year-Old Virgin, "...this is going to hurt." What needs to be done is that IT needs to look, act, and talk like the other parts of the company. I'm going to go one step further and say that the role model that they need to follow is the finance department. "Ouch!" you say. Yep, put the long sleeve shirts back on, jettison the foosball table, take down the star wars posters, and let's all get back to moving the company forward.

The thinking behind this is simple: who do we like to work with? We like to work with people who are like us. That means that if the IT department really wants to align itself with the rest of the business, then it needs to start to look like, sound like, and act like the other departments. The finance department is generally well respected and has the ear of the senior management team so they are a great role model for the IT department. In fact, the IT department should try to be viewed as finance's "brother department" -- if you're talking to one, you should be talking to both.

What would this do for a CIO? First it would instantly boost his / her respectability. All of a sudden everyone would realize that the CIO and the IT department were really part of the company and that they were working to make a profit also. This would allow the CIO to start to take on different information management tasks that showed real value to the company. Finally! Alignment would be possible.

Don't get me wrong here, I like foosball as much as the next IT staffer. However, I believe that the "IT markings" need to be taken down so that we can blend in with the rest of the company. There should be some special place buried deep within the IT department that can be turned into a shrine for IT. This is the place where the IT employees can go to indulge in IT talk and, perhaps, play some foosball. However, once they leave this special palace, they should re-enter a workplace that looks like they are a part of the rest of the company.


Tags: IT, CIO, weird, jargon, finance, align

Most CIOs that say that their departments have become "a part of the company's strategic planning process" are just flat out lying. In reality, CIOs are struggling to change how they are viewed in the company and likewise how everyone who works for them is viewed. Sounds like we all need some guidance here. Current estimates are that only about 20% of firms are doing a good job of aligning their IT shop with the rest of the business.

Patrick Gray is an author and a consultant over at the consulting firm Prevoyance Group. In a recent interview that he had with CIO magazine, Patrick had a number of interesting things to say about the state of CIOs and their tech mangers right now:

• The Opportunity Is NOW!: Believe it or not, this is the time for companies to make IT into an asset instead of a cost center. Up until now, IT has been a fairly stagnant part of the company.
  
  
• It's All About Who You Know: The days of having a CIO that knows everything about every technology and who still likes to sit down and do some coding have officially come to an end. Going forward, it's going to be all about the relationships that a CIO has within the company -- he/she needs to have their finger on the pulse of the company. CIOs will need to be able to spot opportunities that no one else in the company can see and then use the technology and human resources that are available to them in order to capitalize on them.
  
  
• It's All About The Business: The key to making the CIO, the tech managers, and the whole IT department a strategic part of the business is to understand that IT is a part of the business that deals with a specific business area (technology) just like the rest of the business. This means that it needs not only the code jockeys but also the business heads to make the whole thing work.

It turns out that there is an old joke that says that "CIO" stands for "Career Is Over". In today's 21st Century business, nobody can afford to have that be reality any more.


Tags: CIO, business strategy, alignment, opportunity, relationships

Businesses today spent roughly 5% of their gross revenue on IT and end up with very little to show for it. A couple of very bright guys over at the Harvard Business School (David Upton and Bradley Staats) have come up with a new approach to Enterprise IT Projects. They started their research from Eric Raymond's (programmer / open source champion) point-of-view: most IT projects are built using the Cathedral Approach:

• they cost a lot,
  
• they take a really long time to create,
  
• and they only start to deliver any value after they are all done.

The Harvard guys believe that they have come up with a different approach that slashes costs while at the same time boosting the existing business and even making it easier to launch new ones. Sound interesting? Read on!

The new IT strategy is called the "path" approach. It assumes that there is no way that you can define all of a system's specifications at the start of a project and so instead you just focus on laying out a path for the system to be further developed over time.

As a proof that this approach works, they studied the Shinsei Bank which is a a Japanese bank. In 1998 Shinsei was in a bad spot: it had had gone bust and (due to bad loans -- sound familiar?) sold to the U.S. private equity firm Ripplewood Holdings. The very smart guys at Ripplewood got Masamoto Yashiro (former chairman of Citigroup Japan) to be the CEO of this struggling bank. Yashiro decided that Sinsei needed to compete based on a strong IT department. Here's how they used a path-based approach to do it:

1. Instead of implementing a new "big bang" set of business software, they took a different approach. They build a modular infrastructure that would allow them to put pieces in as needed.
   
   
2. They build new systems that mimicked the old existing systems that the bank was already using. This allowed them to switch folks over to the new system and then make gradual improvements without requiring extensive retraining.
   
   
3. They helped to ensure that the IT department was integrated with Sinsei's business strategy by having the CIO report directly to the CEO. Note that this is different from many U.S. firms where the CIO reports to the CFO and is effectively "hidden" from the CEO.
   
   
4. The Sinsei business unit heads spend a lot of time learning to "talk IT". This helps to break down internal communication barriers.
   
   
5. Sinsei IT application development projects start by focusing on the foreseeable business objectives -- not the existing business environment. In other words, they think about how they want things to work, not about how they can automate how things currently work. The IT strategy is then built to meet this forecasted future.
   
   
6. This is key: the Sinsei business folks tell IT what they need. IT creates prototypes and has the business side use them. This causes feedback and new possible solutions are identified.

Finally, the Harvard boys identified three characteristics of a path based IT solution that will allow it to succeed:

• Use a minimal set of standards: pick a few and stay with them. This will reduce costs and simplify the entire project.
  
  
• Create Simple Reusable Solutions: This can be as simple as taking each IT problem, breaking it down as far as it can possibly go, and then implementing solutions to those individual problems. When the low-level problems are connected together you'll have a flexible solution that can be easily adjusted if any component changes.
  
  
• Create Solutions With Modularity, Not Just Modules: Getting back to the original definition of modules, this simply means that you can tinker inside of one module without impacting any of the other modules that make up a complete solution. A good example of this is to create a solution that can be rolled out in phases. This limits your risk, allows users to get used to the new business software, and allows time for changes to be made.

The Harvard boys conclude their study with one final note of caution: if you want to build on what you've accomplished with an IT project, then you need to ensure that you have the committed involvement of your end-users. Otherwise you can expect to fail. In the end, the Shinsei bank is doing quite well due in part to its strong IT department. The realization that most large IT projects end up failing due to internal resistance instead of any technology issues, the path based approach to IT projects has allowed Shinsei to completely re-invent itself.

Tags: enterprise systems, IT, Shinsei Bank, modular software, CIO