Would you love to know exactly what skills you needed to succeed as a top CIO?
Todays guest Martha Heller has placed 100’s of CIOs into some of the worlds largest organisations. She is a power influencer in the industry with reaching an exceptionally high 9.3 per cent of CIOs as reported by Apollo Research.
Her new book ‘Be the Business: CIOs in the new era of IT’ she defines the top skills that are needed to succeed in the new world of technology.
Grab the book here: http://www.hellersearch.com/be-the-business
About Martha Heller
Martha Heller is the founder and President of Heller Search Associates, a recruiting firm specializing in CIO and IT leadership roles across all industries.
Martha: Thank you. We’re just getting going.
Duncan: Just getting going. So before we get into the content here, what drove you to write a second book on CIOs?
Martha: You know, I spend every day all day talking to CIOs from all different size companies, and one of the questions I like to ask regularly is “How has your role changed over the last five years?” So I started asking this question last year, so since from 2010 on. And what they all said is “We’re moving from the back office to the front office. And we are much more involved in revenue-producing activities. As software moved into our products and services, we as IT leaders have become much more important to the revenue stream of the company.”
So I said, “Wow, that’s great. How has your operating model changed in order to support this new role that IT is playing?” And the answer I heard, more often than not, was “Good question.” You know, “We haven’t done much. We’re working on it.”
But then I talked to some CIOs who were really being very successful in integrating IT into the rest of the business, and they had better answers. They were creating multifunctional teams that bridged the line between IT and the business. They were creating partnerships external to the company to leverage into new capabilities. They were developing professionals in the IT organization that had a nice blend between IT and a business. And I thought, “Wow. The CIOs who have moved from the back office to the front office who are at least trying need to hear these stories so that they have a vision and a model to change their own IT organizations.” And I heard enough of that that it seemed like it was the right time to write a book on the subject.
Duncan: And you’re in a kind of fairly unique position where you get to…I mean even more so than I would say than a consultancy, like one of the kind of the big three, four consultancies, in terms of being able to see a large number of CIOs and get a very quick understanding of what they’re doing, their background. Where to do you think the market is in terms of the shift between this kind of blended, ideal situation versus the back office?
Martha: You know, when it comes to the up and comers, the people who are, you know, the directors and VPs today who are gonna be tomorrow’s CIOs, I think there is a huge gap between what companies need in terms of blended executives and what’s on the market. And the reason for that, I believe, is that companies are still growing their people in silos. You know, I’m a networks manager. I’m an applications director. I’m an accountant, I’m a sales leader. Everyone is so specialized that nobody has a broader, multifunctional understanding of the business. While CIOs tend to have that broader experience, they are not raising the next generation of CIOs to have that same vantage point.
So the larger companies that are putting the resources into creating rotational programs where I send an IT person out to a business area for six months and then get them back, that’s the most effective way to create these blended leaders. But that takes a lot of resources. A smaller company cannot lend out a key IT person for six months at a time. So in my book, I have a chapter called “Growing Blended Executives.” And I interviewed CIOs who have found less expensive, more opportunistic ways to create these blended executives. I’ll give you an example.
You know, a guy named Dan Olley, who leads IT for Elsevier, he will no longer allow his IT folks to ask the question during a steering committee meeting “Is the project on time or on budget?” He doesn’t care. The question is “Will the project meet its commercial impact?” If it’s on time, but it’s not gonna produce the revenue, who cares if it’s on time? [inaudible 00:05:51] over budget when it’s gonna bring back double the return, wonderful. By measuring IT people on whether their programs and projects will have a commercial impact rather than when they happen to be on time and on budget is one way to get IT people to start thinking about business context, which is not quite so expensive as creating a rotational program.
Duncan: Yeah, that makes perfect sense. And it’s a much easier metric to measure…
Duncan: …and gets people changed. I mean I found this in organizations. If you change what you’re measuring people by… And I think anyone who’s on executive level is gonna realize this and know this. If you change what you’re measuring people by, suddenly, the behavior changes. Suddenly, people are thinking about it differently and doing things differently. And sort of it can make a quite big impact.
Martha: It can. I’m going to just tell you one more story on this. Eash Sundaram is the CIO and head of innovation at JetBlue. And he no longer measures his people on uptime and three nines and all of that. Now, his people use those metrics to measure their IT providers, for sure. But they’re now measured on something called D-0, which stands for departure zero. And it’s the number of planes that leave zero minutes after their scheduled departure time. That’s a metric that everyone in the company holds dear, including the CEO, the CFO, and the CEO. And what Eash says is that when IT is measured by that same metric, now they’re a part of a business community that cares about when the planes leave, as opposed to worrying only about whether this particular network is available.
Duncan: Yeah, I mean it makes perfect sense. I think it’s something that’s echoed. I’ve interviewed Verne Harnish not too long ago. And his view is the same. You know, everyone needs to know the core metric that’s driving them through the business. And, yeah, the project being delivered on time is great. But how does that impact the actual or the bigger picture?
Martha: And I think the overall point that I’m making in the book, we’re using this sort of turning IT people into businesspeople as what we’re talking about now, and that’s kind of our little metaphor. But, you know, it is easy to understand that we need to be conscious of this business metric. But baking that into the way an IT person is measured and compensated, changing the actual mechanisms of the operating model, that’s that 11th mile to get to that blended nirvana. Knowing that this is a metric that’s important to the business and being conscious of that, like living and breathing it, because it’s how you’re paid, it was a different thing.
Duncan: So I mean there’s a journey on the way there as well, isn’t there? I mean one of the things we’re talking about is leadership and how…and part of this sort of core foundation of this is about how IT needs to stop serving and start leading, how they need to change their position from being…I think there’s a great quote around being order-takers versus automakers. It think that’s… In terms of maturity, one of the areas we’re talking about is ops strategy to VC. Do you wanna talk about that a bit?
Martha: Sure. So the VC idea came to me from Clark Golestani. And you should know, Duncan, I have no original thought. These ideas, they’re just CIOs who speak them to me, and I just speak them out to my readership. But anyway, Clark Golestani uses McKinsey’s Three Horizons Framework, which is really about business strategy and which horizon a company is planning for. But he takes that and adopts it to his IT organization, and he models the evolution of the CIO on these three horizons.
Horizon one, he calls CIO as CTO, and that’s just getting the operations in order. Don’t talk to me about revenue if my email isn’t working. Horizon two is CIO as business partner. I am going to enable my business to grow or that they have better processes or expand into a new global footprint or whatever. Let me know what the business strategy is, business, and I will consult with you on the technology strategy to make that business strategy…to execute on this business strategy. And that’s what most successful CIOs are doing. That’s the level they’ve gotten to.
But Clark pushes the horizon one step further when he talks about the third horizon, which is the CIO as VC. This is the CIO who is looking around his or her company to say, “What are the technology products and opportunities we can promote in order to actually create more revenue apart from what the company is doing?” Let me give an example. Golestani has VCs working in his organization. In IT at Merck, there are venture capitalists reporting into Clark, in IT. What they did was they looked around at all the cool things that IT is doing, one of which is a fraud detection system. There are a lot of counterfeit drug sellers out there on the market online, and this system identifies those to protect Merck’s revenue.
Well, they thought, “You know, there are a lot of other luxury good providers who would want access to this service.” So they actually stood that service that IT was providing off as its own company. They incubated it. And now, it’s a free-standing company. That’s all out of IT. That’s IT as VC. That’s very forward-looking. And for many of the leading CIOs, that’s their immediate future.
Duncan: And I guess that currently, I would assume, is the top three or four percent in terms of the…I mean, I’m sure people want to get there. But in terms of reality of people being there, where would you say the market is?
Martha: I would agree with you. It’s the top, top, you know, small percentage points. At the same time, the inspiration from that kind of innovation and that kind of leadership is available to any CIO regardless of their company’s size. You know, what we’re really talking about here is the difference between being a how executive and being a what executive.
So Scott McKay is the CIO of Genworth Financial, a very large insurance firm. And he gave me this model. He said in the boardroom, there are chairs around the table, and there are chairs along the wall. Everyone who’s sitting in all of those chairs are important people, well-compensated, and they need to be in the room. But the people around the table are the what executives. They are talking about what the business strategy needs to be, what the company needs to spend its money on. The people around the walls are the how executives. They’re waiting to hear what the strategy is so that they can go and execute on that strategy.
Because technology is becoming so central to every company’s products and services, it is time for CIOs to switch chairs. They got to move from the how to the what. Now, they can’t abandon the how, because stuff still gotta get done. But they need to be at the table defining the what. Now, the CFOs at the table, he or she knows how the money needs to move to create shareholder value. The head of sales knows what customers want. So what is the CIO’s unique what contribution at the table? I’ll give you a hint. It is not technology. The CIO’s unique contribution sitting at that table is to use his or her end-to-end view armed with all those beautiful analytics to see we’re doing customer engagement this way in Asia-Pac. We’re doing it that way in Latin America. We’re not doing it all over here. And my unique contribution as CIO is to be the critical capabilities champion. I know what this company’s good at, and I know what this company is not good at. And I know what we need to spend our money on in order to grow and innovate and all of that.
But the challenge is there’s a degree of personal risk in creating business strategy as opposed to enabling business strategy. Sure, there’s risk in saying, “Oh, that’s your strategy? Okay. I can get that done on time and for this money.” There’s risk. But it’s a different level of personal risk than saying, “This is the direction in which this company should move.” However, for CIOs who would like not to be relegated to the operational sidelines as another full crop of technology executives called digital officers, chief innovation officers, and let them come in and lead technology, that is a gut check that they need to do. And they’re doing it.
You know, I’m online all day seeing, you know, who are the CIOs in my network? So I’m always updating, checking people out, what are they doing? I’m seeing CIO and chief digital officer as a title all the time now. Those are the CIOs who have successfully moved from the how to the what. The ones who haven’t have their CEOs hire a chief digital officer that they now have to negotiate around.
Duncan: And that’s something that you touched on quite a lot in the book in terms of the CIO really does have a unique perspective on the organization that other people don’t. They get to see the products arrive in the factory and then see all the steps and how it’s all made and then deliver it out. They’ve a touch in customer services, sales. Every facet of the organization, IT is in. And I don’t think there’s any…in finance, perhaps, but there’s very few other services that have that kind of integration to the organization. So they really do have that unique bird’s eye spectrum what’s going on.
Martha: They do. But I will say this. You know, for the longest time, I always… I have this tendency whenever I think of CIOs, which apparently I do all the time, I always think of them as a Greek mythological figure. So for the longest time, it was Sisyphus. Sisyphus’ job was to roll a boulder up a hill. He did a great job. He went home. He had a glass of wine, watched an episode of Game of Thrones, and then would come back to work the next day, and the boulder would be down at the bottom of the hill, and so on for all eternity. When I wrote my last book, that was my image. Not anymore. I have a new Greek mythological figure in mind, and it is Cassandra. So Cassandra made a critical relationship-building error by spitting on Apollo. Apollo did not like that and cursed her. She has the power of prophecy. She can see the future. She knows what’s coming down the pipe. But her curse is that no one will ever believe her. And by the way, she eventually goes insane.
So, CIOs can see end-to-end. They can see it all. But seeing it and being able to create the vision and the influence and the change so that those systems have a chance, that’s hard. And that’s a skill that successful CIOs have figured out how to accomplish.
Duncan: I mean one of the interesting…that leads nicely into this sort of IT leaders into co-investors, I really like the example from Louisville Gas and Electric. You know, telling other departments that they should put all their budgets together in the same place and then try and build a governance board where they’re actually thinking about the organization as a whole rather than thinking in their own silos is a nice way to at least get well on the road to that kind of actual moving forward.
Martha: Absolutely. I always am amazed that on the one hand I hear from CEOs, because my day job is executive search, right? I place CIOs into their jobs. And what I always hear from CEOs…I mean it’s got to be 100% of the time is “IT costs too much. We’re spending too much money. I don’t know what we’re getting for our money.” But then I turn around and I talk to CIOs, and they say, “My business partners all think that IT is free, because they’re not holding the budget. I am.” And I always think that’s an interesting contradiction. Is it free? Or does it cost too much? Which is it?
But regardless, in order for the business to have accountability for the investment decisions that they request and the return on those investment decisions, they need visibility into the true costs of IT. And when a SaaS vendor comes along and says, “For the low, low price of x million dollars, you can have this wonderful SaaS system,” but nobody’s talking about maintenance costs, nobody’s talking about security integrity, nobody’s talking about architectural integrity, nobody’s talking about what systems we’re already running that could actually do the thing you wanna get done, then business folks are making investment decisions in a vacuum.
If I said to a head of sales, if I were a head of sales personal investment broker and I said, “You know what? I’m gonna buy you a bunch of stock in emerging markets.” But I didn’t give you any visibility into how exposed you already were in the emerging market…
Duncan: No, this is, this is really the shadow IT issue here, right?
Martha: You know, it’s shadow IT for sure. And that’s a huge outcome of what we’re talking about. But beyond that, when IT is such a critical function in the business, and most business executives are oblivious to the true costs of IT, CIOs have work to do to educate those CIOs so that when they request a new piece of technology, they have an understanding of the true costs of that request.
There’s an organization that I quote in the book that I like very much called TBM or Technology Business Management. And it’s a nonprofit organization funded by Apptio, a software provider, that has brought together big CIOs from big companies all working together to create what they call a lingua franca for measuring IT costs. Let’s all measure IT costs in the same way. Let’s develop a framework so that our finance partners can finally get a handle on why we’re spending what we’re spending, and they understand the value of it. But getting your business partners to think like investors with an entire portfolio rather than “I need one of these, and I need it now, and I don’t care how much it costs,” the way my daughters are, my teenage daughters are with their clothes, right? “Mom, I need a sweater.” Well, if all I have to do is give her the sweater, how does she know what the sweater really costs? And maybe she would be better off keeping the sweater she already had.
So conning your business partners into investors in IT and giving them that mindset, that is very important work for the CIO today.
Duncan: Yeah, and it’s hard work as well. I mean there’s a lot of change there from traditional setup. And, you know, I would imagine it would take a good, you know…
Martha: Challenging. You’ve got a company that has grown through acquisition, and it’s got decentralized IT. And a lot of those IT resources don’t report in to you. How do you even get a handle on what you’re spending on IT as a CIO? That’s the first peek. But once you have that, which you need, it’s about letting all the other business partners in on that story.
Duncan: So, again, this ties nicely into our next piece, which is the people and the blended executives who can do that. because, I mean in terms of the types of people we’re talking about in IT, we’re saying that we’ve got a large number of people who don’t necessarily have as strong a management focus as they need to or as a business focus as they need to. How does an organization make sure that they have the right people in those roles to be able to do that? And then also how do people grow as CIOs or grow as well-blended executives? I think you mentioned T-shaped individuals, and I remember suggesting that not a bad idea would be to have someone with a computer science degree and an MBA. I mean is that a good start place to start?
Martha: I tell you, you know, one of my favorite backgrounds for candidates… So we place a lot of direct reports to the CIOs. So what will happen is we’ll place the CIO in his or her role. And then they’ll come back to us and say, “Now I need one of these, one of these, one of these,” to fill out their VP or director-level ranks. And so I look at a lot of resumes of people who are on their way up to be CIO. And I tell you, what I love to see is a computer science degree, because in the end, we’re still dealing with technology. And I love to see an MBA in a discipline that is not IT, marketing, finance. Love to see anything on organizational design. Then they went to Accenture or Deloitte or one of the larger consulting organizations where they gained a point of view on client engagement, a point of view on the software development lifecycle, a point of view on project management, because that’s what the company does. That’s their bread and butter. Then they moved into industry and, you know, advanced and advanced.
Now, the killer move to create that truly differentiating resume is having left IT to go into another organization as a supply chain manager, as a manufacturing plant manager. That’s the beauty. When you find people who’ve crossed the chasm between IT and the business, you get those blended executives ready-made. But that’s very few and far between. So CIOs and company need to figure out if that trajectory of crossing the chasm happens so rarely, how can we create an environment when it happens more often? So again, rotational programs are the way to go, but if not, finding opportunistic ways to send your IT people out into the business and bring business people in.
This is not a part of my book. But I did just talk recently to a CIO who baked into his contract with his consulting firm, I don’t know…I don’t remember which one, like a Deloitte. It might have been IBM. I don’t remember. But he’s bringing businesspeople into IT, and he’s partnering them up with the IBM consultants so that the IBM folks teach the businesspeople the IT context. The businesspeople teach IBM or Accenture or whatever the business context. Now, you get a more informed consultant, and you get a blended executive. That’s just a smart, strategic, opportunistic move that this CIO made. And that’s gonna be the key. Those ideas are gonna be the key to creating these blended executives.
Duncan: That makes sense. And one of the great examples was Dan…was it Dan Olley at Elsevier and his interview techniques for people were, you know, a behavioral question is nice, and it’s nice to know how much you’ve managed, but actually digging down into the how, you know, do you actually know…do you understand the difference between Capex and Opex? Do you understand how that affects the balance sheet or a profit and loss? Can you give me more detail? Can you explain how this really works beyond the, you know, beyond the sort of surface level is, I think, makes perfect sense. And I don’t know how many people actually do that.
Martha: I don’t know how many people do that. But what Dan also does that I really like is when he asks for a question about change leadership. He’ll ask, you know, “Give me an example of how you created change.” And when all he hears is “I restructured my IT organization,” or my organization, he says, you know, “Big schmear.” What he wants to see is a person who is changing the products, changing the way they’re delivering projects, changing the way they’re developing executives. He wants to see somebody who’s involved in change at every level and who understands that ultimately the heart of their job is about change. That’s what he’s looking for as opposed to “Yeah, I managed this one change.”
So, you know, the interview is not a great element. You know, interviews are tough. You get an hour, an hour and a half to assess cultural fit and skills and all of that. But it’s still a necessary part of the process. So the more you can dig down into the real business acumen during those interviews, the better. And Dan gave a great example of that.
Duncan: That makes sense. And so your book is out on the 27th of September, is it?
Martha: Any day now.
Duncan: Any day now? And I guess we can get it from Amazon, Barnes & Noble, all these places?
Martha: All [inaudible 00:28:52], yeah.
Duncan: And if somebody wants to get in touch with you, what’s the best way?
Martha: Oh, there’s so many different ways to get in touch with me. I would say Google me, and you’ll be able to get in touch with me.
Duncan: Google Martha Heller, you’ll find your Tweets, you’ll find your Heller Search…
Martha: You’ll find it all, you better. If my marketing director is doing his job, it should be very easy.
Duncan: Excellent. All right, Martha. Thank you very much for your time. It’s been awesome.
Martha: My pleasure, Duncan. Thank you.