Is your organization obsessed with cutting current costs to the point of forgetting about the future? If so, you are not alone.
At the IT Leadership Academy, we looked at more than 200 large, complex, multinational enterprises in 20 vertical markets and found that 61% of their IT shops have essentially forgotten about the future as they hunker down trying to survive the present.
As grim as that data sounds, it does leave room for a select cadre of IT leaders who consistently are able to be operationally excellent and future-focused simultaneously. I had a chance to talk to some of those leaders, including CIOs Ramon Baez of Kimberly-Clark, Barbra Cooper of Toyota Motor Sales U.S.A., Alan Cullop of NetJets, Bob Dowd of Sonora Quest Laboratories/Laboratory Sciences of Arizona, Thomas Murphy of AmerisourceBergen, and Rama Dhuwaraha of the Lexington-Fayette Urban County Government in Kentucky. These executives make high-value IT look easy — which we all know it is not. I asked them why keeping the future from falling off the cognitive table was so hard for so many IT executives. I’ll try to summarize what I learned.
The reason most organizations have a blind spot when it comes to the future is structural. Most organizational structures in place today are inadequate to address the challenges of the post-Internet age, and it’s hard to lay the groundwork for the future when you haven’t embraced the present. True, a good CIO can overcome a bad organizational structure, but not having an IT organizational structure that embraces the future destroys value, or at least delays it.
This should not be regarded as a secret. The late Alfred Chandler taught generations of business leaders at Harvard Business School the principle that “structure must follow strategy.” He repeatedly stressed that organizations exist for a purpose and that the structure they take should reflect that purpose.
But in most enterprises, senior management is incapable of replicating the single-mindedness of a commander in the field who tells his troops, “Take that hill.” Such focus tends to occur only in crisis situations, when the enterprise’s very existence is threatened. Lacking something on the order of a global economic meltdown to concentrate the mind, multinational enterprises were characterized with great insight some three-dozen years ago as a “garbage can” of problems, solutions, choice opportunities and decision-makers.
NetJets’ Cullop uses the answers to these three questions as his structural compass: Where is the organization making money? Where is the organization spending money? And how is that changing? Cullop marches to the sound of the fiscal drums, making sure every single IT investment either maximizes moneymaking or optimizes money spending. In both cases, Cullop augments exceptional gut instinct with ahead-of-the curve business analytics.
He explains, “I structure IT essentially around the goal of operating what you have with excellence, with an eye toward ensuring that there are enough resources remaining to move the business forward in strategic ways.”
A polypurpose enterprise requires a polypurpose IT structure. Parts of the IT organization have to be hard-wired for maximum cost-effectiveness, but other parts have to be more fluid and possess the slack resources necessary to respond to situations as they arise. In a way, CIOs have to think like the leaders of China, who found that the best way to reassimilate the former British colony of Hong Kong as part of the nation without losing its special characteristics was to rule China as one country, with two systems. In the case of IT, we need one structure, with many purposes.
Thornton A. May is a longtime industry observer, management consultant and commentator. You can contact him at [email protected].
