InformationWeek.com

Welcome Guest. | Log In| Register | Membership Benefits

November 1, 1999

Opinion:
Why So Many CIOs Fail

Ram Charan n the course of conversing with many CEOs at large companies, I've found an unmistakable dissatisfaction with some CIOs. One reason is that some CIOs leave their jobs every couple of years to take hefty financial packages at a new company and fail to complete the projects on which they embark.

Another problem is that some CIOs have failed to change with the times. The Internet has accelerated the pace of change in most industries and brought fundamental shifts in the way companies do business. Speed in decision making is critical to success, and global companies need to coordinate their decisions using the same data warehouses, cutting across time zones and functions. The global economy is also forcing global mergers, which means IT systems must cut across boundaries and cultures.

IT is now the lifeblood of business; it will make or break companies--even industries. Companies are beginning to shift their focus from hard assets to intellectual capital and IT. With this in mind, some CEOs have begun to take a different approach to hiring CIOs. They're saying processes are more important than IT itself. IT is an enabler. So they're choosing CIOs who are superior leaders--people who get the job done, who understand processes, who understand the business.

The question is: Why do members of the existing crop of CIOs fail? Here are five common reasons:

They fail to understand the company's business priorities. IT is now central to the operations of almost all midsize and large companies. But many CIOs fail to grasp exactly what their company's priorities are--and therefore fail to implement systems that can help the company achieve its goals.

They lack leadership skills. CIOs don't fail because they don't know the technology or how to design an IT system. They fail because of a lack of leadership, an inability to assert themselves, and an unwillingness to call on the CEO for help in determining the priorities of various projects.

One CIO I know is so effective that he can persuade users of a project's value at its inception, reducing the need to rework the specs by almost 80%. The involvement of users and huge reduction in project revisions builds credibility, boosts the chances of the project being completed on time, and improves the value of the technology for end users.

They don't build social networks across businesses, functions, and boundaries. On one hand, CIOs want to be able to sit at the table with the CEO and influence decisions. On the other, they fail to build relationships with senior executives on the business side. This limits their ability to understand the concerns of business managers and their ability to influence decisions on business strategies and operations. Ed Tobin of Colgate-Palmolive Co. is an example of a CIO who has successfully built social networks across his company and is very effective in focusing on business priorities (see story, "Ed Tobin, Build Communications Networks").

They're too focused on the long term and on the most advanced design. A 10-year project runs into obsolescence and taxes the patience of the board and management team. CIOs need to focus on projects that can be completed within eight quarters. Business strategies and operational goals change quickly, and projects that take longer to complete run the risk of being out of step with the company's goals by the time they're done.

And while advanced technology may be great, success at the CIO level isn't about delivering a showcase technology. Success is adding value to the business enterprise through technology.

I know of a large midwestern railroad company that was having trouble scheduling shipments and determining which freight-car setups brought the highest margins. It hired a CIO from a consulting company, and one of his central tasks was to spearhead a project that would provide this information. But he was interested in building the most innovative infrastructure, not solving the business problems. Management lost faith in him and eventually fired him.

They haven't converted their shops to the project-management orientation. Many CIOs lack project-management skills. They should projectize just about everything. They should appoint project co-leaders--one person from the IT shop and one from the business side; establish appropriate milestones for review and incentives; and avoid changing the project's priorities continually, which makes businesspeople unhappy. This is probably the most common reason CIOs are forced out.

Many companies have kept their CIOs to make sure year 2000 projects are completed. Once that problem is out of the way, companies will expect their CIOs to add value, especially in the context of E-commerce. They'll demand speed and want timely execution.

Those CIOs who avoid the problems noted above will have an excellent chance of staying at the CEO's table. The rest will likely be replaced by people from outside the ranks of IT.

Ram Charan, a former professor at the Harvard and Kellogg business schools, is a consultant to CEOs of major companies and co-author of Every Business Is A Growth Business (Times Books, 1998). You can reach him at trendlines@cmp.com.

Back to the Columnist page
Send Us Your Feedback
Top of the Page