Why The CIO Position Is In Jeopardy
Disruptive market forces generated by IT are now turning on IT's builders and managers. The number of CIOs will decrease during the next five years.
I just replaced the icemaker in my refrigerator, once again proving the disruptive nature of the Internet and modern IT. More on why that is later.
For most industries, the market forces generated by IT are transformative, often disruptive. Consider retail.
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Retailing has always been in the crosshairs of the Internet. While almost all retailers have an online presence, their strategies vary. Some supplement their physical locations (e.g., let customers order online and pick up at the store). Some retailers price their merchandise to compete with online-only competitors, hence undercutting their own physical store sales. Conventional retailers are trying every model in an attempt to weather the transformative forces of IT--forces that disrupt a variety of related businesses as well.
For example, my wife is a computer novice, yet she has learned to order clothes online and return them, if necessary. By buying online, she avoids having to drive an hour to the mall, an outing that usually turned into an all-day trip. No gas used. No lunch out. No extra purchases. No commission for the sales staff. When she returns a purchase, she has me use FedEx. It takes me only a couple of minutes, costs almost the same as the post office, and there's no waiting in line at FedEx Office (a.k.a. Kinko's) to drop off the package.
The U.S. Postal Service has been a victim (a passive victim) of IT-led disruption more than most organizations. I know lots of 60- and 70-year-old women who five years ago could barely manage to send an email who now tote an iPad, post pictures to Facebook, and have their own websites where they display their hobbies. Few of them send letters anymore. A lot of taxpayer money will go into propping up the USPS, but it will eventually have to restructure its business model.
Best Buy faces the same Internet-based challenges to its business model as did Circuit City, Soundtrack, and numerous other now-defunct electronics retailers. Its stores are filled with things I buy online. I used to go to Best Buy if I needed some memory for an old computer, but online tools now are a lot more accurate than most Best Buy sales associates, and the online stores have far more inventory. As people get more comfortable researching and buying expensive things on the Web, it's going to get more difficult for Best Buy to know what to keep in its brick-and-mortar stores.
I was asked within the past six months if I would interview for the Best Buy CIO position. I declined. While Best Buy has time to adjust to the distruptive market forces IT has generated, I doubt it can without a brutal bankruptcy and restructuring. I have been involved in bankruptcy-driven restructurings; it's intense, emotional, and unrewarding work.
The future (if there is a future) business model for Best Buy and other retailers will be smaller stores that sell products that customers must see first hand, can't be "showroomed," and must be sold by expert sales staff. In other words, they will have to employ people with the expertise and sales skills that will attract customers to their stores. But even that transition is fraught with peril.
Consider high-end bicycle shops.
Boulder, Colo., where I live, is an intense cycling area with many exceptional shops that sell bikes, parts, clothing, and service. They're always under pressure at the low end from the likes of Walmart and Target, and they compete fiercely at a price point of $750 to $5,000. Few cyclists will buy an expensive bike on eBay unless it comes from one of the few sites selling excess pro equipment and they know exactly--to the centimeter--what they want. But consumable parts (tires, pedals, cleats, chains), which are expensive on high-end bikes, can be found online at serious discounts.