20 People Who Changed Tech: Max Hopper And The CIOs
We salute the strategists, peace-makers and visionaries who turned tech innovations into distinct business advantages. Last of a 20-part series.
Hopper always said that "timing is everything," that falling in love with a new technology without understanding what's really necessary to implement it could damage the CIO and his or her company. If you move too quickly, you overspend and get only modest results; if you move too slowly, you'll always be a follower.
Charlie Feld, who himself was a helluva CIO at Frito-Lay, once told me that nine out of 10 things that crossed his desk were bad news, but that the CIO had to keep looking for that one new development that could be a game changer. He jumped on handheld computers for Frito-Lay's salespeople, outfitting 10,000 of them to be more efficient as they were in a direct-to-store delivery mode. Frito-Lay dominated the snack food market for a number of reasons -- and Charlie Feld was one of them.
The key to being a Great CIO: translating technology into solutions businesspeople can understand ... and then getting some sort of internal consensus to move ahead, knowing that problems will arise along the way.
In some cases, the IT strategy became the strategy. When John Reed ran Citibank, he saw that ATMs were a way to increase profits and reduce costs.
When Jim Barksdale was the CIO of Federal Express, he ran with founder Fred Smith's credo that information about package shipments is as important as the shipments themselves. When is the package coming? Is the shipment complete? What will it do to my supply chain? What's the backup plan?
By letting FedEx customers track their own shipments, he avoided the hundreds of customer service agents whose main job was to apologize. "It's lost? Let me call you every hour and tell you how we are doing." Instead, FedEx empowered customers and cut its costs. It had pretty much lapped the field before UPS caught on that something had changed.
And it happened out of IT. In fact, for many companies the close coupling of corporate strategy and information technology was their key to winning.
A New Breed
CIOs always seemed to be IT guys who grew up into the job, but about 20 years ago things began to change. More than a few were business types first who then took over the IT function.
Michael Bloomberg was a trader at Salomon Brothers who was moved to IT. He always said that he knew more about trading than the IT guys and more about IT than the traders. When he started Bloomberg, he went to DuWayne Peterson, the Merrill Lynch CIO at the time, and offered to build the firm a system that would give its traders a leg up. Peterson was smart enough to agree, but Merrill Lynch demanded part of Bloomberg's new company -- a little decision that would be worth $5 billion or so to Merrill Lynch. I guess Peterson earned his bonus.
Cinda Hallman was director of IT at DuPont and saw great opportunity in tying the chemical maker's many minicomputers together. DuPont's supplier, DEC, then introduced an office automation suite called All-In-1 that catapulted the company into the No. 2 computer vendor -- all built on an insight of Hallman.
When Kailash Khanna was the CIO of American Express, he recognized the burgeoning IT talent in his native India and the fact that communications costs were dropping quickly enough to let Amex outsource some of its requirements there less expensively. From this move came the entire Indian IT outsourcing industry.
Dave Evans, a one-time line marketing manager at J.C. Penney, pioneered EDI (electronic data interchange) as the retailer's CIO. The key to retailing is having the right product in the right sizes and colors at the right stores at the right time. Have too little of the right inventory and you lose sales; have too much and you're in markdown city. Before Evans, most retailers were just stupid distributors for the suppliers. After Evans, retailers knew their customers and their needs.
Half the time that a tech vendor produces an innovation, it has no blessed idea of what to do with it. Then some amazing CIO grabs the innovation, turns it into a business advantage and runs with it. The vendor watches what's happening and then tells everyone else. The CIO is the catalyst.
When American Hospital Supply was just a distributor, a purchasing agent at Stanford Medical Hospital kept calling, eight to 10 times a day for pricing, availability, sizes … until someone at AHS asked: "If we just give him access to our database, would that shut him up?" The genius was the IT department, which realized that every hospital would like that information and made the system industrial strength.
From that beginning, AHS so dominated the hospital market that it was eventually sued by the Department of Justice for monopolization. All this from a mere distributor whose CIO and IT team listened to one customer and produced a solution that the biggest supplier, Johnson & Johnson, had to bow to. Not all innovations are in product; sometimes they're in IT infrastructure.
Another example? The IT gurus at Otis Elevator built a customer-facing solution using their internal database that let architects configure elevator subsystems in 10% of the usual time -- engineering a loyalty that GE, Westinghouse, Fujitsu and Hitachi spent a decade trying to replicate.
Our hats are off to these creative people, executives who could see the potential in a new technology solution, sculpt it to their needs and convince the rest of the organization that the risks were more than worth it. Without these people, the tech industry wouldn't flourish and wonderful ideas that serve customers in a range of industries would die on the vine. For every great invention there must be a concomitant user with the faith that implementing such an invention can be transformative.