Business Walls Tumble, CIOs Face Agility Test

As more companies tear down the walls between traditional jobs and turn to scrum development, CIOs must rewire their leadership brains.

The biggest buzz out of the Consumer Electronics Show in January wasn't about dazzling smartphones or tablets. Cars stole the headlines. General Motors touted its plans to build 4G high-speed broadband into its vehicles. Audi, Hyundai, Honda, and GM announced their "Open Auto Alliance" with Google and chipmaker Nvidia. Audi took reporters on rides in its Piloted Driving prototype. BMW demonstrated it could control its new i3 electric car via Bluetooth, using Samsung's Galaxy Gear smartwatch.

The automakers' starring role at CES 2014 was but a ripple on the surface of a much deeper trend: Technology is obliterating the boundaries between major industries and tearing down the walls between traditional business functions. CIOs must adapt.

The CIO's role as we've known it took shape in a vastly different age. Once, the CIO's primary mission was to design and build large-scale systems that worked within pre-defined tolerances to produce clearly expected outcomes. CIOs were technologists who oversaw a highly linear, tightly controlled waterfall development process. It might have been sophisticated and complex, but by today's standards everything moved at a stately pace.

[How can CIOs make themselves invaluable? Read 5 Skills CEOs Prize In CIOs.]

Agile or scrum development is now commonplace. The likes of LinkedIn, Facebook, and Google have set the standard for software and systems that rapidly adapt to large volumes of unpredictable inputs on an almost constant basis. Teams iterate, release, monitor, iterate again, release a new version, monitor, and reiterate in a nearly continuous loop. An extreme example is, whose agile IT lets it change prices on its site upwards of 2 million times a day, optimizing offers to match shopper identity and behaviors moment to moment.

Time to rewire
IT organizations across industries now feel the urgent need to be similarly agile and adaptive, challenging CIOs to rewire their leadership brains and get things done in fundamentally different ways. This process often begins with letting go of familiar organizational structures, which isn't as easy as it sounds.

The self-image of most C-level executives is linked to the size and solidity of the organizations they lead. CIOs have taken comfort in knowing exactly who in their organization is responsible for applications, infrastructure, architecture, and so forth. They then set annual goals for those clearly defined divisions and gauge performance against objectives at pre-determined points along the way. CIOs felt much like captains of large, well-ordered ships they could command and steer toward clearly defined destinations. In contrast, agile development is best pursued by what Amazon famously dubbed "two-pizza teams" (teams small enough to survive an all-nighter on two pies) that can spontaneously form to iterate solutions as needs arise, then disband and take new shapes to solve whatever comes next.

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As such, being agile requires CIOs to let go of the organizational concept on which much of their status was based. They also must become vastly more tolerant of variability, allowing the many small failures required to understand, adapt to, and succeed in an unstructured world that defies prediction.

Big questions arise. Can successful CIOs who rose to their positions by working under one set of assumptions move out of their comfort zones to embrace fundamentally different assumptions? Can they accept the fact that they must do very different things from those that got them where they are today?

New freedoms
Every day brings new evidence that old barriers simply don't matter anymore. A decade ago, who would have imagined a white-shoe investment bank like Goldman Sachs allying with an arriviste like Facebook? Yet today Goldman Sachs serves on the board of the Open Compute Project founded by Facebook in 2011.

Netflix, having revolutionized media delivery, boldly developed an original program, House of Cards, after sophisticated data mining showed that a political drama starring Kevin Spacey and directed by David Fincher could prove wildly popular. Netflix then made all the episodes of the new series available at once, further defying convention and feeding the vastly underserved penchant for binge viewing. The stunning success of House of Cards illustrates what's possible when companies embrace a new way of thinking. The walls come crumblin' down.

Because technology is by far the most powerful driver of these new possibilities, CIOs find themselves thrust into a much brighter spotlight. More rides on their leadership abilities and decisions than ever before.

Over the past 10 or 15 years, the CIO role has evolved from chief technologist to overarching business leader. This evolution is now reaching a new inflection point. The mindset and competencies required to lead traditional, highly structured IT organizations and processes are starkly different from those needed to deliver hyper-adaptivity and drive innovative opportunism. Yet today's CIOs must do all of the above. Meantime, CIOs can expect demands for technology to continue to grow and diversify as technology becomes ever more central to everything businesses do.

A clear plus for CIOs is that technology's growing primacy, combined with the compelling case for more out-of-the-box thinking, frees them to apply their talents in almost any setting, including industries in which they have little or no experience. In 2012, for example, General Motors recruited Randy Mott, who previously had served as CIO of Hewlett-Packard, Dell, and Walmart, but lacked automotive experience, to be its new CIO. Deutsche Bank last November appointed Kim Hammonds, formerly with Boeing, Dell, and Ford, as its new CIO.

Top companies in a range of industries no longer hesitate to stray out of their swim lanes when choosing a CIO. Indeed, CIO candidates who lack experience in the company's own industry might enjoy a certain cachet in a marketplace that rewards businesses prepared to think differently. 

Live free or die
The fundamental choice facing every company, CIO, and aspiring CIO is the same: Embrace the possibilities of a world without walls, or cling to what feels familiar and secure and risk becoming irrelevant more quickly than you ever imagined possible. (Just ask Blockbuster.)  

Technological advances have reached a stage where they can't be fully commanded or controlled, but rather initiated, influenced, and harvested. CIOs today must create an environment in which they inspire small teams to work unconventionally, fail incrementally, learn continuously, and adapt rapidly. That's the essence of an agile culture.

Engage with Oracle president Mark Hurd, NFL CIO Michelle McKenna-Doyle, General Motors CIO Randy Mott, Box founder Aaron Levie, UPMC CIO Dan Drawbaugh, GE Power CIO Jim Fowler, and other leaders of the Digital Business movement at the InformationWeek Conference and Elite 100 Awards Ceremony, to be held in conjunction with Interop in Las Vegas, March 31 to April 1, 2014. See the full agenda here.

Karena Man is global head of research in the CIO Practice Group of Egon Zehnder, a leading executive search and talent management consulting firm.

Editor's Choice
Mary E. Shacklett, President of Transworld Data
James M. Connolly, Contributing Editor and Writer