The CIO’s critical balancing act in the next five years
- 30 October, 2019 06:30
CIOs will need to partner with the executive team to design a value proposition that drives the right mix of traditional and digital business.
“It has been 50 years since the first message was sent across what became the Internet, notes John Kost, distinguished vice president at Gartner.
“In the past 50 years, we have seen technology transform enterprises, our relationship with customers and citizens, and society itself."
“The next five years will bring as much change as the last 50,” says Kost, as he summarises the key challenge CIOs face today.
“With it, there will be even more uncertainty, and also more opportunities for technology leadership to have an impact,” says Kost, in his keynote at the Gartner Symposium ITXpo in the Gold Coast.
Kost says last year, Gartner introduced ContinuousNext, a formula for a world that is constantly changing.
This year, Gartner is introducing the concept of ‘TechQuilibrium’ - for ‘Technology + Equilibrium’ -to help organisations navigate through the toughest turns and come out as winners.
According to Kost, TechQuilibrium is “the perfect mix of traditional and digital for the enterprise”.
“It is the balance that applies to many things in your world - how you lead, how you serve customers, and ultimately, how your organisation takes its place in our emerging digital society,” he further notes.
He also says there are three forces or ‘turns’ creating uncertainty and pressure for CIOs and their organisations as they shift their business models - geopolitics, economic shifts and digital giants.
“They will have to make many hard choices across opposing forces - braking and accelerating at the same time; while taking a turn, cutting costs, and investing for growth.”
“Here’s the rub, you have to do both to navigate successfully through the turns and excel in digital society,” he states.
Kost points out during the last global recession in 2008, companies that were able to see opportunities broke away from the pack. They had a strategy to cut deeper and where to fund growth and innovation.
One of these was Shell, which slowed down Arctic exploration efforts, and bought a power utility and invested in electric charge points, becoming the top provider of charge points in several countries.
At the same time, digital giants are driving virtually every enterprise to determine their own TechQuilibrium, having to make a mission-critical bet on the balance between traditional and digital.
Most enterprises are not going to be only one or the other, Kost says.
Traditional companies are scrambling to drive toward digital, while the digital giants are tipping their balance toward traditional.
These digital giants are acquiring or building their way into traditional industries like financial services, physical retail, automotive, and even healthcare.
Alibaba, for instance, now has one of the world’s largest supply chains, biggest payment networks (Alipay), a health services business, and also invests in major movie franchises like Mission Impossible.
“In the digital society, the distinction between traditional and technology organisations will eventually disappear.”
He cites how the City of Copenhagen changed its TechQuilibrium point from "being all traditional to slightly more digital by adding AI".
The city improved its emergency services by combining humans with an AI bot from Corti that can analyse the tone of the caller’s voice.
Corti can sense from voice data alone, whether or not the caller is having a heart attack.
As a result, Copenhagen has reduced the number of undetected cardiac arrests by half.
According to Kost, the race is on and every enterprise and industry will be challenged to find their TechQuilibrium.
CIOs, he says, will need to partner with the executive team to design a value proposition, a plan that drives the right mix of traditional and digital business.
“And, when you reach this balance point, you will have reached your point of TechQuilibrium,” he states.
Individual enterprises and whole industries will have different points of TechQuilibrium, he points out.
“Not every industry needs to be digital in the same way, or to the same extent.”
His advice to CIOs?
“First is to decide what your TechQuilibrium point should be. Then, design the enterprise TechQuilibrium for both your business models and your operating model; and drive decision intelligence to help you anticipate and win in the turns.”
Build your fusion teams
Kristian Steenstrup, distinguished analyst and Gartner fellow, says in this environment, the leadership imperative for CIOs is to play both defence and offense.
“Are you tired of being thought of as a service provider? I’m tired of it too… It’s time to complete the turn from service provider to strategic leader.”
“There is no stopping, no turning back and no rear-view mirrors," he declares.
He also says the organisation is primed for it. According to Gartner’s 2020 Board of Directors survey, two-thirds of directors see digital and technology disruption as their number one business challenge.
“To win in the turns, strategic CIOs must embrace going on the offensive, working with your CEO and executive team,” advises Steenstrup.
“Drive traditional and digital discussions through the lens of growth, cost and risk."
“When we communicate using this framework, the board will consider the CIO a leader who can play offence, create business results and deal with digital disruption," he states.
CIOs can accelerate the move to digital product management to deliver digital products and services. They create agile teams made up of both technology and functional leaders.
We refer to these groups as ‘fusion teams’, he says.
He cites the case of Desjardins, a financial services company from Canada.
It’s time to complete the turn from service provider to strategic leader...There is no stopping, no turning back and no rear-view mirrors
“The CMO and the CIO are working together to structure how Desjardins will launch digital products to the market. This partnership continues right down to the team levels with what they call BizTechOps teams, their version of fusion teams. As the name implies, it is a team of business, technology and operations leaders,” says Steenstrup.
Desjardins estimates that their current mix sits at 70 per cent of traditional IT to complete a massive core platform renewal and 30 per cent BizTechOps to handle their digital products.
However once their core modernisation is complete, the CIO expects that they will move closer to a 50-50 balance in traditional IT and digital product management.
Thus, he recommends that CIOs create fusion teams of both IT and functional experts, which can both grow the business and defend it at the same time.
The ‘everything’ customer
Olive Huang, vice president and distinguished analyst at Gartner, calls for giving people - customers and citizens - great experiences.
“We know your customers today can be very demanding. They want conflicting things at the same time, immediately, right now.”
“Your customers want all the best features and an effortless experience. They want to be treated like everybody else and served on their own unique terms.
They want to be connected and sometimes left alone. They want everything, and they want to feel that you actually care.”
She notes that at the same time, they have many technology options at their own disposal.
“Technologies have created this always-on, connected, ‘everything customer’,” she states. “They are a challenge and an opportunity, all at once.”
According to Huang, to win, you must serve your core customers and expand to the new ones, and to use technology for scale and for inclusion.
But in this pace of change, "some customers can't catch up and become disconnected,” she says,
“Poorly designed tech solutions push us apart,” she stresses.
She then explains that, “Technologies should bring us closer to our customers, not push us further apart. You need to stay engaged with the ‘everything customer’ continuously, and with empathy.”
“You need to design experiences that create value for your customers, from the intersections between the customers and the technologies.”
Huang further adds that, it could as simple, for instance, “as being able to share your entertainment screen with your husband on the same plane so you can watch the same movie together, like [you are] sitting in your own living room.”
This she says, is a feature she discovered on a recent flight on Air New Zealand. “Fantastic,” she remarks.
“As CIOs, you must drive the enterprise forward on the path to growth with the connected, always-on everything customer.
“You need to think like a designer,” she says.
Poorly designed tech solutions push us apart...Technologies should bring us closer to our customers, not push us further apart.
“You need skilled digital designers to get started with a digital design process. Designers think about their 'everything customers' differently than other roles in your organisation. And their design skills are not only limited to web and app designs.”
Crown Equipment, a forklift manufacturer, as an example, has artists and anthropologists on their design teams and won innovation awards.
Domino’s Pizza, for its part, has about 15 ways to digitally order a pizza, including from a smart television.
Huang says, “They recognise that success with the 'everything customer' goes beyond making investments in technologies. They invest in the people and processes that lead to well-designed experiences at each touchpoint and across all touchpoints.”
She further notes that, “They turned the expected into the unexpected by wrapping their traditional products in a blanket of rich digital services.”
Beyond the enterprise
Partha Iyengar, vice president at Gartner, highlights the role of the CIO beyond the organisation and the sector.
“We are all citizens in an emerging digital society” says Iyengar. “Technology is shaping the way we live, how we work, and how we communicate with each other.”
According to him, “As CIOs, when you decide, design, and drive, you influence digital society.”
This, he says, directly impacts your ability to win in the turns.
“Security is a moral imperative in a digital society.”
He stresses that, “Cybersecurity is a global threat. It’s time to have a serious conversation about security.”
“We already spend plenty on security, up to $180 billion globally,” he says. “But just spending more won’t save us.”
If we do not manage risk in the technologies that support our lives, society will unravel
His advice: Invest in a safe digital society while protecting your enterprises.
“If we do not manage risk in the technologies that support our lives, society will unravel,” he states.
“We need new solutions that counter inappropriate use of technology, and a better understanding of how our own technologies can be misused.”
“Every organisation has a customer value proposition,” he says.
He proffers a different idea, to build a social value proposition.
“Every industry has larger societal topics; this is the next engine for growth.”
“Building a social value proposition is not about donating or volunteering for a good cause,” he says. “It is about building a business out of improving our digital society.”
Iyengar explains that, “Every single industry has larger societal topics you can turn into business success.”
These could be health, education, or access to financing.
“As a CIO, work with your board and CEO to show how technology is at the core of that social value proposition,” he advises.
“Digital society is here now,” he stresses to the nearly 2000 CIOs and ICT leaders at the conference.
“You are so much more than the custodian of technology design and implementation...Your choices influence digital society. Be a positive influence!”
Divina Paredes attended the Gartner Symposium ITXpo in the Gold Coast as a guest of Gartner.