The AOM All-Academy symposium titled Executive Leadership and Information Technology – A Fragile Dance, described here, was great fun – the participants came at the issues from four different directions that together signalled that IT is both more invisible (at least if you don’t look closely) and yet more important than ever.
Jim Cash started (PDF slides here) by reflecting, based on his boardroom experience and his interaction with CIOs, that there has been a strong evolution in the role and expected contribution of CIOs – at least from the admittedly skewed sample he has. (Jim runs a invitation-only program called the Cash Concours, with 38 CIOs of Fortune 200 companies. The group meets quarterly, and Jim visits their companies twice a year.) CIOs are expected to help the firm with the challenges facing the whole firm, including the “large” issues such as the erosion of trust that lead to the Sarbanes-Oxley act, as well as the shifting definition of shareholder value, with more focus on long-term and risk reduction.
Jim considers IT-business-alignment – the notion that the business should come up with a strategy, and IT align with that – outdated. In the companies he is involved with, there is an IT/business convergence – and no new strategy is contemplated without thinking about the influence of technology and technology evolution on the specific business environment. The winners are the CIOs that are “redesigning themselves” to function as full partners in the strategy deliberation and implementation.
Two issues are particularly close to Jim’s heart, and in his view important for CIOs: One is the company’s awareness of and influence on technical standards. The other is the role of China – for many companies, the IT organization not only tasked with supplying IT for Chinese subsidiaries and joint ventures, but the IT organization is in many ways spearheading the company’s move into China. Understanding the role and evolution of China, including its future as an outsourcing location for IT services, is particularly important for CIOs of multinational corporations.
John Seely Brown (PDF slides here) started by noting that China as a market has important ramifications for US corporations – the challenge of selling their goods there, at 10% of the US price point, will lead to a lot of innovation which will make its way back to the US. Information technology is currently driven by the rapid commoditization in three levels: processing, open source, and open standards. He cited Akamai, Google, and the Internet archive as organizations that are able to provide stunning amounts of technology at 1-10% of the IT price point of regular companies – thanks to provisioning and virtualization technologies.
The main driver, however, is standardization – and standardization drives not only decreases in price but also enables flexibility – which is particularly important since IT frequently is the single biggest thing holding up M&A and other corporate change activities. With commonditized technology we can enable further specialization as well as learning.
The key challenge for corporations is to understand how to leverage resources they don’t own, as well as change their business model from supply push to demand pull. JSB cited Amazon, where he is on the board, as a particularly agile corporation – note that they are setting aside a relatively large portion of their screen space to the sale of used books, which means they understand the concept of reciprocity. A good way of understanding the new technology is to see the Internet not as wiring diagram, through which messages are sent, but as platform for inter-company applications.
Vijay Gurbaxani (PDF slides here) took the economic perspective, noting that information technologies have had a profound impact on labor and multi-factor productivity – and cited a number of companies that have created new dominant designs for business processes in their industries. He sees the new marketplace for outsourcing, which is moving from provisioning of IT towards business process outsourcing, as an important contributor to the commoditization of technology and processes.
Mark Kriger (PDF slides here) underscored the role of leadership, giving IBM as an example of a company that has turned itself around under new management. He wondered whether the problem of IT contribution might not be related to ITs perceived lack of explorative power (as opposed to power to exploit existing resources better), and saw the ability of CIOs to be leaders as the key differentiator.
After the presentations, a lively debate ensued – questions ranged from the security of XML applications to the role of IT in China. When asked by a prospective MIS teacher what he should teach the students which he wouldn’t have 5 years ago, the panel said “social software” and “managing vendor relationships” – the first as a new technology, the second as perhaps the most important supply skill for CIOs today.