In 2016, the digital revolution has finally become an unavoidable priority for the majority of executives in the typical organization today. For years it was possible — even sensible — for senior leaders to ‘kick the can’ on responding to technology disruption. The calculus was that they could realistically put it off for three to five years, often long enough to be onto their next position, or retirement, before having to tackle the hard, risky, and unfamiliar world of digital business.
Most organizations were aware this time was coming, and I suggested last year that IT had ‘one last chance’ to lead digital transformation, before other parts of the business responded, or perhaps more likely, nimble new digital entrants reinvented their industry and starting taking away real market share with surprising rapidity.
There’s no question that today, this year, the CIO — along with the CEO and often the CMO and the new Chief Digital Officer — is currently on the hot seat to produce credible results with more profound and effective digitization of the business. Confirming this point with stark data, a recent report from Harvard Business Review underscores the tension and urgency that’s entailed: Most executives now expect that their organizations will encounter moderate to massive digital disruption within just the next 12 months.
The short-hand poster children for these changes have been the same at virtually every conference I’ve attended or article on the topic I’ve read in the last several years: Every industry is getting its Uber or Airbnb equivalent, two tech startups that have definitively disrupted not just a company or two, but every single company in their respective industries of taxi driving and hospitality.
The speed and size of these digital upheavals is impressive: In less than a decade, Airbnb now has more capacity than the top three largest hotel chains combined and it continues to grow expansively, using very different sourcing models. Thousands of other startups are vying for the same results within every other niche.
Putting What Matters Most First for the Digital Enterprise
However, digital transformation is about far more than developing sharing economy business models — where the disruption starts with dramatically lower operational and capital expenditures and often ends with a radically better digital customer experience — but also a whole host of changes required to both become and receive the benefits of being a digital native organization. That’s because digital native companies — typically because they’re newer and can start green field while attracting the best and brightest who want to use the latest advances — use different, more contemporary technologies, processes, organizational models, and techniques for innovation, operations, and growth.
The usual CIO priority lists for 2016 — such as Gartner’s — have all made the rounds in the last few months, and they remain a distinct disappointment in how incremental they typically are. Usually cybersecurity, albeit a critical operational topic every organization simply has to get right today, usually makes the top 5, the usual suspects — analytics, cloud, and mobile — typically fit in somewhere near the top. Other lists from practicing CIOs, such as the Society of Information Management (SIM) survey for 2016, emphasize other less directly technical urgencies, such as improving business alignment, innovation, time to market, and productivity/efficiency.
Yet, vitally, none of these items speak effectively to the real existential challenges that most businesses face from technology today.
Case in point: Last year I compared the year’s various technology priority lists from senior executives in all areas of the enterprise and found that the urgent items from business leaders was very different from the priorities from technology leaders. Strikingly, the list from business users was primarily filled with technology asks to improve the market-facing experience, from improved digital marketing and customer experience management, to compelling new digital products and services.
Virtually none of these items were on IT priority lists, despite years of data showing that the traction and imperative in terms of business value, competitive effectiveness, and actionable results lies directly on the customer/company intersection. Perhaps the most well-known findings is Watermark’s latest study, where they found that customer experience leaders greatly outperform the broader market, while under performers are severely penalized. IT leadership, at least last year, did not get the message: Customer experience is digital experience today, and it’s the lifeblood of our organizations.
Traditional IT is the challenge, new models emerging
At this point, it’s worth pointing out that my own background is in IT and I’m very passionate about its potential — and so I come to provoke it a bit, not bury the industry. So I have a decent idea of how things got to where they are.
It’s key to understand that most IT organizations are designed for en entirely different era, where automation and information management was the major goal, and businesses led technology innovation. What’s more, operational concerns still dominate what IT actually does, from keeping the servers up to fixing errors in applications. In addition, most IT organizations have a vast and growing backlog of systems and solutions they have to maintain on an upgrade cycle. I know of large enterprises with literally thousands of official applications they have to support. Thus, turning on a dime and rapidly fighting fire with fire using the latest technologies just isn’t an option in traditional IT organization. The IT organization is often in the entirely wrong posture for this.
Thus, I’ve made the argument that no central service bureau built on these old models can possibly withstand the onslaught of exponential charge we are currently facing from the digital world. To succeed, we can’t do just a little more of what we’ve already been doing. Instead, we’ll have to employ entirely different and more powerful models for tackling the very high rates of disruptive technological change that we’re witnessing today.
Those of us working in many large organizations have seen what’s at stake if we don’t: IT systems that are badly out of date, applications that are 5, 10, or 20 years old or even older that are lethargically maintained, poor mobile experiences, fragmented and siloed customer experiences, no APIs, no hackathons, no developer networks, and the list goes on.
The Next Model for IT Requires a CIO-Led “Stack”
Why are the latter items like APIs and hackathons so important? Because they are techniques that fully appreciate and take advantage of the inverted capabilities that the power laws of networked systems enable. Short version: We can’t possibly — using only the resources of IT — come up with, design, implement, test, and also absorb the failure in every domain in which we are required innovate in order to thrive and survive. The old days of doing it all ourselves using traditional IT projects are receding and even counterproductive much of the time.
Today’s digital natives understand it’s instead about cultivating and supporting an ecosystem of strong partners that will in turn invest and take their own risks using the value inherent our digital infrastructure and data.
What then must CIOs do to pay down the growing sea of legacy technical debt, begin unleashing a lot more capacity for change, making a regular habit of creating terrific new digital products and services, and delivering much higher levels of value in the most important parts of the business?
Surveying the great IT leader conversations that fellow ZDNet columnist Michael Krigsman has been hosting the last several years helps uncover part of the story. Great CIOs know how to create platforms for the things they need the most, so those things can be extended, improved, and grown by others.
Specifically, the modern CIO needs a platform for change perhaps most of all. For now, I‘ve suggested perhaps the best model is a combination of an enterprise social network or online community to wire everyone together across the organization, and then overlay a more decentralized center of excellence model to empower change agents. But other experiments are under way to find the best new model.
A platform for sustainable, scalable change is the priority
There’s now real evidence to think that this works, as evidenced by exemplary industry CIOs like the FCC’s David Bray, who deeply believe in and are accumulating real evidence for the efficacy of a strong bottoms up network of change agents that have far more capacity for innovation and technology realization. There are other bright stars too.
Other platforms that today’s CIO can and should make a priority, that usually don’t even make the usual lists: Evidentiary business and technical leadership, a deeper and more scalable talent network, an upgraded service platform that outcompetes with digital natives, and new technology platforms to modernize. All aimed at achieving new digital models of business and — and this is the key — largely realized by the full help of the network.
In the visual above, I propose what the stack looks like and made it business objective neutral. The ability to scale and activate on change on a sustainable basis is now the most important objective, the actual technological details and priorities will change month by month. The contemporary CIO’s priority today must be to build an IT leadership stack that can cope effectively with continuous change as the most dominant factor to manage. I believe this is a credible start, and welcome your comments and discussion below.