How CIOs and their teams are driving innovation
Today’s Chief Information Officers are busy building and managing “departments of the near future.” This includes being responsible for organizing the continuous innovation of business models, processes and products. Along the way, so-called “market intelligence” is increasingly coming into focus and, with it, the demand for techies to consistently adopt the customer’s point of view, developing products and services that have potential. They’ll find all the building blocks for this at TWENTY2X.25 Feb. 2020
"Successful CIOs are like acrobats. They manage the daily balancing act between efficiency and effectiveness. Competing interests are a recurring issue. The IT department is supposed to provide services in the most cost-effective way and, at the same time, drive forward the process of digital transformation and investment in innovation and sustainability. There is no clear line of demarcation, and that means daily moderation between competing demands," reports Christian Noll, Managing Director of IBM Germany and General Manager of IBM Global Business Services for the German-speaking countries.
He thus sums up in a few words what countless CIO surveys, CIO of the Year awards, statements and conferences have long been emphasizing: The role of the CIO is becoming increasingly important, but also increasingly difficult.
There is general agreement on this, and not just at the annual Handelsblatt IT Management conference. Only last January, the publication wrote that budgets were stagnating and requirements were growing. And all this in the face of a general shortage of skilled workers. At the same time, even the most traditional companies are busy reinventing – in other words, digitally transforming – themselves. In particular, the hidden champions of German small and medium-sized enterprises, which have their origins in industrial production, are willing to transform themselves into "software companies at their core". This underscores the dual role and relevance of CIOs – after all, who would understand better how to operate at the interface of technology and strategy?
The annual CIO of the Year Award, presented by CIO Magazin and Computerwoche, was conferred for the 17th time at the end of November 2019, this time on Anke Sax, CIO of Deutsche WertpapierService Bank (dwpbank). Sax took first place in the category of medium-sized enterprises. The jury praised her "holistic performance… including [in the areas of] technology, IT strategy and cultural change." Her transformation program titled "IT 2020", which has been running for three years, is having an obvious impact. At dwpbank, which manages the securities accounts of 75% of all savings, cooperative, private and commercial banks in Germany, IT transformed its self-image "from a pure contractor to a competent advisor". In an interview with CIO Magazin, Anke Sax emphasized the facet of cultural change and mentioned special communication skills as a success factor. Listening, asking questions and creating a common basis of understanding are fundamental to professional cooperation between departments and IT, she explained.
This pattern is evident with other recent CIOs of the Year in the SME category: The jury praised Brigitte Falk, Cronimet CIO and 2018 winner, with the words "Ms. Falk is truly persuasive with her understanding as a ‘digital business enabler’ and the clear objective of making a value contribution to the company’s future by means of the digital transformation she is driving forward. About her predecessor as CIO of the Year, Thorsten Pawelczyk, CIO of the environmental services provider Tönsmeier, it was said in 2017: "The conception and management of digitalizing [the company’s] central business process was entrusted to IT."
Many jobs were upgraded in terms of content, which has helped the company to present itself as an attractive regional employer. And, as for the 2016 CIO of the Year Jens Riegel, at that time in the service of Lohmann Animal Health, RWTH professor and juror Günther Schuh remarked that the prizewinner had implemented his project "against resistance from the individual departments, who considered process optimization through IT to be impossible," saving the company a lot of money in the end. The list could be continued with another dozen CIOs of the year from medium-sized businesses.
Bringing IT back into the company fold
So, does that mean that CIOs are not only acrobats, but also coaches, moderators and, above all, knights in shining armor fighting in the face of significant resistance? There is certainly no shortage of heroic stories. And probably rightly so. Thomas Denk, co-founder and managing director of the consulting firm Deliberate from Böblingen, Germany, adds a few more role descriptions: "The head of IT is becoming an architect, planner and controller". This is urgent, he says, because if the cloud is the next step, one may wonder why you even need your own IT division and IT manager. The "CIO as a service" is already available. According to Denk, IT has been encapsulated, decimated, centralized and optimized within companies – and is now supposed to lead companies into the age of digitalization. The first goal therefore is "to bring IT back into the company fold."
The first, but definitely not the only goal. Once it is achieved, it creates the necessary (re)anchoring of IT as a strategically important corporate division, from whence it can then tackle the real challenges. And these challenges run in both directions: providing efficient basic services and being an effective driver of transformation. The former is more than just a "hygienic" factor. Functional, highly available core process support by means of IT is not just a matter of course for the rest of the organization, for suppliers and customers; often it is a prerequisite for being able to innovate and transform. In other words: If you don’t get the basics right, you’ll hardly be a credible innovations driver and shaper of future markets.
But what does it mean to get the basics right? A look at the IT situation at typical medium-sized manufacturing firms helps answer the question. Professors Stefan Wengler (Business Administration, Hof University of Applied Sciences) and Ulrich Vossebein (Business Informatics, Technical University of Central Hesse) have examined these together with the head of Kairos business consultants, Gabriele Hildmann, and come to the following conclusion in a series of articles in Informatik Aktuell: "As a result of numerous rounds of automation and process optimization, production is generally at a high level in terms of IT technology, whereas the situation is usually much more analogue in the business administration areas."
This, they write, is due to the fact that the overall process has always been at the center of things in production, while isolated, so-called "island" solutions have been sought and implemented in the other departments – for example, human resources, marketing, sales or procurement. As a result, despite achieving relatively good process efficiency values in those areas, they are not transferable to other departments.
Data, information and knowledge
A key to efficient IT services consists of integrating company infrastructure with applications, which is also key to creating a smooth transition to innovation and transformation. Because integration projects naturally focus on the elements that connect things, i.e. the common denominator. And these, in turn, are undoubtedly found today in the data. Data about the market and the competition, about trends and customer requirements. Data about decisions and their influence, about interactions and transactions. Data on procurement, production, sales and logistics.
Data is only the first step – in a manner of speaking, it is the raw material that needs to be refined into information and, ultimately, knowledge. It is not without reason that (big) data analytics and business intelligence, including the corresponding reporting and visualization capabilities, are considered indispensable ingredients for well-founded business decisions. In short, it is about market and business intelligence in a holistic sense. Detailed transparency of all essential business processes, preferably in real time, creates the prerequisites for developing innovative products and services, bringing them to market maturity, introducing them successfully and asserting them against the competition.
It is more critical than ever for companies to open themselves up and integrate the data and information, capabilities and services of other partners in the ecosystem as well as to build open interfaces to third-party systems. Especially for modern platform business models, this is an indispensable skill that has both technical and cultural requirements. From an IT perspective, the focus here is on the tradeoff between data security and protection on the one hand and user-friendliness and user benefits on the other. Every company needs to strike the right balance, one that fits its business strategy, market and competitive situation as well as regulatory framework and customer requirements.
At the active center
CIOs are thus advancing from a supporting to a shaping role, and they need to set up and adjust their team accordingly. The "Department of the Near Future" is thus created. It is characterized by a pragmatic solutions orientation as well as strategic understanding and customer orientation. Technical expertise alone is no longer enough. He or she must also have a deep understanding of the business, be able to network closely with individual departments, be creative and also be willing to further develop. Lifelong learning is not a hollow phrase, but the essential lever for success for every participant in a knowledge-based economy. Similar to other central functions – Human Resources, Marketing & Communication, Finance or Legal – the IT department is undergoing a transformation of its own while playing a major role in the overall transformation of the company. This can easily become a highly emotional rollercoaster ride. At the active center, so to speak.
Take the organizational structure as an example: Heinz-Walter Grosse and Bernadette Tillmanns-Estorf have proposed a far-reaching change. The CEO and the Director of Human Resources and Communications at the medical technology company B. Braun Melsungen turned the whole company around based on the principle of "Tasks & Teams" – clearly described in their book of the same name.
They began by literally exploding the organizational chart after identifying that corporate fossil as a central problem that paralyzed the joy of change, sustainability and agility and – even more importantly – threatened to reduce the company’s business success, as increased sales automatically translated into new hires. New tasks inevitably led to new departments and organizational chart boxes, which grew almost naturally until they were ready for the next cell division. Synergy effects failed to materialize – which could prove threatening to the company in the long run in view of possible disruptive competitors.
Grosse and Tillmanns-Estorf analyzed what was worth salvaging from the wreckage of the organizational chart. Decisions, motivation, career, leadership, rules, which are naturally required – except that everything now is different, i.e. free of hierarchy, with more appreciation, more transparency and more respect. The innovative capacity also needs to be preserved: "The classic organizational chart clearly defines where innovations are created, in which box the 'innovative capacity’ belongs. It is not considered the job or fundamental attitude of everyone at the company. Innovations tend to be created in closed departments," the authors write. And after cracking open the chart? "Without an organizational chart, it is much easier to work across departments.
Competencies can suddenly be 'mixed', employees who would otherwise be acting strictly according to their ‘silo placement’ suddenly come into contact with other employees, debates can be held without needing to go through ‘divisional management’ – without ‘asking for permission’. Today, employees at B. Braun are increasingly working in so-called "circles" – task-related, overarching teams of three to six people, depending on the task and requirement, with defined goals, agreed timing, with no classic hierarchy, but with principles and instruments for cooperation and decision-making.
Take the example of the workplace: Rigid IT structures with a management geared towards maximum centralized control and homogeneity are only partially suitable for such agile collaboration in ‘breathing’ team constellations of internal and external forces. This already applies to the infrastructure that is required in order to fulfil the expectations of modern working nomads – including people inside the organization. It starts with ‘bring your own device’ and by no means ends with collaboration tools like Slack, Trello et al.
These devices and tools do not in themselves make for a truly collaborative environment. They require a home that supports the daily work routine, communication channels and working modes, and with which the team feels comfortable. This is how the Berlin-based innovation consultants at Dark Horse Innovation outline it. In their joint venture with the designers and architects of raumHOCH, they develop workspaces that make it easier to say goodbye to the beloved (single) office. After all, the average office worker spends less than half of his or her working time in individual and highly concentrated "tunnel work." The other half belongs to social interaction, dialogue, team work and meetings.
"The desk is the VW Golf among working environments. It masters all situations satisfactorily, but you can’t win a race with it." That is how Dark Horse describes the challenge. The VW Golf of IT equipment is probably the desktop computer and the corded telephone. In any case, the department for the near future should definitely start with itself and design its own working environment as an agile field of experimentation – physically and digitally. This will also help in finding and retaining the data-friendly, technology-oriented, innovative and collaborative – at any rate scarce – personnel needed for the transformation and preferably located in the CIO’s sphere of activity..
The demands on "departments of the near future" and their managers continue to grow. The transformative CIO, as McKinsey consultants Anusha Dhasarathy, Isha Gill and Naufal Khan call it, has five key characteristics: First, he or she is a leader who knows the business inside out and takes responsibility for sales; second, an agent of change who can explain the meaning of the transformation as well as the risks and dependencies beyond IT; third, a talent scout who is just as adept at hiring as he/she is at developing existing talent; fourth, a cultural revolutionary who grants autonomy to developers and is exemplary in the way he/she cooperates; fifth, a tech translator who explains the implications of technology for the business model.
Sounds like a superhero. And it is urgently needed, because the road to transformation is still a long way off. In its global IT Survey 2018, McKinsey comes to the conclusion that a over 80% of the people surveyed wanted to bring their companies to the highest transformation levels ("digitally converted" or "fully digital") and only just under 20% already saw themselves at these development levels.
CIOs and their teams – as well as their commercially active colleagues – will find a wealth of ideas, products and solutions at TWENTY2X to help them implement their individual version of the "department of the near future" and thus master the art of developing marketable product and service innovations from the customer’s point of view, without neglecting their core responsibility for efficient IT management. From business management, new tech and new work to security and sourcing, the trade fair offers exhibitors and attendees an ideal platform, as well as a sophisticated program consisting of presentations, best-practice sessions and a multitude of networking opportunities.
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