Bill George on CIO’s
Published on October 26, 2009
Originally posted in CIO Insight on October 26, 2009.
Ask CIOs if they have solid relationships with business leaders, and they’ll likely say, “Yes.” Ask business leaders about their CIOs, and you’ll likely hear a different story. And this disconnect has only increased.
Nor does the apparent easing of the recession mean CIOs can rest easy. Just as no one knew exactly how bad things would get, no one really knows exactly when they will return to normal—or even what normal will look like.
Bill George, the acclaimed former chairman and CEO of Medtronic, professor of management at Harvard Business School, and author of the new book, 7 Lessons for Leading in Crisis, says things won’t ever be the same. What is clear, he says, is that CIOs need to do everything they can to enable the business. That means giving all employees the tools they need to reach customers and to collect and analyze data on their clients.
Part of the battle for CIOs is to communicate IT’s capabilities; but far more important, George says, is to demonstrate that value. George offered a candid look at CIOs and IT from the executive’s viewpoint in a recent conversation with CIO Insight Editor in Chief Brian P. Watson. What follows is an edited, condensed version of that discussion.
CIO INSIGHT: What’s your perception of IT leaders and what they bring to the table in a crisis?
One thing is for sure: When we come out of this crisis, the markets companies are serving are going to look dramatically different. Take retail. Yes, it’s true that everyone’s gone to Wal-Mart because it’s the lowest cost, but large organizations like Niemen Marcus and Saks Fifth Avenue are struggling.
A lot of people are hunkering down, saying, “Let’s just get through this and get back to the good old days of 2006 and 2007.” That’s not going to happen.
Progressive companies are trying to get in front of that. Today, you’ve got to get ahead with IT—there’s no way to get ahead without it. You can’t just afford to have full personal coverage—you have to have great customer information systems and ways for your people and executives to connect with customers, and for customers to connect with you. It’s a lot more than having a good Website—it’s being really interactive and using online tools to do that.
I would think progressive CIOs would be right out in front of that by showing the business value. How can we build market share? How can we build a revenue base? How can we connect with our customers to raise their satisfaction? All of those things are extremely important—not just to be the back-room people figuring out the techie side.
Take a company like Apple. Apple has done an amazing job of connecting people with information. That’s what we want to do at companies. How do we really hook up to our customers with really good information? Everything comes down to human factors. Executives don’t have time to learn all the technical stuff—they just want to be connected. So how do I use IT to get much more connected with my customers?
Is there a deficit in CIOs’ ability to communicate the value of IT to the C-level?
A lot of people talk about how they communicate IT value. I’d rather see them demonstrate the value. I want to see it in my laptop, my iPhone. I want to see that value right in front of me. I want to be so linked up, I want our customer data to be so good.
Airlines are the least customer-friendly companies in the world, yet they have great IT systems. But have they taken the next step? They have great reservation systems, but are they really connecting with me?
Amazon has some of the best customer information systems and database management of any company in the world, and they use that to market. I’ve never met anyone from Amazon, but I do business with them. I do everything online. My wife wants to get a Kindle, and she asks whom she can call. I tell her not to bother calling—just do everything online. Just give me the tools to make me effective.
Another thing that’s important coming out of this crisis is globalization. I want to hook up with my customers all over the globe. How can I connect seamlessly with my customers in Australia? In India? At Medtronic, we had development teams in Minnesota that worked during the day, and teams in India that worked off that cycle. So the [Indian team] uploaded everything when the Americans went home, and when the workers in Minnesota came back the next morning, everything was done. That’s the kind of seamless IT I want to have on a global basis, 24/7.
The third thing is that we’re living in a globally cost-competitive world. One of the first lessons in my book is, “Face Reality, Starting With Yourself.” That’s the reality today.
What are the best ways my company can save money? Honestly, not having as many people. How I do that is through IT productivity. I have fewer salespeople, but they’re more productive because I’m giving them the right tools to work with. Our quality systems need to work so well that we don’t have any rework. I can link up my engineers in 10 different virtual-development locations through such good IT systems that people can work from home. Sometimes we focus so much on security that we lose sight of connectivity and ease of access. We want to make it easy.
These are ways we can use IT to be more competitive. It doesn’t matter if your name is General Motors or General Electric—business has to offer better value to customers than your competitors do. If you can’t, you’ll be out of business.
Do you agree when the business often says IT takes too long and costs too much?
And that they’re too bureaucratic. But rather than warding those off, CIOs need to get out in front of them. They need to be leaders. There are a lot of IT people who are really good implementers, really good executors—but I’m asking them to be my leader.
If you were starting a new company, what qualities would you want in your CIO?
Be engaged with the business. At Medtronic, we wanted our CIO out seeing pacemaker implants, seeing procedures, riding with salespeople. Why is that important for a CIO? Because it helps the CIO understand employees’ lives. You’re there to support them. That’s the life of the business. How do we make it really easy for customers? If a doctor is in surgery and something’s going wrong and he wants to call Medtronic for technical advice, that’s an urgent thing. You’ve got to have a way for the surgeon to get through to a person and not go through a bureaucracy.
If I’ve seen a fault in my 40 years of working with my IT executives, it’s that they don’t engage with the business often enough. They engage with their own—they engage with IT. They have to engage with the head of sales, the head of research, the head of customer support and say, “How can I help you?” That’s the level of engagement I would expect. The CIO should be part of the top executive team, but as a service provider and not just a cost center.
So getting out there and building relationships is the most important thing?
Yes. And then being creative enough to get our company to figure out how to use the existing technologies and new technologies coming along not to take the right risk for IT’s sake, but to get us on the leading edge of changes in the business. If I’m a business executive and I want to blog or get into Twitter, then show me how. Make it easy for me.
The best CIOs seem to understand that, especially in this tough economy. But the business seems to have a different perception.
They can tell—is this person here to help me, or sell me something? Too many CIOs try to sell to the executive team, rather than trying to help them. If CIOs become advocates, they’ll help. If they try to sell you, well, the business has gone through that before.
You can often outsource the execution more efficiently than you can do it yourself, and not have all the fixed costs in your own people, but you can’t outsource the essence. You can’t just bring in a consulting firm to give you a new IT strategy—you have to do that yourself. Then you can outsource. Who cares who runs the data center? It doesn’t really matter. What’s important is controlling the essence.
You’re talking about innovation. That’s been another tough thing for CIOs this year. How should business and IT leaders move from being in the trenches to preparing for the inevitable upturn?
The fifth lesson in the book is, “Never Waste a Good Crisis.” The way you waste it is to say that everybody is going to get a 15 to 20 percent cutback in expenses, so we’ll just hunker down until we get through this and restore our budget. That’s wasting an opportunity.
How do we use the crisis? When people know we have to cut back, how do we use it to transform the company? If you’re in the travel and hospitality business, for example, obviously you’ve been hurt badly. How do you get out in front to become more appealing to your customers?
Lesson No. 7 is, “Go on Offense, Focus on Winning Now.” You need to play to your strengths—the company’s, not just IT’s. How can IT help the company win in the marketplace?
Too many people are like sailors at sea. When there’s a huge squall, they take down the sails and go underground and wait for it to pass. I’m on the board of Exxon-Mobil. Exxon always invests in downturns. When the price of oil goes down, that’s when they invest—and when they make their best investments. But when they come out of the difficult times, they have the refineries up and running and the oil exploration up and running. It’s the same with Intel. Intel has always invested in downturns.
Motorola didn’t, and now they’re out of the semiconductor business, and Intel’s going strong. So think about making the investments. Don’t wait until you come out of it because then it’s too late. You want to put in a new enterprise system or customer-facing system? That takes time. You don’t do that overnight.
Lesson No. 4 is, “Get Ready for the Long Haul.” There’s no short-term, quick fix. You need to have a long-term plan. You have to make the investments. The time to make them is now, when everyone else is in crouch-mode and pulling back. You need to be out in front of the game leading so you can use those investments to your advantage.
Back to the disconnect between what business and IT leaders think about each other. How IT savvy is the current league of business executives?
They’re certainly not IT experts. I think the progressive ones, like John Chambers at Cisco, are really on top of it. The aggressive ones really know how to use the technology. John Lechleiter at Eli Lilly is a research scientist who became CEO. He’s using technology to communicate with people all around the world. He can’t go see those people all the time. What if there’s a crisis? How do you get out and tell people? The progressive executives are using IT to be in touch with people all the time, in real time.
The organization of the future is going to look much more like the Internet than like a military hierarchy. We’re moving steadily away from the hierarchy, and the faster we move, the better. We need to go to more of an Internet-type structure, where there’s not just a central core everything flows out from, but it’s much more interactive between the nodes and the system. That’s the way people are operating: on a 24/7 basis. It’s that kind of world.
I’m also on the board of Target. Target has 400,000 employees, mostly in the U.S. But they have people buying in the Far East and Africa, and they need to be in instant touch with those people. Why? Because they want to get goods moved to market faster. If they can get goods in three weeks and competitors take three months, Target’s going to beat them. They see trends—they see what’s happening and they see where they need to move quickly.
The executives need to be IT savvy to know how it becomes an integral part of their strategy. A lot of IT executives think of their strategy for IT. I don’t think they can have one. It’s really about the company’s strategy to use information for competitive advantage.
So in this Internet-like structure, where do you see the CIO’s opportunity?
Part of it is educating their own people. Senior people in the organization need to be interacting with more junior people that are much more Web-savvy and tech-savvy than they are. You need that pairing up. It’s not a question of having your assistant print up your e-mails. That’s absurd. You have to be out there, you have to have access, and you have to be on top of everything. Good executives are overstretched—IT has to help make them more effective. And they’ll get excited about it when they see that IT really works.
Lesson No. 6 is, “You’re in the Spotlight: Follow Your True North.” The word today is “transparency.” Everything is open. That’s why I say I’m not big on a heavy layer of IT security. That should be hidden from me—I don’t want to have to fool around with that or change my password every 30 days. The IT police come to me and say, “Change your password,” but I can’t keep up with all the passwords.
If Medtronic has a product problem in Argentina, everyone in the world knows about it in two hours. You can’t hide. Things that are said internally go external, and everything said externally is known internally. There’s no sense fighting it—you can’t shut that down, so don’t try.
After 9/11, Rudy Giuliani was there that day. Sometimes you can’t physically be there, so how do you communicate? If you have a fire in a plant in Belgium, how do you communicate? Can you use IT tools? Can you Skype? IT needs to set you up so you can get in touch with the plant manager and say, “I’m there.”
Top CIOs, too, say you can’t hide in a crisis.
In the old days, we said, “Lead, follow or get the heck out of the way.” Well, I’d like to see the IT executive leading me, since I’m not an IT specialist.
What’s the biggest waste of time in business? Air travel, particularly overseas. If I had a meeting with the minister of health in China, I’m going to be there. But I can’t just fly over to China all the time for a two-hour meeting—it takes a week out of my life to go over there. So why can’t we videoconference? Why can’t I use IT to help me with that?
When I led Medtronic, the head of Europe was on our executive committee. I didn’t want him to come to Minneapolis for a meeting every two weeks. I wanted him to be with his customers. So he just would attend the meeting over videoconference. It’s a six-hour time difference for him, but you do it. You feel that touch better with tools like videoconferencing than with picking up a phone. These tools are there, but a lot of people aren’t using them. I don’t know why.
You mentioned your board membership. What sort of attention do CIOs and/or IT get from boards?
You don’t see CIOs as often, but you see their work every day. Goldman Sachs couldn’t survive without these tools. But seeing the impact of that in a global world—knowing exactly what’s going on at all times, having their executives know what’s going on so they don’t have to go to the trading floor—you have to have those tools in your pocket. The companies that are on the leading edge, like Goldman Sachs, see the trends. That’s why they were able to avoid the subprime mortgage crisis: They saw it in early 2007. But if they didn’t have good IT tools, they would have missed it. Other companies were still investing in subprime mortgages 18 months later, and Goldman was out. That’s a big advantage. Timing is everything.
In your teaching pursuits, do you see any interest in students wanting to be a CIO?
The more common thing is that they want to move back and forth. I had that back at Honeywell. I had all the computer systems, telecommunications and everything. It was a way of really getting to know the company in addition to the other responsibilities I had. It’s good for people who want to go into general management to get that experience—and bring that very business-oriented perspective.