How IT and the Role of the CIO is Changing in the Era of Networked Organizations

As I’ve examined the case examples below, and talked with many top CIOs about how they were operating their departments over the last several years, it’s become clear that the contemporary IT organization — at least ones that are successfully leading their organizations into the future — is now wielding a new kind of power.

I don’t mean power in the traditional, hierarchical sense through departmental mandate, titles, and the org chart. In fact, those don’t seem to mean nearly as much as they used to, as I hear more and more concerns about the growth of shadow IT and the lines of business increasingly going their own way with their budgets, all with minimal formal IT involvement.

Yet, looked at another way, these very trends — worrisome as they should be for most CIOs — might actually represent vital asset pools and change capacity that we could actually tap into and guide, as Red Hat CIO Lee Congdon strongly suggests.

Instead, I mean power in the sense of genuine, highly effective influence through trusted collaboration, proactive enablement, orchestration of bottom-up change agency, and new forms of digital leadership. We know that as our organizations update how they operate in today’s digital world, which has fundamentally different rules and highly effective new ways of working, the way we manage and achieve large-scale group outcomes is by leading through new networked models.

In other words, moving from inefficient hierarchies to self-organizing communities to deliver IT.

The need to greatly augment our IT ‘metabolism’

Some would say that grassroots models of business change have always been with us. They would be right in a strictly literal sense, as the actual means and methods are different now. In my analysis this is clearly a new phenomenon in in terms of how new forms of influence are actually employed, how easily they can be scaled, how much fewer resources are required to marshal change, and how constituents can be cultivated, shaped, and self-organized more rapidly than ever before.

In the era of mass technology proliferation, with millions of new apps and billions of always connected devices and customers, the IT department in many organizations has become a tiny and badly outnumbered island of routine automation and application delivery. We’ve learned that such a small capability can’t possibly keep up with today’s truly vast digital change.

IT has also long been the primary guardian of data and infrastructure, along with its collective operational continuity and governance. Together all of these functions, given the nearly flat increases — or even declines — in IT spending for 2015 in a time of the all-time greatest amount of tech change, tend to wag the dog, making it very hard to focus on what IT needs now most to do: Lead the company through the increasingly urgent generational imperative for digital transformation and innovation.

Related: Is it IT’s last chance to lead digital transformation?

Blazing a new IT trail: Internal competition and change agency

Recently we’ve begun to see CIOs, and this includes CTOs with the same responsibilities, work with their organizations a very different way. We started to see it when Graham Holding’s Yuvi Kochar willingly decided to compete as an ordinary — albeit a highly informed, invested, and aligned — service provider to his own stakeholders using a lightweight and highly maneuverable cloud portfolio of solutions, instead of an iron-fisted controller of corporate technology pushing aging and difficult-to-maintain legacy on-premises systems:

As a result, I have structured my corporate technology team to be a service provider to our businesses. To ensure flexibility and agility required by our M&A strategy, I am pursuing a 100 percent SaaS technology portfolio. We acquire SaaS services, value add them with high-caliber functional support and project management and offer them as a service to the primarily functional teams at our businesses. We keep overhead costs to a minimum. Our businesses prioritize the agenda for our services by paying only for the ones they want and use.

It also happened when David Bray, the highly-respected and effective CIO of the FCC, needed to overhaul an increasingly complex technology landscape with antiquated applications. Bray’s open approach to the FCC’s IT strategy ended up with him listening to and then backing local change agents closer to the situation who suggested their own solutions, which ultimately led to considerably cost savings, faster deployment, and lower maintenance overhead. It wasn’t easy however, as this is not the way technology bureaucracies — especially in the public sector — have traditionally sourced ideas and direction. It was an struggle at first to work this way, says Bray:

There were a lot of skeptics to this new approach. Several who wanted to not make the change or even wanted to follow the much more expensive approach. My role was digital diplomat and ‘human flak jacket’ to help deal with any friction because this was a new way of doing things. With the SaaS approach, the data was not going to be kept onsite. We would be leveraging code and security provided by a cloud-based vendor. And in the end, it came together.

There are similar efforts in the queue with the Commission’s change agents for 2015. Working together, they demonstrate daily that positive change agents can transform how the mission and technology of the FCC best serve the public.

From this, and the stories below and other sources, we can begin to piece together a new mindset for modern IT and what I’ve previously called the New CIO Mandate:

Here are other essential stories of CIOs realizing IT in new, more decentralized, collaborative, and bottom-up ways:

• AstraZeneca. CIO David Smoley remade IT at the pharmaceutical giant to be a learning and collaborative organization focused on the customer and technical leadership, he recommends, “that, in addition to embracing technology, they better understand the business, focus on behavior, be bold, and build their networks. People rely less on curated information, he explained, and more on networking and learning what other businesses are doing.
• Houghton Mifflin Harcourt. The incoming CIO Brook Coangelo had to rebuild the entire IT brand from the ground up. Central to this was including internal customers closely in the process of technology change, often taking their lead, using an internal culture he calls Nimble.
• Etisalat. Francisco Salcedo, senior vice president of Digital Services, at the telecommunications firm reports they have begun to “provide IT services within the organisation in new ways as opposed to traditional methods, and become a business growth enabler, rather than a bottleneck.” Key to this process: “Focus on adding value to the business, while leveraging IT expertise of partners to support business experts in generating new revenue streamlines.”
• IBM. New IBM CIO Jeff Smith says that for him, “clarity is more important than certainty, course correction is more important than perfection, self-directed teams work better than command and control, and innovation is for everyone, not just the select few.” How does he enable next-gen IT? One key way: Smith created an internal Kickstarter-like crowdsourcing platform called ifundIT. With it, anyone can formulate a project or problem that needs to be solved, and raise internal funding to get it accomplish. I think this is a terrific example of how to use internal networks — social and otherwise — to rapidly engage, then actively enlist, change champions and supporters.

All of this certainly represents considerable and difficult changes for many IT organizations, yet the benefits are clear: A rate of internal change that more properly matches today’s operating environment. But there will be bumps, as with what Tony Hsieh has dealt with at Zappos in fundamentally remaking the organization into a holacracy — a somewhat comparable change to what is described here, but org-wide, well beyond technology — some creative destruction is almost inevitable.

However, as with almost everything with technology change and transformation, the CIO has an absolutely key role to play today, and can be a leader or a follower as the business has to move now and seize opportunity in today’s challenging markets. As Adobe CIO Gerri Flickinger recently said, we are entering a new golden age of IT, if you’re ready to move to the next level.

Additional Reading:

Going Beyond ‘Bolt-On’ Digital Transformation

Closing the gap between executives and digital transformation