How are CIOs Meeting Evolving CEO Expectations?

Chris Patrick is the global CIO practice leader at executive recruiter Egon Zehnder International (EZI), and co-author with EZI Partner Steve Kelner, of a new online series for cio.com--Your Leadership Portfolio--which examines the key leadership competencies that IT executives must cultivate over the course of their careers to meet the future demands of the role. Patrick sat down with Rick Pastore, managing director of the CIO Executive Council, for a discussion on the evolving role of the CIO, the impact of the worldwide recession, and the progress IT leaders are making in meeting the expectations of the CEO.

Pastore: The CIO position has been evolving into a more strategic, business-facing role over the past several years, moving somewhat away from a primarily internal focus on running the function and being strictly a service provider. But how has the recession affected that evolution. Was it a major setback for CIOs, or just a blip?

Patrick: The inflection point that I'm observing is that 12-to-18 plus months ago, conversations we were having with boards, CEOs and other C-level positions about the CIO function was, not surprisingly, highly cost focused. They were having to manage tighter budgets, and the overriding priorities we were hearing was being able to do more with less, helping to drive efficiency, not just cost efficiency, but supply-chain efficiency and any other areas of the business in which the IT function can help drive out costs and allow companies to do it all better, faster, cheaper. There was an overriding umbrella perspective from the C leadership engaging us to say, "We are not in a position to be placing huge bets on technology. We've made investments in the past and the focus now is to make sure are we getting everything we can out of those investments. And where we do place new investments, they're going to be smaller and they have to be more impactful, the return has got to be sooner." They were focused on what can you do to deliver results in the next quarter or the next two quarters.

Pastore: So the recession was driving your clients to ask for CIO candidates who specialized in costs and operations and whose focus was more tactical?

Patrick: I don't know if I'd go so far to say it was driving the need, but it was certainly influencing the priorities. But that doesn't necessarily equate to a nonstrategic CIO. The best CIOs are those that can operate from the 50,000 to five-foot level, and know when they need to be tactical and cost-focused, and when they can be more strategic and transformational. So it wasn't one versus the other, but I'd say there was much more of an emphasis on the near-term. The CEO's horizon is six months, not six years. And they need to be able to drive results and impact and have programs and projects that have much more rapid.

Pastore: And now you are seeing a shift away from that short horizon over the last six months?

Patrick: Yes, it's not that people are stepping away from that because, at the end of the day, cost always matters. But I think you're starting to see the pendulum, if you will, starting to swing back towards, "Let's think about longer term strategic opportunities while not taking our eye off the ball on cost and efficiency." The good CIOs are effective at doing both.

Pastore: Right, these are the IT leaders who can be business strategists, focus externally on the customer, talk about the market, and then if needed, fix a tactical crisis in the IT function. But you don't see a lot of candidates who have that full range of leadership competency.

Patrick: Yes, as we've talked about, it's at that strategic level where this function has to continue to evolve and develop capabilities because CIOs have, traditionally, been good at the tactical--managing costs. That's because this function evolved from the CFO's organization; it was a cost center, it was something that in some cases was considered a necessary evil. But the enlightened CEOs, like the ones you are interviewing for CIO's June 15 cover story, are seeing that there's much more that the CIO can do than just make the trains run faster and more efficiently. A vast majority of our Fortune 500 CEO clients now state a critical need for a strategic IT leader.

Pastore: When you're working with CEOs and what they want in the CIO, do you ask them questions on how they are going to personally interact with the CIO? Do you get into how they partner together?

Patrick: Yes, absolutely. The dialog that we want to have with the CEO is what role does this person play on your leadership team. You can position that question as one, what are you looking for, and two, what's been missing in the past? What are the symptoms that you're trying to solve for? The answers often will indicate that the CEO had been working with a CIO that really just was never able to develop a strong working relationship with their business unit leadership peers, and in the absence of that, you'll often see these business unit leaders going off on their own for IT. The CEO will say, "I've got lines of business or various divisions that have built up their own IT infrastructure because they didn't feel they were getting the support from a centralized corporate function." And that is often a symptom of somebody who either wasn't effective at engaging those leaders in what IT can and should be doing in a business context.

Pastore: The supply of strategy-ready or strategy-capable CIOs, how is that changing?

Patrick: It's an accepted, if you will, context within the function. I don't think there are many CIOs out there that don't recognize the need and agree that [the ability to focus on business strategy and external customers and markets] are a key skill to develop. But it's still a developing skill. The CIO is a relatively new functional role, compared to the others in the C-suite, and it's evolving. The skill sets are still evolving to catch up, in some cases, to the need. And that's going to take time and experience. There's a need to develop it early; it's not something that somebody picks up in the latter part of their career, but it should be built into the long-term development.

Pastore: How so?

Patrick: As VPs of IT are coming up through the function, they're getting more exposure to the business. They're getting an ability to really learn, understand, and interact with those business peers in a much more strategic context as opposed to being the supplier of technology. And that's just going to take time, and until more time goes by, the supply will be smaller than the demand. But I think there's an encouraging trend. Anecdotal evidence of those that I've talked to suggests there might be one to two out of five CIOs who can check all those strategic skills boxes. But others on the CIO track are clearly headed in the right direction. I think they recognize what they need to do and will get there over time.

Pastore: That's evident in CIO magazine's research. The State of the CIO survey showed that for 2010, CIOs strongly wanted to focus external customers, achieving business results and identifying commercial opportunities for the company, which makes sense in the context of a reviving economy, but it would be great if a year from now, we could say that they delivered on that.

Patrick: Yes, the key is both having the opportunity, the environment and the platform, and then being able to actually deliver on that opportunity.

Chris Patrick can be reached at chris.patrick@ezi.net. Rick Pastore can be reached at rpastore@cio.com.