What Your CEO Wants...
A three part success series written for the Phoenix CEO-CFO Group
by Jackie Bassett, CEO of BT Industrials, Inc.
The average tenure of a Global 500 CEO is 3 years. Digitalization has just met globalization and your CEO is running out of time. He needs you to help him deliver measurable business results. He needs new international customers. He needs new and differentiating revenue sources.
He needs to deliver what customers want, when they want it and how they want it - ahead of the competition. Results like that will only come from game-changing innovation. Delivery of that level of innovation at the pace of this global economy will only come from technology.
Yet a recent article in CFO magazine reported an eye-opening trend. CEOs are taking the tech reins away from CFOs. The article shared a Forrester report claiming that out of 503 CIOs 34 percent reported directly to the CEO.
http://tinyurl.com/CFO-com-Article
This report showed that CIOs who reported to the CEO had the highest IT budgets as a percentage of revenue. While that's great news for product vendors who will now know to focus their sales efforts on marketing to companies whose CIO is a direct report to the CEO, how does this new reporting structure impact the financial executive?
Does this trend mean that CEOs believe just spending a lot of money on technology will increase corporate revenues? There's nothing in this particular survey that would confirm or deny that conclusion.
How can a big IT budget possibly improve corporate performance when there are ample surveys available that consistently document that 70% of most IT budgets are spent on pure maintenance of the technology itself? There's certainly no innovation there.
Why are CEOs looking to take the tech reins from CFOs?
Two reasons why CEOs are looking to take the tech reins from CFOs can be found right in the report itself and I hear this level of thinking from CEOs across the globe.
First, those CIOs who are not direct reports to the CEO reported that the largest amount of their time was spent on reducing costs.
CEOs understand that costs are a decision variable in any investment decision and that cost reduction can improve margins. But they also understand that no company has ever experienced sustainable, exponential revenue growth by having their top executives spend most of their time reducing costs.
Cost reduction does not drive new and differentiating revenue sources. Cost reduction does not win new international customers. A company can only reduce costs - even by 90%, once. Then what? A focus on cost reduction is not what your CEO wants from you as a strategic partner in the business.
Second, CIOs who reported to the finance chief said they had the smallest budgets as a percentage of revenue, compared to those who reported to other executives, and that their companies were least focused on improving their businesses with new technology.
This survey reports that while 34% of CEOs do focus on improving their business with new technology, 66% of CEOs don't.
So are the latter CEOs looking to improve their business - or not? If they are, how are they delivering what customers want, how they want it and when they want it?
How are they successfully competing in an increasingly dynamic market? How are they able to gain visibility, able to manage change and are they accurately anticipating customer demand shifts ahead of the competition?
Or are they losing business to those CEOs who are focused on improving their businesses with new technology?
Here's another eye-opening statistic. A recent survey of CEOs of the top 100 most innovative companies showed 95% of these CEOs have their CIO as a direct report!
"Technologies are just a vehicle to respond to needs and come up with absolutely brilliant solutions and applications. It's about connecting with the world and working with the right partners."
Rudy Provoost CEO, Philips Lighting
CFO Leadership and Technology Innovation:
So how can you deliver what your CEO wants? It's about leadership and technology innovation. No amount of technology can fix a broken process.
Collaborate! Collaborate! Collaborate!
Another survey of over 700 global CEOs reported lack of collaboration as a key factor inhibiting the growth of their companies. Compare your own list of the top 3 challenges your company faces that you believe are inhibiting the growth of your company what the other line of business owners (which include key customers and partners) are saying they are.
Make certain you identify, then correct broken processes, first before you add more new technology to the fray. Or you may need to invest in a very specific technology to diagnose the source of the problem more accurately.
"CEOs stated that internal inhibitors were more significant than external hurdles. In terms of how to drive innovation, the study found that 76% of CEOs ranked business partner and customer collaboration as top sources for new ideas. This greatly contrasts with internal R&D, which ranked eighth as a source for new ideas."
2007 IBM Global CEO Survey
Take control of your existing IT investments.
Look at which IT investments missed expectations and reconfirm that those expectations are still aligned with what your company's customers are looking for.
If they are, investigate the many ways you can optimize the original investment - a process that includes analyzing which original assumptions about each investment were off-track.
If a particular IT investment is not aligned with what your customers want either because it wasn't aligned from the very beginning or the market has since shifted, then take a leadership role and kill the project.
Be Strategic, and Do It In 90 Days!
Financial statements are lagging indicators and are no longer accurate predictors of future success. Forecasts too, driven by assumptions made based on historical patterns of behaviors in a world that has changed more in the last 10 years than it has in the entire last century, are also proving to be unreliable strategic planning tools.
It's the ultimate irony that we are drowning in data yet we continue to struggle with the lack of visibility into the myriad of disruptive changes that are happening within entire industries.
Strategic planning success at the speed of change can only be achieved by leveraging technology. The right technology can help a company anticipate market shifts ahead of the competition, identify and respond to rapidly shifting customer demands and manage the unprecedented level of change that is necessary to compete.
Next: Take The Innovation Challenge!
Here is a link to the 2008 list of Most Innovative Companies by Industry (provided by Business Week)
http://tinyurl.com/Most-Innovative-Companies
Choose which company matches the industry your company fits best in and match your financials with theirs. Think about how your own company compares. What needs to happen so your company can be on this list?
Share with your peers what individual successes you are having that are moving your company closer toward getting on the list of most innovative companies.
In Part Two of this series, entitled "Turning Problems Into Profits" we will share in greater detail actual cases and specific actions leading innovators are taking to deliver What Your CEO Wants...
Jackie is the CEO of BT Industrials which is a strategic management and technology consulting firm providing collaborative management consulting services to create value innovation. The company works with Board of Directors, CEOs, CFOs and CIOs to integrate technology into business strategy as a competitive advantage - turning problems into profits.www.btind.com. She can be reached at: jackieb@btind.com
This article was taken from the Newsletter at www.PhoenixCEOCFO.com with persmission.
Michael Swiszcz, President - Phoenix CEO-CFO Group & Branch Manager - Ledgent
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