“The job of a CIO is understanding how technology of all forms, anything with a chip in it, could transform his or her industry and future,” says Gartner Fellow and author Mark Raskino.
Mark Raskino is a distinguished analyst and Gartner Fellow in executive leadership and innovation research.
Raskino works primarily with CIOs and CEOs. He covers business and technology trends and their implications for business strategy and IT management.
His research and publications include digital business, Gartner’s Annual CEO Survey, Annual CIO Resolutions and Annual CEO Resolutions, as well as the 2008 Harvard Press book Mastering the Hype Cycle.
His latest book with Graham Waller Digital to the Core: Remastering Leadership for Your Industry, Your Enterprise and Yourself draws on interviews with more than 35 C-level executives in global companies and government organisations, as well as Gartner’s board of directors, its CEO and CIO survey data.
What are the tenets of Digital to the Core, isn’t it the case that every business is a digital business today?
It isn’t, and that is the point. It is interesting to compare and contrast the arrival of digital officers in recent times with the heads of e-business you would have seen at the turn of the millennium, and there are parts of that story in the book. But if you take the very longest arc possible all the way to when computers turned up in businesses circa 1958, then you roll forward to the microprocessor, which came in 1968, our whole lives have been through the information age.
We don’t know how long the information age is but let’s imagine that its 68 or 100 years, one thing we can be pretty confident about is that we are in the second half.
‘It is only really since the internet came along that we can say seriously that computing has been used to win revenue’
– MARK RASKINO, GARTNER
The first half, for corporations it was characterised by the use of computers to manage the costs of their business. You can argue that there were other things going on and I used to work for an airline and we would argue that tickets were distributed by computers and networks from 1970 onwards, but for the most part, in most businesses, the predominant purpose of computers in those businesses was to control the administrative costs of the business.
If you simplify a business to two things – controlling costs and winning customers, use of computers was predominantly for the controlling costs part of the business.
It is only really since the internet came along that we can say seriously that computing has been used to win revenue.
But there are other tensions as well. We are now into winning revenue whether it is through e-commerce or digital marketing and that means we need risk aggression.
We are supposed to take risks with technology, because that’s what you do as an entrepreneur; you win customers by taking risks. But all of the management philosophy around IT management built for the previous 30 years was about minimising risk because the predominant use of computers was for controlling the cost of the business.
‘A lot of CIOs were hard-wired to keep it all steady and quiet – ‘steady as she goes, son, don’t cost too much’. Now you want rockstars!’
– MARK RASKINO. GARTNER
So all the management wisdom needs to be rebuilt and reinvented. And particularly we are suffering from the effects of the last phase of the first half –by about 1990 we said ‘we have way too many programmers in this business, can someone package the software for us’?
Through the 1990s, it all became packaged, but if you look at that first decade of this century, the millennium through to the financial crisis, we were locking it all down, just saying this is standardised, must be outsourced, offshored, low rates of change.
We actually created IT competencies and leadership built for a perfect steady state, not for radical change.
So, are you suggesting that CIOs aren’t necessarily equipped for the rapid change expected in the digital age?
We are now going through a schism where actually what we need is technology competency inside our corporations that is inventive, creative, agenda-setting, industry-revolutionising, and we don’t have that in our IT departments because we didn’t build it in and that’s where the schism comes.
That why you get this problem for CIOs. A lot of CIOs were hard-wired to keep it all steady and quiet – ‘steady as she goes, son, don’t cost too much’. Now you want rockstars! Well, guess what, they’re the same humans with the same schooling, background psychometric etc, so there is churn in the role.
Does this mean the beginning of the end for the traditional CIO? Is this the time of the renaissance CIO?
We believe that the CIO role will re-emerge and be rebuilt. There aren’t many you can point to that are in that position at the moment, but if there is one in Europe that I would point to as the archetype of the renaissance CIO it would Klas Bendrik, the CIO of Volvo, who exhibits all the characteristics essential of a digital officer and a CIO combined.
‘If the future of the company is to do with information technology or digital then the lead technologist of the company should be the person who sets the agenda’
– MARK RASKINO, GARTNER
He is someone you can find on YouTube discussing the future of cars, whereas most conventional CIOs – you’ve tried to interview them, it’s not easy – aren’t allowed to say anything.
What? You are a C-level executive and you are not allowed to represent your company even on IT, which is your subject, without permission from the comms department?
If the future of the company is to do with information technology or digital then the lead technologist of the company should be the person who sets the agenda, who looks for the vision, who is redeveloping that future and is able to talk about it, and so we are going through this huge macro rotation of everything.
Aren’t CEOs culpable too? Shouldn’t they be clearing the way ahead for CIOs to digitally transform their enterprises?
Researching the book, I interviewed Jeffrey Immelt, the chief executive of GE about it. He will acknowledge to people that he was the chief executive in 2000 and in that first decade he was the leader of a big company saying “outsource it, offshore it”. Now he has made the future of GE about the industrial internet and he has had to do a 180-degree mea culpa to his CIOs, but is saying ‘let’s move forward’.
So, how should CIOs get customer value outcomes and innovation using the force of computing?
You don’t start with process, you start with data.
There has been an inversion where a lot of corporate IT would naturally go to the process part first and do the data model second, but that’s not the way Google thinks.
Google thinks ‘what new kinds of data exists in the world today and how do I exploit it? What kind of data will exist soon and what can we do with that’?
If we get involved with smart self-driving vehicles and we want to make sure the world is full of cars covered in LIDAR sensors that are scanning the streetscapes and creating huge volumetric 3D models, what can the Google monster do with this data?
They think through the data as the opportunity and then use the process to build, but it is an inversion; one is primary, one is secondary.
With such big shifts of thinking going on, is it really surprising that people get tripped up?
The point about Digital to the Core – what justifies that title – is if you look at the internet period from 1994 onwards and look backwards at what most corporations and industries have really done with that, they have taken the business of the past and amplified or accelerated it using digital, but they haven’t reinvented it.
That’s a bit like the first cars pulled horseless carriages because people were using the internal combustion engine to put the horse-drawn economy on steroids, but, eventually, we learnt how to reinvent the economy based on the existence of the internal combustion engine.
‘Cars are being reinvented; it is clear and obvious. It will soon be car-as-a-service. GM takes a $500m stake in Lyft, that’s a serious strategy’
– MARK RASKINO, GARTNER
Think about things like two cars per family, drive-thru, suburbia, Walmart, supply chains, all of this is a product of re-inventing society around what the internal combustion engine can do.
Now we are getting to the phase of reinventing our products and services around what the internet can do rather than just supporting or enabling the old products and services.
What that means is we have digital on the outside – supply chain management, e-commerce, digital marketing and investor management websites – but now we have to reinvent the core, the product.
Cars are being reinvented; it is clear and obvious. It will soon be car-as-a-service. GM takes a $500m stake in Lyft, that’s a serious strategy.
So it’s getting to the point where it will be car-as-a-service, we mightn’t even own cars?
Right now, you could argue that 30pc of anything any buyer is buying in a car is digital. It’s less about how many valves the engine has and more about screen size for GPS, auto-sensing-braking on the highway, rear video camera, HUD, media integration. These are all digital features and so we are already digitalising that product.
Think about products like the electronic cigarette, a few years ago the big thing was electronic versions of books or music. Now you have electronic cigarettes.
If you think about it, just in the last two to three years, the Fitbit-type things are disappearing because that functionality is being built into watches. Swiss watch manufacturers are now building it in. So, essentially, even the watch is being reinvented as a superior digital product.
We call that digital remastering – digitally enhancing physical products radically.
And that is taking it to the core, because if you look at something like Ford, which we cite in the book, it has said ‘we are not a car company, we are a mass mobility company. Henry Ford put the world on wheels, our job is to do that but using today’s stuff’.”
Ford may not be the first people with a self-driving vehicle but its franchise is mass mobility in the context of data and technology.
We are also seeing this happening in banking with blockchain.
Are CIOs being brought into this conversation or do they have to fight for their survival?
I could be lynched for this, but I honestly think they are not even trying to fight their ground. There are some, but they are in the minority, who are really involved in this level of change.
The job is no longer just about implementing SLAs, outsourcing agreements and keeping the lights on.
‘Digital is much, much deeper than even what the marketing department can take control of’
– MARK RASKINO, GARTNER
The job of a CIO is understanding how technology of all forms, anything with a chip in it, could transform his or her industry and future.
A good example could be about drones. A lot of CIOs look at you and say ‘what has that to do with me’? Well, because it’s a machine, it’s a sensor platform, its entire purpose is to sense and scan the world around it for some kind of data collection that can be analysed. They are used in the electricity industry, in oil and gas.
It is unfortunate, but true, but if you look at the history of the CIO, every time a new technology came along they were in denial about it while people were getting on with it, from the PC onwards.
Honestly, there is a small percentage of CIOs who are ahead of the game trying to introduce these ideas and cause their companies to move in a different direction. But that’s got to be 10pc to 20pc
Is it fear, boardroom pressure or are they just conservative?
There are some valid excuses, like when digital has been digital marketing, but that’s fair enough because it was part of the digital marketing department.
But digital is not just digital marketing. Digital is much, much deeper than even what the marketing department can take control of.
It is not marketers who invented the electronic cigarette, it is not marketers who invented the drone and the idea that marketers and agencies own digital is false. They own digital marketing but there are limits to that.
CIOs need to be leading and taking digital to the core to the extent that it is a substantial endeavour requiring support from the CEO and the board of directors .
Walmart in the last year or two has been investing heavily in e-commerce
A lot of digital is about catch-up with e-business that wasn’t really done properly, and the next level is taking it to the core, reinventing the core product and reinventing the industry.