META Report: Turnaround CIOs: Resuscitating IT Organizations

Situation Analysis: All IT executives must eventually face and resolve

dysfunctional situations. There are, however, few situations where management

know-how can create tremendous value, satisfy customers, and improve employee

performance other than through turnaround. Successful CIOs employ

well-structured processes to rescue poorly performing IT organizations.

One of the prime reasons outside CIOs are hired is to turn around dysfunctional

IT organizations by fixing, improving, or adding discipline. Dysfunction is

especially contagious for companies in decline. Poor morale breeds feeble

performance, negative energy, lost momentum, user dissatisfaction, wasteful

executive micromanagement, declining expectations, mistrust, and inferiority

throughout the enterprise.

Our research indicates that, at any given time, nearly 50% of CIOs are in

turnaround situations, struggling to establish the trust needed to repair,

recover, and restore ITO performances. Currently, less than 10% of Global 2000

CIOs have established processes to mature ITO operations and turn around poorly

performing ITOs. By 2004, 15% of G2000 CIOs will have such turnaround processes

to produce operational excellence – enabling the ITO to run at maximum

efficiency. By 2008, 25% of CIOs will master personalized turnaround processes

to parachute into poorly performing ITOs, or smoothly transform core IT

competencies to match radically changing business plans, strategies, and


Small and medium businesses should hire turnaround CIOs to first fix their

broken IT operations. As firms grow rapidly, inherited structures, processes,

and organizations are often not successful, applicable, or capable in the next

(and larger) life cycle of operations, markets, requirements, and customers.

Management gurus have referred to these situations as inflection points, big

leaps, and chasms.

Interviews with successful turnaround CIOs reveal key change management

activities. In addition to having a clear, well-understood, and personalized

transformational process, experienced CIOs employ value management processes to

reinforce the value of IT, project management processes to initiate change, and

human capital management processes to unlock employee energy and enthusiasm. In

applying a transformational process, fast-acting CIOs specifically focus on the

following areas:

Vision: Turnaround objectives and stretch targets should be

enormously dramatic to inspire and motivate. Many CIOs establish visions early

(on day one) to use the “Everest Syndrome” – creating a passionate drive among

employees that they are embarking on an endeavor that will demand their utmost.

CIOs must persuade employees to take action and go beyond the ordinary, as

normal operations are not meeting business expectations and myopic actions

reinforce credibility death spirals.

CIOs perform visionary due diligence by interviewing superiors, peers, and

subordinates. CIOs hired from outside the corporation should perform this

analysis while interviewing. Reviews should also be performed on previous

consulting studies for deficiencies and easily accomplished value opportunities

(low-hanging fruit). At minimum, this vision should coincide with CEO

objectives to establish basic IT credibility.

Plan: Good plans cover communicating IT value (inform), maturing

operations (perform), finishing in-process projects and key initiatives

(transform), and establishing process, structure, governance, and human capital

management (resource management). Knowledgeable CIOs quickly recruit an IT

executive team or arrive with one. Many CIOs follow a best practice of bringing

with them at least a trusted lieutenant and administrative assistant. A key

part of every turnaround CIO is to unlock the power of the existing senior and

middle management teams. In 66% of turnaround situations we investigated, much

of the know-how, insight, and proven practices were locked up in the current

staff members’ minds. Experienced CIOs have methods to unlock and involve the

best of the indigenous staff.

Inform: Successful CIOs communicate constantly and comprehensively.

Business often does not fully understand the value of IT and the ITO. CIOs

apply value management processes to communicate the values of information,

technology, and the ITO. Unlike growth CIOs who already have dependable,

repeatable, and mature operations, turnaround CIOs must boost operations

quality while addressing augmentation. To do both well, CIOs must communicate

progress frequently, concisely, and in many forms, including portfolio

management. Now executing his third turnaround, one CIO’s mantra is “gentle

persuasion, persistently applied.”

Perform: Crucial IT basics must be mastered, made repeatable,

regular, and of quality. Core IT operations must be quickly understood to

perform multidimensional gap analysis and set performance objectives.

Operationally focused CIOs have detailed objectives for the 10-, 30-, 60-,

120-, and 180-day milestones, and every 60 days thereafter. Tactically, the key

operations of the largest two lines of business and those of the enterprise (to

build CEO and CFO support) are locked down, baselined, and put on a continuous

improvement process. Results must be produced, or the ITO will continue to


Experienced CIOs build their baseline processes on formal methods (e.g., COBIT,

PMBOK, IEEE, AMA). They do not necessarily adopt the entire methodology at the

start. Having some initial imperfections causes a maturing ITO to refine,

adopt, and grow processes within its IT and business alignment contexts. This

renewal strategy creates a speedy continuing improvement culture that applies

to other IT processes.

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Transform: One or two major initiatives must be executed during a

turnaround’s first year to ensure CIO longevity. Poor IT performance typically

masks long-simmering business frustrations. CIOs must determine what IT

transformations are needed to enable business growth and crisply report

progress on these initiatives monthly. Even if the LOBs appear content, smart

CIOs practice relationship management, train leaders to handle greater

ambiguity, and transform basic operations to operationally excellent ones.

Maintaining mediocre performance is not a healthy prescription for tenure.

Resource management: While good CIOs have excellent people skills to

manage change, world-class turnaround CIOs are masters at creating

collaborative cultures and motivating employees to perform. Infrastructure,

project management, and value management are put into place to supplement

change and reinforce the informing, performing, and transformingactivities.

Along with relationship and value management processes for tightly integrated

business/IT alignment, successful turnaround CIOs possess several fundamental

characteristics. They are proactive risk-takers, effective communicators, and

passionate enablers. They employ master plans that embrace specific high-impact

initiatives, strong CEO backing, and discretionary projects that build teams.

Because both good relationship management and technical architecture (reducing

system complexity) are necessary for successful turnarounds, CIOs can come from

either LOBs or ITOs.