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
models.
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
atrophy.
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.