From Tactical to Strategic: Understanding Industry is Key

By Allen Bernard

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As most of you know from first hand experience the CIO's job is changing; perhaps more rapidly and more radically than any other executive's job … ever. Like the PC, which spawned a revolution in the way the world works and communicates, the technology supporting businesses the world over has dramatically transformed the way companies work and communicate. At the helm of this change is the CIO.


The "old timers" remember when running IT was all about interconnectivity and bandwidth, and the limits the lack of these two things imposed on IT's ability to impact business much beyond process and productivity improvements. Today, of course, much has changed.


While most of these infrastructure layers are still in place (nothing in IT really ever goes away) there are yet again many more newer layers stacked on top of the old. But these newer layers, with a little cajoling and some elbow grease on the part of IT, do interact and play well together. This has enabled IT to support the business in new, truly innovative ways by connecting with and connecting to customers, suppliers, partners and vendors in ways never before imagined.


But, like all new and disruptive changes, these take time and often happen in fits and starts. IT today, and therefore the CIO, are in the midst of this change trying to orchestrate a bevy of often conflicting technologies while balancing the business metrics of cost and risk. If this is not enough, today's most successful CIOs understand that IT is not longer about IT, it is about business.


To be successful, therefore, today's CIOs must be chameleons. They must, on the one hand, be technologically savvy so they know the art of the possible, while, on the other, they must be deeply knowledgeable about the industry in which they find themselves if they are to have impact as innovators—something many businesses are demanding of them today.


To get a better understanding of these changes and where we are today on the timeline, CIOUpdate is continuing its series of Q&As with CIOs that are doing their best to juggle all of these changes and still have a positive impact as innovators and businesspeople, not just technologists.


In the beginning of April, I got Century Insurance CIO Doug Bond on the phone to talk about all of this and how, as the CIO of $260M specialty lines insurance carrier in the midst of merger, he is coping. What I found out wasn't so much surprising as enlightening.


At the time of his hiring in 2005, Bond had been a consulting at Century on their business intelligence initiatives. He liked the people he came into contact and liked management's view of the role technology could play in expanding their business. When it came time to sit down and talk, Bond made sure they understood two things: having worked in the industry since the 1980s he knew a lot about the business and he was not at all interested in being an order taker.


They agreed. They were looking for someone just like him. Someone who could take a "seat at the table" (to use an overworked expression) and participate in the strategic business decisions that had to made if the company was to continue growing. Bond was able to do this because, early in his career, he picked an industry to work in as an IT professional. Not the other way around. Knowledge of technology was table stakes. Knowing the insurance industry is what made the difference and positioned Bond to gain equal status as a C-suite executive.


"(Your knowledge) has to industry-specific," said Bond. "It's not just business in general. I think one of the things that has benefited me here is being able to understand the industry … to the point that (the powers that be) recognize you know what you are talking about and involve you in those discussions.


"I've been with a lot of IT when I was doing consulting where that wasn't the case. And I think to a large extent, when you have those executive staff meetings and if you're just sitting there and absorbing and listening, those are the kind of things that lead to what you read a lot about today where the CIO is reporting to the CFO. You're kind of minimalized in terms of 'Well, if you don't really understand the business you can't really help us in terms constructing strategy and constructing solutions that are going to make us better.'"

As more than one CEO has explained to him: "If you're not an active participant in talking about how you can improve the business; how you can make yourself more competitive as a business through IT; then you probably

have better things to do than just sit in those meetings."


And this is when the enlightenment came: Without a deep understanding of the industry in which you find yourself, regardless of how smart you are or how many certifications you have or how many MBA's you hold, you will never had the right kind of knowledge to become a strategic member of the executive committee.


Company vs. Industry


The business knowledge most CIOs possess today is company specific. They know, perhaps better than anyone else in the business, how the company actually runs. How things get done. And this is extremely important knowledge to possess. But it is tactical knowledge. No strategic knowledge because you can't use much of it to understand how your company relates to the wider industry it is in.


This isn't to say you aren't a good CIO if you do not possess deep industry knowledge. Far from it. But going forward, it is industry knowledge, not just technical know-how that will separate the CIOs who make an impact on the top and bottom lines; who will be viewed as leaders in their own right and who can help move their companies in the directions they want to go—not just facilitate that movement with better technology as most CIOs do today.


"I've seen enough organizations where the CIO role—I don't want this to come across the wrong way—but most people that get into IT, they don’t necessarily tend to be people that are the natural born leaders," said Bond. "The majority of them tend to be people who certainly understand the value in technology—sometimes, almost too much, to the detriment of the business—and I think in cases like that, that's what really leads them to where inevitably, where they end up, which is viewed as a commodity and (the business says) 'Sit back until we tell you what we need.'


"There are companies that will continue to go down that path and view IT as a commodity and they'll get what they ask for. And the business (folks) will get together and talk about where they want to go and what they think they'll need, but I think that's where the problem lies. In a lot of cases, when you get the business coming to IT and requesting something they've already thought out, you don't have someone who is at that intersection (of technology and industry) that can understand the root business need or opportunity and construct that with technology possibilities to really come up with a more ideal way of going about it."


For example, Bond points to Progressive Insurance as a leader in his industry. If his head was down simply dealing with the immature infrastructure he inherited as the incoming CIO two years ago, he wouldn't recognize Progressive for the innovator it has become. Because he understands how Progressive used technology to change the way insurance is sold, he was able to show his management the way down a similar path.


"With most insurance companies, at the end of the day, your customer is still the agent. You still have to develop product the consumer wants but once you've gotten that, you're really trying to sell to the agent."


To that end, Bond went out into the field to understand what Century's agents needed and wanted from the company. He then set about figuring out how to make this happen technologically. The result is a portal that not only acts as a communications channel but allows agents to write business by interfacing directly with Century's back-end systems and allows Century to push out alerts directly to agents' desktops.


The first part of the portal is nothing particularly new, but pushing out renewal alerts to the agents—the company-to- agent side of the communication—that is.


"It's just like any other thing," said Bond. "You have to be able to have those kind of communications with true business people who, in most cases, don't know anything about IT; they probably don't want to talk much about technology, so you have to be able to construct a conversation in a way that you show you understand what their ails are and what their opportunities are and then can communicate the possibilities in way they understand."


In lingo-speak: talking in "business terms, not technology terms."


Bond didn't create a portal, he created a way for agents to write more business with the company in less time with less effort. If you say that to a businessperson, you'll get their attention. Oh, and by the way, no one else in the industry is doing this … that's innovation.


Beyond Table Stakes


As we move forward and IT becomes even more enabling, effective CIOs are going to be less and less IT focused.


The effective CIO in five years will be "[t]hat individual that can look at things from an IT standpoint and sometimes make hard decisions about things like outsourcing or whatever it may be. If you see where the company wants to go … and how you are going to fit into that situation so that … you can gauge the things you are investing in as to whether or not you are supporting that long-term vision.


"If you don't have that long-term vision just like the rest of the business, you can eventually find yourself in that same situation where you're just kind of taking more of a tactical approach to meeting the business' needs. And not positioning yourself where you can provide that innovation and support things more proactively (instead of) waiting for things to happen to you."


The problem for many CIOs today is they come from an IT background and don't have the needed business skills and industry knowledge to fulfill this role; to sit at the intersection of technology and business and provide insights into how each can affect the other. But is the job in many companies today and will be the job at most companies inside of five-to-ten years.


"You need to be at that intersection to be able to marry business opportunity with technology capability," concludes Bond. "Not that you can't do it from purely from a management standpoint, I just think, in some cases, you're going to loose … true innovation.


So, like other C-level executives who find themselves challenged to be more than they thought they could be, it is now up the CIO to step up. This is, after all, the job of all C-suite exec's: to see the future and figure out how best to position the company to meet and benefit from it.