June 4, 2019 –
Mayfield & CMU i-Lab regularly host CXO Roundtable discussions – this most recent dinner took place in San Francisco, where we spoke about the future and current role of the CIO. We used the comparative role of a IT leader in a startup, product-driven organization to highlight the importance of the CIO role.
As an early stage venture firm, Mayfield works with a lot of nascent, high growth companies. To be frank, most of these Series A (or even Series B & C for that matter) don’t have a CIO — most push a bottoms-up, product-oriented business model because there’s better cost efficiency. But as these organizations grow and mature, the more crucial the CIO role becomes. Even though business units in tech companies can sometimes innovate without a CIO, this discounts the role that CIOs play in today’s world as the orchestrator for an organization’s entire technology architecture in terms of scale and integration.
Line of business leaders may have narrower objectives, whereas the CIO is unique in having a view that spans the entire enterprise. Therefore, the CIO views the enterprise as an ecosystem, and can see how strategic solutions should be prioritized to maintain the overall balance of the ecosystem. At our last dinner, in a discussion led by Eli Potter, Head of Enterprise Applications and Architecture at Coinbase, we tackled whether or not a CIO was needed in modern tech companies.
The consensus was that a master orchestrator was necessary – whether or not they held the CIO title. Moreover, that chief conductor role needed to inspire line of business leaders to move their strategic thinking from resilient to antifragile by focusing on customer and employee journeys. A culture of Fast Fail, Forward, where the organization benefits from pressure, takes deliberate and focused effort to build.
As Declan Morris, former CIO at Splunk, put it: “There is a difference between running the business and providing special offerings. When it comes to running the business you still need someone to organize everything even though it’s becoming more commoditized.” This is differentiated from enterprise architecture because there is also now a layer of SaaS applications which includes engineering applications – someone needs to be able to own both pieces.
The Customer-Driven CIO
Increasingly, the CIO’s role as an orchestrator is also extending to touch tech in product. As even conventional industries are becoming tech industries (see: IoT refrigerators, toasters, and even toilet seats), physical hardware is beginning to move into software. So, today’s CIO will need to be able to upgrade and connect back to production systems. “If the CIO is purely focused on back office and not tech in product, that won’t work. Every CIO should be saying ‘tech will define the future of my business,’ regardless of industry. In this day and age, management and boards can no longer afford to have a total dearth of tech-savvy individuals.” (Patrick Naef, Former CIO, The Emirates Group) This is in fact born out by the data: An MIT study “Assessing the Impact of a Digitally Savvy Board on Company Performance” (Weill, Apel, Woerner, and Banner)1, recently found that companies with three or more digitally savvy board members outperformed the competition by delivering 17% higher profit margins, 38% higher revenue growth, 34% higher return on assets, and 34% higher market gap growth.
Furthemore, the more a CIO is involved on the product side, the more opportunities they will discover to create value. First, CIOs can take a portfolio approach to generate new revenue streams from existing assets. Under Anil Earla, Former Head of Information & Data Analytics, Visa realized they had a lot of data that was just waiting to be monetized – and as a result they were able to leverage this into a product for last mile data now used by Google Wallets. At an airport, something as banal as WiFi, could be used as a point of sale. Thanks to products in even conventional businesses becoming increasingly aligned with technology, CIOs can innovate both inside and outside the org itself. This is in part fueled by the removal of some of the legacy IT Operations burdens as public cloud quickly retires private data centers. By trading on-prem infrastructure hardware for cloud infrastructure APIs, the modern CIO is now afforded more time to apply their skills to partnering with the product and customer teams across the enterprise. CIOs have time to ask “How can we leverage our product to enable our customers?” (Tom Fisher, Former CTO, MapR)
Additionally, CIOs can help with the customer journey. While at Equinix, Brian Lillie took a lot away from customer listening systems. Once you map out the customer journey, you can see that customer value moments happen where the customer really made a key decision. These are the right place for a monitoring system on customer value and customer experience. Using data such as this, Equinix was able to create a churn early-warning system for their sales and customer success orgs.
Onward: 5G, Edge, Quantum, IoT
So what does this mean for CIOs? What lessons can we take away from this curated symposium? First, the role of the CIO has evolved from back-office operations to product influence and enablement. Indeed this includes a focus on efficiency, effectiveness and customer service. Declan’s role at Splunk focused as much on customer success as he did on “internal” IT.
It is clear successful scaling startups as they become established in their own right, evolve from engineering product to engineering an intelligent adaptable enterprise. The CIO’s role is pivotal in continuously adopting new technology. It is not a step functional change as we move from analog to digital. This was evident from the wise words of Brian on security, who now serves on 2 public boards and has that helicopter view of the enterprise. Indeed not only is technology a key issue, he alluded to the organizational structure around issues of security among others. The CIO has weathered many an organizational storm and is well versed in having to influence without authority. They have fought battles of who owns what in a federated structure.
CIOs intuitively understand it is not just the latest shiny toy that is needed, but building a resilient enterprise that can bounce back unscathed from the inevitable screw-ups and left field attacks. Realizing that every company needs to be robust to withstand unexpected changes or novel attack vectors comes from the years of CIOs pulling arrows out of their backs. From our discussion it is clear that CIOs see the need to be malleable in the adoption of technology for different functional needs and use cases. As operational technology and information technology converge, this grows in significance.
What is unique about CIOs in Silicon Valley is their vantage point to adopt new technologies from startups serving the enterprise. One CIO prides himself that almost 60% of his software comes from early stage startups because he is as much as a thought partner as a customer. What emerged from our spirited discussion was that CIOs need to concentrate not only on today, opportunistically investing in things that work and have traction, but also correcting the mistakes of the past and elevated expectations from technologies such as blockchain, AI and ML. CIOs need to be simultaneously looking at tomorrow, while being preemptive in providing innovative solutions to IoT, Edge, 5G and Quantum.
- Source: Peter Weill, Thomas Apel, Stephanie L. Woerner, and Jennifer S. Banner. “Assessing the Impact of a Digitally Savvy Board on Company Performance.” MIT CISR, 2019,https://cisr.mit.edu/blog/documents/2019/01/17/mit_cisrwp433_digitallysavvyboards_weillapelwoernerbanner.pdf/