Communications of the ACM

Communications of the ACM

The 7 Habits of Highly Effective Technology Leaders

By Stephen J. Andriole
Communications of the ACM, March 2007, Vol. 50 No. 3, Pages 66-72
10.1145/1226736.1226737
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Long before Nicholas Carr published his now-famous article "IT Doesn't Matter" in the Harvard Business Review, technology leadership was changing [3]. The technology heroes of the 1970s and 1980s were different from the heroes of the 1990s, and the heroes of the early 21st century would not even recognize their 20th century counterparts. This article looks at seven habits that early 21st century technology leaders practice day-in and day-out. These habits are derived from survey data we've collected and analyzed at the Cutter Consortium since 2001, when we posted our first online survey about business, technology, and management [1]. The list is clearly about business—not technology—processes and outcomes. The article describes the changes that define new IT leadership challenges as well as the specific leadership skills that highly effective technology professionals must have.

So what should business technology leaders do? Among other things, they should build business scenarios; track technology that matters to business; identify business pain and pleasure; organize adaptively; manage infrastructure cost-effectively; communicate well and often; and market.

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Building Business Scenarios

In the 1990s, when I was CTO of CIGNA, we engaged IBM to develop a set of business scenarios that described where the insurance and financial services industries would be in the early 21st century. My group at CIGNA was The Technology Group, which was responsible for setting technology standards, defining the overall computing and communications architecture, maintaining security, and managing the R&D budget. In order to develop credibility with the CIGNA lines of business, we suspended all talk about technology and instead focused on current and emerging business models and processes. Needless to say, in the mid-1990s this disarmed the business executives, since their image of "systems" was that we were always late, always expensive, not fully competent, and too often even a little arrogant. Realizing this, we used business scenarios as a Trojan horse. It worked well. Why? Because all of the effort was about business, not technology.

Habit #1: Business technology leaders focus on business models and processes before they focus on technology infrastructure or applications.

What good scenarios really do is profile marketplaces and profitable transactions. They also identify constraints. They are compasses that influence the direction that strategic decisions take. Highly effective business technology leaders develop, package, and sell business scenarios. They work with the business to profile "as is" and—especially—"to be" business models and processes.

Is this to say that business models and processes should be developed independently of technology-enabled opportunities? No, but they should lead the process. There will be times when new business models are difficult if not impossible to imagine without technology knowledge. Since business technology leaders understand technology, they are in a good position to exploit the business technology intersection. Several analysts have documented this trend [2, 4–6].

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Tracking Technology that Matters

Technology leaders acknowledge the distinction between operational technology and strategic technology as suggested in Figure 1, which identifies five levels of business technology. These levels help us understand how senior management sees technology and where the leadership opportunities and challenges lie. Everything below the line in Figure 1 is a commodity. But competitive advantage is still quite possible through the right above-the-line investments in strategic technology.

Strategic technology investments are those that speak directly to customers, market share, the competition, and collaboration. Operational technology investments speak directly to the computing and communications infrastructure. CRM—when well done, of course—is strategic, as are investments in business intelligence and business analytics, supply chain optimization, dynamic forecasting, distribution and pricing, and product/service personalization, and customization. Desktop, laptop, and personal digital assistant (PDA) acquisition, deployment, and support are operational, as are routers, hubs, storage area networks, and database management platforms.

Leaders exploit the operational/strategic distinction; they also track technology trends, especially trends that really matter to the business, that is, all technologies that can impact business, not technology "concepts" or even "prototypes." Examples? The Semantic Web—the intelligent Internet—is a tremendously interesting concept, but is a long way from implementation. Real-time synchronization and real-time computing generally are also fascinating concepts but, again, we are some years away from widespread implementation.

On the other hand, utility computing—the technology acquisition and support model that uses the electricity model to describe its pay-by-the-drink approach to technology acquisition—is emerging as a prototype with some real potential, though it is far too early to commit to a major investment in whole technology subscription models. Similarly, grid computing is showing solid promise in some industries as is Web Services technology, thin clients, and the newest voice recognition technologies. These all bear watching so long as they map onto the business scenarios that the same business technology leaders develop.

Technology clusters are real and powerful and ripe for exploitation. Clusters are proven technologies with large supporting casts of developers and support vendors; they are also supported by well-funded R&D infrastructures.

Leaders should track the more interesting concepts but resist temptations to hype technologies that are still in the early stages of development: the last thing a business executive wants to hear about is how cool a technology is, or how great it's going to be (in, say, five years).

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Leaders should track the more interesting concepts but resist temptations to hype technologies that are still in the early stages of development: the last thing a business executive wants to hear about is how cool a technology is, or how great it's going to be (in, say, five years).

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Habit #2: Business technology leaders track technology that matters by focusing on the distinction between operational and strategic technology and the chasm between technology concepts, prototypes, and bona fide technology clusters.

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Identifying Business Pain and Pleasure

Business technology leaders should speak the language of business. They should focus on the pain that business managers and executives feel. The really good ones keep a running list of the most difficult problems—the sharpest pain points.

Habit #3: Business technology leaders identify and prioritize business pain—and approaches to pain relief—as they move toward the creation of business pleasure.

Business pain comes in many forms. Some comes in the form of cost control, such as headcount and overhead cost. Pain relief comes in the form of improved business response and control, such as improved management effectiveness, employee productivity, and supplier relations. Business pleasure includes revenue generation, up-selling, cross-selling, organic growth, acquisitive growth, and, of course, increased profit.

The whole pleasure/pain exercise focuses on business success. It also focuses on what individual business professionals will personally find exciting—and rewarding. Leaders understand what makes people heroes, what the organization values.

Figure 2

Figure 3 identifies three paths in the alignment-to-partnership journey. Effective technology leaders appreciate business pain and pleasure, become more than just credible, and define business value around strategy. Influential technologists shape both operations and strategy. If they get operations correct, they can spend most of their time with their new partners thinking about competitive advantages, revenue generation, and profitability.

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Organize Adaptively

Lots of companies are decentralized these days, though the number recentralizing is increasing. The essence of the centralization/decentralization dance spins around the value of shared services. But it is also about discipline and governance.

Habit #4: Business technology leaders optimize the value of shared services in centralized and decentralized companies, and they organize around the distinction between operational and strategic technology. Technology leaders also champion governance above and below the operational and strategic line.

The above-the-line/below-the-line distinction in Figure 1 is important to optimal organization. But the wild card is governance. If an organization is without unambiguous governance its chances for effective organization are pretty much non-existent.

The key to going forward is to define the business technology organization as though there is one—not two—organizations. Below-the-line infrastructure should be managed transparently. While this is not to say that it is unimportant (the opposite argument to be discussed later), it is to affirm its relative unimportance compared to above-the-line projects, programs, and impact. (This is the concession to the IT-is-a-commodity arguments that are accurate only to a point.)

Organizational leadership focuses first on the governance of business technology resources, investments, responsibilities, principles, and priorities. The business value of technology should be the primary governance philosophy. Below-the-line infrastructure and support should be shared across the organization regardless if the business structure is centralized or decentralized. Above-the-line applications should be identified by the business regardless of whether the structure is centralized or decentralized. Enterprise architecture should be jointly owned by the lines of business and the infrastructure support provider.

Reporting relationships are always complicated, especially in decentralized organizations. The key is to organize around the five business technology layers (see Figure 1) that share decision-making authority through explicit governance (and Business Technology Councils for handling exceptions). Flexibility is essential, since the business technology relationship is fluid and continuous and not defined around a number of discrete rules.

Reporting relationships should speak directly to business processes. CIOs and CTOs should report to the CEO or the COO, not the CFO, whose incentive is usually to hold costs down. CIOs and CTOs should organize their organizations around the five layers, but should also make sure that they organize around hardware, software and processes.¹

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Manage Infrastructure

Leaders make certain the computing and communications infrastructure is secure, reliable, scalable, and cost-effective. Leaders understand there are alternative ways to acquire, deploy, and support computing and communications infrastructures. They optimize the alternatives with reference to their organization's core competencies, culture, and evolving business strategy.

Given the amount of infrastructure outsourcing, leaders can write diagnostic requests for proposals (RFPs) for infrastructure technologies and processes, as well as the effective service-level agreements (SLAs).

Habit #5: Business technology leaders manage computing and communications infrastructure professionally and cost-effectively through negotiated service-level agreements (SLAs) and measurement best practices.

Another skill is measurement. How well is the infrastructure performing? What does industry benchmarking data tell you? Leaders are aware of what is happening in their industry and in their environment, especially with acquisition trends. When outsourcing makes sense, leaders manage the SWOT (strengths/weaknesses/opportunities/threats) analysis: Leaders direct all of the technology acquisition processes (once joint decisions are made about what to acquire).

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Communicate

Leaders understand that the essence of communication (and its cousin, influence) is hard and soft facts, and hard and soft communications skills. Are your technology leaders good communicators? Do people understand what they say and what they mean?

Communication is a continuous process. When things are relatively quiet, leaders still need to communicate what they are doing, the status of their projects, and their strategies. When things are bad, they can call upon a deep continuous relationship with their partners and stakeholders to jointly solve problems; and when things are good, leaders can exploit their communications investments to make sure everyone understands the significance of the victory at hand.

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I cannot emphasize enough the value of internal and external technology marketing. The technology story at your company—assuming it is mostly good—must be packaged and sold on a continuous basis. A small investment will yield substantial returns. Business technology leaders understand all this.

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Habit #6: Business technology leaders communicate often and predictably; leaders communicate good news and bad news in business terms and provide transparent insight into technology initiatives through tools like dashboards.

Most communication is routine, that is, how well the infrastructure is performing, technology costs, technology total cost of ownership (TCO) models, and the return on investment (ROI) of business technology projects and programs. Regardless of how mundane it might be, insight into the availability, vulnerability, and effectiveness of the technology infrastructure and key strategic applications is necessary—just as necessary as monthly sales reports.

Project/program/portfolio "dashboards" are preferred by managers: everyone likes easy-to-read status reports on key projects and whole programs. It is also a good idea to develop some form of "scorecard" that communicates the overall impact that business technology is having at the company.

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Market

Leaders think about who creates, distributes, and maintains the technology message inside and outside of the company. Business technology leaders are sensitive to the need to internally and externally market their business technology accomplishments and strategies.

So what are the pieces of a good technology marketing strategy? First, consider what is being sold. Obviously there is hardware, software, and services, but there is also image, perceptions, and strategies. When everything goes well everyone thinks the technology people are really pretty good, that things work reasonably well and for a fair price. If the hardware and software works well, but the image is poor, technology is perceived to be a failure, just as bad hardware and software—but good perceptions—will buy some time. Like other business leaders, technology leaders sell hard and soft information and insights, tangible and intangible assets, and processes.

Habit #7: Business technology leaders actively market their roles in the company as well as technology's ongoing contribution to the business through a variety of tools and techniques.

Public companies have a unique challenge. Increasingly, technology is included as a variable in company valuation models. The analysts that cover public company stocks look at technology infrastructures, applications, and best practices in order to determine the maturity of a company's technology acquisition, deployment, and support strategies. CIOs and CTOs who are bona fide business technology leaders talk to these analysts, fielding their questions and otherwise molding their understanding of the role that technology plays in the current and anticipated business.

What is the brand of your technology organization? If you were a professional sports team, what would be a good name for your technology organization? Would you be the Innovators? The Terminators? Put another way, if you asked the analysts who cover your stock to word-associate technology and your company, what would they say? Disciplined? Strategic? Weak? What about collateral materials? Does the technology organization have its own Web site? Its own brochures? Case studies? White papers? Reference-able accounts (internal customers who are happy with technology's services)? Are there newsletters and technology primers? Is there information about the competition?

Is there a technology "road show"? A consistent message about the role technology plays in the company, how technology is organized, what matters most, the major projects, and technology's contribution to profitable growth, among other key messages is essential to running technology like a business.

Most importantly, are there dedicated resources for technology marketing? I cannot emphasize enough the value of internal and external technology marketing. The technology story at your company—assuming it is mostly good—must be packaged and sold on a continuous basis. A small investment will yield substantial returns. Business technology leaders understand all this.

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What Next?

Are leaders born or are they developed? The seven habits described here should provide enough clues to the answer. Many leadership qualities are, of course, inherent to specific personalities, but just as many can be developed over time with the right insight and coaching.

Without question, the nature of business technology leadership is changing. This article tries to profile the trends and the leadership requirements that will be rewarded in the early 21st century. Is this a wake-up call? To some extent it is, but it is also a framework for thinking about 21st century leadership as we put more and more distance between us and the business technology alignment debates of the 1990s.

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The Digital Library is published by the Association for Computing Machinery. Copyright © 2007 ACM, Inc.

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