CIO = Chief Intrepreneur Officer

In Summary: The new expectations from the CIOs are not just to manage the information but also to actively contribute for the revenue growth of the business. This new challenge will usher the CIO world into a new era where the ‘I’ in the CIO acronym will stand for Chief Intrepreneur Officer. Current generation of the Information CIOs will struggle to morph into this new role and most of them will fail because the old success formulae designed to just deliver IT projects on time and cost will not work anymore. To be a successful Intrepreneur the CIO’s will have to adopt new methodologies such as the Lean start-up propagated by Eric Ries. His book, ‘The Lean Startup’ is a must read for every CIO.

 Expectations from the CIOs are changing to “Grow Revenues”: In the last five years slowly but surely the expectations from the CIOs have changed significantly. Earlier the expectation was ‘Improve customer service, improve operational efficiency, reduce cost or manage risks’. But now it is, “How can you help grow the revenue and create technology centric new businesses?”

 “Business wants more immediate value from IT and forward-looking strategies from technology leaders that support growth and innovations”, says McKinsey’s business technology survey in 2011. On similar lines in a Gartner survey on CIOs 2011 Agenda, CIOs have put their number one objective as to Enable Enterprise growth.

 CIO = Chief Intrepreneur Officer: With this new expectation the role of the CIO will change from provider of information to contributor to the business growth in an entrepreneurial way. The ‘I’ in the CIO acronym will not stand for Information but for Intrepreneur. The term Intrepreneur means being an entrepreneur within an established business. In this blog I will use the term Information CIO to refer to the current generation of CIOs and the term Intrepreneur CIO to refer to the next generation of CIOs.

The timing of this expectation is right as the work load on the Information CIOs is fast reducing. The responsibility of providing the processing power i.e. data centres, data storage is going away with the advent of the Cloud. Secondly, the responsibility of applications deployment and maintenance is also reducing with SaaS (Software as a Service) models such as Saleforce.com maturing rapidly. This diminishing responsibility is being superseded by the new responsibility of growing the revenue.

 The proactive Information CIO’s who recognise the future and want to morph into an Intrepreneur CIO are asking one question “Is there a reference example in the industry where the technology leaders have enabled revenue growth?” Yes there is and the answer is Amazon.com. 

Amazon.com is setting the bar high for the Intrepreneur CIO.  This new expectation of becoming an Intrepreneur CIO is fuelled by the performances of companies such as Amazon.com. Amazon.com is setting the bar for the Intrepreneur CIOs and boy! that bar is very high to cross. In the last 5 years Amazon.com has added c. US$5 billion every year to its top line especially in the time when the western world economy is not doing great. The key point to note in Amazon’s growth is that it’s the technology that is at the heart of Amazon’s ster;ing growth, whether it is their customer service or their new products such as Kindle. The reasons I like Amazon over Apple or Microsoft is because it has successfully impacted the traditional brick and mortar retail industry not just for books but for a whole host of items such as fashion, electronics et.al.

 The key question is what does it take to create a new business/revenue growth within an existing business like Amazon.com does? Is there a management science that Intrepreneur CIOs can leverage? This question has been very difficult to answer, various management gurus have attempted to answer it in a theoretical way but pragmatic answers and practical methods have remained elusive. Thankfully now we have a very robust response to this challenge in the form of The Lean Startup by Eric Ries.  

 The Lean Startup is a must read to become an Intrepreneur CIO

Eric Ries in this book has captured the essence of the management science required to develop new businesses. Eric has been a CTO with various silicon-valley start-ups. He has experienced both failure and success of startups. His IMVU venture has been very successful (it generates US$ 1+ Million a month). His experience is perfect for Intrepreneur CIOs to draw from. This book is a must read for the future generation of Intrepreneur CIOs to succeed.

 Most of the current generation of Information CIO will fail to morph into an Intrepreneur CIO: The Lean Startup has lot to offer. However, the more I read this book and appreciae the methods and skills of what it takes to create successful start ups, I started to get concerned. The methods and the skills that Eric prescribes in this book are not going to be easy to be adopted by the current generation of the Information CIOs and hence most of them will fail.

 In adopting these methods the Information CIO will have to be brave, unlearn their old formulae of success and emotionally very strong. The book has a lot of new methods and skills to learn, I have picked up three of the most challenging ones.

1. Validated learning
2. Innovation accounting
3. Pivot or Persevere  

 Validated learning: An Intrepreneur CIO will be developing new business models, making some fundamental assumptions about the target customers’ needs and how to address them. The lean start-up model recommends entrepreneurs and intrepreneurs to validate those fundamental assumptions AS EARLY AS POSSIBLE.  The most fundamental assumption needs to be validated upfront. The mistake most of the failed entrepreneurs and intrepreneurs make is they take their fundamental assumptions about their customers and their needs as facts and do not validate them with the real customers.

On the contrary the successful starts-ups first, get their base assumptions validated. They are brave enough in getting their assumptions challenged and be prepared to change or drop them.

Microsoft initially had set out to be a BASIC compiler company but through validated learning they realised that it is not a compiler that market was looking for but an easy to use and low price operating system. That validated learning created world’s largest operating system company.

Validated learning will be a struggle for the Information CIOs, it essentially requires two critical skills:

a)     Be absolutely clear of the fundamental assumptions and be prepared to be challenged on them.

b)     Secondly, to validate the assumption you need an ability to hit the market and face the customer

Innovation Accounting: When you are starting up a new business the traditional cost accounting methods don’t work. They are fit for industrialised and assembly line type of businesses. For innovation projects you got to measure whether the money is consumed in creating something that customers really want or not. If you are not accounting for what your customers really want and only measuring whether the development is running on time then you are destined for achieving failure.

For the Information CIOs, Innovation accounting is possibly the most difficult thing to learn because it entails unlearning the old formula of success. So far, the success has come to them by delivering software on-time and on cost as per the given business requirements. If the software was of no use then it was all blamed on the business requirements. This attitude and approach will not work in the Intrepreneurs CIOs world. The Lean Startup gives very good details on what to measure and how to measure.

Pivot or persevere: When your innovation accounting tells you that money and time is being spent on developing a product or feature that your customers don’t want, it is a decision time. As per The Lean Startup terminologies, in these situations you either pivot or persevere. Pivot means you keep few fundamentals firmly grounded and change few things and test the market. Persevere means you carry on with no change to the earlier plan.

For the Information CIOs whilst the challenge with innovation accounting is to unlearn the old successful formula, the challenge with pivoting or persevere is to deal with your emotions. A decision to pivot means throwing away some of your earlier work. Throwing away your own work is akin to abandoning your own child, which is very difficult. In the book, Eric has given his own encounter at IMVU where he was the CTO and he had to throw away his 6 months of software development code because the customers simply didn’t care about that feature which the IMVU product team thought was absolutely critical for the products’ success.

As I said earlier The Lean Startup is a must read for the Information CIOs to morph into an Intrepreneur CIO. If you don’t have time to read the book I would strongly recommend you to watch this lecture by Eric delivered at Stanford University and learn how to build a successful start-up. I will be interested in knowing after you have read the book or watched this video if you agree with my assertion that most of the current generation of Information CIO will fail to morph into an Intrepreneur CIO.

 http://www.youtube.com/watch?v=zGXAVw3vF9A 

PS: I wanted to embed Eric’s video here for easy viewing but for some reason not able to do so.  I will embed the video as soon as the problem is resolved. Thanks for your patience.

You can also visit Eric’s blog at: http://www.startuplessonslearned.com/