The new year presents CEOs with a set of contradictory conditions and confounding challenges. The global economy will stay strong. Corporate profits will rise. But at the same time, competition will intensify and the rate of business change will accelerate. CEOs will privately wonder how things can be so good, yet so hard.
Most CEOs are confronting the reality of a new economy — one enabled by information technology and increasingly open global markets.
It’s an economy where growth seems more important than profits, at least for a while, and where cyberspace is offering new channels to markets. At the top of most CEOs’ agendas will be the challenge of keeping their current businesses running while moving to new ways of operating.
Be prepared for their actions to become increasingly radical. And expect more pressure on IT organizations, no patience for system delays and less tolerance of clumsy technologies. It’s the flip side of their recognition that IT is now important.
What, specifically, will be on their agendas? The following list contains some old issues, but don’t be fooled. The quality of the CEO’s response will be different than in the past.
Uncover whether the IT organization has the right skills to make it to the future. Having the right people has always been a CEO issue. But today, CEOs are a lot less tolerant of team misalignment. They want the right behaviours and skills and will act more aggressively to get them. I know several CEOs who have recently changed more than half of their direct reports.
This year, the message to IT organizations will be clear: If the boss is making tough decisions on management alignment and the quality of the team, he or she will expect other critical parts of the organization to do the same. So take stock, and take action.
Adapt to accelerated change. Many CEOs worry about speed. They are increasingly forced to make decisions about unfamiliar technologies and market conditions. They are concerned with burnout — for their people and themselves. But in 2000, they will take as a given that nothing in technology or the economy will slow down. So they will look for ways to make their organizations more agile. This means IT organizations will have to get increasingly lean — fast. Dump old systems and unnecessary work.
And if you see your CEO picking up the pace, don’t hope that he or she will opt-out for a slower job elsewhere: There are none. No business or industry will provide cover. Moreover, many CEOs are enjoying the challenges of the new economy.
Focus on costs. Although business will be good, increased competition will put more pressure on costs. CEOs will also focus on growing the top line and increasing market share, but don’t get lulled into thinking your IT budget is secure just because technology has become more important.
In 2000, CEOs will be looking to find money to enter new markets and new businesses while lowering their costs or at least keeping them fixed. At best, your IT budget will remain the same, while you will be expected to do more.
Search for value creation. For the past year, creating more customer value has been the mantra principally of marketing gurus. The problem is, no one knows how to create new customer value on a regular basis.
This year, CEOs will take up the mantra and the challenge. If they don’t succeed, their businesses will be damned to competing only on price. The good news here is that they will turn to IT for help — but again, you will have to find the money and talent for innovation.
And are you hoping that an early retirement program for IT managers will also be on the CEO agenda? Forget it. Not at the start of the new millennium and of the new economy.