You’ve been demoted. The CEO called you into his office, sat you down and told you that after a great deal of careful thought and consideration, he’s decided that you will now report to the CFO. Everyone agrees this makes the most sense. IT doesn’t need to report to the CEO, so IT shouldn’t.
Don’t worry, he says, IT is still perceived as a strategic asset. But, your CEO insists, IT is best overseen now by the executive directly accountable for assuring that the firm gets maximum feasible returns for its capital and operational investments. That’s the CFO.
Yes, the CEO fully understands your disappointment. But he also wants you to know he completely supports your work and wants you to succeed. He thinks IT will have a greater impact on the firm by reporting to finance. What’s more, he adds, the CFO is world-class. He stands a better-than-even chance of ultimately succeeding the CEO or being headhunted to CEO at another firm. This new move could be great for you. Really.
So step up and be a team player, damn it. Your CEO is counting on you to sell this reorg to your people. This move is great for them too. Honest.
Who knows? Maybe the CEO is right. However, it sure doesn’t feel that way. Let’s be honest: There’s no way this doesn’t send a signal to the world that IT now matters less. Your vendors, for example, will know instantly. Perhaps your most important customers and clients will too. Certainly your colleagues — the C-level folks who used to be your peers — will know it. How can this not dramatically reduce your professional effectiveness?
The answer to that is simple: It depends on what you mean by “professional effectiveness.” When the CEO says he no longer wants or needs you as a direct report, that means one of two things: that things are going so well that he really doesn’t need to have direct interaction with you about current and future initiatives; or that, frankly, your interactions really aren’t worth his time and attention relative to the other issues on his plate. Therefore, you should be interacting with someone else.
Care to guess which of the two is likelier?
While being demoted is undeniably a blow to one’s pride, I strongly believe it can — if managed with shrewdness and guts — reinvigorate IT and reposition the CIO as a paragon of effectiveness within the enterprise. Post-demotion success, however, is predicated on a single mission-critical imperative: Are you willing to go the extra mile to help your new boss succeed?
Different strategies for a different boss
This question is neither Machiavellian nor coy. It’s at the dark heart of professional effectiveness. When you report directly to the CEO, it’s clear that making the boss succeed is intimately connected with making the company succeed. This is particularly true in a time when the CEO is regarded as a personification of the company’s strategy and brand.
This is emphatically not true when your boss is the CFO or the COO. Designing an IT strategy and budget around making the CFO succeed is a completely different task than designing IT strategies and budgets for CEOs. The vocabulary is different, the sensibilities are different, and — more often than not — the personalities are different. I have yet to see any studies, but I’ve never been in a Fortune 1000 firm where employees described the temperaments of their CEO and CFO in similar terms.
The most effective IT strategies tend to emerge from operations up rather than from the strategy level down.
The single most important question a CIO in this new world must honestly answer is if he is prepared to make the CFO succeed on the CFO’s terms, not IT’s.
If the answer to that question is I don’t know or I’m not sure or, worse still, not really, the CIO cannot succeed. Professional effectiveness, in this context, means doing things that subvert the new boss in favour of IT’s not-so-hidden agenda.
For example, I know of one demoted CIO who reported to a CFO so hated by the business unit executives that the CIO successfully organized an insurrection against him. How? He devoted surreptitious hours to helping division heads develop IT-enabled, top-line growth initiatives that resonated with what the CEO publicly said he was trying to get the firm to do. When the CFO said no to these initiatives, the CIO sided with the business unit people against his own boss in a way that led to the isolation of the CFO. The CEO had to get rid of the CFO, and the CIO was back at the top table.
Why did this work? Because the CIO placed a good bet that the business unit chiefs could collectively build a better-balanced case for cost-cutting and growth than the machete-wielding CFO could make individually for cost-cutting alone. In this scenario, “helping to make the CFO succeed” would have come at the expense of helping the enterprise grow. That said, it begs the question of why the CEO had reassigned the CIO to the CFO in the first place. The punch line to this story is that the board soon after removed the CEO. Why? Because the board members kept hearing murmurs from the business unit executives how unhappy they were with the CEO’s leadership.
What happened to the CIO? He ostensibly reports to the new CEO, but what he really does is serve as a mediator between what headquarters strategizes and business units execute. He has become an internal systems traffic cop. Because he proved to be such an artful political infighter, nobody powerful wants him to have too big of a base of operations.
The guts of the business
Which brings us back to professional effectiveness. To the extent that the reassigned CIO can, in good conscience, invest in making his new boss successful, he should do so. Unreservedly, supportively, creatively and innovatively.
Why? One, it’s the professional thing to do, and I believe a professional ethos is crucial for IT effectiveness. Two, precisely because the sensibilities of CFOs and COOs are so different from CEOs’, it gives the CIO the opportunity to expend more ingenuity and energy on the guts of the business — as opposed to its brains. This is important because, increasingly, it’s become clear that the most effective IT strategies tend to emerge from operations up rather than from the strategy level down.
Look at Dell Inc., Harrah’s Entertainment Inc., Tesco PLC or Wal-Mart Stores Inc. What you find are strategic IT directions that emerged from the skillful evolution of operational IT innovations. Tesco’s loyalty program, for instance, came from a marketing idea developed by a man who went on to become its CEO. In other words, in successful IT-driven companies, transformation emerges from operations, not from C-level retreats at fine golfing establishments. There are too many CIOs who do not truly grok the operational nuances of the business processes their technologies support.
That said, I do wonder about CEOs who demote their CIOs. Maybe a better signal would be to fire them outright because in every growth business that I see, IT is becoming more essential to the firm’s future, not less. Then again, some CEOs will never be smart enough to understand the value of a world-class CIO.