Read the attached article and write a short essay that answer the following questions
1.How quick are companies adapting to the disruptive technologies and how do CIO’s need to adapt?
2.What does this change mean for the future of the workforce?Types of growing jobs/careers that you may be interested in?
The CIO challenge: Modern
business needs a new kind of
tech leader
As technology becomes increasingly important, an organization’s success
depends on whether the CIO can move from being a functional to a strategic
business leader.
by Anusha Dhasarathy, Isha Gill, and Naufal Khan
© skynesher/ Getty Image
January 2020
“There’s no worse time than now to be an average
CIO.” These words, uttered by an executive at a
recent conference, neatly capture the intense
pressure on CIOs. For years, executives have
stressed the need for CIOs to move beyond
simply managing IT to leveraging technology to
create value for the business. This priority is now
a requirement. New technologies have been at
the center of trends—from mobile-first consumer
shopping preferences to the promise of artificial
intelligence in critical decision making—that have
reshaped the competitive landscape and disrupted
business models. For this reason, companies need
to be tech forward: technology needs to drive the
business.
Despite this pressing need, of the organizations
that have pursued digitization, 79 percent of them
are still in the early stages of their technology
transformation, according to McKinsey’s 2018 IT
strategy survey.¹ Legitimate factors are delaying
progress, from the scale of the change to the mindboggling complexity of legacy systems. We believe,
however, that one of the biggest issues is that many
CIOs have not accepted the degree to which their
role needs to expand beyond cost and performance
responsibilities in order to transform IT into a core
driver of business value.
Three vectors of a holistic
transformation
Before understanding the responsibilities of the new
CIO, it’s important to understand the nature of tech
transformations themselves. In most cases we’ve
observed, tech transformations are implemented
as a set of disjointed initiatives across IT. That leads
promising developments to stall out or underdeliver.
We have found that a tech transformation must
be holistic to deliver full business value. Creating
powerful customer experiences, for example,
requires a data architecture to track and make
sense of customer behavior. Architecting modular
platforms needs revamped approaches to hiring in
order to get top-flight engineers.
1
2
“Can IT rise to the digital challenge?” October 2018, McKinsey.com.
The CIO challenge: Modern business needs a new kind of tech leader
This reality requires a CIO to first come to terms
with the scope of the transformation itself. In
our experience, it’s been helpful to think about it
along three vectors:
1. Reimagine the role of technology in the
organization. This vector includes establishing the
role of technology as a business and innovation
partner to design a tech-forward business
strategy (for example, tech-enabled products and
business models), integrate tech management
across organizational silos, and deliver excellent
user experiences.
2. Reinvent technology delivery. IT needs to
change how it functions by embracing agile;
improving IT services with next-generation
capabilities such as end-to-end automation,
platform as a service, and cloud; building small
teams around top engineers; and developing
flexible tech partnerships.
3. Future-proof the foundation. To keep pace with
rapid technological advancements, organizations
need to implement a flexible architecture
supported by modular platforms, enable data
ubiquity, and protect systems through advanced
cybersecurity.
Five traits of a transformative CIO
For IT to become a driver of value, the
transformative CIO also needs a new set of skills
and capabilities that embody a more expansive
role. In working on tech transformations with
hundreds of CIOs, we have identified five CIO
traits that we believe are markers of success.
1. Business leader
To help technology generate business value,
the transformative CIO has to understand
business strategy. Findings from our 2018 IT
strategy survey reveal that companies with
top IT organizations are much more likely than
others to have the CIO very involved with shaping
Sidebar
Questions for the CIO
• Can I clearly articulate the business’s goals?
• Are the most important technology initiatives delivering quantifiable business value to the company?
• What percentage of technology resources is focused on work that drives business goals versus maintenance?
the business strategy and agenda, and strong
performance on core IT tasks enables faster
progress against a company’s digital goals.² CIOs
who can make this leap tend to take the following
actions.
Learn the business inside and out
The scope of an IT transformation means that CIOs
must be prepared to interact with the business in
different ways. We have found, for example, that
the best CIOs go far beyond meeting with the
C-suite or attending strategy meetings. They invest
time with functional and business-unit leaders
and managers to gain an in-depth understanding
of business realities on the ground and go out
of their way to develop a nuanced and detailed
understanding of customer issues. CIOs do this
by continually reviewing customer-satisfaction
reports, regularly monitoring customer-care calls,
and participating in user forums to hear direct
feedback.
As one large financial institution set out to
build its digital products, the business and
technology teams jointly led user listening and
feedback panels early and often throughout
the development process. Both technology and
business leaders made it a priority to attend these
panel discussions so that they could effectively
guide their teams on developing products that
would best address the needs of end customers.
The CIO of a B2B technology-services company,
meanwhile, meets customers on a regular basis to
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get firsthand feedback on both products and the
customer’s experience of doing business with the
company. He uses these perspectives to inform
his technology decisions.
Take responsibility for initiatives that generate
revenue
CIOs can further develop business acumen
by taking responsibility for initiatives that
generate business impact, such as building an
e-commerce business, or by working with a
business-unit leader to launch a digital product
and then measure success by businessimpact key performance indicators (KPIs), not
technology KPIs. Such efforts allow CIOs to
build a deep understanding of the business
implications of technology, such as customer
abandonment because of slow download times
on a site or other poor user experiences.
As part of a digital transformation, for instance,
the CIO at a large financial institution committed
to developing digital products to help the
business scale its presence in a new market.
While the CIO already understood how to build
systems to support financial products, he and
his team had limited experience in creating new
digital products to sell directly to consumers. So
the team created a program built on rapid testand-learn cycles to identify what mattered to
customers and meet those needs. Subordinating
tech decisions to customer needs was crucial in
allowing the CIO and his team to develop a digital
“Can IT rise to the digital challenge?” October 2018, McKinsey.com.
The CIO challenge: Modern business needs a new kind of tech leader
3
offering that succeeded where it mattered: with
consumers.
Get on boards
Developing a deeper well of business knowledge
often requires CIOs to extend their networks
beyond the organization. One of the best ways to
do that is by joining the board of another company.
A third of the boards of companies within the
Fortune 500 today include a former CIO or CTO,
and that number continues to increase.³
2. Change agent
A full technology transformation is not about
moving to the cloud or embracing new IT solutions.
It also involves infusing technology into every
strategy discussion and process throughout
the organization. Driving a transformation
around the three vectors we laid out earlier
(reimagining the role of technology, reinventing
technology delivery, and future-proofing the
foundation) starts with a CIO mind-set that both
acknowledges the need for transformative
change and commits to a multiyear journey.
Partner with business leaders
Generating support for a transformation among
business leaders across the organization requires
creating true partnering relationships with them
3
4
based on common goals, mutual responsibility,
and accountability. According to a McKinsey
survey on business technology, in fact, the
companies in which IT plays a partner role
in digital initiatives are further along in both
implementation and achieving business impact.?
To kick-start the transformation journey, the
CIO of a transportation-and-logistics company
made it her first priority to meet with every
single business leader to understand their goals
and issues and to set expectations on how
they could best work together, by clarifying, for
example, what the business side could expect
to get from IT in a consultant role versus IT
as a service provider or partner. This effort
to understand what mattered to each leader
established trust, and from each of these
discussions it became clear that the business
wanted a true partnership with technology
and understood what it meant. The CIO further
built on the relationship with the business by
prioritizing initiatives in the tech transformation
that addressed business needs and working
closely with business leaders to drive progress.
This active collaboration ensured that the
products and services IT developed were
adopted.
“The digital CIO has arrived,” MIT Sloan CIO Symposium, 2016.
“Partnering to shape the future—IT’s new imperative,” May 2016, McKinsey.com.
Sidebar
Questions for the CIO
• Do leaders in the C-suite have a clear understanding of why a tech transformation is important?
• Do you have partner-level relationships with people in the C-suite in developing the vision and plan for both
business and IT?
• Is your tech transformation actively incorporating each of the three vectors of change?
• Do you have a “war room” to manage the transformation that can solve problems as well as track progress?
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The CIO challenge: Modern business needs a new kind of tech leader
Sidebar
The CEO’s role in making the CIO successful
The stage is set for CIOs both to lead a successful technology transformation and to influence business strategy. They
can’t do it alone, however. The CEO must create an environment where the CIO can thrive. Here are a few things CEOs
can do:
• establish a strategic role for the technology function
• elevate the CIO to report directly to the CEO
• rebalance technology investments and track their business value
• prioritize the development of a world-class tech workforce
Articulate the ‘why’
Gaining support for a transformation requires that
stakeholders understand that true change will
come only from tackling all three transformation
vectors in a strategic, interlinked manner. That
means not just explaining how this three-pronged
approach is better for IT but also clarifying
how it drives business goals and how it can be
implemented. When considering a shift to cloud,
for example, executives tend to understand it
first as a cost-saving opportunity. But in helping
executives understand the full range of cloud
benefits—improved speed to market, better
developer productivity, and improved resiliency
and disaster recovery—CIOs can help them see
how the cloud can unlock new revenue models
and services tied to business priorities.
Have an integrated plan that highlights risks and
dependencies beyond IT
Large IT initiatives have always required detailed
planning, but business-oriented CIOs ensure that
transformation plans account for dependencies
outside of IT, such as marketing campaigns or
legal implications. They approach planning as a
dynamic process rather than something static,
The CIO challenge: Modern business needs a new kind of tech leader
which allows transformation teams to better
remove roadblocks and to allocate people and
spend when and where they are needed. To
actively manage this process, such CIOs also
put in place a “war room,” a dedicated team
that ensures transformation initiatives are
delivering value by actively tracking progress
and helping to break through root-cause
issues.
This was the approach taken in a large global
retailer’s digital and technology transformation.
The CIO set up a transformation war-room
team that worked jointly from the beginning
with leaders outside the IT function, including
marketing, operations, sales, and e-commerce.
Together, they created detailed work plans.
This detailed early planning revealed which
systems needed to be upgraded and when.
The war-room team actively tracked progress
and quickly escalated issues for speedy
resolution. The results were clear: a fivefold
jump in digital sales, and project delivery four
times faster than projects of similar scope had
previously taken.
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Sidebar
Questions for the CIO
• Are the top people in IT really stars in their field?
• Do you rely exclusively on HR to find your talent?
• Do you have a clear view of the talent you need in the next three years—and a plan to develop it?
• What percentage of the best people you hire are still with you two years later?
3. Talent scout
Nearly half of respondents to McKinsey’s 2018
IT strategy survey cite skill gaps on traditional
teams as the top obstacle to a successful digital
transformation.? So CIOs need to focus not just on
recruiting top people but also on retaining them.
Two solutions have proven effective.
Reimagine how to attract tech stars
Companies can reap tremendous benefits
from outsourcing. In the oil and gas industry,
for example, the outsourcing of application
development grew 50 percent between 2014
and 2018.? But that needs to change, especially
around the most crucial capabilities. CIOs who
want to reinvent tech’s role need tech stars,
particularly the best engineers. By hiring the best
tech people, we’ve seen companies reduce their
technology costs by as much as 30 percent while
maintaining or improving their productivity.? CIOs
need to move quickly. In just 18 months, one CIO at
a transportation-and-logistics company radically
reshaped its talent profile. All the direct reports
and approximately 50 percent of tech employees
were new, and 80 percent had transitioned to
different roles.
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The head of technology and analytics at a large
retail organization set up a talent war room to
hire data scientists and engineers. As part of this
effort, the war-room team revamped recruitment
and onboarding processes by using different
talent sources, such as HackerRank and General
Assembly, and by updating candidate screenings
and interviews with appropriate assessments
of technical and other skills, such as coding
and collaboration. In addition, they led weekly
check-ins to track the talent funnel and adjust the
process as needed.
Build up internal talent
Getting good people doesn’t matter if you can’t
keep them. Top CIOs, therefore, develop diverse
career paths so that top talent can advance in
their own areas of strength—for example, by
letting a top-notch software engineer advance
while continuing to code design software rather
than forcing her to manage others in order to
succeed.
Retraining the existing tech workforce also
needs to be an important element of this platform.
The CIO of a large consumer company made
“Can IT rise to the digital challenge?” October 2018, McKinsey.com.
Dhingra, Sverre Fjeldstad, Natalya Katsap, and Richard Ward, “A new mandate for the oil and gas chief information officer,” November 2019,
McKinsey.com.
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Klemens Hjartar, Peter Jacobs, Eric Lamarre, and Lars Vinter, “It’s time to reset the IT talent model: Foster an engineering culture of smaller
teams of better engineers to maximize productivity,” forthcoming in Sloan Management Review.
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The CIO challenge: Modern business needs a new kind of tech leader
Sidebar
Questions for the CIO
• Do you meet or speak with IT employees who are on the front lines at least once a week?
• Do you have a way to accurately measure and track people’s attitudes across the IT department?
• Are your top engineers happy with their work?
• How often do you publicly celebrate success and support noble failures?
digital and analytics upskilling one of the
company’s key strategic priorities, launching
an enterprise-wide program, in tandem with
HR’s learning team. The program invested in
an online learning portal to create personalized
online learning experiences based on an
employee’s goals and learning needs. These
were supplemented by other programs,
including in-person training, top management
immersion sessions, and the cultivation of an
in-house expert network that people could tap
on specific topics.
4. Culture revolutionary
An effective talent strategy requires a culture
that supports talent.
Build a true engineering community
Pay matters, of course, but top people want to
go where they’re valued. One way to create that
kind of environment is to provide engineers
with more autonomy by reducing the number of
managers and often-bureaucratic processes,
such as time-consuming reports and multiple
rounds of approval.
Creating ways for cohorts of similar skill sets
to get together can be a powerful way to
share best practices and foster a sense of
community. The CIO of a software company
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established various community-building and
knowledge-sharing efforts—hackathons,
“dev days,” tech spotlights, brown-bag
lunches—where product managers,
developers, data engineers, and architects
could meet on a weekly basis to share details
about their projects and bring up ideas or
issues for discussion. The CIO attended and
actively participated.
Model and support true collaboration
Promoting collaboration across technology
teams and between the business and
technology is one of the most crucial
prerequisites for a successful transformation.
Top-quartile IT organizations are more
likely to have an integrated or fully digital
operating model, according to McKinsey’s
2018 IT strategy survey.?
In practice, CIOs can enable collaboration
if they’re willing to relinquish some control.
One CIO at a financial-services firm realized
that for his people to increase their impact,
they had to be more closely tied to business
teams. So he embedded them into crossfunctional teams aligned around specific
products, relying on informal networks of
guilds and chapters to provide guidance
and light oversight. The most effective
“Can IT rise to the digital challenge?” October 2018, McKinsey.com.
The CIO challenge: Modern business needs a new kind of tech leader
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Sidebar
Questions for the CIO
• Do the questions about technology that leaders in the C-suite ask reflect a true understanding of the impact of
tech decisions?
• When you explain the ramifications of tech decisions, do leaders really understand you?
• How often do company leaders reach out to you for substantive guidance about how tech can improve their
business?
CIOs ensure this level of collaboration is the
norm within IT itself as well. This is particularly
important around cybersecurity. IT can radically
reduce cycle times and maintain effective
security by incorporating security early into
development and working closely with the
cybersecurity team on an ongoing basis.
5. Tech translator
In the past, IT transformations have often proven
expensive, time consuming, and short on value,
and this has made some companies leery of
undertaking them again. To address this issue
and build trust, the best CIOs play an active role
in educating leaders about technologies and
their applications for the business.
Make the business implications of tech decisions
clear
Many tech decisions don’t get sufficient business
scrutiny beyond cost and high-level strategy
discussions. Transformative CIOs don’t settle
for that kind of interaction, articulating instead
how a proposed solution solves the underlying
business problem, what alternative approaches
exist, and the pros and cons of each. The CEO
of a B2B technology-services company found this
level of insight so important that he asked the CIO
to present periodically to the board on technologyled business models.
This role was particularly important when a retail
giant was looking to acquire an analytics company.
The CIO and his leadership team were involved
from the very beginning in determining the data
and analytics capabilities needed to fulfill the
company’s business strategy. They performed
deep-dive technical assessments, system and
data-platform compatibility reviews, and tests
of vendor capabilities. The CIO ran a pilot with
a business unit and operations team for three
months to determine whether the final vendor
could deliver on its capabilities. At the end of
the process, the business was able to make an
informed decision.
These skills are the tools that enable a CIO’s
ability to transform IT. And in an increasingly techdriven business landscape, they position CIOs as
legitimate contenders to lead businesses as well.
Anusha Dhasarathy is a partner in McKinsey’s Chicago office, where Isha Gill is an associate partner and Naufal Khan is a
senior partner.
Copyright © 2020 McKinsey & Company. All rights reserved.
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The CIO challenge: Modern business needs a new kind of tech leader