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When it comes to IT management are you a one-hit wonder, only as good as your last ERP, CRM or network implementation? Or do you consistently add business value and contribute to the positive financial performance of your company? Are you an innovator or a maintainer?
If you can answer these questions, you probably know your “Stock Price” in the organization. If you can’t, the place to start is benchmarking. You need to ask yourself hard questions and gain feedback from those you trust.
Start with a few “Tip of the Iceberg” questions because the many facets of who, what, why, when and how will be lurking just below the surface. Think Titanic. If you know what exists both above and below the surface, you can steer away from activities that don’t add value and avoid sinking the ship!
1. Are you a trusted adviser to the CEO? Does the CEO’s inner circle seek you out to help solve business problems and interact with key clients?
2. Does your organization drive real innovation and business change?
3. Does your CIO (or you) report directly to the CEO or to another C-Level that reports to the chief executive? The reporting chain relationship is a leading indicator of the value the board and the CEO has placed on your organization.
4. Does the senior IT leader drive the company’s risk mitigation strategy and is he an integral part of the organization’s succession plan?
5. Does the senior leadership of your IT organization cross-pollinate and take short growth assignments with other business operating units — sales, marketing and finance — to bring knowledge capital and business experience back into your technology organization? If you and your team don’t understand the business at the core, you can’t use technology as a tool to solve problems, right?
6. How is infrastructure funded within your organization? Does funding and allocation occur at the enterprise level or by project?
7. Are you treated as a separate business unit with your own P&L or do you really only manage cost-recovery activities and charge backs to other business units.
8. How broad is your span of influence and control? Does your organization only manage applications and infrastructure, or do you provide generalized business services and multiple service lines, each with leaders responsible for sub P&L lines? This could be everything from supplier management to real-estate and even the cafeterias in your manufacturing facilities. I know of one CIO who also carries the title of President, General Business Services; he’s one of his company’s biggest suppliers and it’s clear that this man has an equal seat at the table with every other business operating chief.
9. Does every member of your organization understand they are directly responsible for client satisfaction and do they take it seriously? Note to self: If they don’t, reconsider the talent comprising your leadership team!
10. Could your organization be spun off as a separate operating company tomorrow? Could you operate as a separate entity selling your services back to your parent company and to third parties? Said another way: does your team understand process (think ITIL), product development/management, product marketing, sales, client service management, maintenance, billing administration, finance, human resources, and, finally, can your products scale across business units? If they don’t, you don’t understand the business you are in.
Contributing to shareholder value
It is said that Steven Jobs bets the business every time Apple develops and releases a new product. Based on Apple’s track record, it’s hard to imagine he would have risked shareholder value unless he had an integrated leadership team that understands each other’s business and the cumulative effects of capital allocation and the results for each project leading up to launch day. Ask yourself, “Where can my technology organization make the greatest measurable contribution to overall company shareholder value?”
Is it:
• Revenues and earnings growth?
• Capital spending and placing the right “business bets”?
• Cost reduction?
• Cash flow management?
• Marketing and advertising?
• Developing new distribution channels?
• Time to market?
• R&D and Innovation?
By now, maybe you have done a thumbnail assessment and have some of the answers to these questions. After you draw your own conclusions, ask yourself this question: “Is our industry so competitive that my organization must provide a noticeable competitive advantage across each of these areas to advance our business, or are there niche areas where the CEO/board/other business unit leaders can derive the greatest value by engaging with my organization to transform the business?”
Here are some other market indicators to predict where your organizational “Stock Price” falls within the bounds of your company:
• Do you think these elements are much different than the basic economic indicators that the analysts on Wall Street use to evaluate your company as a whole?
• Why should they be any different for you as the technology business leader?
• If you can articulate what each of these areas mean to your company’s strategy and how your organization directly makes an impact or contribution, then chances are you are strategically aligned with the goals of the business. Congratulations, you get to keep your job.
Increasing your value
However, it’s not just enough to understand the business and to be strategically aligned. Raising your stock price requires shifting your organization and changing the culture. It’s about doing things differently and playing your game differently than you have ever played it before. It’s a dynamic process that means that every single one of your goals and objectives need to be in lock-step with those of the business and there is an influential business result for every action or IT investment that you make.
It means jettisoning activities that do not create value. It means being nimble enough to align your organization with shifting business goals and anticipating the needs of the business ahead of the game. It means reducing the cycle time from the creation of an idea to revenue realization. That in itself delivers business value by delivering more revenue sooner. It also means creating the need instead of waiting for the business to come to you with a problem to solve. By then, the game changing business opportunity has already sailed. Again, another missed opportunity for your organization to create value. In order to drive the process you have to be willing to think outside the box and take some calculated risks.
Regarding the earlier question of whether you are an innovator or a maintainer, here’s a simpleton viewpoint: Innovators make plays that make business happen. They are nimble, see what’s going on on the field, the sidelines and the background behind them; they have the ability to quickly assess the landscape, seize the opportunity, take action, and change the outcome of the game.
Maintainers can keep it running, they can control their budgets, meet the low-balled service-level agreement (which they probably set), and even make their function transparent to the business. But when that’s the case, just outsource it. It is a commodity and doesn’t help to differentiate the organization.
A CEO would be better off to hold someone who has an equal lack of understanding of the business to a better SLA; this is someone who probably has better processes and someone who can deliver it at a lower cost. Game over. He just saved the CIO’s salary and bonus check and he can focus his time on someone who is interested in being a leader, being innovative, and ultimately delivering new business.
While we are on the subject of innovation, what is real innovation? Simplistically, it is breakthrough work. It’s the transformation of an industry or creating a competitive advantage with a new product or technology.
Have you heard of the square watermelon? In Japan, retail culture is much different than the United States and shelf space is limited. Japanese retailers have space limitations and as you can imagine, so do Japanese consumers. The typical Japanese refrigerator is smaller and more efficient than the super sized 20-to-23 cubic foot monster in an American home.
You have probably seen the giant boxes of watermelon on a pallet in a typical U.S. grocery store. Stop for a minute and think about how much floor/shelf space that pallet consumes. Think about how much space in your refrigerator that watermelon takes up.
Recognizing that problem, a group of Japanese farmers developed a square watermelon by growing the fruit in a plastic box, so it would take on a square form as the fruit develops. Farmers have been growing fruits in bottles or other containers for centuries, so the idea in itself was not new. However, the innovation was in the application.
This agricultural technique or “technology” transformed product packaging, the distribution channel, use of shelf space, marketing and the price of watermelons! Instant value creation at its best!
So, how can you drive change, increase the value of IT and drive up your stock price? Here are some things to consider:
• Position your organization to become a business within a business. At the same time, encourage your team to treat their job as their own business and to be entrepreneurial.
• Become a marketing organization. Market your services within your company and ensure that your senior leadership team engages externally, and presents and participates in industry events.
• Become a metrics-driven organization. Know your business and the impact that it has on the business.
• Question your organizational habits. Do you hire and promote the same kind of people year after year, or, do you move people in and out of your organization to broaden your inventory of intellectual capital? Consider giving each of your developing leaders a “broadening” assignment outside of your organization and then bringing them back in at a later date.
• Consider hiring non-IT professionals into your organization and growing them. Technical skills are typically logical, repetitive and straightforward. If the basic aptitude is present, then it can be reduced to a training issue. Business skills are cognitive and artistic. Diversity of thought solves many problems.
• Seek every opportunity to contribute to shareholder value, whether it’s across the board or a niche that adds velocity to the business.
• Be innovative and creative. Don’t settle for running an efficient IT shop and just delivering the “nines”. Seek opportunities to engage in breakthrough work that directly contributes to growing the business and the bottom line.
• Become client focused. In the end, clients ring the cash register.
Challenging yourself on all these fronts will help you add real business value to your organization and raise your personal stock price.
Five Nines, LLC is a management and technology consulting firm that specializes in the development of IT and infrastructure management strategies, practices, and reliable solutions. Buck can be reached at kbuck@fiveninessolutions.com
