Peeking into the mind of the CEO


Just when IT departments have gotten used to the idea of being revenue generators and engines of business innovation in addition to service providers, chief executives are adding new areas of responsibility to the CIO's roster. Challenged not only by the imperative of making a profit, CEOs are worried about uncertain economic conditions, natural disasters, regulatory compliance, research and development and rapidly changing customer demands. They are relying on IT not only to solve these problems while coming up with new products and services, but also to enable new business models altogether.

Two surveys I came across last week offer a peek into this new mindset of the CEO and reveal the extent to which they are placing their hopes and dreams in IT. PricewaterhouseCoopers issued its “15th Annual Global CEO Survey,” based on responses from 160 U.S. CEOs. The Economist Intelligence Unit released a study, “Agent of Change: The Future of Technology Disruption in Business,” based on input from more than 500 senior executives and managers across the globe.

The PwC study reveals a self-interested optimism on the part of senior executives in the face of gloom about the economy overall. While nearly half (48 percent) expect the global economy will decline this year, 40 percent expect their own companies will grow. They seem to be letting go of the “wait and watch” approach, but they are concerned about talent shortages as globalism and technology “continue to change the nature of work.”

PwC found that almost all of the CEOs they surveyed are revising their innovation strategies. A full 72 percent are concentrating on developing new products and services within existing business models. CIOs have been instrumental in developing new, IT-enabled products and services for some time now, and this role is becoming entrenched. But what role will IT leaders be asked to play to help drive growth for senior managers who are not looking to new products and services as the engine?

The EIU study, which was sponsored by Ricoh, suggests one answer: CEOs are now looking to CIOs to help develop new business models altogether. In effect, they want IT to enable new operating paradigms for how the company does business.

Of the “megatrends” EIU identified, technological progress is expected to have the most direct effect on how companies operate and are organized. Senior executives anticipate that technology disruption will be ongoing over the next 10 years. The disruptions will spur new business models, organizational structures and jobs themselves, the EIU researchers predict.

One-tenth of the study's participants fear that their own organizations will no longer be around in 2020. Meanwhile, 60 percent say their main vertical market will be barely recognizable by then. Data analytics, automation, virtual collaboration and customer-led innovation are expected to drive much of the change in the business models.

The EIU researchers make it clear that the technologies alone won't improve business models. Instead, the technologies must lead to changes in business processes. Without a doubt, the ever-increasing scope of CIO responsibilities will require a broader understanding of the business and financial insight. To have the greatest results, though, the expanding role must embody expanded authority. If CEOs really expect CIOs to transform the company's business model, they better make sure they have sufficient power to effect change. - Caron