The CEO of a leading consumer goods company was unhappy with his CIO. An important competitor was gaining market share at a disquieting pace by using social media and data analysis to target customers more effectively. When asked about these developments, the CIO outlined some potential responses, but he didn’t follow through on them. Instead, according to the CEO, the CIO remained preoccupied with “keep the lights on” IT projects and was therefore unable to gain traction with the business leaders and others within the company who would be critical in helping to address the new competitive challenge.
This type of disconnect—between what’s top of mind for CEOs and the attitudes and abilities of IT leaders—is all too common. The symptoms will be recognizable to many executives. IT leaders are often trapped in the status quo, their principal focus being to keep a company running in the face of sharply increasing demands and tight budgets. A lot have the desire but lack the capacity to deliver beyond basic IT needs.
Meanwhile, many CEOs we know confess they have little knowledge of where IT money is spent, how that spending squares with technology opportunities and threats, or how to improve the fit between dollars and strategic priorities. What’s more, the CEO’s engagement with the IT organization is fleeting, occurring primarily at budget time and thus reinforcing the idea that IT is a support function that should focus on low-cost service. That engagement can also be frustrating, as when delays and cost overruns plague big projects.
Dealing with this disconnect has acquired new urgency as the financial stakes rise1 and new technology trends—the growth of big data, the proliferation of smartphones, cloud computing, heightened levels of automation enabled by embedded sensors and the “Internet of Things”—shape strategy and disrupt business models in unprecedented ways.2
CEOs who aren’t continually asking themselves and their organizations how they can harness trends such as these to change the game are likely to get blindsided. To avoid that outcome, they need to shake things up by inserting themselves into the technology debate—difficult though that may be—and insisting that meaningful conversations take place.
As part of our work with McKinsey’s Center for Business Technology, which researches the role of technology in changing business models, we have identified several ways to provoke these discussions. One good way is to ask executives throughout the company whether (or how) competitors could be using technology to leave it behind. Another is to push leaders to broaden their line of vision to include technology shifts in other industries. These aren’t the only ways of framing the conversation, of course (for ideas on how senior executives can stir up organizational thinking about big data, see “Seizing the potential of ‘big data’”). But they are often a good starting point. To illustrate the benefits, we’ll focus on the experience of executives at an insurance company and a grocery retailer. These companies began using technology more strategically to reinvigorate themselves after their executives asked some tough questions.
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