How to inspire and make way for innovation
No one would disagree that it’s now imperative for an executive team to understand technology. At the same time, every executive, IT or otherwise, must also have deep business acumen. For IT leaders, a combination of IT and business acumen, along with being passionate about what you do for your business, is what drives innovation.
Today, technology is the disrupter. Of course, this has been true in the past, but now technology is the primary way businesses transform. Just look at the S&P 500. In 1958, U.S. corporations remained on that index for an average of 61 years, according to the American Enterprise Foundation. By 2011, it was 18 years. Today, companies are being replaced on the S&P approximately every two weeks. Technology has driven this shift, and companies that want to succeed must understand how to merge technology with strategy.
All of this comes naturally to start-up companies. Why? Because they’re not born out of an IT organization or a business organization; they’re born out of solving problems. You could say this should be natural for technology companies, but, all too often, IT is thought of as an efficiency and productivity boost, or as a path to cost cutting. It’s easy to measure, so it’s easy to put technology into a box. But the role of technology leaders is changing. IT leaders need to shift their thinking from being a service provider to driving business value.
How have we tried to foster this thinking in our IT group? Here are a few practices to consider.
Companies don’t have the luxury of being complacent. Today it’s "disrupt or be disrupted." Within the financial services industry, we have seen a rise of unconventional competitors. Small FinTech companies have grown swiftly, and we’ve also seen established technology companies become global players. IT leaders need to shed the cost-center mentality and become top-line producers.
We often use the hedgehog concept introduced by Jim Collins as a benchmark to determine if our strategy aligns well with our organizational mission. The hedgehog concept encourages organizations to consider three things: what are you passionate about, what drives your economic engine, and how can you be the best in the world for one individual thing? By considering these three questions, we ensure that what we’re doing in IT is aligned to Vanguard’s mission to take a stand for all investors and give them the best chance for investment success.
When I first joined our senior leadership team at Vanguard, two of my fellow managing directors had preceded me as head of our IT organization. This kind of rotation is key to giving business executives both a strong understanding of technology and a deep appreciation for the critical role that technology plays in shaping our organization.
Rotations need to go both ways, too. Although I started my career in very traditional IT roles, I made several major rotations leading our High Net Worth and Advice businesses. These roles were challenging, but they gave me valuable insights into the business. I’m a better CIO after having run those areas at Vanguard.
Technology leaders need to create a culture of continuous learning by empowering teams to experiment and fail quickly so that they can learn from their mistakes. Technology can certainly help facilitate this, but that mindset needs to be built into the company’s culture.
The whole idea of creating a continuous learning environment in any company is to deliver business value at start-up speed. Those are some of the things that CIOs still struggle with, but if you can master these points, you can continue to lead the market based on your existing brand and experience.