CIO Role: How the new rules of competitive advantage empower CIOs

The CIO's role has fundamentally transformed from cost cutting and standardizing process to innovating. It’s time to help your organization study the new playbook on competitive advantage – and enjoy a refreshing change for CIOs
329 readers like this.
crisis leadership

I’ve learned countless important lessons throughout my career as a CIO. But in recent years (and especially since becoming CIO of Red Hat, an open organization) I’ve been surprised at how much I’ve had to unlearn, too.

One of the most interesting things I’ve had to reconsider, in fact, is my understanding of the means by which companies attempt to develop and maintain competitive advantage today.

The world is changing. Organizations are moving critical operations to hybrid cloud environments at an aggressive pace. And open source has become both the default option and the source of innovation in those environments.

The CIO role is evolving: We're beginning to think and act differently, especially with the partners we choose.

As a result, the CIO role is evolving. And we’re beginning to think and act differently, especially with the partners we choose, because ultimately our changing technical landscape offers great benefits – most importantly, enhanced choice, autonomy, and agency.

[ What's next for the CIO role? Read also CIO role: Everything you need to know about today’s Chief Information Officers. ]

What (I thought) I thought about competitive advantage

Like many of us, I learned that gaining a sustainable competitive advantage in a market came from establishing first mover advantage, erecting barriers to restrict new entrants, and proclaiming that a given solution was superior to alternatives.

Among technology companies, the thinking was that one company could (and should) provide everything CIOs needed to be successful. Those companies had the means to invest huge sums into R&D and find solutions from within their own organizations. In most cases, this resulted in proprietary solutions for customers – and the hope that those customers would never need anyone else. In other words, their focus was on creating products with comprehensive feature sets that gave CIOs everything they could need. They’d occasionally form partnerships, but those were rare – and frequently didn’t feature the customer at the center of the work.

And at the time, that seemed to work for CIOs.

The CIO's old and new roles

This worked when we were attempting to simply optimize, not necessarily reinvent or make bold changes.

It worked because at the time our principal functions were to control costs, standardize processes, and optimize operations. Given our remit, “innovation” felt like something better left to our “partner of choice,” and we relied on them heavily as a source of innovation.

This worked when we were attempting to simply optimize, not necessarily reinvent or make bold changes.

But now our roles as CIOs have fundamentally changed. The push toward hybrid environments and the prevalence of open source means we’re often the drivers of innovation in our organizations. And what CIOs once considered acceptable practice from vendors is no longer ideal.

We’ve recognized what was happening historically: We often found ourselves hitching our wagons to a single vendor offering its own solution to the problems we faced and vying to control that entire stack. Vendors could easily claim they were operating with customer needs at the forefront – but more often than not, their version of customer-centricity really amounted to helping their customers combine pre-existing products in specialized ways. Their offers to help customers build things had parameters. CIOs resigned themselves to relationships of reliance and indebtedness (not to mention the constant work of tailoring our thinking around specific parameters from a single vendor).

Today, that’s changing rapidly. And CIOs are benefitting.

[ Do you make thoughtful decisions? Read also: 4 styles of decision-making: A leader’s guide. ]

A new source of competitive advantage

Today’s best ideas can come from anywhere. In fact, more and more innovation is coming not from corporations but from users – practitioners who used these full stack solutions and simply understood the problem better and created solutions. They’ve taken those solutions and created open source projects around them, so everyone could benefit from their work.

Modern app dev, artificial intelligence, elastic storage and compute – every niche is the site of intense and productive competition moving the industry forward, and each of these areas is the result of user-driven innovation.

A single vendor can no longer pretend to excel at everything. So organizations are finding they need to study new playbooks for achieving competitive advantage in their markets.

We need to facilitate productive relationships between numerous vendors in a hybrid environment and co-create solutions with customers.

Today, an organization’s source of advantage is much less its ability to hoard and block and erect barriers. Instead, sustaining competitive advantage requires the ability to facilitate productive relationships between numerous vendors in a hybrid environment and co-create solutions with customers—that is, an ability to take an open approach and becoming the best at facilitating innovation. And we all need more of this.

[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]

New opportunities for CIOs

For CIOs, this change couldn’t be more refreshing. For one thing, it means the vendors they work with must absolutely operate with their best interests in mind. CIOs should be making sure they’re seeking partners who will serve as the best stewards for their interests, the best brokers of the relationships that will help them solve problems and succeed.

Today, CIOs are finding partners who are genuinely committed to helping them build new things, sometimes (oftentimes) things that require thinking outside the single-stack mindset. We’re all reinventing and transforming our respective organizations, and the “profit pool” is big enough for all of us to succeed.

CIOs should feel more empowered to think proactively about their challenges – to begin their planning unencumbered by the limitations that working with a single vendor might have placed on them. They can assertively put their fists on the table and demand that others work together on their behalf.

Some of us are already there. Others have more (un)learning to do.

Editor's note: This article was published originally on LinkedIn.

[ 7 new rules of the road for IT leaders: Get our infographic to learn from CIOs succeeding with digital transformation. ]

As Chief Information Officer, Mike Kelly is responsible for leading the information technology organization at Red Hat Inc., the world’s leading provider of open source solutions. Since joining the organization in 2016, Kelly has focused on leading the IT team as they provide the tools and technologies that enable Red Hatters every day.