Deloitte's CIO report - culture and talent present a digital obstacle

Profile picture for user jreed By Jon Reed December 6, 2016
Summary:
The UK version of Deloitte's CIO survey is a revealing look at CIOs in transition - and the talent issues holding them back. Here's my critical review.

businessman-in-gap

The 2016–2017 UK edition of Deloitte's CIO survey is entitled Navigating legacy: Charting the course to business value (free download available).Though the 68 page report is heavy with digital buzzwords, the data speaks to the dilemmas CIOs continue to face between operational duties and deepening their business relevance. For this review, I'll hone in on tensions on talent that may block the CIO's path.

Deloitte compiled the survey with "in-depth interviews and online surveys" of more than 1,200 CIOs from 48 countries and 23 industries. More than 25 percent of UK respondents were from the FTSE 250. Perhaps the survey's biggest takeaway:  "expectation gaps" between what IT is able to currently deliver and what the business expects are often wide. Examples:

  • 78 percent of CIOs said that "strategic alignment of IT activities with business strategy" was crucial to their success. But only 5 percent considered it a leading-class capability.
  • 57 percent of CIOs said the business expects them to assist in business innovation and developing new products and services. However, more than 50 percent said that either "innovation and disruption priorities currently do not exist," or they are still being developed.
  • The security issue might be the most concerning gap. 61 percent cited cybersecurity as a core expectation (I'm surprised that number isn't higher). But only 10 percent of CIOs said cybersecurity and IT risk management are a top business priority.

I worry about these types of gaps because expectation gaps often lead to funding gaps for those priorities - a self-defeating cycle. That's a dynamic we see in the talent data I'll get to shortly.

Before we go there, a word about terminology. Deloitte uses three fancy terms for the CIO personas they identified:

  • Trusted operators - these are the core operational IT functions business expects from CIOs, expanded to include enabling technologies for business transformation efforts.
  • Change instigators - these folks move beyond enablement to take the lead on "technology-enabled business transformation and change initiatives" in their organizations.
  • Business co-creators  - these CIO personas "spend most of their time driving business
    strategy and enabling change within their businesses."

Another "misalignment" Deloitte found: CIOs spend their time differently than their ideal allocation:

cio-pattern-journeys

Figure from Deloitte's 2016 CIO report, Deloitte University Press

Based on these dilemmas, Deloitte advises CIOs to take these five actions:

  1. Be adaptive - you're not limited by a personality trait or work style.
  2. Invest in talent  and capabilities to drive value.
  3. Rethink digital  - define digital based on your business context. Be prepared to drive digital strategy rather than simply enable.
  4. Cast a wider net of relationships and influence - maintain key stakeholder relationships inside and outside the company.
  5. Step up or step aside - As Deloitte puts it, "CIOs are at an inflection point" - regardless of industry. Though "step aside" is hardly realistic advice, it matches up with my view, step up or become irrelevant, and get pushed aside.

If you find these recommendations a bit broad and generic, that was my biggest problem with the report also. However, when you download a copy, be sure to get into the appendix where Deloitte presents a number of concise and illuminating data charts.

As for the talent aspect, the data posed some confusions for me. Those confusions illustrate the tensions between talent as essential to business change/CIO relevance, and companies' overall tepid investment in talent versus other priorities. For example, in the appendix, we see that talent placed a meager seventh on the business priority list at 15 percent:

talent-not-a-priority

Figure from appendix of Deloitte's 2016 CIO report, Deloitte University Press

This might lead us to assume other issues are more important than talent. They are certainly beating talent on funding. But when it comes to executing on change, CIOs do not take talent lightly. Though only 15 percent cited talent as a business priority, 45 percent of CIOs "identified engaging, motivating, and acquiring talent as essential for success." Deloitte reflected on the problem:

In our interviews, many CIOs talked about their talent challenges: years of reinforcing mediocrity as the expectation, a hesitation to make the tough calls, the inability to secure the right talent to build the right capabilities—all which may lead to a suboptimal IT culture. We found that many CIOs we spoke to are actively looking for ways to shape and sometimes even transform their cultures because they realise that to keep high performers, their culture has to support, encourage,and engage those professionals.

Easier said than done. Talent is also a moving target. Yesterday's talent initiatives don't cut it for today's digital needs.  Moving from so-called "trusted operators" to "change instigators" means "strategically infusing talent" while motivating current staff. That gets back to culture. A culture of risk-taking and "focus on outcomes" is not exactly typical to most IT departments. Deloitte quoted a "change instigator" CIO that likened talent to sports, where a lack of talent inhibits the best strategy.

“You can have the best plan, you can have all of these pieces, but if you don’t have the talent to get the job done, who cares? It’s like professional sports. You can have the best strategy in the world, but if you don’t have the talent to drive it, you’re done, you’re out of it. The reason I’ve been successful, and why my team is successful, is because talent I have on the team drives everything.”

My take - the talent gap is a CIO struggle

Though talent and culture didn't get top billing, it is in the top five of the CIO's priorities, across all three personas:

talent-top-five

Figure from appendix of Deloitte's 2016 CIO report, Deloitte University Press

While strategic alignment with the business was clearly the top capability cited in the survey, CIOs noted gaps in their ability to deliver on all five. Respondents were asked to note which of the five capabilities are "currently being built or do not exist." Of the five, three were in the 20 percent range. But the other two were in worse shape. 43 percent of CIOs said the "innovation and disruption" IT capability was "currently being built or does not exist", while talent was at 37 percent.

While talent is not the CIOs top priority in this survey, it's much higher than for the business as a whole. At the same time, a full 1/3 of CIOs surveyed do not feel they can deliver on the talent agenda they've identified. The lack of business priority would imply there is also a funding issue.

This is not the easiest survey to decipher. But if you can wade through branded language like "CIO pattern journeys," there is plenty to chew on here, include a nature-versus-nurture personality types analysis, as well as more data on digital transformation.

I'd urge a bit of caution with the emphasis on customer experience. While it's clearly a key business priority, it looked to me like the apparent lead of CX was impacted by the exceptionally high value attributed to CX in customer-facing industries like financial services, travel, media, hospitality and professional services.

The report doesn't address talent platforms, which I believe will play a vital role as CIOs look to external talent sources beyond the classic outsourcing model. As I wrote last year, platforms bring plenty of ethical and logistical considerations. But CIOs may find that these platforms are useful for farming out smaller "gigs,"  - and as recruitment assets.

In my piece on the so-called talent crisis, I argued that too many companies cultivate mediocre IT administrative skills, while paying a premium for external talent on a contract basis. If CIOs want to succeed as change agents, they need new models. For example, Bryson Koehler, EVP, CTO and CIO of the Weather Company, an IBM Business, who has figured out how to stay lean AND talented:

  • Automate wherever possible
  • Use free/open source tools
  • Use SaaS where possible (Koehler would rather pay a salary to a developer/engineer than to a
    person to just manage infrastructure tooling)
  • Focus FTEs on the “new stuff” and utilize third party services to do manual testing, regression testing, and hardware certification

Those types of specifics were missing from the Deloitte report, but that's the kind of conversation on talent CIOs need to have next.