6 ways CIOs can be more like venture capitalists

VCs understand risks and returns -- a skill chief information officers need as well.

There's been no end to speculation about what's been happening to the CIO's role -- from full-fledged corporate partner to digital instigator.

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But Deloitte's Tom Galizia and Chris Garibaldi say that CIOs are actually evolving into an entirely new role within the walls of their organizations. In a new report, they suggest that CIOs are well-positioned as the "venture capitalists" of their organizations.

It makes sense. In many ways, CIOs listen to a lot of pitches and make decisions on investing large amounts of funds. They need to assess risks and returns. Once they have made their investments, they need to keep evangelizing the approach taken, as well as keeping tabs on how their money is being spent.

The only key difference is CIOs use other people's money, while VCs are likely putting their own money into ventures. Galizia and Garibaldi also add that CIOs and venture capitalists are worlds apart in many ways. "CIOs can’t shoot from the hip on risky investments. They provide critical services that the business simply can’t do without, where the risk of getting it wrong could be catastrophic."

However, CIOs can learn a lot from VCs as well -- "balancing investments in legacy systems, innovation, and even bleeding-edge technologies; understanding—and communicating—business value; and aligning talent with the business mission."

VCs "operate in a high-stakes environment where extraordinary value creation and inevitable losses can coexist inside a portfolio of calculated investments," Galizia and Garibaldi point out. "So do CIOs."

Portfolio investment strategy: Juggling and balancing portfolios are part of the CIO's job. The trend in enterprises is to create a portfolio approach to IT -- 38% have done so in just the past year.

Determine valuations: "A CIO with a VC mindset doesn’t just report on the organization’s to-do list or inventory of assets; the CIO communicates the quantitative and qualitative value the IT organization contributes to the business," Galizia and Garibaldi state. 

Handicap: "Make sure you are getting what you need in order to provide what the business wants from IT," they write. "And be ready to reevaluate in light of market shifts, M&A events, or leadership transitions."

Hedge: "Build a concession architecture that allows you to port assets to different players or to shutter underperforming investments or partnerships in order to move on to the next opportunity."

Promote, promote, promote: "Understand your current brand permission, then build awareness about IT’s mission, effectiveness, and vision," Galizia and Garibaldi say. "IT should be a board-level topic—recognized as one of the crown jewels of the company. Externally, it’s important to attract talent—and attention. Even some leading VCs have launched PR and marketing efforts."

Broker talent: VCs have a knack for spotting talent, and knowing what it takes to keep talent on board and motivated. "CIOs need doers and thinkers just like VCs, but they also need leaders. Use this age of innovation as a means to launch initiatives to reward and retain demonstrated talent with the curiosity and horsepower to help lead growth," the authors write.