Leadership vs. Management

In general people hired as revenue generators tend to be better at it than people hired as IT administrators, so most of the time IT parasitism is accompanied by decreases in corporate productivity per overhead dollar.

This is the tenth excerpt from the first book in the Defen series: The Board Member's IT Brief.

Note that this is a draft for a new bit to be inserted before the extract published last week - a response to the many comments received based on my perception that a lot of them derived from my failure to properly frame the hiring decision before discussing technology alignment.

Basically I think that discussion raised some very difficult issues - and that by itself justifies my decision to ask for help with the book (many thanks!) - and I'm quite sure I'll be re-writing this section at least once more before it's finished.

In that same vein I've also added a new second paragraph to section 3.2, which now starts:

In choosing a CIO, the cardinal rule is to pick someone whose skills align with the technology you have or want. Management processes form a critical piece of your information architecture and are not the same across all technologies - expertise with respect to one is usually counter-productive when applied to another

Notice, however, that real world IT, especially in larger and older organizations, is often characterized by a virtual dog's breakfast of competing technologies. What you want to do is pick a mainstream, not the only one, but the one you have or want to get to as the primary driver for IT behavior and use in your organization.

3.1 the CIO and IT role

The most important thing you can do before reviewing resumes or interviewing candidates for senior IT management positions is to think long and hard about how you want IT to work in your organization - because you should expect that the guy you're hiring is going to play a big role in making that happen, or not happen.

Be aware, however, that quite a lot of CIOs have no actual role in systems operations but act, instead, merely as figureheads interfacing the real IT head to other senior managers. Thus if you find that your other senior people are really looking for someone just like them who happens to speak a little geek, your biggest problem isn't choosing a new CIO -you have one in place - it's what to do about the other players participating in the charade.

Very broadly speaking, systems operations present themselves as either cost sinks or revenue generators - but be careful because a lot of cost sinks like to pretend to be revenue generators and you may have to look closely at the typical fence straddler to see which side the majority of the operation actually falls on.

Despite the sales appeal that goes with a revenue focus, however, you'll find that most CIO candidates present themselves as cost minimizers - typically telling resume readers how they've saved their more recent employers just enormous chunks of change -- but if you read carefully and maybe make a few calls to references, what you'll find is that the hallmark of IT career success is having your share of the overall corporate budget increase every year.

Part of what's going with that on is that head hunters make their decisions on which resumes to present based on perceived majority expectations, and therefore usually won't present an IT guy who has consistently cut his own budget and span of control.

What you normally get, therefore, are lots of candidates who claim to be cost minimizers, but actually increased overhead expenditures in every management job they've ever held - and what that means as a corollary is that if you want someone who really will cut IT costs while shifting control to users, you'll almost always have to rely on the grapevine instead of the head hunters.

Review enough resumes and you'll see that there are three main ways CIOs achieve claimable savings while increasing budgets. The first, and easiest, is to rely on the operation of Moore's law to bring down capital costs each year: "Reduced IT capital budgets from $16 million (annualized) to only $9 million - achieving a 77% saving!" - and simply not report on the resume that staffing, consulting, and software costs increased significantly more.

The second, and most objectionable, method is to institute or expand user department billbacks for IT services and recognize consequent reductions in the annual budget requisition as savings - while, in reality, of course, IT costs are sky-rocketing along with user resentment and rebel IT.

The third, and sadly most common, strategy derives claimable company wide savings from the fact that the combination of IT control centralization with IT efforts to find and sell new and more efficient user work processes often demoralizes users, turning the control shift into an avalanche and letting IT assert ownership of an ever larger chunk of user resources while justifying each step on short term savings.

What's going on with these kinds of strategies is that the candidates involved see IT as inward facing: as vehicles for personal and career growth; and is fundamentally a consequence of IT's original organizational posture as a function brought in to cut transaction costs in Finance.

In general, however, people hired as revenue generators tend to be better at it than people hired as IT administrators, so most of the time IT parasitism is accompanied by decreases in corporate productivity per overhead dollar - but be aware that most of the time is not all the time, and you have to think carefully about what you want IT to do in your organization and correspondingly how you want to manage it before embarking on your CIO quest. ---

Some notes:

  1. These excerpts don't include footnotes and most illustrations have been dropped as simply too hard to insert correctly. (The wordpress html "editor" as used here enables a limited html subset and is implemented to force frustrations like the CPM line delimiters from MS-DOS).

  2. The feedback I'm looking for is what you guys do best: call me on mistakes, add thoughts/corrections on stuff I've missed or gotten wrong, and generally help make the thing better.

  3. When I make changes suggested in the comments, I make those changes only in the original, not in the excerpts reproduced here.