Fire Your CIO

by Mike Abramsky, Principal, Red Team Global. This article appeared on Friday October 5 2012.

Do you stifle productivity – or shoot the CIO?

That’s the dilemma increasingly faced by CEOs. With the rise of tablets, smartphones, social media, apps and personal clouds, we are in the midst of a profound computing shift, perhaps the greatest technology revolution in the enterprise since the invention of the PC. But the IT department with its risk-averse, slow-moving, heavy-handed culture threatens to torpedo hoped-for productivity.

This revolution is more than just technology; some CEOs recognize it as early days of Retooling the Enterprise. The ease of adoption of these new tools means non-technical staff can pursue faster, more flexible, informed, collaborative and cheaper ways of working. Employees are bringing their own tablets, Smartphones, laptops, and are adopting powerful and free software such as Workday, Salesforce, Dropbox, Twitter, Evernote, Facebook, Google Docs and Apps.

Every business process is up for reinvention: sales, marketing, product development and support, offering higher productivity and employee satisfaction. This is just the beginning; the PC took 10 years to revolutionize business: imagine what may be possible 10 years from now.

This shift, however, wields a double-edged sword: while enjoying the freedom to adopt technologies of their choosing, few employees grasp the security, regulatory, scalability, integration and other risks and costs these new tools create.   In one large organization we talked to, the VP of Sales who demands iPads for all her sales reps, confronts an intransigent CIO worried about security and ROI.  The CEO wonders, “Is the IT department impeding innovation? Or are we opening ourselves up to a massive security breach? Are these tools essential to competitiveness, or are they just expensive toys?”   Unauthorized adoption by an employee of a seemingly risky, insecure and unreliable technology today could be the source of a dangerous security breach or an important competitive advantage tomorrow. Or perhaps both.

Caught in the middle, many CIOs struggle to respond.   Today, CIOs get fired for a damaging security breach, regulatory violation or a systems crash.  Tomorrow, CIOs may also get fired for missing out on important innovations.  This circumstance mirrors the rising adoption of PCs and client/server-based systems in the 1970s when many CIOs steadfastly viewed IBM mainframes as safer, more scalable and reliable. It happened again with the Internet in the 1990s when new competitors usurped laggards too slow to embrace it.

Claims that IT has become irrelevant are overdone. Technology is getting more complex; security risks matter more than ever. IT will continue to do certain things well: managing core transactional systems, storage/hosting/cloud infrastructure, networks, databases and legacy enterprise infrastructure and applications. But the IT department of the future is going to be smaller, forgoing formerly proprietary tasks for cheaper, externally-provided – and often employee-sourced — computing.

Retooling demands a new CIO mandate: supporting and nurturing nascent and productive work innovations, some of which disrupt long-established IT culture and policies.  A progressive CIO we talked to observes that useful innovations initiated by employees and vendor partners – rather than inciting anarchy – are helping build a more productive, effective organization.  This doesn’t mean being soft or naive when it comes to security and other risks.  Allowing personal, productive technology to flourish, while securing important data and addressing inappropriate use (e.g. games, pornography) means helping employees be smart, while keeping them from doing something stupid.

Nurturing serendipitous innovation – while mitigating risks – requires a new CIO mindset, including learning by doing: first observing employees, customers and partners are doing, asking what else they want, determining the benefits, assessing the risks, then figuring out how to do it in the most scalable and secure way.  It requires avoiding lengthy approvals, heavy-handed policies, complex and cumbersome software which can crush employee initiative.

It also means working with new, sometimes tiny, unproven vendors, many of which can’t yet scale, or will fail — while a few may become tomorrow’s Cisco, SAP, Oracle or IBM. Many CIOs today are too influenced by big, incumbent software and service vendors; some of whom may be cannibalized by these new technologies and are concerned with preserving their status quo.

Retooling demands strategic leadership, including CEO-driven ‘Retooling Principles‘, high-level guidelines for addressing these disruptive new tools.   Apple’s secrecy principle, banning employee use of social media, is one example.  A fact-driven risk-reward approach may help assess the potential benefit of new innovations against their actual risks.  Do we allow new innovation at the cost of a redundant infrastructure? Do we allow an untested sales ‘app’? What about self-service access to critical data? How do we avoid corrupting the database? When do we force a solution, or say no?    New, ongoing processes and steering committees are required – led by business managers, with IT input – similar to those in place for developing new business, managing risk or finalizing budgets.

There are many progressive CIOs. Others may not make the leap, or be capable of overcoming an ingrained intransigent inflexible, risk-averse IT culture. But you can’t fight the future.   Given the high stakes, retool proactively, before smart employees find a way around you, and faster-moving competitors disrupt you.

Mike Abramsky is principal of Red Team Global, which facilitates technology innovation via collaborative workshops and consulting.

Who could update RIM’s status? Facebook

by Mike Abramsky, Principal, Red Team Global

Research In Motion has lost the smartphone war. With its global market share at 7 per cent, down from 21 per cent in 2009, RIM has ceded the very market it created to Apple’s iOS and Google’s Android smartphone platforms. Yet RIM still boasts 75 million subscribers, $18-billion in annual revenues, relationships with 110 carriers, customers in business and government, numerous patents and a global presence – all of which could be more valuable in the hands of a company that needs a stronger mobile presence, such as Facebook.

Still fighting, RIM has reorganized and is planning to launch a new software operating system called Blackberry 10. Sadly, it’s all too little, too late. RIM waited too long before taking these competitive threats seriously. In the fast-paced and brutally competitive smartphone game, RIM missed fundamental shifts in the end-user market as Apple redefined what consumers expect from a smartphone.

RIM simply has lost too much momentum with consumers, carriers, enterprises and developers to recover.

Selling the company seems the best strategy now. There is much at stake: RIM employs thousands, and investors may still extract value. While RIM appears willing to consider bids, it appears (so far) that there are few takers for the handset business. But RIM’s real worth does not reside in the handsets or Blackberry 10; the company’s hidden value lies in its global network and lucrative services. RIM gets a small share of wireless revenues from each subscriber, which could be highly valuable in the hands of the right acquirer. One such buyer could be Facebook.

It’s well known that Facebook has a serious mobile problem; 40 per cent of its 900 million users are accessing Facebook through a mobile device, but Facebook struggles to monetize them. Further, Apple and Google control the two dominant smartphone platforms and can tightly integrate their own social networking and other applications, giving them priority over Facebook, which is just another mobile app. This threatens Facebook’s growth and dominance as the world shifts away from the PC.

By opening up RIM’s network to Android, Apple and Windows-based smartphones, Facebook can deliver ubiquitous, instantaneous mobile messaging and social networking (chat, sharing content, etc.) with RIM’s trademark addictive “crackberry” messaging experience. RIM’s network also offers Facebook a much-needed distribution platform for smartphone apps and content, atop which it could begin to innovate and sell new services.

Consumers are shunning e-mail and SMS in favour of chat, Skype and mobile messaging. Because of RIM’s network efficiency, a Facebook-enabled smartphone would be affordable, allowing for cheap “Facebook” data plans. According to comScore, a typical consumer spends 441 minutes a month on Facebook mobile, and in my household with two teenagers, Facebook consumes most of our mobile data bills.

RIM’s presence in 175 countries, where low-priced Blackberry messaging plans have driven its popularity, would also help secure Facebook’s mobile global objectives. It would be challenging for Apple or Google to replicate the interconnection of RIM’s network to its worldwide carrier partners.

RIM also addresses another big Facebook problem, illustrated by its struggling stock price post-IPO: growing its revenues and earnings to justify its lofty valuation. In the last 12 months, RIM’s services business generated $4.1-billion in revenue and $3.3-billion in gross profit, which would double Facebook’s current profits. RIM investors expect these services and profits to decline, but under Facebook, with its powerful global reach, installed base, brand and software innovations, these mobile services could prosper, boosting Facebook’s share price. Facebook would also get talent and patents to help fight the wireless war.

RIM management may not yet be ready to accept this tough reality, as it implies shutting down or selling off the handset business. But the handset business is dying anyway. Given the stigma over RIM’s recent poor performance, some Facebook investors will balk. Yet RIM’s current low valuation makes the economics of buying it for the services business alone more attractive. Facebook, in fact, may not be the only acquirer candidate under this scenario, which may expand the number of potential bidders, to the benefit of RIM shareholders.

While it would be sad to see a Canadian business icon go this way, this approach still allows RIM to save jobs and live on as part of the smartphone industry – before it’s too late.

This post also appeared in The Globe and Mail – Wednesday May 23, 2010.