We are in an era where technology changes so rapidly that it is hard to recognize the latest and greatest product or service. Often the upgrade to the next platform or version is costly, time consuming and sometimes disruptive to production, and it would be easy for some organizations to be willing to settle for a technology platform that is merely "adequate". However, in order for today's firms to be competitive, they must remain on the "cutting edge" of technology in order to meet the demands of their clients and stay ahead of their competitors. The challenge for some Chief Information Officers (CIOs) is how to influence decision makers from an attitude of settling for adequate (satisficing) to striving for best (optimal). This paper will examine the challenges that CIOs may encounter when trying to lead their organizations through a technological paradigm shift, how to manage those challenges to influence decision-making, and the impact on the organization.
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Today's business leaders have the arduous tasks of maintaining a competitive edge and taking their companies to the next level while keeping the firm profitable and financially sound. With the current economic crisis, balancing these tasks has become an even greater challenge for most executives. While technology has become an essential part of just about every industry, IT leaders are still faced with some push-back from their company's executives when it comes to investing into new technology that could be costly or involve a major change to the firm's culture and enterprise "norms". This is why it is so important that CIOs and other IT leaders gain the trust of all of the stakeholders before they can lead them to the next level of technology.
The Role of the CIO
Over the last couple of decades, the IT department has evolved from being a peripheral support group for the organization to an integral part of the organization. In other words the organization's view of IT has changed from being a "strictly vertical function to one that can also be viewed across the operating companies" (Krivoshik, 2009). Most organizations have some "C-level" IT leader who is responsible for the information technology (IT) infrastructure of the company. In some organizations the position is Chief Information Officer (CIO) or Chief Technology Officer (CTO) or both. If there is both a CIO and a CTO, the responsibility is usually divided with the CTO being responsible for the day-to-day operations of the system infrastructure. The CIO is then responsible for aligning the technology strategy with the firm's overall strategic goals and ensuring that the firm is on track to achieving its current and future objectives and goals, and that they are aligned with the evolving technology (Hugo, 2007, p. 1). Each company is different in their organizational structure, some CIOs report directly to the CEO and others may report to the CFO or the COO. Depending on the industry and company, the CIO's role takes on many different forms. In some industries like healthcare, the CIO "has emerged as a critical executive for healthcare provider organizations", according to the article, "Evolution of the Healthcare CIO" (Glaser & Kirby, 2009).
The CIO is also responsible for the IT governance which includes the strategy and policies for using information technology within the organization. The IT governance also defines how much autonomy the CIO has over decisions concerning the firm's IT systems and technology infrastructure. The more decisions that the CIO can make independently, the better he or she is able to fulfill the role as IT leader. The IT governance may also determine how the IT department is structured, the reporting order and possibly a "change control" protocol. Firms with well-defined IT governance will benefit from its call to order (Laudon & Laudon, 2010, p. 66).
Organizational change is not always welcomed by all. Most people resist change because they fear the unknown. This is especially true when it comes to technology changes. Over the past several decades the changes in technology have increased on a very frequent basis, in fact, according to Gordon Moore, co-founder of Intel, "computer power doubles roughly every 12 to 18 months" (Your Dictionary, 2010). Just as users get used to one version or platform of technology, along comes another and the upgrading process and the learning curve starts all over again. This type of continuous change can be overwhelming at times, and if not handled correctly, can be disastrous.
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David (2009) talks about how revolutionary changes in technology are impacting organizations in a major way. "Technological forces represent major opportunities and threats that must be considered in formulating strategies." Advancements in technology can have a major impact on an organization, including its "products, services, markets, suppliers, distributors, competitors, customers, manufacturing processes, marketing practices, and competitive position" (David, p. 81). David further states that new markets can arise from the advancement of technology and the explosion of new and improved products can advance a company's competitive position in its industry or cause it to become obsolete. Technological advances can cause cost barriers between businesses to be lowered or removed, reduction in production runs to be achieved and new competitive advantages that are "more powerful than existing advances." Conversely, adverse results such as a shortage of skilled IT professional due to a lack of training and certification in the new technology may occur. This could change the value and prospects for IT professionals and create a shortage of IT professionals in the job market. Virtually every company and industry is affected by the emerging technological developments. Being aware of key technological threats and opportunities is imperative in high-tech industries when developing their external strategic tactics (David, p.81).
Organizations need to re-prioritize their technology budgets. In the past technology expenditures were allocated after marketing and financial budgets were fulfilled. Businesses are literally disappearing on a daily basis as a result of the current pace of technological advancement. Therefore, CIOs should be focusing their strategic goals towards sustainable, competitive technological opportunities that will sustain and advance their position in the market place (David, 2009, p. 81).
One of the main obstacles that CIOs face when trying to advance their organization's technology platform is in convincing the key stakeholders that the change is necessary. Because in most companies the decision makers are from the "baby boomer" generation, their willingness to change, especially when it comes to technology, is not always as immediate as CIOs would like them to be. One explanation for this may be that they find it easier to stick with what is working now. In other words, as the old saying goes, "if it ain't broke, don't fix it". "Satisficing" is a term used in decision making. It is defined Business Dictionary as:
1) General: Aiming to achieve only satisfactory results because the satisfactory position is familiar, hassle-free, and secure, whereas aiming for the best-achievable result would call for costs, effort, and incurring of risks.
2) Decision making: Examining alternatives until a practical (most obvious, attainable, and reasonable) solution with adequate level of acceptability is found, and stopping the search there instead of looking for the best-possible (optimum) solution (2010).
In his article, "Put Yourself Out of Business", J. Peter Duncan (2007) talks about how companies must be willing to embrace change in order to keep their competitive edge. He addresses how IBM lost its competitive market lead back in the 1980s when it decided to continue to put all of its efforts in building bigger and better mainframe computers and ignored the growing need for smaller equipment. The article tells how Digital Equipment Corporation (DEC) "rode to prominence" with their invention of the "mini computer". The article also talks about how a company cannot get too comfortable in their own success; they need to continuously keep their focus on the changing environment and consumer needs and demands. And that management must make sure the current efforts on technology and innovation are in alignment with the future direction of the firm. As was stated in White & Bruton text, "the [strategic] planning process should gather information about the environment as it is today and as it might be tomorrow" (2007, p. 53). The author's theme is that a firm must be willing to challenge and compete with itself to produce a better and next generation product or service than the one that is currently offered. By doing this, the company will be keeping itself in business. Getting everyone on board for change is a challenge CIOs face and at times can make them feel like Sisyphus, trying to push that boulder up hill (Sisyphus, 2009).
The Paradigm Shift
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One of the latest buzz words is "paradigm shift". According to one online dictionary, a paradigm is defined as "[a] set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline." (The Free Dictionary, 2010). In Kuhn's book, The Structure of Scientific Revolutions, the main thesis is that science is not just a cumulative set of facts and techniques (Stopes-Roe, 1964), but instead is predicated on several stages of a paradigm: pre-paradigm, current paradigm and paradigm shift or scientific revolution (which comes as a result of a discovery or a new theory). According to Kuhn, normal science is the accepted practice in which those in the scientific community share an assumption and anticipation of the outcome of their work. In other words, they already know what their findings will be. Kuhn's definition of the word paradigm is scientific practices that are recognized by a scientific community for their proven "problems and solutions" (p. x). It is Kuhn's belief that when an anomaly cannot be conformed to fit within the accepted results it then becomes a "crisis". It is through the process of resolving the crisis that a new set of standards and expectations are established and eventually accepted for that scientific process (p. xi). According to Kuhn, it is this accepted change in theories and practices that becomes the new paradigm (p. 5). In the world of technology, a paradigm shift is when "a disruptive technology hits the market." Usually the onset of this new technology forces businesses and people to have to change the way they operate. The Internet is a good example of a paradigm shift. Its emergence into the technology market had an impact on almost every aspect of business, from how music and books are formatted and delivered to how a company markets and sells their products or services (Reed, 2009). In fact, the Internet may have single-handedly caused the demise of many "brick and mortar" businesses. Another example of a technological paradigm shift is with social networking. Sites such as "Facebook" and "MySpace" have drastically changed the way people interact and communicate with one another. Companies that consider themselves to be industry leaders are usually the ones that present these paradigm changing technologies (Reed).
Several decades ago, when managers were focused on managing production, their strategy was to improve their firm's productivity and to reduce cost and improve profit margins through "fine-tuning of operational efficiency" and obtaining stability (Kahlil, 2000, p.42). Today managers must take a different approach and be able to deal with both stability and change. IT leaders no longer manage in a "static or stable technological environment." Today, CIOs must be equipped to manage a "highly dynamic and frequently turbulent environment" (Kahlil). When talking about the responsibilities of CIOs , Field says that "[i]t is a very tall order to be able to recognize the game-changing nature of IT [and] to have the street smarts and influencing skills to navigate executive committees to the right decisions."
Fostering an Environment of Change
Robbins says that a "learning organization" is an organization that has "developed the continuous capacity to adapt and change" (Robbins, p. 573). Robbins theory is that learning can be thought of on an organizational level just as it is on an individual level. According to Robbins, most organizations engage in "single-loop learning". In this method "when errors are detected, the correction process relies on past routines and present policies. Conversely, organizations that practice the "double-loop learning" methodology look at ways to "[modify] the organization's objectives, policies and standard routines", when faced with an error. Double-loop learning causes deeply rooted assumptions and norms to be challenged in an organization. It also provides opportunities for radically different solutions to problems and dramatic jumps in improvement" (Robbins, p. 573). This methodology can be very effective for a CIO when trying to convince others to base their decisions moving forward on how operations can be carried out differently rather than resorting to the measures that worked in a different era of business. Gaining stakeholder "buy-in" can be especially difficult at times when there are so many disastrous stories about failed enterprise implementations of software such as ERPs or CRMs. When an organization begins implementing changes in response to complex changes in the economy, it makes sense to increase the complexity of its technologies. The CIO must weigh in on how to best approach the decision based on the firm's mission, goals and objectives, overall strategy. Once an approach is determined, the organization needs to fully map out in detail the challenges that are faced and the opportunities that are presented, in order to facilitate a plan that will optimize chances for success (White & Bruton, 2007, p. 304).
Perhaps most important for affecting change in how a firm views the importance of technology overall is the ability to assemble a strong team of allies that will promote the agenda of advancement. A CIO would be wise to make sure that this alliance includes other chiefs and top executives that have influence and can encourage doubters and naysayers that it is indeed in the best interest of the organization to invest in strategic growth, and who will stress that information technology is an essential element to advance the company. The value of IT must be viewed as relevant as any other strategic business unit within the organization. Assisting stakeholders with technology problems, implementing technologies including equipment provisioning, and technology knowledge transfer are some of the key work processes. Effective use of technology by stakeholders enables them to more efficiently and effectively deliver service to customers. This can indirectly improve profitability by meeting or exceeding client demands. Increased profitability and organizational happiness among all stakeholders leads to more favorable culture, and is a contributing factor to the sustainability and long-term focus of the firm.
The role and responsibilities of the CIO are varied and multifunctional. He or she is tasked with being abreast of the organization's overall strategic goals and must be able to tie in those goals with the functions and operations of the various business units, striking a balance of maintaining a stable, but scalable IT infrastructure. The CIO must also be able to communicate to all levels of stakeholders, assuring them that the technology in place will meet their current and future needs and influence their decisions to integrate new technology as it enters the market. To do this, he or she must foster a learning environment where change and challenges are embraced and viewed as opportunities to advance. Successfully advancing the technology capabilities of a company and the general vision of the firm's leaders with regards to information technology will take them from satisficing to the next level of optimum performance, all the while achieving the organization's top priority - the bottom dollar.