Fintech has huge upside in the early innings moving to mobile and online
Source: WSJ, June 19, 2016
New financial technology is disrupting everything from payment systems to messaging to how we manage our data. Dennis Berman, financial editor of The Wall Street Journal, explored the implications with John Collison, president and co-founder of Stripe, an online payments company, and David Gurle, founder and chief executive of Symphony, a cloud-based secure-messaging system. John Collison and David Gurle on how CFOs face a very different environment. Edited excerpts follow.
Dennis Berman: What do CFOs need to know?
John Collison: Part of what’s happened due to the decreased distribution costs of the internet is that capital constraints disappear. We’re used to thinking in a capital-allocation frame of mind, and sometimes, when it comes to technology development, that’s not the right framework. Because you have these tiny tech teams who end up developing a platform, or a product that grows to tens or hundreds of millions of users.
Two things. I still think the world is in a head-count state of mind. You notice this when managers discuss the size of their organizations, that that’s the unit of relevance. When you’re dealing with new technology that could have a very large impact on a company, it’s very dangerous to think about it in terms of head count. The second thing maybe is the metrics you choose for early-stage technology. Revenue will seldom be the right metric. We use market share. Obviously, we later want to optimize that net revenue into earnings and things like that.
David Gurle: Technologies have a cycle, and it’s going to keep changing and challenging your assumptions all the time.
Most of the time it is the early adopters that make the strategic bet and eventually make the big benefit. The late adopters, or the ones who come in midterm, they miss the train. Because adoption of new technology is just not money you’re going to spend. It’s also a change in your corporate culture, in processes.
Dennis Berman: What should businesses think about in terms of the pace and ease of payment?
John Collison: The important thing to realize about online and mobile commerce is that it’s still relatively tiny. Between 2% to 5% of global commerce happens online. In the U.S., on a consumer basis, it’s around 5%. That’s online and mobile, so it’s still just a very small total. And you can kind of see why—in that it’s such a pain to do anything online or on mobile. This is why we spend so much time on the developer experience.
We think Apple Pay In-App has been a huge deal. [In-App Purchase allows purchases within apps simply and securely.] You go from this multipage, lots of data entry experience to just pressing your thumb on the fingerprint sensor. Apple announced its bringing that to the web and to Safari. That’s going to be a huge deal. When you get a platform and a technology that enables a new kind of commerce or payment experience, you get these entire industrial shifts. I think there will be something similar with Apple Pay, where there are a new breed of companies and businesses possible that were not possible before.
Dennis Berman: Can you think of a cool example?
John Collison: Sure. You can’t buy an individual newspaper issue online right now; they only sell subscriptions across all the major papers. I think that is because it’s been so cumbersome to go through the payment flow, that once you pull someone through it you might as well sell them a subscription. So we might see different forms of content, it being possible to sell them as a result.
LinkedIn will have a tough time retaining talent in the Valley even if Microsoft leaves it alone.
Source: Wall Street Journal, June 14, 2016 / By Jay Greene
Microsoft has agreed to buy professional social network LinkedIn for $26.2 billion. The software giant hopes to jump-start its software packages by connecting them with LinkedIn’s vast network.
Microsoft Corp. snapped up LinkedIn Corp. for $26.2 billion in the largest acquisition in its history, betting the professional social network can rev up the tech titan’s software offerings despite recent struggles by both companies.
The deal is Chief Executive Satya Nadella’s latest effort to revitalize Microsoft, which was viewed not long ago as left behind by shifts in technology. Mr. Nadella hopes the deal will open new horizons for Microsoft’s Office suite as well as LinkedIn, both of which have saturated their markets, and generally bolster Microsoft’s revenue and competitive position.
Mr. Nadella said today’s work is split between tools workers use to get their jobs done, such as Microsoft’s Office programs, and professional networks that connect workers. The deal, he said, aims to weave those two pieces together.
“It’s really the coming together of the professional cloud and the professional network,” Mr. Nadella said in an interview on Monday.
For instance, connecting Office directly to LinkedIn could help attendees of meetings learn more about one another directly from invitations in their calendars. Sales representatives using Microsoft’s Dynamics software for managing customer relationships could pick up useful tidbits of background on potential customers from LinkedIn data.
Microsoft also sees opportunities in Lynda.com, a channel for training videos that LinkedIn bought for $1.5 billion last year. Microsoft will be able to offer Lynda’s videos inside its own software, such as Excel spreadsheets.
Mr. Nadella also talked about giving its Cortana digital assistant access to data from LinkedIn.
As for LinkedIn, the deal offers hope to renew decelerating growth as well as an exit for shareholders after the stock tumbled from a peak of $269 in February 2015 to as low as $101.11 last February.
Microsoft will pay $196 per LinkedIn share, a 50% premium to the social network’s closing price on Friday. Both boards approved the deal, and Reid Hoffman, LinkedIn’s chairman and controlling shareholder, supports the transaction. LinkedIn Chief Executive Jeff Weiner will keep his current job when the deal closes, which the companies expect to happen by the end of the year.
The tie-up will also test Microsoft’s ability to meld a large acquisition with its own operations. The Redmond, Wash.-based company has struggled to integrate previous purchases including Nokia Corp.’s handset business and aQuantive Inc., costing shareholders billions of dollars in the process.
The deal dwarfs other Microsoft acquisitions. Its next largest deal, buying the Nokia handset business, led to Microsoft taking charges that exceeded the $9.4 billion price. That deal was orchestrated in 2014 by Microsoft’s previous chief executive, Steve Ballmer.
Microsoft’s prior efforts at weaving social networking into its productivity software haven’t caught fire. In 2012, Microsoft bought workplace chat service Yammer Inc. for $1.2 billion, but has seen rival products, such as Slack, gain momentum.
“Sadly, history has shown [synergies] are very difficult to realize when two big companies combine, especially to the extent LinkedIn is remaining an independent fiefdom within the Microsoft empire,” said Mitch Kapor, founder of Lotus Development Corp. and partner of venture firm Kapor Capital.
Some business leaders look forward to benefits from the tie-up. Tech companies and their customers “are looking for ways to get even more out of social media,” said Steve Phillips, chief information officer of Avnet Inc., an electronics supplier that uses Microsoft products including Office 365.
Mr. Nadella and Mr. Weiner met at a Microsoft gathering of CEOs a few years ago, and the pair talked earlier this year about working more closely, according to a person familiar with the matter. That person said there was “such a mind-meld” during those discussions that the conversation moved toward the possibility of an acquisition. Mr. Hoffman was also “actively” part of the takeover talks, which lasted a few months, the person said.
Another source said that Messrs. Nadella, Weiner and Hoffman and Microsoft exec Qi Lu, who worked with Mr. Weiner at Yahoo Inc., met for dinner in April to discuss potential scenarios. Microsoft and LinkedIn leaders dined at Mr. Hoffman’s house Sunday night, the person said.
The deal highlights Mr. Nadella’s bid to reshape Microsoft, a little more than two years after taking the helm. Mr. Nadella, who rose through Microsoft’s ranks in its business applications and server groups, has focused much of the company’s efforts on products and services for corporate customers.
As CEO, he has extended Microsoft’s software to platforms that it doesn’t control, including Android mobile phones and the Linux desktop operating system. And he has pushed to connect Microsoft’s products to data sources that can provide customers with timely, useful information, and to develop services intended to anticipate information users want and actions they’ll take.
Growth has been a challenge for both Office and LinkedIn. In the quarter that ended March 31, revenue at Microsoft’s productivity and business processes unit, which includes Office, grew by 1% to $6.5 billion. Office users number 1.2 billion, the company said.
Growth at LinkedIn, which in the first quarter claimed 105.5 million monthly active users of its web and mobile apps, has decelerated in the past two years. UBS Securities LLC analyst Brent Thill estimates that LinkedIn revenue will climb a bit more than 25% in 2016, down from more 35% growth in 2015 and more 45% growth in 2014.
Microsoft said it expects LinkedIn, which will be part of its productivity and business processes segment, will have a minimal negative impact—about 1%—on adjusted earnings for its fiscal 2017 and 2018 years. The deal is expected to add to Microsoft’s per-share earnings in 2019.
Following news of the acquisition, Moody’s Investors Service said it would review Microsoft’s triple-A credit rating for a potential downgrade. Moody’s said the only companies that hold its triple-A rating, which indicates pristine credit quality, are Microsoft, Johnson & Johnson and Exxon Mobil Corp. Morgan Stanley served as financial adviser to Microsoft, and LinkedIn was represented by Qatalyst Partners and Allen & Co.
Analysts said a competing bid from another tech company is unlikely given the size of the transaction. Credit Suisse analyst Stephen Ju also cited “the lack of clear strategic fit” between LinkedIn and other major tech companies.
There are many best practices and guiding principals to observe in Founder-led companies that can be translated into executive management teams across many domains. How founders build their companies on the inside, from the beginning, can influence the success on the outside, for a long time.
by Chris Zook
A recent study by three professors at Purdue’s Krannert School of Management is part of a growing mountain of evidence of the superior and more lasting performance of companies where the founder still plays a significant role as CEO, chairman, board member, or owner or adviser. Specifically, the study found that S&P 500 companies where the founder is still CEO are more innovative, generate 31% more patents, create patents that are more valuable, and are more likely to make bold investments to renew and adapt the business model — demonstrating a willingness to take risk to invent the future.
This begs the question, why?
When the founder is still involved, why are companies more innovative? Why are they able to increase value at a higher rate, willing to make bolder investments, and able to maintain more loyal employees?
Over the past decade, we at Bain & Company have been studying the deep roots of the most adaptable and sustainably successful companies. We started with the observation that profitable growth is becoming more challenging, and that only one in 10 companies achieve it over a decade. We confirmed this observation by developing a database of all public companies in the global stock markets and tracking their performance over 25 years. We found that the companies most successful at maintaining profitable growth over the long term were disproportionately companies where the founder was still running the business (such as Oracle, Haier, or LBrands), was still involved on the Board of Directors (like Four Seasons Hotels and Resorts), or, most importantly, where the focus and principles of how to operate that the founder had originally put in place still endured (as at IKEA or at Enterprise Rent-A-Car).
To find out why, we went out into the field. We did a series of interviews with executives and founders around the world, and analyzed another 200 founder-led companies with the help of an expert who knew each company well. What we found surprised us. Three sets of hard-edged practices and underlying attitudes, tracing back to the way the founder had set up the company, emerged consistently. In other words, how founders built their companies on the inside, from the start, influenced their companies’ success on the outside, for a long time.
We call these company practices “the founder’s mentality.” They are not vague cultural notions that are hard to pin down and take forever to change. Rather, they are grounded in concrete actions and an approach to business that can be studied and emulated with rapid results. And that is good news for all companies: most of the practices that produce this successful performance are observable, learnable, and useable by all leaders immediately.
The first is the unique, spiky feature, or capability that gives a business special purpose. We call it business insurgency. My co-author James Allen refers to this as waging war on industry norms on behalf of underserved customers, as Netflix did for video rentals, or to create a new market entirely, as Google has done, following its mission to organize all of the world’s information.
Many businesses lose this sharp sense of purpose as they grow. This is why only 13% of employees worldwide feel any personal engagement with their work at all. And engagement matters. Our research shows that engaged employees are 3.5 times as likely to solve problems themselves and invest personal time in innovation as unengaged workers. Imagine if all were engaged!
Lose this clear purpose and your company becomes directionless and uninspiring — especially to the millennial generation.
The second element of the founder’s mentality is a front line obsession — as the founder had. It shows up in a love of the details and a culture that makes heroes of those at the front line of the business and gives them power.
An example I love is how M.S. Oberoi, founder of Oberoi Hotels, role modeled this for the next generation of leaders. He scrawled responses on customer comment cards even at the age of 94 when he could barely see and had to hold the cards an inch away from his eyes.
Lose this deep curiosity for what is going on at the front line, and your company loses its instincts. At the extreme, your company becomes an out-of-touch bureaucracy where power shifts to corporate offices and to people who may never have served a customer or made a product.
The third element is an owner’s mindset, the fuel that propelled the rise of private equity, whose essence is dialing up speed to act and taking personal responsibility for risk and for cost.
This has been central to the success of AB InBev, the $50 billion world leader in beer. The company states at the top of its list of principles that “we are a company of owners and act like one” and translates that idea into minute detail throughout the whole company.
Lose the owner’s mindset and your company becomes complacent, slow to act and decide, and risk averse. Leaders can easily turn into custodians and then into bureaucrats, and bureaucrats are especially vulnerable today.
Our research shows that companies that maintain the founder’s mentality as they age are four to five times more likely to be top quartile performers. For instance, an index of Fortune 500 companies in which the founder is still deeply involved performed 3.1 times better than the rest over the past 15 years.
Some of the most successful venture capitalists, like Andreesen Horowitz have been quite vocal about their strong preference for investing in businesses where the founder is the CEO. In fact, most of the great tech firms — just think of Oracle, Intel, Microsoft, Apple, Dell, Google, Amazon, Facebook, and so many others — had founder CEOs, often for a long time. In his blog, Ben Horowitz lists three reasons his VC firm prefers founder CEOs: founders have the moral authority to make the hard choices, they know the detail of the business and have better instincts, and they have a long-term perspective on investments and building a company that lasts.
The implication for today’s business leaders? Cultivate a founder’s mentality as a key strategic asset, and talk about it, measure it, monitor it, and reward it. We believe it is the most important indicator of the health of a company on the inside — which is almost always where the deep root causes of failure to perform on the outside reside. The founder’s mentality is an indicator of a company’s readiness to act quickly, to adapt to change, to retain the ground-level instincts of a founder, and to innovate to invent — and not fight the future.
There is no doubt that CDOs add significant value to a business, but in order for CDOs to be successful and gain appropriate support from the business, it is crucial to have a proactive plan for internal obstacles, map out clear objectives, and be highly adaptable and creative.
by Mario Faria
Does your organization have, or is it considering adding, the role of chief data officer (CDO)?
If so, you’re in good company. The power of data in driving business success today points to a compelling need for a centralized CDO office. Gartner predicts that by 2018, 30% of all organizations will have an appointed CDO. By 2019, 90% of large organizations will have hired a CDO.
The big problem is that in practice, there is little agreement on the degree of authority needed to fulfill the responsibilities expected in this nascent role — or the resources that will be available.
Consider this scenario: A new CDO in her first 90 days on the job is tasked with creating an enterprisewide information governance board. She identifies delegates and invites them for an inaugural meeting, but only half of the members of this new board respond that they will attend.
The CDO in this situation was given responsibilities. But without being invested with formal authority, she can’t help the organization get the maximum value from its data assets.
There are three strategies that CDOs should employ to avoid organizational pitfalls:
The economy. Marketplace dynamics. Government regulations. These are all external roadblocks that CDOs encounter every day.
In addition to the lack of authority demonstrated in the above example, CDOs frequently face myriad internal roadblocks. Some of the roadblocks that participants in Gartner’s annual Chief Data Officer Survey (conducted between May and July 2015) said they encounter on the job include:
CDOs need a proactive plan to address these organizational obstacles. The plan starts with recognizing that a hefty component of the CDO role is acting as a change agent.
To begin CDOs must identify the major roadblocks and prioritize them according to business impacts. Next, determine the root causes of these roadblocks and map who are the blockers behind them. The final, critical step is to establish a plan of action to deal with the top-priority roadblocks by focusing on positive business outcomes.
This shouldn’t be a solo effort. It’s important to have a corresponding map of the company’s key influencers; their support and endorsement of the plan is critical. The team should also be kept apprised of the roadblocks that the CDO office faces, and if possible, the plan should be shared with the blocker.
Lack of resources is one of the big challenges that CDOs identified. For example, some of the job roles needed to accomplish the CDO’s responsibilities may not exist in the organization, or they might be currently staffed in another part of the organization. New CDOs need to develop an accurate picture of staffing needs and priorities. Three broad categories of objectives fall under the CDO’s domain:
Objective: Manage information assets
Example roles: Information Governance Leader, Data Sourcing Manager
Objective: Deliver insights to improve business decision making
Example roles: Chief Analytics Officer, BI& Analytics Leader
Objective: Generate incremental business value
Example roles: Algorithm Program Manager, Information Product Manager
Next step: Map primary objectives to top-level functional roles.
Being adaptive and creative are also key strategic competencies for CDOs. Some functions vital to the success of the CDO office might straddle or reside in other parts of the enterprise. To adapt to this challenge, CDOs can develop virtual organizations, with combinations of direct and indirect reports (such as employees from IT) to augment resources while engaging other parts of the business in enterprise information strategy.
For example, information stewards — senior business users who possess information and analytics acumen — can work with information governance leaders to recommend and enforce user policies.
Keep in mind that the appointment of a CDO typically comes from a high-level decision. In practice, it can trigger an array of problematic reactions within the organization — including confusion, uncertainty, doubt, resentment and resistance. CDOs need to rise to the challenge of changing the status quo if they expect to lead the business in making data a strategic asset.
Established tech giants like Google and Apple are well-worn avenues for potential talent, but shrewd CIOs are now targeting employees at tech companies struggling with rapid expansion. The impact of hiring from these upstarts can reverberate throughout an organization, as they bring experiences and insight that can only be gathered from their unique growth experience.
by Clint Boulton
CIOs working for large companies are forever lamenting the challenge in luring technical talent, as employees gravitate toward high-flying, cash-rich startups based in Silicon Valley. At a time when CEOs are asking CIOs to oversee digital transformations, IT leaders at Walgreens, Whirlpool and other companies say luring more software developers, data scientists and user experience designers is difficult.
Thirty-eight percent of IT leaders who plan to recruit talent in the next sixth months said that it is “very challenging” to find excellent IT talent, according to the CIO Executive Council’s 2016 IT Talent Assessment Survey. But CIOs have a shot at hiring help thanks to a potential shakeout looming for so-called unicorns, those generously funded private companies worth at least $1 billion.
“When the taps start to get turned off — which they did in Q4 — the startups have to tighten their belts, which means they have to lay off staff,” says Forrester Research analyst Ted Schadler, who examined valuations of more than 150 tech unicorns in a recent report, titled “What Comes After the Unicorn Carnage?” He says valuation challenges for unicorns, in particular, will create opportunities for CIOs who have typically lost out on technical talent to nascent companies that begin shedding workers to cut expenses.
How deep the current downturn will go is anyone’s guess. Recent funding activity signals dark days ahead. T. Rowe Price Group has marked down 12 unicorns, cutting Hadoop software maker Cloudera by 37 percent, database software provider MongoDB by 23 percent, and file-sharer Dropbox by 16 percent. Funding for U.S. startups fell 25 percent from the fourth quarter to $13.9 billion, marking the largest quarterly decline since the dot-com bust, according to Dow Jones VentureSource.
CIOs such as ADP’s Stuart Sackman aren’t shy about exploiting the potential tech-geek grab. “To the extent that there are more people available because there are less opportunities to go win the lottery working for a unicorn …. I do think that helps us,” Sackman tells CIO.com. He also says a little belt tightening is generally good for ADP, which competes with a few thousand startups in the market for human resources software.
Sackman says ADP has countered the challenge of attracting talent by opening an innovation lab in New York City, where the company is building analytics and machine learning capabilities into its software for PCs and mobile devices. He says the company has the resources and scale “to go big fast with new ideas and innovations.” “People want to work on things they know are going to have a big impact,” Sackman says.
Saad Ayub, consultant and former CIO at Scholastic and The Hartford.Saad Ayub, consultant and former CIO at Scholastic and The Hartford.
Shawn Wiora, CIO of Creative Solutions in Healthcare, is already prepared to take advantage of the purge thanks to modern networking. He connects with engineers and product managers from many of the startups and incumbent vendors he works with via LinkedIn, and instructs new staff to add 100 new connections on the social network. “We have to stay in touch with every vendor we’re working with,” Wiora says. “Sometimes we solicit them for employment opportunities,” or to ask them questions about their technology.
CIOs who don’t capitalize on the looming talent purge risk losing out to more nimble companies hustling to accelerate their digital transformations. “Companies either digitally transform to serve customers where they live — or watch as customers find companies that can,” Schadler says. “CIOs should seize this small window of opportunity to hire or acquire talent for digital transformation to serve customers in the digital channels of their choice.”
Schadler also says CIOs must align their hiring strategy based on what talent they need with what will become available on the market. “Instead of a generic ‘hire talent,’ it’s ‘what talent do you need to acquire and where does that talent reside today and does that line up against markets that are already fading or will fade in the next couple of years?'” Schadler says.
As recruiters feast like piranhas on employees cut loose from struggling startups, CIOs who have built track records as “digital disruptors” will land the best talent, says Saad Ayub, who consults CIOs after serving in CIO roles at as Scholastic and The Hartford. “If as a CIO I am doing this then when the bubble bursts it will be easier to pick up talent,” Ayub tells CIO.com.
This report provides a unique overview of the technologies most likely to impact business strategy over the next two years. Savvy CIOs will take advantage of these new products and trends to create unique business propositions that differentiate them from their competitors.
Deloitte’s Tech Trends 2016 by Deloitte.
Women in technology face a scarcity of resources from lack of role models and mentors, to missing out on promotions, in an industry where they are already less than one quarter of the workforce. Although companies recognize the disparity, there’s no consensus as to how the problems can be corrected, making the business even more isolating for female employees.
by Lindsay Gellman and Georgia Wells.
Women are underrepresented at all levels of technology firms, a report by McKinsey and LeanIn.Org finds.
Technology companies have disrupted other industries with apps that dispatch cars, housekeepers or pizzas in a matter of minutes. But tech firms lag behind those old-line businesses when it comes to advancing women.
That is the main finding of a McKinsey & Co. and LeanIn.Org report on the status of women in tech. Not only are women underrepresented at all levels of technology firms, particularly in key engineering, product and finance roles, researchers found, but plenty of those women also believe that their gender is holding them back at work.
Big companies including Cisco Systems Inc.and Microsoft Corp. are tackling the talent pipeline, investing in programs to encourage and mentor girls and young women studying science, technology, engineering and math fields that typically launch tech careers. Researchers found that women make up 36.8% of entry-level workers in tech; in other industries, women account for nearly half of entry-level workers.
Yet the data, gathered from 26 tech companies and a survey of about 9,000 male and female employees, suggests that women currently in tech feel pessimistic about the climate in their companies. Some 29.9% of female tech employees polled said they felt gender played a role in their missing a promotion or raise, and 37.1% of female tech employees said they felt their gender would disadvantage them in the future. In nontech fields, a smaller share of women—21.6% and 22.8% respectively—felt that way.
Some female executives say that stems from a paucity of women leading tech companies. “If you can’t see an example of what you could be, you really aren’t going to have that extra incentive to break through any types of barriers,” said Julia Hartz, co-founder and president of online ticketing platform Eventbrite Inc.t
At a Wall Street Journal event in San Francisco Monday, several prominent tech executives said the most effective way to create a more diverse workforce is for the heads of technology firms to lead by example.
Padmasree Warrior, U.S. chief executive of electric auto startup NextEV Inc., said she asks her recruiting team daily for a list of diverse candidates. Now her team tells her who the candidates are without her needing to ask, she said.
Facebook Inc. and Pinterest Inc. have tried out an approach known as the Rooney Rule, which requires that at least one woman or underrepresented minority be interviewed for open jobs. The Rooney rule was born in the National Football League as a way to ensure that teams interviewed minority candidates for head-coaching jobs.
Cisco is ensuring that job candidates encounter at least one interviewer of their same gender or ethnicity, a practice that has resulted in a roughly 50% increase in the odds a woman will be hired for a given position, said Ruba Borno, a Cisco vice president and chief of staff to Chief Executive Chuck Robbins.
About 36% of female tech employees hold product-development or engineering roles, according to the data, versus about 57% of men. Hearsay Social Inc., a maker of predictive-analytics software for companies, wants to equip more staff, including women, to take on such roles, said Clara Shih, its co-founder and CEO. Hearsay has begun holding an in-house coding academy for employees; two customer-support representatives, both women, have switched to software-engineering roles as a result, Ms. Shih said.
The data builds on Women in the Workplace, a 2015 McKinsey and LeanIn study that tracked the progress of women in 118 firms across industries and polled tens of thousands of men and women about the issues surrounding women in corporate life.
Both men and women in the tech industry face challenges balancing work and family. Among tech employees, roughly 40% of men and women said their jobs make it harder for them to do things for their families. Netflix Inc. and Amazon.com Inc., among others, have introduced new parental-leave benefits, in part to allay those worries.
Still, despite the generous new benefits, many women believe they will face setbacks at work for taking time off. Elisa Steele, Jive Software Inc.’s CEO, said she makes a point to meet with women who are pregnant at her company to emphasize that their jobs will be waiting for them when they return.
Carl Bass, CEO of Autodesk Inc., the maker of 3-D design software, agreed. “As a leader, it’s not about what you say, it’s about what you do, and employees sense it immediately. If you say it is fine to take maternity leave, but then don’t promote the person who took maternity leave, employees get the message,” he said.
The predominantly male cultures at many tech companies can make them lonely places for women, said Caroline Simard, senior director of research at Stanford University’s Clayman Institute for Gender Research, which works with companies to identify and root out gender bias.
“When you’re the only woman in the room, such as in a top leadership position in a tech company, that feeling of isolation on a day-to-day basis can be difficult,” Ms. Simard said.
The problem is compounded when women don’t find mentors among their company’s predominantly male leadership. Autodesk’s Mr. Bass said men need to play a bigger role in mentoring women. “In too many companies, the role of mentoring women is left to other women,” he said.
Some men worry that company efforts to help women get ahead will hurt men. “I have heard men say, ‘What about the boys? Are we putting them at a disadvantage?’” said Cisco’s Ms. Borno, who acknowledges these concerns, but doesn’t feel they should carry the day. “Look, change is hard. We’re going to be facing that as an industry.”
The tendency for CIOs to be seen as simple technicians, rather than business partners, can often undervalue the significance of the role. It’s crucial for CIOs to become ‘strategic enablers’ for their organizations, delegating the more technical aspects to their direct reports, and freeing them to strategically collaborate with other executive officers.
by Paul Rubens
In a world of ‘shadow IT’ services, CIOs need to adapt if want to avoid being relegated to little more than technicians.
It’s a brutally frank question. But in a world where business units can sign up for “shadow IT” services in minutes to get anything from CRM to analytics to data storage to email, do organizations really need a C-level technology expert anymore?
The good news for CIOs is that the answer is probably “yes.” The bad news is that they are going to have to change and adapt if they want to have any chance of staying relevant.
That’s certainly the view of Jim Cole, a senior vice president at Hitachi Consulting. “The role of the CIO remains relevant to the extent they are strategists first, technologists second,” he warns.
Instead of being the chief architect of IT systems, CIOs must concentrate on being “strategic enablers” for their businesses by allowing them to “enter and exit markets with the utmost in flexibility and agility regardless of where the IT services are provided,” he adds.
CIOs who fail to do that risk finding their roles relegated to ones which answer to another C-level executive, while someone else – perhaps a Chief Digital Officer – steps in to handle the more business-critical strategic initiatives.
One key characteristic that CIOs need to develop is the willingness to allow business units to choose and use any (or almost any) applications that they feel they need to get their jobs done, Cole says. This includes the type of software as a service (SaaS) offerings that previously were acquired without the knowledge or permission of the IT department,
“Today’s CIOs remain relevant by engaging directly in the consumption of shadow IT within their businesses,” he says. To do this CIOs need to make sure they understand why particular shadow IT services are in demand, and what can be done to make sure that they can be used as effectively as possible.
“The alternative is to develop draconian, isolationist policies which are often cloaked in the guise of “security” and “data protection” but in reality are often attempts to falsely preserve command and control,” he adds.
The problem for career-minded CIOs is that traditionally the role has been one of Plan-Build-Run, and the capability to execute successful projects of this kind has been the hallmark of a successful CIO, says Abner Germanow, a senior director at New Relic, a Calif.-based analytics company.
Executing Plan-Procure-Manage projects – subscribing to SaaS offerings, in other words – has not typically been something for CIOs to show off about or to use as justification for an enhanced compensation package. “Not many CIOs have made their careers by subscribing to services,” he points out.
But Germanow agrees with Hitachi Consulting’s Jim Cole that a willingness to embrace SaaS is essential if a CIO is to remain relevant. “The reason that many companies subscribed to Salesforce was that their IT departments couldn’t make a CRM system. There’s been a long history of going around the CIO, but smart ones shouldn’t fight it, they should embrace it.”
An obvious question to ask then is whether the modern CIO’s role really comes down to one of keeping an eye on SaaS services that business units subscribe to, and ensuring that they are used in a secure fashion – perhaps, ironically, by subscribing to a Cloud Access Security Broker (CASB) service?
Germanow believes there is some truth in that, but also that there’s a need to move from control-based to trust-based security. “The trend in security is a shift from ‘I control and secure everything myself’ to ‘When I use Azure I now use modern technologies and a shared responsibility model with cloud providers,’” he says. “The focus is on business risk, not technology risk.”
Cole says there is more to it than that. To stay relevant a CIO has to orchestrate a complex blend of “best of” applications, technologies, and platforms – as well as providing “reasonable guardrails” when it comes to security, risk, and consistency, he says.
That means working with business units or individuals who want to subscribe to SaaS and building it into an overall IT plan. “The successful CIO engages, embraces, seeks to understand, partners to develop roadmaps, brings a mix of facilitating policies and enabling support services,” Cole explains.
“By engaging they help to establish a culture of accountability, approvals, audits, and awareness so the company leaders never wake up in the morning wondering where their data is and is it secure,” he adds.
Some CIOs may baulk at the idea of handing over much of the responsibility for running applications and securing data to cloud providers and effectively allowing business units to decide what’s best for their needs, but CIOs that can’t adapt to the changing face of enterprise computing are doomed to sink into irrelevance, he warns.
“For those CIOs who remain in the traditional “command and control” operating models, their relevance as a business partner will shrink as they continue to try to enforce isolationist policies that, like in geopolitics, never seem to end well,” Cole says.
Collaborative external partnerships and integrated internal innovation best practices are vital in solving complex problems, and driving effective disruption for an organization.
by Meg Graham and Cheryl V. Jackson
The future — with artificial intelligence, self-driving cars and all — will affect business sooner than we think, LinkedIn co-founder Reid Hoffman says.
But it might not always be the way we expect.
Hoffman joined other innovators and executives from Chicago and beyond at the Economist’s Innovation Forum on Thursday to explore how topics like automation and cybersecurity could affect their companies. The forum drew more than 250 attendees to the Four Seasons Chicago.
Hoffman said he wasn’t concerned about artificial intelligence or automation replacing too many jobs with robots. He gave the example of mobile apps that diagnose whether a skin lesion is cancerous.
“Does that mean doctors are all going to go away? Not necessarily,” he said.
Instead of taking the place of doctors, such an app might serve as a crosscheck for a doctor’s instinct, he said. “That allows doctors to focus on a lot of other things, or have higher touch with their patients and so forth. It doesn’t mean we’re going to have all robot doctors.”
Though driverless cars will undoubtedly replace the jobs of taxi drivers, many advancements will change the nature of jobs rather than replace them, Hoffman said.
“If you actually look at most of these technological developments, they tend to be oriented toward how … you amplify productivity for individuals,” he said.
Later in the morning, Irene Rosenfeld, CEO of Deerfield-based snack giant Mondelez International, said big companies have it wrong when they think of innovation as something that happens in a vacuum. Mondelez owns brands Oreo and Cadbury.
“In the past we would have been guilty of this,” she said. “There’s always been a debate — particularly in packaged goods — about whether or not there ought to be a separate innovation group that understands the disciplines of introducing a new product. … There’s real value in it being integrated.”
She established global integration teams at the company to quickly distribute ideas from one part of the world to another.
“It allows us to understand a variety of cultures. It allows us to move much faster,” she said.
The strategy resulted in a successful launch of the Oreo brand in China, after a previous failure that didn’t take into account the desire in that market for a thinner cookie and smaller packaging, she said.
Mondelez is even allowing the recently purchased Enjoy Life Foods, an allergen-free food-maker based in Schiller Park, to operate as a stand-alone company, figuring the larger entity can learn from the startup.
“Because they’re small, they can test and fail a lot faster than typically our guys do,” she said. “And I think they learn a lot from us in terms of food safety and guardrails.”
In a panel about creating power partnerships, executives discussed how collaboration with other organizations can boost efficiency and spur growth on both sides. Brad Keywell ⇒, CEO and co-founder of Uptake Technologies, said partnerships have been crucial for his predictive analytics company.
“The opportunity to effect change and at the same time build a company with speed is one we could take on independently, and try to disrupt from the outside — which is more our method of building,” Keywell said. Instead, “we’ve really created a model I’d refer to as collaborative disruption, versus blunt disruption. Collaboration allows us to really do what we’re built to do, which is create value and solve big problems.”
Keywell touched on Uptake’s collaboration with Caterpillar to take on fuel optimization and predictive maintenance. He said while Uptake brings speed, technology and talent, Caterpillar brings industry expertise, insights and data — which allow both companies to solve problems in a smarter way.
John Flavin ⇒, executive director of the Chicago Innovation Exchange, said companies are more likely to take an open source approach than in the past, sourcing ideas from different places. The CIE, for instance, connects large companies with ideas from the academic and entrepreneurial communities.
“To compete, we need to be able to move at that scale and that speed,” Flavin said.
In a session on the “Rethinking the Global Supply Chain,” Joshua Claman, chief business officer at 3D printer manufacturer Stratasys, said technology has changed design because engineering students are no longer constrained by the kinds of parts they can make.
“I think today, they are realizing they can make it as complex as necessary,” he said. “You can print parts that previously were inconceivable.”
Nicole DeHoratius, adjunct professor at the Booth School of Business, said the availability of 3D-printed parts means companies using that technology can be more responsive than those reliant on overseas manufacturers.
“We’re likely to bring some things closer to home and shorten out lead times,” she said.
And later, panelists in a session on cybersecurity agreed that a 100-percent unhackable company is unrealistic.
“I don’t believe there is such a thing as 100 percent secure. I don’t think that exists,” said Jay Kaplan, chief executive at security firm Synack. “Everybody’s vulnerable. Whether you’re one of the largest companies or a small startup … you’re going to be the next headline eventually.”
And companies shouldn’t rely on passwords for security, he said, urging a second form of authentication — which can include biometrics like a fingerprint or eye iris scan. “Passwords make no sense to me,” he said. “I can’t believe passwords are something that still exist.”
Jamil Farshchi, chief information security officer at The Home Depot, suggested focusing protection efforts on the company’s most sensitive information.
“Just assume you’re breached,” he said. “Looking through that lens will put you in a much better position against the attack.”