CASE

Barbra Cooper started as a CIO when the position was still called "vice president of information services." In her more than 30 years in IT, she's seen the role become ever more strategic. Until now, the CIO is in the unique position of being the C-level officer who can "see across the entire enterprise." As the CIO for Toyota Motor Sales USA, Cooper thinks tomorrow's CIOs will be even more strategic and influential, but she also worries about the future business and technology changes they face. "The next 10 to 20 years are going to be challenging," she says. As she talks about the challenges that lie ahead, the question arises: Where will the IT leaders come from to tackle them? It's a question more and more IT executives are asking themselves. CIOs are moving up and out. The first full career CIO generation is beginning to retire. Others are increasingly taking on broader responsibilities or moving out of IT and into other business leadership roles as the position evolves beyond its technology roots. In fact, CIO's 2008 State of the CIO report found that 56 percent of CIOs surveyed say long-term strategic thinking and planning is the executive leadership skill most critical in their current role, followed by collaboration and influence (47 percent), and expertise running IT (39 percent). At the same time, many CIOs don't know who would lead IT if they left tomorrow. When you consider that just 17 percent of respondents to the State of the CIO survey cited people development as a critical leadership competency, that's not surprising. The skills to be CIO have also changed as the role has shifted from technologist to business strategist. It used to be that "we could afford to let the business tell us what they wanted us to do, be good at delivering it and keep our jobs," says Cooper. "Now, the physics and velocity of business and its demands mean you can't afford to wait until something happens." Indeed, CEOs now look to the CIO to act more as a strategic business leader and less as a function head. TAC Worldwide CEO Robert Badavas says he seldom speaks about technology with his CIO; instead, the two talk about "shaping the business value to our clients," he says. To be successful, he notes, the CIO needs to understand the value proposition of the business. "By staying in the silo of technology, HR, accounting or any other," says Badavas, "you're not going to be as valuable to the business." Or to the CEO. With all that in mind, CIOs today must groom not only competent replacements for themselves but also next generation IT leaders who are "business ready" and able to succeed in a more IT-intense and integral business environment. The shift in business expectations means that CIOs have better job security than in the past. It also takes longer to find good ones with the right mix of business and technical know-how. For example, Pete Walton is in his second stint as CIO at Hess Corp.

The petroleum products company coaxed him out of retirement in 2005 when its CIO at that time left. Hess wanted someone who could take its Information Services "to the next level," says Walton. "CEOs want someone who's business savvy and can figure out how you can use technology for the business. Trying to find that hybrid person is hard," says Diane S. Wallace, chief information officer for the state of Connecticut. It will only get harder to find them, just for demographic reasons. "We have this triple threat of labor shortage: The Boomers are retiring, young people are not going into IT and fewer people are getting degrees," says Robert D. Scott, who in February retired as Procter & Gamble's vice president of global business services. Scott says he noticed a drop in IT interest during the technology bubble of the late 1990s. Then the rush to outsourcing created a cloud around U.S. IT jobs. That pall persists despite strong job growth in IT, which is expected to add more than 200,000 jobs by 2016, according to the Bureau of Labor Statistics. Procter & Gamble (P&G) is a case in point. It outsourced about half of its IT staff in 2003, but IT employment is now back to the level it was five years ago. Scott says that this is because the company outsourced its commodity IT, and "internal IT moved up the food chain, and is creating more and more business value." Scott says P&G continues to attract strong candidates for IT jobs, but the hiring pool is not as deep as in years past. Plus, P&G believes strongly in promoting people steeped in its culture. It worries about keeping its Generation Y employees.

The triple threat is already creating an IT brain drain. Wallace says 40 percent of her staff of 518 will be eligible for retirement in the next two to three years. Barbara A. White, chief information officer and associate provost at the University of Georgia, says that when three staff members retired in April, she lost their combined 90 years of experience, and she has a lot of staff likely to retire in the next 10 years. Toyota's Cooper is dedicating time to prepare her organization for the future, which includes being as proactive as possible and staying ahead of the business needs. It also means a commitment to active succession planning. Two years ago, Cooper sat down for 90 minutes with 27 team members who reported either directly to her or directly to another team member. Each meeting was an open coaching session structured around her ideas of what IT leaders will need to be in 10 years. She then crafted a three- to four-page letter for each team member, detailing the capabilities she wanted them to develop and a plan for showing how they were achieving them. Those who reported directly to her received a summary of what she sent to their team members. Procter & Gamble has a corporate culture that promotes from within. It saw, however, that good technical talent was getting harder to keep, and it also understood that Generation Y employees expect to change companies frequently. To combat both challenges, it blazed a new, faster IT career path for its younger workers. IT leadership adopted an accelerated development program, as a part of the career path, says Scott. It would place a new set of top performers in a Career Executive Development Program, designed to provide them exposure to high level IT executives and assignments to help accelerate their growth. It comes with one caveat: If you don't perform, you'll be looking for another employer. It's a modified version of what's in place in the company's fabled brand management department. "We wanted to signal that we were very serious about growing people, and were willing to invest extra time and energy" in them, he says. The program is only two years old and is too new to have clear results (no one, for instance, has been asked to leave yet). P&G also created what it calls "The CIO Circle," which rewards long-time IT people who have mastered an area of technical expertise. This "master's" designation allows P&G to acknowledge their status as knowledge leaders even if they are not on the management track. Rewards programs encourage employee loyalty, says Laurie Orlov, a consultant and principal of LMO Insight. Fast-track development in particular should help companies cultivate Generation Y leaders. With so much training and management exposure, they have every reason to stay, she says. Chief information officers who are serious about developing leaders in their group have to be willing to invest time in their people and to give them opportunities to grow, even if that means sometimes letting them fail.

It might also mean getting out of their way when the time comes. Hess Corp.'s Walton says that his goal at all of his jobs has been to identify and develop replacements for himself. "You do that by creating opportunities for them, you make them look like leadership heroes in the eyes of their business and let them take all the glory," says Walton, who is 63 and retired from Hess for the second time last month after the company named Jeff Stein horn, who served under Walton, as its new CIO. Like most chief information officers who aim to develop their staff, Walton has used a multipronged strategy for helping people along: He mentors, he provides role models, he moves staff into new opportunities, and he invests heavily in education. In fact, he sent selected top managers to a Harvard Business School executive program, and IT has two memberships to the BSG Concours Group, a strategy and executive education firm. Walton sees the coming leadership challenge as a plus, not a minus. "There is a gap, but it's an exciting one to fill," he says. For one thing, Walton thinks the blend of experience and technical savvy available when you mix Baby Boomers and Generation Y is a powerful one for companies that work to bring these generations together. He is talking with Hess about how to do it, and he may want to take on such a role in the future. Now that a new IT leader is in place at Hess, however, Walton can relax for a bit. "I'm going to get my [golf] handicap down," he says.

CASE STUDY QUESTIONS

1. Several comments in the case note that chief information officers are in a unique position for companywide leadership, extending beyond their primary technological concerns. Why do you think this is the case? How are CIOs different in this regard from other chief officers, for example, in finance, HR, or marketing?

2. After reading the case, what do you think are the most important competencies for the successful CIO of tomorrow? How do you rate yourself in those? Have you considered the importance of these skills and abilities before?

3. How can chief information officers prepare their successors for an uncertain future that will most likely require skills different from those possessed by the successful CIOs of today? Which key competencies are enduring, and which ones are a function of the current technological environment? How can chief information officers prepare for the latter?