By Tom Trainer
Senior Vice President and Global CIO
PepsiCo, Inc.
Co-Chair
BTM Global Leadership Council
BTM Institute
PLANO, TEXAS
When I began my career in information technology, it was still the era of the “glass house,” the room that held our only computer. It was enclosed for climate control and located somewhere in the back of the building or the basement. It was there because when computing came along it was just tacked on to a business already in progress. We who labored in the glass house mostly used the computer to process transactions.
When we think back on those days, we usually remark that our smallest laptop today has more computing power than the machine, an IBM 360, that occupied the glass house.
More important, however, is the symbolism of the glass house: We in information technology were isolated, set apart, somewhat odd and mysterious in our “cage.” People would walk by the glass house and peer in curiously. No one on the business side was quite sure what we were doing in there.
Today, the glass wall that once separated business and technology is coming down. I expend most of my energy as a CIO on my relationships with business executives, sitting with them to make business decisions. For example, I co-own with a top business executive our program to redesign business processes across PepsiCo. I’m not just the “techie” observer.
As the examples in this book vividly demonstrate, the leading companies—those that are winning in the marketplace—do not choose sides any longer. Their “business” executives are conversant in technology. Their “technology” executives can talk the business. They are all in the glass house together. This is a critical point and worth repeating: To succeed today, companies must manage business and technology together.
Have you experienced this epiphany yet? If you take nothing else away from this book, grapple with the significance of this new mindset for your business.
I have had CIO-level responsibilities for more than 20 years, and in that time, I’ve watched as the management of technology became more important than the technology itself. Because we can all buy the same machines, the only differentiator is how we use them. And as technology has become embedded in every nook and cranny of the organization, the firms that have pulled ahead are those that manage business and technology as one. They design business processes and the enabling technology together.
What are the characteristics of the leaders who can do this? For one thing, understanding technology, although important, is not the most important. What will be increasingly vital is the human side of things. A leader must know how to communicate across organizational boundaries. He or she needs to do this to develop and manage relationships. A leader must understand the political network as well as the official organizational structure. Where are the power bases? How do they work? When things change, can the leader adjust to and align with the new power structure? This has nothing to do with technology. It has everything to do with the ability to think and act at an organizational level to get the right deployment of resources, human and otherwise, to deliver the value the organization needs from technology.
As I reflect on those who will follow in my footsteps, I realize that they will need a different set of skills and perspectives. I’m convinced that leaders of the future must:
Come out of the glass house for good. They must understand that business technology is strategic. Executives of the future will know that merely looking over their shoulders at what the competition is doing with technology will only strengthen the competition. They will know that the appropriate level and mix of investment in technology is a function of what their own firms are trying to achieve strategically.
Know that managing technology is as important as the technology itself. The next generation of leaders will understand, or should if they want to succeed, that they must invest in the management of technology as well as in the technology itself. If there is any remaining doubt today, there will not be in the future: Technology per se is an equalizer. Only in the management of it can firms eke out advantage. As Professor John Henderson of Boston University noted in Chapter 3, “Making the Right Investments,” “Leadership is a differentiator of companies. Technology is not a differentiator.”
Understand what technology does. Unless they appreciate that business technology often plays a critical role in establishing or maintaining a strategic position, future leaders may well spend inappropriately. But appreciation must evolve to an understanding of how the various types of technology—those that enable transactions, for example, or decisions or relationships—contribute to a firm’s strategic actions. More often than not in the first half century of business technology, it was thought about only tactically.
Follow the money. They must focus on the business and understand how it earns a profit. Leaders must understand the business strategy: With regard to each product-market, is the firm in an exploratory or exploitative posture? This assumes that the firm has a strategy that is well articulated and supported by appropriate structures, processes, and information.
See through walls. Tomorrow’s leaders will, I suspect, be far more comfortable than my generation with deriving value through partnerships and other types of engagements with other firms. They must understand the role technology plays in enabling these partnerships. They must learn to manage the technology that stretches across internal firm boundaries as well. BTM will break down many existing silos.
Manage business and technology as one. The moments of dissension, the pointing of fingers for failures, will, I hope, disappear as executives come to see that business technology failure is often due to a weak or nonexistent business strategy or a failure to create a business-driven IT strategy. Alignment will increasingly be seen as only the first step; it will occur to all that the design and management of business cannot be done apart from the design and management of technology.
Scrap the org chart. We are already seeing the blending of corporate roles, and I predict that it will be commonplace in the future. The CIOs at Schneider National, for example, who moved into business positions, are harbingers of what is to come. Most of the executives interviewed for this book talked of the need for people who are comfortable in both the business and technology realms. This re-identity is underway in many firms.
Get underneath the hood. Executives of the next generation must be able to discern the business processes, below the overarching posture of a firm, that advance the strategy. Moreover, they must see technology as part and parcel of these processes; the two are inseparable. This is going to require untying the functional straitjackets in which many firms have existed.
Get comfortable with speed. Is it too much of a cliché to say that everything will move faster and faster, that interconnectivity makes the whole world our playing field, and that we must give up command and control so that our people on the edges of the organization can react to events in real time? And that this is an entirely new way of thinking about management and leadership? And that even if we pay lip service to it today, it will be very hard to accomplish?
Wake up each day and be ready. Expect unimaginable change. Leaders of the future may well look back on the years of my career as somewhat curious. Perhaps they will look back on these days of business and technology wrestling toward alignment and wonder what in the world we were thinking. Why didn’t we get it? Well, I do hope that this book will some day be outdated, quaint, and amusing.
In his interview for this book, Rob Slagboom, vice president of information and communications technology at Transavia Airlines, said he needs “people who have a high-level view, who can understand longer-term approaches, who think strategically about IT. And they have to understand the business. But who will be their teachers? It’s the classical predicament of a field in development. It has to grow up.”
I want this book to be a step in that direction.
Let me step back now to the generation before me to illustrate an important point about our future.
When I was growing up in Scotland in the 1950s, one of the more remarkable stories of business technology was unfolding in London.
It seems that the very first use of a computer for a routine business process occurred in 1951 at a bakery in London. J. Lyons & Co., with 33,000 employees, was a huge supplier of cakes, pastries, teas, and other foods to hundreds of teashops and other outlets around the country.
Lyons was an innovative company. It built its own delivery vans and baking equipment, and it was an early adopter of such technologies as microwave and microfilm. So, as bold as it sounds today, it is not surprising that the firm’s executives, hearing of the new “electronic brains” at work in the military and science, would decide to build their own. They named their machine LEO, for Lyons Electronic Office. And they created software to run it before the word software even existed.[1]
What is of interest to us here is that the people at Lyons, alongside their derring-do with hardware and software, also understood many of the principles espoused in this book. Many years earlier, the company had established a Systems Research Office to study its operations and look for ways to make them better.
Lyons executives understood that business processes and technology were intricately linked. David Caminer, who headed the Systems Research Office and was asked to create software for the LEO, has written:
It was a cardinal principle at Lyons that new machinery should not be introduced without the system as a whole being reexamined. There was no question of leaving the system as it stood and merely mechanizing those aspects that most readily presented themselves. It was now the turn of the computer to be considered in the same ambience.[2]
The LEO found its way into every corner of the business. It ran the payroll, cranking out a paycheck in 1.5 seconds, compared to 8 minutes by hand. It charted the international supply chain of the tea business, providing managers with information they never had before. It automated operations, issuing instructions on which type of cartons to use for baked goods for each order and directing trolley loadings.
It was deployed to manage shipments of up to 250 items to some 180 teashops. This business process was altered because of the LEO. Managers discovered that most shops’ orders did not change that much. It would be simpler to calculate deviations from the basic order as they were phoned in. It was management by exception. The LEO also made it possible for management to have a nearly real-time view of the operation.
It is fun to think about working in such an innovative, greenfield environment, but Lyons offers two serious lessons. One is that its success was due not just to building a computer, but to the way it managed its business and technology together. The second is that computers were only introduced into business a scant half century ago.
We have learned a lot since then, but 50 years is not a long time, and there is still much to discover about managing business technology. Only now is what we know being codified in a standard. By contrast, consider the discipline of accounting. Nearly 100 years before the LEO, the Institute of Accountants in Glasgow petitioned the queen for a royal charter.[3] Soon, use of the term chartered accountant would be widespread. More than 450 years before the LEO, Luca Pacioli, a Franciscan friar, published a book summing up what was known about double-entry bookkeeping “in order that the subjects of the most gracious Duke of Urbino may have complete instructions in the conduct of business.” That sounds to me like an attempt to create a standard.
Pacioli could draw on centuries of insight. Some 5,500 years before the LEO, accounting was being practiced in Mesopotamia. And, as we know, the accountants are still trying to get it right. So we who seek to manage business technology today might be forgiven our occasional bewilderment—we’ve only been at it for 50 years!
The BTM Standard—toward which this book is an important step—will be significant, not in and of itself, but for what it makes possible. The companies and organizations we have talked with for this book bring us food and medicine. They offer investments and insurance. They make the steel for our cars and the gasoline to power them. They deliver our packages and fly us around the world.
Increasingly, they depend on information technology to do all this. If we help them do it quicker, cheaper, better, if they discover through technology entirely new products and services, if they can move this remarkable computing power we have forever out of the glass house and into the heart of their businesses, then they will win—and so will we all.