Why We Need Chief Restructuring Officers For Digital Transformation
Companies usually fail at digital transformation. They need to restructure their technology organizations. They need effective leadership and talented teams. They need impact audits. They need a Chief Technology Restructuring Officer. Because business-technology needs a reset. Just look at Tesla, Facebook and the Wall Street Journal.
Chief Restructuring Officers (CROs) usually have tough jobs: they’re given “broad powers to renegotiate all aspects of a company’s finances to deal with an impending bankruptcy or to restructure a company following a bankruptcy filing … while CRO’s officially report to the company and its board of directors, they are considered to have greatly strengthened the hand of creditors since the CRO can make executive decisions … on occasional instances, the CRO can oust the chief executive officer (CEO) or President of the company, as happened in 2012 when Gregory F. Rayburn replaced Hostess Brands CEO Brian Driscoll as CEO a month after being appointed CRO.”
A CRO for digital transformation (DT)? Absolutely. How many companies believe they’re technology organizations are as effective as they should be? How many believe their DT investments have returned what they should? How many are convinced they have the right team and the right leadership? How many understand that their competitive future depends upon their business-technology investments? Or is digital transformation just another project that over time might yield measurable results? There are reasons why most digital transformation efforts fail. It’s been studied to death.
CROs – as suggested above – have broad powers. Chief Technology Restructuring Officers (CTROs) should also have broad powers. Job one is an assessment of the organization’s technology structure. Clearly – it’s 2020 – “technology” should report to the CEO with at least dotted lines to the Board of Directors. Anything short of this authority and influence is malfeasance.
Next, the distinction between Chief Information Officers (CIO) and Chief Technology Officers (CTO) should disappear and replaced by a Chief Business Technology Officer (or Chief Digital Officer) responsible for both internal and external data, applications and delivery. Titles are important and this one reflects the full integration of technology and business – which is a 21st century survival tactic and a longer-term strategic no-brainer. It also enables synergism among data, applications and delivery.
The technology organization should organize around the following activities:
Business-technology strategy, fed by multiple business units
Internal infrastructure & applications
External products & applications
Cloud storage & delivery, including all SaaS offerings
Innovation through emerging technology, especially AI & machine learning
Note that these activities can – will! – change over time. In fact, they will change as the business-technology field and mission itself changes. Agility? Sure. But all business-technology should – for the time being – be managed by a talented leader with an even more talented team. Over time the “business-technology organization” should disappear within the business units and product teams, but we’re some years away from complete integration. In fact, the whole notion of centralized versus federated versus decentralized governance is already obsolete.
Restructuring officers take hard looks at leadership. First and foremost, the Chief Business Technology Officer should be a diplomat with major business credibility. He or she should also have wide and occasionally deep technology expertise. The tilt toward business acumen is a 21st century phenomenon: it’s now important for leaders to know technology and business. Leaders should also have the personal and inter-personal skills of an actor – he or she should be friends with as many business-technology leaders (and vendors) as possible while leveraging credibility in some occasionally very tough decisions (like investments in digital transformation or firing decisions). They should also be capable of seeing into the future, at least three to five years into the future. So forecasting is another talent they must possess. Their personal and professional networks must be huge – almost as huge as the political capital they’ve amassed over the years. They must own the business-technology “vision thing.” They should also generate more love than hate among the team.
The restructuring officer should assess leadership through these lens. While no one can check all the boxes, leaders should be assessed on the basis of relative talent. If we had to rank-order talents, credibility through business success followed by technology expertise would rank the highest, followed by the soft skills everyone needs to survive. Note that they are interdependent. A really smart, experienced business leader with exquisite technology chops cannot lead successfully without soft skills – and vice versa. So a mix of skills and competencies across these broad categories is absolutely necessary.
There are eight key members of the team that must be assessed – continuously assessed. In fact, like the CBTO, all of the key talent should be subject to term limits. The idea – however subtle – that everyone “deserves” a seat at the table simply because they’ve been at the table for a long time challenges the velocity of common sense. Leaders burnt out, and high performance teams absolutely burn out – and learn dysfunction at an early age. The standard fare of high performance teams include composition, team dynamics, domain experience and the ability to call foul during a project – all good, but incomplete. McKinsey describes a Latin America mining company’s approach to team building as employing:
“A ‘yellow card,’ which everyone carried and which could be produced to safely call out one another on unproductive behavior
An electronic polling system during discussions to gauge the pulse of the room efficiently (or, as one team member put it, ‘to let us all speak at once’)
A rule that no more than three PowerPoint slides could be shared in the room so as to maximize discussion time. (Brief pre-reads were permitted.)”
It’s likely that a good restructuring officer would assess such approaches to team building as anything but agile, adaptive or productive. An especially tough one would assess such practices as silly, or worse, the tactics necessary to fix a truly broken team (and therefore not worth the effort). (Who actually suggests “yellow cards”?)
Team members should all be auditioning for the top job, especially during their limited terms, either at their home companies or with other companies in mind: ambition is an extremely important talent. Incentives are also essential to team performance. Without adequate – generous – incentives, teams will not be as productive as they should. Specialization is another one. Linebackers should not play quarterback. The idea that “talent” is horizontal is wrong. Professionals can solve specific problems, but not all problems. Teams should be assembled according to the demands of the problem at hand. The notion that “we can move Harry” here or there creates team dysfunctionality and threatens productivity. Teams come and go. There aren’t any great teams sitting on the bench just waiting to be deployed. They’re assembled, unassembled and re-assembled in real-time and over time.
This is where Chief Technology Restructuring Officers must be brutal. How successful has the organization been? How much money has it saved the company? How much revenue did it generate? Is it a quiet organization that no one notices because the trains still run on time, or is it a front-and-center strategic organization focused on profitable revenue? Is it structured properly? Is it led effectively? Is the talent there? Are the teams productive? Brutal assessments are required here. But note that the Chief Technology Restructuring Officer never disappears. “Auditing” should be a permanent part of the business-technology world.
The New BusTech
Clearly, Chief Technology Restructuring Officers have their hands full, especially because they work in alternative realities. First and foremost, they must confront the extraordinarily high tolerance the field has for failure. Digital transformation, ERP, CRM and other bustech projects all have high rates of failure. Are the reasons truly inexplicable, are the solutions outdated, or is acceptance just too high? The ultimate rationale for a Chief Technology Restructuring Officer is the need to reset the whole organization, the whole team and the entire process. Good Chief Technology Restructuring Officers will look beyond what the consultants tell them is wrong, what the vendors have up their sleeves and all family-and-friends approaches to management. If we knew how to do this without help, we would have done it by now. We need help. We need Chief Technology Restructuring Officers.