As the saying goes, the path to the CEO office goes through managing operations and innovation. Vision and execution underpin the success and growth of every company. People who rise to the top know how to transform vision into innovation and how to steer the organization’s operations to monetize the innovations and gain market share. In a world of pervasive technology and data gathering, the CIO is the leader uniquely positioned to drive innovation and transform operations.
Today CIOs are transforming both operations and innovation:
The Transformation of Business Operation
In most enterprises the CIO is driving the rapid digitization of both internal and external operations. If we look at business history, it is evident that powerful CEOs have always used technologies to gain competitive advantage. The automation of manufacturing operations (the introduction of the assembly line and industrial robots) is just one example of how technology can reduce the marginal cost of producing more output, which in turn drives down price and grows sales. The digitization of business process will have the same profound effect on enterprises as the automation of manufacturing had in the past. But the most important change will occur in the customer facing applications where the CIO has the potential to have the most visionary and financial impact.
The Optimization of Business Processes
Thirty years ago every operations manager read the book, “The Goal: A Process of Ongoing Improvement.” It taught them how to optimize manufacturing processes to weed out inefficiencies. It helped them identify every bottleneck at every step in the process and systematically eliminate it. Managers tabulated data in notebooks and used a scientific approach to analyze the inputs and optimize throughput. It has been reported that Amazon’s Jeff Bezos has asked his managers to read this book. Why is it so relevant? Because the methodology to extract efficiencies out of processes is still the same, but we have so much more data collected at so many more steps. Like the invention of the microscope, which led medical science to historic new discoveries, so the invention of sensors gives us more dense data, that opens process optimization to new innovation. And it is the CIO who has to establish and manage the data lifecycle from data capture to process optimization.
The Transformation of Innovation
The digitization of the customer facing operations leads to what some people call “customer kanban.” Kanban is a management system pioneered by Toyota to make every step of the process transparent to every person involved in it. This leads to rapid innovation by teams as everyone has immediate input on how to make the entire process better. Infusing the same lever of transparency in the customer lifecycle management opens the door for rapid idea generation, testing and then scaling the success story. And again, this process is critically dependent on the CIO’s ability to institutionalize by leveraging technologies.
I used a lot of historical analogies with manufacturing. This is so because many CEOs rose from the manufacturing operations. But the key point I want to make is that today the CIO is influencing most of the operational processes. And new marketable ideas originate in operations. Hence, my prediction that the CIO will be the next CEO.
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