Preface: Per IBM’s 2015 C-Suite study, “…CxOs believe technology and market factors are by far the biggest of the various external forces buffeting their organizations. CEOs put technology at the top of the list, as they have for the past four years. But now, for the first time ever, the other members of the C-suite also see technology as the main game-changer.” [1] This Q&A is part of a series that secures ideas (of C-Suite leaders and professors) on innovative Business/IT solutions which have the potential to be deployed across a variety of different industries for positive change.
Q. Building upon the findings of IBM’s recent study, why do you think other C-Suite leaders have finally recognized technology’s relative importance to a company’s future prospects?
A. I believe digital’s impact across industries, as well as prudent organizational design, are the catalysts for this change. First, as Marc Andreessen famously stated, “…software is eating the world,” and one can easily see the massive changes that have been disrupting sectors – from the taxi business to the music industry. I believe no business will be left unturned, not even highly regulated industries like pharmaceuticals and utilities.
Second, a number of CIOs have been able to create operating models that have evolved IT from being not only a back-office support function, but a collaborative partner with different parts of the business (ie, front-line sales force and marketing). By back-office, I’m referring to the critical IT support functions which are still crucial to keep the lights on and maintain daily business operations. Still, the view by some is that technology keeps progressing at a lower cost, and that raises challenges for CIOs. The issue with that view is that IT is then concentrated within the denominator of the value equation (revenues over costs). The good news is that when a disciplined approach is used for IT resource allocations, IT leaders can be deployed as collaborators with commercial teams to not only provide ideas on saving money, but also to co-create strategies on increasing the numerator (revenues). This advanced organizational design has enabled Merck to not only uncover sources of value (approaching a billion dollars [2]), but also stand up entirely new businesses like Steelgate Intelligence Systems, which is focused on combatting counterfeiting. Given these types of business results, I am not surprised at IBM’s C-Suite study findings. The better news is that for those companies which have not deployed such organizational designs, this approach might be an untapped opportunity.
Q. Well, as I’ve shared with some of my clients, when a company is not achieving their sales quota, the CEO is not going to be hunting down the CIO for the revenue gap; that fun discussion will be with the SVP of Sales and Marketing. As such, shouldn’t CIOs instead be focused on security breaches and other technology pain points?
A. From a RACI (Responsible, Accountable, Consulted, and Informed) perspective, you have a point around how the A (Accountable) might be tagged to the commercial team. For CIOs, the expectation is that technology just works, risks are managed and daily operations run smoothly. However, what I’ve challenged my IT colleagues on is that they need to think like venture capitalists (VCs) and understand the entire business equation in terms of expected revenues, costs, and profitability. If your IT leaders don’t have such skill sets today, sign them up on a VC’s CIO Advisory Board to secure this knowledge so that they can work with their commercial counterparts to decrease cycle times and focus on enhanced customer relationships.
Q. Organizational inertia to change is still a common theme at a number of companies, regardless if they’re doing relatively well or not. What top three ideas would you introduce to combat such inertia?
A. First, I would explain how digital disruption can be a threat to their overall company’s future, and point to recent findings by the MIT Center for Information Systems Research where board members estimated that 32% of their company’s revenue would be under threat from digital disruption in the next five years. [3] And while the word “disruptive” might sometimes be interpreted in a negative manner, I’d paint today’s digital revolution in terms of the “art of the possible”. Second, I would share my passion around the huge opportunities of converting information into monetized assets which can be grown and protected by prudent Intellectual Property Rights strategies. Finally, I would stress the importance of starting small and building confidence. When we first introduced 3-D printing at Merck, we started with mundane areas like parts replacement. Once early wins were secured, the teams then progressed to other needs like packaging design and biologics. Given that all organizations are operating under the “do more with less” constraints, inertia to change is no longer an option if you want to be relevant and valued.
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Clark Golestani is Executive Vice President and Chief Information Officer at Merck, where he is responsible for global information technology. Mr. Golestani has more than 25 years of technology thought leadership combined with deep knowledge of health care and life sciences IT. Prior to joining Merck, Mr. Golestani was responsible for establishing and managing strategic client relationships as a principal with Oracle Corporation’s consulting practice. He serves on the Board of Directors of NPower, a non-profit focused on building technology skills. He also serves on several venture capital advisory councils for Accel Partners, Sierra Ventures, and Sutter Hill Ventures. Mr. Golestani has a degree in Management Science from the Massachusetts Institute of Technology Sloan School of Management.
[1] IBM Redefining Boundaries: Insights from the Global C-Suite Study (5,247 business leaders from 21 industries in more than 70 countries), http://www-01.ibm.com/common/ssi/cgi-bin/ssialias?subtype=XB&infotype=PM&htmlfid=GBE03695USEN&attachment=GBE03695USEN.PDF, November 2015
[2] Computerworld, http://www.computerworld.com/article/2977613/data-analytics/merck.html, September 2, 2015
[3] MIT Sloan Management Review Thriving in an Increasingly Digital Ecosystem, http://sloanreview.mit.edu/article/thriving-in-an-increasingly-digital-ecosystem/, Summer 2015
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