Do you know your Executive Quotient (EQ)? By figuring your EQ, you can determine how well you're positioned to be the strategy-oriented CIO that businesses are demanding.
Your EQ can be measured across a set of executive leadership competencies that are essential for any well-rounded C-level executive – including IT leaders who want to move beyond the limits of function head and its focus on operations, alignment and order-taking.
It's also a success indicator for CIOs who are taking on formal or informal responsibilities in non-IT aspects of the business or moving up to the chief executive officer (CEO) role.
Your CEO sets the benchmark for performance across all executive competencies. The good news is that the best CIOs stand up well against their bosses and even outperform them in many competencies. The bad news is that they underperform significantly in competencies unique to strategic business leadership. This gap defines the development goals IT leaders need to set in order to advance their individual EQ, their careers and the CIO profession as a whole.
Helping the CIO profession fulfill its desired and necessary strategic role is the reason the CIO Executive Council developed its Future-State CIO program, of which the EQ competency assessment is the heart. The Council partnered with global executive recruiting company Egon Zehnder International to adapt its competencies and assessment model to gauge CIO EQ.
In 40 years of assessing executive talent, Egon Zehnder chose this set of competencies because of its predictive value in identifying top-performing executives. These are the behaviours that differentiate good executives from great executives, says Stephen Kelner, global knowledge leader of Egon Zehnder's talent management and management appraisal practice group.
Kelner describes the competency of Market Knowledge to illustrate the range in performance levels. The Market Knowledge score indicates how well an executive understands the marketplace, including customers, suppliers, competitors and regulators.
"Level 1 CIOs are doing their basic job," says Kelner. "As they move to Level 2, CIOs can describe what the industry is doing and the basic forces of the market, including typical customers and obvious competitors." At the higher levels, CIOs know their market well enough to spot, anticipate and capitalise on trends. The highest performers make an impact on the marketplace by creating new businesses or new products through their understanding of technology, customer needs and market trends. Unfortunately, Market Knowledge, according to Kelner's six years of accumulated data, is, compared to CEOs' competencies, a weak spot for CIOs.
Examining the competency performance data based on interviews and 360-degree assessments of 25,000 executives in the Egon Zehnder database, we find five points that characterise an outsanding CIO:
- Outstanding CIOs (those ranked in top 15th percentile) score highest in Results Orientation, Strategic Orientation, Change Leadership and Customer Focus.
- Outstanding CIOs perform significantly better than average CIOs in all competencies except for People and Organizational Development, where they are equivalent.
- People and Organidational Development scores are relatively low for all types of executives assessed, particularly CFOs.
- Outstanding CIO scores slightly surpass good CEO scores on most competencies.
- Outstanding CEOs – the most well-rounded strategic leaders – perform significantly better than outstanding CIOs only in Market Knowledge and External Customer Focus.
CIOs who want to devote more of their time and energy to driving business strategy and innovation should focus on developing and leveraging the three competencies most particular to the business strategist: market knowledge and strategic and commercial Orientation. However, even to get a chance to be a business strategist, CIOs must be strong in foundational competencies such as change leadership, collaboration and influence, and function expertise. Without these, a CIO is unlikely to get a seat at the strategy table, and may in reality be a CIO only in title.
Kerrie Hoffman, Johnson & Johnson Consumer Group's Global Supply Chain CIO, wasn't surprised by the relatively low scores for CIOs in Market Knowledge and External Customer Focus. Hoffman rose through the sales ranks of Johnson & Johnson before joining the IT department and becoming a CIO. She knows how important the market and customers are to a business. But, as CIO, she finds she has to make a concerted effort to focus on these areas. "The day-to-day job of a CIO doesn't really require you to spend time doing customer and market visits, but it should require it," says Hoffman.
Hoffman is leading an integrated Operations/IT effort to formulate and execute business strategy for emerging markets in areas of the Asia-Pacific region, where its products have been typically sold in parenting stores. Hoffman travels frequently to the region to size up the market. "Before I leave for these visits, I do my homework and get an overview of the specific business segment and market I'm going to that day. That way, I can really understand their challenges and the technology and business capabilities they need. My ultimate goal is have a rich and collaborative conversation with customers that takes us in a new direction - to really change the game," Hoffman says.
CEOs, who often rise from the sales ranks, have an intuitive customer focus and often form close relationships with key customers. Conversely, in most industries CIOs concentrate on internal stakeholders and have not had much need to interact with external customers. An exception is George Chappelle, senior vice president and CIO at Sara Lee Foods. He credits his external customer focus to his 20-plus years in the consumer packaged goods (CPG) industry. "CPG is all about the external customer. I have to have these skills as CIO because I am so involved with customers – from market research, new product innovation and throughout the supply chain," says Chappelle. For CIOs in any industry who want to connect to the external customer, Chappelle suggests getting involved with new product or sales information initiatives. "Both require heavy IS support and will get any CIO linked externally," Chappelle says.
When it comes to People and Organizational Development, from the CEO on down, C-level executives are relatively poor performers. Rajinder "Raj" Gupta, adjunct professor and executive director of the CEO Perspective Program at Northwestern's Kellogg School of Management, has interviewed more than a dozen CEOs from companies including Walgreen's, AON and Northern Trust about the competencies data. "In general, I found that the premium for CEOs as they rise through the ranks is a deep understanding of the business and customers, not necessarily on how they manage their people. The CEOs I spoke with are definitely aware of the need to focus more of their attention on people development," says Gupta.
There's opportunity here if CIOs can rise to the challenge. Michael Pilkington, managing director of corporate technology at Euroclear in Belgium, believes CIOs, like CEOs, have not focused enough on this area. "As executives, we are tasked with spending a lot of our time focusing on how to serve our clients; I think we should spend just as much time thinking about ways to motivate and develop our people," he says.
When Pilkington took over IT at Euroclear, he made it a priority to respond to the general corporate feeling that the IT department was insensitive to users. He believed his team needed to work on its awareness of its internal customers' needs, and not just those in customer-facing positions. Each member of his non-customer-facing team went through a half-day customer-focus training session (customer-facing staff went for a full day) to drive home the importance of customer awareness. Pilkington also ran a number of sessions to educate business users about IT.
According to Gupta, CEOs want strategic-minded CIOs. The biggest deficits CEOs see in the current crop of IT chiefs are the lack of a deep understanding of business opportunities and the inability to communicate strategically with high-level internal and external stakeholders. Market Knowledge, Commercial Orientation and Customer Focus fit here. "In industries where business is closely entwined with technology, or where it can be used as a competitive advantage, that's where CEOs are looking for CIOs with high EQ," says Reynold Lewke, Egon Zehnder's North American CIO practice leader.
This trend is personified by Kumad Kalia, CIO of Direct Energy, and his CEO, Deryk King. King specifically recruited Kalia for his EQ. "I took great care to recruit someone with a good track record of operational excellence, strategic thinking, experience in customer service and a diverse career background," King told the audience at the spring CIO Leadership Conference. "I expect a much broader contribution from my CIO; he has to be prepared to talk about issues outside of his immediate responsibility." Kalia concurred: "The role of the CIO is more than just keeping things running," he said. "We've had to acquire a lot of the skills of a traditional general manager."
Direct Energy was ready for a strategic CIO with an expanded role, but many companies still have a traditional, constricted view of the CIO as operations-oriented function head.