If you want to know why people buy Toyota, just ask someone who drives one. Some people have put as many as 300,000 miles of their vehicles. That emphasis on quality comes through in every commercial about Toyota. However, quality resonates through just about every function, especially IT, at a Toyota company. But this hasn't always been the case. In 2002, executives at Toyota Motors Sales, USA, Inc. complained about how IT was unresponsive, and about where all of the money spent on IT projects went. Barbra Cooper, the CIO, undertook a massive restructuring of IT to better align strategically to better align with the needs of the business units and to better align with the company's culture of quality and continuous improvement.

Recently, enterpriseleadership.org sat down with Zackery Hicks, a corporate manager from the Office of the CIO at Toyota Motor Sales, USA to talk about how IT meets project goals, innovates, maintains quality, and develops talent. Here's what he had to say:

EL: Can you provide an overview of your IT organization?

ZH: Barbra Cooper, our CIO, also oversees the University of Toyota, which is a global responsibility. Our IT organization has a federated model, consisting of about 400 employees. The office of the CIO oversees the transparency, governance, and the business enablement. We have aligned a divisional information officer or DIO with each of our business units. Each DIO has a staff of direct IT reports. Each DIO sits with his/her business line and attends that business unit's staff meetings. At review time and throughout the year, the business executives provide feedback on DIO performance to the CIOs. DIOs have a dotted line to their divisional executives.

Within my domain, I have IT strategy, finance, governance, resource management, and vendor management. I also have security, privacy and compliance.

EL: Is that structure a model for all of IT within Toyota?

ZH: For some divisions of Toyota, IT has the same structure as us. The manufacturing divisions have a flatter IT structure than ours because of their
specialized business needs.

EL: Did Barbara Cooper develop this structure for the IT organization?

ZH: She did. Barbara likes to say she called the police on herself. Before joining Toyota, she has been a change agent CIO, transforming new companies and then moving on. Her longest tenure as a CIO has been at Toyota. Several years ago, she felt that it was time to transform IT here because people perceived IT as more of an order taker. Cooper wanted us to be thought of as a respected strategic partner. She took us on the journey to achieve this goal.

EL: Where does the Toyota Motor Sales IT organization fit into the global Toyota IT?

ZH: We are a separate company from Toyota Motor Corp in Japan. However, all the supply chains interconnect with each other. In fact, all of our systems connect with those of our other affiliated companies. We have
a close relationship with the other IT organizations within Toyota.

EL: Can you describe the governance structure by which the DIOs operate?

ZH: The Office of the CIO facilitates the executive steering committee. We have many project portfolios recommended by each division for committee approval and for provisioning.  Each division and each DIO has his/her own local governance. You can liken it to state and federal government.

We decided to empower DIOs with all of the resources needed to meet their business units' needs.  We did this because we didn't want DIOs turning into relationship managers.  Furthermore, we wanted them to strive to be successful. As a result, we empower them to respond quickly to their evolving business units' needs. We have a threshold for what they can decide
locally.  Beyond that local approval level, they have to rise up to enterprise governance. 

EL: Do the DIOs have to reach project objectives before funds are released?

ZH: We have a business case for each project. We look at the ROI and the total cost of ownership. We also want to have a portfolio view so it isn't just only based on ROI. Some projects that might help us with innovation or help us in our continual quest for better quality might have a lower threshold. In the overall picture of the company, these projects have value. We take more of a portfolio view, but we absolutely do look at securing a return. In the Toyota Way of Plan-Do-Check-Act, we ask each project team to come back after completion to verify whether or not the project reached its objectives.

EL: Can you describe the metrics or methodology the business units can judge the success of IT projects?

ZH: The business case at the initial start states these objectives. At the beginning of the year, we do an annual plan. We agree upon what the enterprise goals are going to be. What does each DIO or direct report have in common with the things we agreed upon? What are our targets? What things are going to be done locally? What are the local plans that we are going to achieve that year? The annual plan must address all of these questions.

By the time the business case comes forward, we already have awareness on what projects we can expect. We do have funding gates at appropriate phases of the project. Before we begin construction, we look to have a completed ROI analysis and a full cost of ownership for a five-year plan. We want ideas to get off the ground. We make it very easy for the different
business sponsors who have ideas for something new. We'll fund the idea, give the team a pre-determined amount of time to go off and think about the idea, and to vent the idea out with IT and any other affected groups to see if the idea has some legs. If it does and the team comes back, then we'll give them more seed money to get through high level requirements. We continue down this path before they get to construction. We want to encourage good ideas that help the business. We also want to limit our exposure by investing in the wrong things. Before we give them money to begin construction, we want to make sure all of the risks and the returns are vented out.

EL: Toyota is known for being a leader in sustainable innovation and breakthrough innovation. Can you give me one or two examples of how IT has contributed to innovation?

ZH: We're proud of our dealer extranet. Two disparate systems used to burden most of our dealerships. They used to enter their factory order requests in with their factory system and then run their office via their dealer management system. The interface we created enables our dealerships to work on either the factory system or the dealer management system without
ever rekeying any input. A vehicle entered as sold in the factory system would automatically update their inventory systems as purchased on their own. This innovation tore down the silos between the automation that existed. The extranet provided the dealerships with more flexibility. They now could see the vehicles to them in their pipeline, and can trade with other dealerships before the vehicle arrive to the dealership. This capability gives dealers the ability to get the right car, to the right place, and at the right time for the right customer.

Quality is another aspect of innovation for us. It's part of our focus on and part of our culture. Quality shouldn't be limited to our vehicles. Our systems should also have that quality. We've been innovating by providing our engineers, regardless of where they are in the world, the ability to view any part of a vehicle that is not performing as designed. Our Toyota dealerships have this capability for servicing vehicles.

EL: What quality practices are you using in IT?

ZH: Toyota is Lean. We have our own culture on Lean thinking and continuous improvement. Cooper made them a big priority when she reorganized IT. We wanted to better align IT with the Toyota culture. Our mantra says that we're not a public corporate IT shop; we're a corporate in-house IT department which knows what our business wants and mirror that. We needed to move upstream and to understand our business better. We achieved this posture through Lean thinking and the continuous improvement or Kaizen. We absolutely incorporate these quality practices in everything we do in IT.

EL: How does IT meet the objectives of the Toyota Production System?

ZH: We're the sales and manufacturing arm of that. IT uses the same principles used in manufacturing. The methodology is the same. You can't see everything that IT does. On the other hand, if you walk by a vehicle assembly line, you can observe how much wasted time is expended. We mirror our production system by using dashboard and process documentation to visualize and to enable people to see what's doing on in it and to improve upon it. This visualization is all part of our continuous improvement.

EL: What types of IT career development programs do?

ZH: At my previous companies, you were labeled either an IT person or a business person. At Toyota, you have opportunity rotate through different areas of the business.  I started at Toyota in corporate services. Because I had IT experience, I had the opportunity to move into IT. However, people have to demonstrate the talent to move to another functional area, as well as to have the desire to do so.

EL: Is there a formal leadership program at Toyota?

ZH: It's based on different levels. Our University of Toyota functions as a center for dealers and for our employees to learn business skills, communication skills, to uplift the organization's abilities, and to prepare for the future. This center is also open to IT people. In addition, while working with the University of Toyota, we developed our own career path within IT based on the changes occurring in this industry. In the 1980s, a good programmer could count on becoming a manager. Today, a lot of programming happens offshore. An IT manager today needs to oversee relationships with disparate vendors, and a disparate workforce across the globe. 

EL: Can you describe the performance goals set for senior IT people?

ZH: We focus a lot on achieving our goals by building employee performance incentives into our plans. We establish goals at the beginning of each year.
Throughout the year, we make sure we honor these goals, unless business conditions change. It's easy to get distracted because of all the complexity which comes with IT. Having objectives, having goals, and tracking our performance of those goals becomes important for keeping everyone on track.

The Office of the CIO has been successful in managing not only the day-to-day operations of IT, but enabling the CIO to have optimal business engagements and worry less about tactical part of IT.

EL: How have you handled the execution of IT strategy?

ZH: We put the portfolio of our current applications on one axis. On another axis, we looked at what business conditions are likely to occur. We wanted to see what would happen at the intersection of these two things. What would happen to our systems if we need to support more or less dealerships? Would our systems support the increasing variation of our vehicles? What affect does business complexity have on our systems? This process helped us to have a better dialogue with our business customers. We were able to go upstream by our increased ability to have a dialogue about changing business conditions and the potential impact of our application portfolio. Instead of being an order taker, we could anticipate if we needed to invest in new systems. This awareness helped us more in strategic planning.

Through the Office of the CIO we ensure that these potential projects or projects that support the business strategy rise to the top and get the needed funding, and get all of the executive support they need. We make sure they are tracked monthly through that visualization. We want everyone to have the same understanding of what is going on with the projects, to be able to help the projects as they are coming off the tracks, and to get projects back on track based on early warning signs.

EL: Can you describe some of your IT innovation programs?

ZH: We have several formal programs around innovation.  In fact, one of our top goals for 2006 and 2007 included innovation. I mentioned our annual planning process helps keep our associates focused on those areas where we want to make progress. Innovation was an area that's taking center state in our annual plans. We don't care if the submitted idea was actually carried out. We're more interested in how many ideas each executive brings forward from their team. We want to provide a clear path for any idea to rise to the top. We also have some local groups compete similar to a science fair. Their ideas don't have to be about Toyota per se.  Perhaps a submitted idea might be the muse for another associate in how it could benefit Toyota. We don't want to limit innovation. We hope to bring in some ideas that could drive some foothold here at Toyota. Each quarter we give out awards for innovation and continuous improvement. In fact, in 2007, IT allocated 100 percent of its continuous improvement fund to innovative ideas.

Note: Since this interview took place, Zack Hicks is now corporate manager of administrative services.

Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

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Almost everyone agrees that anyone who seeks to lead must get firsthand experience. Experience, however, by itself doesn't guarantee learning. What matters most is what one makes of experience, particularly traumatic and often unplanned crucible events that challenge one as a leader. This conclusion comes from research done by Robert Thomas, who is executive director at Accenture's Institute of High Performance Business Leadership and as an associate professor at Tuft University's Fletcher School of Law and Diplomacy. The empirical research down by the Institute provides Accenture's consultants and clients with insight on topics ranging from new business global to talent management.

Most of the information analyzed in Thomas's new book, Crucibles of Leadership: How to Learn from Experience to Become a Great Leader, comes from interviews with leaders selected on the basis of their proven ability to grow and to sustain an organization during times of trial.

In this podcast, Thomas talks about what some CEOs have learned from their crucibles, how even CIOs can leverage their crucibles to move up the ranks, and how C-level executives can help emerging leaders learn from their experiences.

Bio
Robert Thomas is executive director of Accenture's Institute for High Performance Business and Galvin Professor of Leadership at the Fletcher School of Law and Diplomacy at Tufts University. Dr. Thomas has authored numerous books and articles on leadership, technology, and organizational change. He has co-authored Geeks and Geezers: How Era, Values, and Defining Moments Shape Leaders with Warren Bennis, which was Business Week's best selling book in 2003.

Resources
Accenture - Human Capital Development
Accenture - Next Generation Leaders

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer
AlarmMusic.com Production Music Library for Broadcast, Film, Video & Post Production

If you ask a global CIO like Gary Cantrell of Textron to name you one of his goals for 2008, he'll tell you he wants his IT organization to become more agile. No one knows more about what Cantrell is trying to do than Michael Hugos.  Up until 2006, Hugos was the corporate CIO at Network Services Company, an $8 billion cooperative distributor of janitorial products and disposable food services items. He received a CIO magazine 100 Award in both 2003 and 2005 for improving the agility of Network Services' supply chain initiatives. He also received an InformationWeek 500 award in 2005 for innovative use of an IT wholesale distribution system.

Hugos now sports the titles of business agility mentor and CIO-at-large to several companies. He also writes books about supply chain management and business agility. The second edition of Essentials of Supply Chain has become the top selling book in its class on amazon.com. He recently published The Great Innovation Since the Assembly Line -- Powerful Strategies for Business Agility. In addition to writing books, Hugos often writes about agility in his Computerworld column and on his CIO magazine blog. He also conducts workshops on what he calls the 30-Day Blitz to becoming agile.

enterpriseleadership.org recently sat down with Michael Hugos to get a better understanding of business agility and IT agility.  Here's what he had to say:

EL: What exactly is agility and why what does it offer an organization?

MH: Agility applies to a wider range of activities. Just as lean manufacturing advocates using easily reconfigured machines in flexible production sequences, agile methods advise the use of short and iterative development cycles for rapid response to changing conditions and customer demands. Agility also places a greater focus on customer satisfaction rather than internal operating efficiency.

EL: Can you explain what it means for an organization to be lean and what is the relationship between lean and agile?
 
MH: Lean grew out of the popular manufacturing principles in the Toyota Production System and Just-in-Time manufacturing process. It emphasizes two things: the elimination of non-value added activities that customers don’t pay you for, and the elimination of wait times where products or work in progress accumulates and waits. These ideas relate mostly to manufacturing or supply chain processes. However, lean also advocates ideas that overlap a lot with agility. For example, a rapid response to changing customer demands can occur through using appropriately sized and easily reconfigured machines, and placing those machines in flexible production sequences that can change quickly as situations change. These are very much agile ideas.  

EL: Apparently, supply chain experts have merged lean and agility to create leagility.  What's the story behind this term?
 
MH: Leagility applies mostly to the operations of lean and agile supply chains. We can discuss these concepts well enough with the words lean and agile. By making up a new word like leagility, you create more confusion in the discussion.
 
EL: What are some of the characteristics of companies that are either agile or lean and agile?

MH: Lean and agile companies display a handful of key characteristics. The most important characteristics include decentralized decision making procedures, and individuals and autonomous operating units that are empowered to decide and to act on their own initiative. At lean and agile companies, senior management makes the goals clear to everyone, and trains and trusts employee to do the right things to accomplish those goals.

These characteristics have become necessary for agility. Why! We live in a world where things change quickly. People at the scene of the action need to assess events and act quickly in order to be agile. If they're required to pass information up the chain of command and wait for orders before they can act, they won't respond effectively because situations will change while they are waiting for orders. Opportunities will disappear. People will become frustrated and passive. This scenario creates the inertia and lethargic behavior that bureaucracies are so famous for.

EL: Can you provide an example of an organization that has done a super job of becoming both lean and agile?

MH: The United States Marine has done a good job of becoming both a lean and an agile organization. Its basic tactical unit consists of the 20 to 40 person autonomous platoon. Specific platoons of infantry, artillery, and armor become task forces to handle specific assignments. The commander issues mission orders which spell out what the platoon must do to accomplish its assignment. The senior commander doesn't tell people how to do their jobs. People closest to the scene have been trained and are trusted to figure out how to do what the commander wants, without asking permission before they act.

I'll admit business isn't war. Business creates opportunities; war destroys. You can learn many lessons for business by analyzing successful military operations. I've learned a lot about agility from reading U.S. Marine Corps' 110-page book called Warfighting. Everyone from the Commandant of the Marines to the newest recruit has to read and live by this book.

EL: When it comes to agility, what company has a lot in common with the U.S. Marine Corps?

MH: Both Whole Foods Market and the US Marines -- two very successful organizations -- use very similar operating models. They both consist of small, autonomous operating units, empowered to act on their own initiative. Senior management in both organizations says what they want but does not micromanage. Instead, they train and trust their people to figure out how to do their jobs. These two organizations come from very different lines of business and very different world philosophies.  Because they have both independently arrived at similar operating models, you can easily conclude that there some universal truths about agility and the way effective agile organizations operate.

EL: What are some of the hurdles an IT organization has to overcome if it wants to improve its agility?

MH: It needs to overcome three big interconnected and self-reinforcing hurdles, which are tough to break down. These hurdles include the tendency to use bureaucratic organization structures and operating procedures; the tendency to engage in long development cycles that last between 18 to -36 months, and the tendency to design and build very complex systems.

For centuries, people have used the bureaucratic operating model. Most companies today use this model, not just IT departments. Bureaucracies work well in situations which don't change that much. They can handle lots of details and complexity, and produce predictable results. Problems arise when we try to use the bureaucratic operating model to deal with situations that change all the time. The rapid pace of change can easily overwhelm these bureaucracies. They react by trying to slow things down. They become even more rigid and intransigent. IT and business must cope with rapid change. The rigid bureaucratic behavior of many IT groups really drives business people nuts. IT needs to adopt a decentralized and flexible operating model.

EL: What are some of the programs with long system development?

MH: Traditionally people have the tendency to engage in long system development. Long development cycles work when things don’t change much, but they don’t work well in high change environments. The bureaucratic process don't respond very well to change, especially for the waterfall approach of collecting requirements, creating system specifications and then implementing the system. People first spend three to six months analyzing situations and collecting requirements. They next spend another 12 to 24 months developing systems or selecting and implementing packaged solutions.

During this time, significant changes will occur, and business people will want to come back and alter the system requirements to reflect the changes. This process starts up a whole dysfunctional cycle of behavior where bureaucratic IT project organizations resist the change requests, business people resent being put off, and nobody is happy. Because business people have a lot of political power and influence, IT usually gets the blame for whatever happens. IT needs to be able to get things done in shorter periods to respond well to change.

EL: So how do you deal with the complexity hurdle?

MH: Because we organize ourselves in hierarchical bureaucracies, we then use bureaucratic procedures to do analysis and requirements gathering. We spend months analyzing things. And the more we analyze things, the more complexity we find, the more complexity we build into the specifications for the system we're developing. We become overwhelmed and intimidated by the apparent complexity. We attempt to design systems that can handle every eventuality, no matter how rarely it may occur. This practice leads to specifications for a very complex system, which you can't build on time or on budget. We need to work in shorter development cycles and deliver working systems that address the most pressing problems first, instead of trying to solve all problems at the same time.

EL: You say that an agile organization is one with a network organization. Can you briefly explain?

MH: Agile organizations have a network organizational structure. It provides the best way for autonomous operating units to act quickly on their own initiative, to coordinate their activities with each other, and to deliver benefits for the entire organization. Network organization structures can make best use of an agile operating dynamic.

Traditional pyramid shaped hierarchies just move too slowly. They restrict decision making to those at the top of the pyramid. Since those people are several levels removed from the action, it takes them a while to analyze the reports they get and understand what is happening and then issue their orders. Merely putting in expensive business intelligence and reporting systems does not shorten the decision cycle enough or make the decisions that are made much more effective. Since the people who have to carry out the decisions where not involved in making them, people often make a half-hearted attempt to carry them out. To counter this tendency senior management often indulges in micromanagement of lower levels which only reinforces the dynamic because people have no initiative to think for themselves and are reduced to merely following orders.

EL: Many CIOs use metrics from scorecards, such as the Balanced Scorecard, to evaluate the effectiveness of IT process. What criteria (such as number of projects done on time, or number of projects done on budget) does an agile IT organization measure?

MH: As CIO at Network Services Company, I developed a suite of e-business and supply chain systems that we developed and iteratively enhanced for several years. The project office produced a simple set of weekly reports and scorecards that enabled me, as well as everyone else in the company, to track progress on projects and our performance against budgets. I needed to know how projects were doing as they progressed. I needed to see early on if problems had developed so I could get involved when necessary. Reporting should enable effective intervention and mid-course correction, not just keep score.  You shouldn't measure things, such as the number of projects done on budget, if they don't have any value to the business people who use the systems.

Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

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Innovation can deliver a desirable experience for your customers, and sustainable growth for your company. Many companies, however, struggle with how to deliver top-line growth and deliver true business innovation. Meanwhile, come companies have become astounded by the curve balls being thrown at them because of rising energy costs in the global economy.

Getting corporate innovation right goes beyond delivering the next generation product. If you want to deliver something that creates value for customers, you need to take a holistic look at innovation. This approach requires a total solution based on the right business model, the ability to leverage partnership relationships, and the desire to reach customers through different channels. Cheryl Perkins practiced this holistic innovation model while she was chief innovation officer for Kimberly-Clark. This model has become the underpinning of her strategic innovation consulting practice called Innovationedge. She says, "We started the practice to deliver a roadmap so companies can get their leadership teams focused on key priorities and capabilities so they can start to innovate."

Because so many products have a tie in some way to IT, CIOs plays a critical role in driving innovation more than they did a few years ago. Perkins says that CIOs and their teams can harness the important discrete pieces of information that sit in various departments across the company. She adds that even regulated products have discrete information residing in different departments. She says, "The IT team puts critical support systems and information systems in place so you can capture the knowledge and transfer it. This process is critical to speed to market. If you don't have this flow of information and data throughout the corporation, your time to market will be delayed. Without the IT team, the data and knowledge can't be transformed into new solutions."

Bio
Cheryl Perkins is founder and president of Innovationedge, a strategic innovation consulting firm for corporations and entrepreneurs. Prior to starting Innovationedge, she was senior vice president and chief innovation officer for Kimberly-Clark Corp., a Fortune 500 consumer paper goods company. She oversaw the company's innovation process, systems, and tools. She was also responsible for research and development, engineering, design, new business, global strategic alliances, and environment, safety and regulatory affairs. In 2006 Business Week magazine chose Perkins as one of the Top 25 Champions of Innovation in the World. Also, in 2006, Consumer Goods Technology magazine named her as a top executive responsible for driving vision within the consumer goods industry. This year she received an innovation award at the Indira India Innovation Summit in Mumbai, India. She has 10 U.S. Patents and several more pending.

Resources
Innovate - Interview with Cheryl Perkins, Chief Innovation Officer of Kimberly-Clark
The Appleton Blog
Reuters - Cheryl Perkins Receives Innovation Award

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer
AlarmMusic.com Production Music Library for Broadcast, Film, Video & Post Production

Bill George, currently a management professor at Harvard Business School, has spent the past decade researching and writing about the authentic approach to leadership. It's about understanding your motivations, orienting your moral compass, building your support team, empowering others to lead, and staying grounded by integrating all aspects of your life.

George has the right credentials to write as an authority of authentic leadership. Inspired by Medtronic's mission to restore people to full health, George joined the company in 1989 as president and COO. He became CEO in 1991. Under his 10-year leadership, Medtronic's market capitalization grew from $1.1 billion to $65 billion. In 2003, he wrote the best-selling book, Authentic Leadership - Rediscovering the Secrets of Creating Lasting Value. He followed this book in 2007 with True North: Discovering Your Authentic Leadership, which includes vignettes of executives who demonstrate an authentic leadership style.

George is on the board of Novartis, Goldman Sachs, and ExxonMobil. His articles have appeared in the Harvard Business Review and U.S. News and World Report, and many other business publications.

enterpriseleadership recently sat down with Professor George to discuss what it takes to be an authentic leader, who are and who aren't examples of authentic leaders, and what challenges a CIO faces in becoming an authentic leader, and how governance must change to support sustainable innovation.

EL. What were your criteria for the executives profiled in True North?

BG. The idea for the research came out of Authentic Leadership where many people wanted to know how to become an authentic leader. We interviewed 125 leaders who we felt were authentic and successful. Measuring authenticity is hard to do. We want back over the interviews and measured our qualitative judgment of their authenticity. Part of our criteria looked at people in all age groups. We had a minimum of 15 people per decade, ranging from more than 20 on up to more than 70. We wanted to get the age dispersion to see what, if any, differences existed between the emerging generation and the older generation.

EL. Did you look quantitatively at what type of success some of the authentic leaders profiled in the book had?

To do quantitative research, you need to look at things over a long period. For example, some people asked why we used Jeff Immel, CEO of General Electric, when the company's stock hasn't gone anywhere. He's looking at long-term restructuring.  He's doing a good job. 

EL. Is values-based leadership the same as authentic leadership?

BG. Authentic leadership encompasses values-based leadership. Authentic leadership goes beyond that, but it certainly requires values-based leadership, especially a sense of purpose, an ability to lead with the heart, which includes having a passion for the work you do, having the courage to make tough calls, being able to build long-term relationships that get the best out of other people, and having empathy for your employees.

EL. Some companies, like Oracle, have had a high turnover in executive talent. What would you say about the leadership style of a CEO who runs a company where this is happening?

BG. These executives would be at the opposite end of the spectrum of what we're describing as authentic leaders. These leaders can be aggressive and manipulative. Oracle has had good people, such as Ray Lane, building the company. Oracle has grown by aggressively acquiring companies, such as PeopleSoft and Seibel Systems.

EL. Jack Welch, the well-respected CEO of General Electric, supposedly has a tough personality.  Would you say he is an authentic leader?

BG. He's right in the middle. He did some fantastic things at GE. He transformed GE in a way that the leaders of parallel companies, such as Westinghouse, Seimens, and Phillips, were unable to do. You have to admire what he did. He has a very rough style, but he has the ability to get the best out of people. He makes people feel like he really cares about having them perform. In the end, his on-the-job values are very sound. He made tough calls about removing some people whose ethnics were questionable.

EL. Is Steve Jobs, CEO of Apple, an example of an authentic leader?

BG. He's a very difficult case. He has learned from his crucible.  It's obvious that he never had formal training in leadership or management. He had a failed marriage with John Sculley. Jobs went off and formed another company, and he's very well with it.  Now he has come back to Apple where he's doing amazing things. He's a good fit for the Apple culture. He, however still has an arrogant streak. On the other hand, Jobs is an incredible innovative leader who transformed a company with no marketing. Look at what he has done with the Ipod, with the iMac, and now with the Iphone. This country needs people who can innovate and create new things.  He has shown sustainability in creating innovations. Most people are like a one trick pony which can't come up with another exciting product. 

EL. Where does Carly Fiorina, the former CEO of Hewlett-Packard rank on the authentic leadership scale?

BG. For 40 years now, HP has been my role model for how you run a company. HP became the role model for companies such as Medtronic and others. HP put her in the wrong position. Lew Platt, her predecessor, used to fly commercial, and Dave Packard drove an old car to work. These people used to hang out in the cafeteria. She brought an elitist style, which didn't fair well with employees. She focused a lot of time outside the company. She lost the hearts and minds of the engineers who are the real innovators. Other innovators, such as Bill Gates, stay close to their creative people all the time. She would have been better off staying at AT&T. The bottom line is that she didn't connect in the Silicon Valley, highly creative culture. Mark Hurd has come in and connected, and, as a result, turned HP around very quickly. I wouldn't say she's authentic. She seems to be more focused on the external world. 

EL. Can you give an example of a CEO who is an authentic leader and describe what this person has done to create an authentic organization?

BG. Authentic leaders have to be very consistent and true to the roots of that organization.  Take a man like IBM's Sam Palmisano. He has taken IBM right back to its roots in the very best sense. He is also moving IBM forward into the future. He has put in an amazing program in place called Leading by Values. It had a 72-hour online jam for 350 people.  Everyone said what values the company ought to have.  The values aren't unique, but the commitment is. He was taking it from a task-oriented organization to a true values-centered organization. His philosophy is that we have to act as one organization all around the world.  This down-to-earth guy has really achieved this. He has come up from the ranks at IBM, working in just about every aspect of the company. He spends a lot of time with the engineers just tracking their innovations. He is very passionate about going into emerging markets.

EL. As the former CEO of Medtronic, you know that CIOs have to balance the interests of IT with those of the business units. What challenge does this place on CIOs who want to find their authentic leadership?

BG. This is a huge challenge for some CIOs. About a decade, ago many CIOs were spending too much time trying to build their own empires. The emergent CIOs and CEOs really understand how to use information as a strategic weapon to better their business. Take Dick Kovacevich, CEO at Wells Fargo. He has been the most successful banker for 20 years.  He went away from all of the commercial banks using IT to cut costs and to take people out. He, instead, said we want to use it to make our front-line people more effective so they can better service customers with all of the bank's offerings. He saw the opportunity to have all of the customer profiles online. He did it very well. On the other hand, CitiGroup, a larger bank, never could ever do this. You can't even figure out how to get the status of your credit card.

EL. You co-authored a book called, Mastering Global Corporate Governance. If a company wants to improve its sustainable innovation initiatives, how should it modify its governance model?

BG. Boards of directors have been asleep. They need to get engaged in the important elements of the business. The governance model is to focus first on leadership succession and second, to look at how well employees focused are on handling customers.  They need to look at the numbers third and then all of the other formalities.

The boards I'm on do an outstanding job of that, but I lot of boards haven't. The Target board focuses heavily on the needs of consumers. This board which has four women reflects the needs of its key consumers, namely women. The Target board has always been asking tough questions: How well have we been serving the Hispanic market? Are we meeting the needs of young people? Do we use IT effectively so that our merchandise is fast flowing and we can turn it over quickly? If you look at the results, you'll see how well Target has used it IT systems.

EL. How would you rate the leadership styles of most CEO of Fortune 1000 companies? Are they authentic leaders?

BG. A big change is taking place today among CEOs. My generation, people who are in their late 50's and 60's, didn't do a good job. I call these the pre-Enron CEOs. They focused too much on the trying to meet the short-term needs of the stock market. As a result, they destroyed many great corporations.  I'm speaking of the old AT&T, the old Sears Roebuck, and the old General Motors. These were once great corporations. They are virtually out of business or hanging on for dear life. Their CEOs weren't authentic. They weren't corrupt people, like Enron or WorldCom.  They didn't really build their companies for the long term. You can see this in the pharmaceutical industry. Great companies, such as Bristol Myers Squibb, have lost their position.

Today's CEOs are very different. They know they have to meet the short-term needs. However, they're trying to build organizations for the long term. For example, Anne Mulcahy has brought Xerox back from the brink of bankruptcy. The same goes for Andrea Jung at Avon. These are examples of outstanding CEOs. A.G. Lafley's predecessor at Procter & Gamble turned the company against it culture. Lafley has created an incredible corporation. There is a whole generation of very authentic CEOs, including some very young ones.

EL. How have governance models in Fortune 1000 companies changed?

BG. They are changing, but there is too much emphasis on regulations, such as Sarbanes Oxley. These are your ministerial duties. Boards aren't changing fast enough. Worrying about today's leadership and tomorrow's leadership should rank number one of their list. They aren't doing that. They aren't engaged enough and knowing who the people coming alone are. They're more concerned about who would replace the CEO if he/she were hit by a bus. They get into a panic and have to go outside the organization to recruit. The chief operating office should be thinking about leadership succession. If the COO isn't doing it, then the board has to insist on it. Everyone needs to get to know the candidates by seeing them off site, or seeing them on the job. Jack Welch did this very well. He suggested that the board go visit Jeff Immel on site when he was running GE Medical Systems. Boards that do their job get really engaged with who the leadership is.

I'm on the board of Goldman Sachs. When Hank Paulson, the former CEO, decided to become Secretary of the U.S. Treasury, we moved faster than we anticipated. Fortunately, Lloyd Blankfein had been groomed. We knew him very well. We also knew the people coming up behind him.

Links
Authentic Leadership Book Review
PBS Interview With Bill George
True North Web Site
Strategy + Business Interview with Bill George

Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

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Many CIOs grapple with how to align IT with the needs of their businesses. By de facto, they have to demonstrate the value their role serves and to make sure technology works well within their businesses. However, these CIOs aren't alone. Businesses, in general, have a hard time measuring and quantifying the value of IT and how it affects the entire business.
Meanwhile, forces such as a mobile global workforce, the growing dependency on social media, and the push for more utility computing based on service-oriented architecture are driving businesses to converge their IT strategy with their business strategy. This move will fuel growth and will sustain profitability. In a converged company, information, not the technology behind it, is what matters to all constituents the company serves. As a result, CIOs take on the new role of information officer not chief IT officer. They become more involve in strategy planning and in the governance process. Moreover, they look at how technology enables the business architecture and how the business manages the overall investment portfolio.

No one knows more about getting out of the alignment trap and moving toward convergence than Faisal Hoque, founder and CEO of BTM Corporation; founder of the BTM Institute, a not-for-profit IT think tank; and author of five books on business technology management. In fact, a decade ago, Hoque conceived and developed a unique holistic business model which looks at the relationship between business and technology in the following areas: governance, strategy and platform, enterprise architecture, investment management, and the maturity of the overall management structure. The result is a converged organization where business and technology come together to drive innovation, which, in turn, fuels growth and profitability.

In this podcast, Hoque provides a good overview of the organizational changes and the philosophy changes CIOs need to consider if they want to transition from alignment to convergence. He also talks about the BTM Institute's Business Technology Convergence Index, a five-year study that quantifies the relationship between the way global companies value their technology investments and the companies' revenues and profitability.  He says, "Companies with mature converged business technology management practices, such as FedEx, UPS, and Procter & Gamble, have better financial performance than their competitors. Think about it. Today, both FedEx and UPS are information services companies, not just movers or packages and trucks."

Resources
MassHighTech -- Ziff Davis Partners with BTM

CIO  - Study Provides Evidence That Technology Execution Leads to Business Performance

CIO - IT Management in Search of Alignment Answers

CIO Quarterly - Blending Business and IT

CIO Update -- Offshore Outsourcing article by Faisal Hoque

Bio
In 1999, Faisal Hoque founded Business Technology Management (BTM) Corporation, to innovate new business and technology models to help global organizations improve their operational efficiency. He also founded the BTM Institute, a not-for-profit technology think tank comprised of academic researchers, global business leaders, and government officials.

A former senior executive at General Electric and other multi-nationals, Hoque is an internationally known, visionary entrepreneur and award- winning thought leader. Professor Mohammed Yunus, a 2006 Nobel Peace Prize Laurete, has recognized the value of Faisal Hoque's work in bringing sustainable technology and business innovation to third-world countries. Recently, Ziff Davis Enterprises named Hoque one of the 100 Most Influential People in Technology today.
He is the author of five books including The Alignment Effect: How to Get Business Value Out of Technology, Winning the 3-Legged Race, and Sustained Innovation: Converging Business and Technology to Achieve Enduring Performance.  He has written numerous articles and papers for such publications as BusinessWeek, The Economist, Forbes, The Wall Street Journal, and CIO Magazine, and is a frequent public speaker.

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