Business moves more quickly than ever, and enterprises must deploy new applications and services to meet changing market demands successfully. But if digital transformation efforts aren’t correctly managed within an overall business strategy, not only are these initiatives likely to fail, they’re also going to cost the business.
Author Phil Weinzimer believes he has some answers to keeping digital transformation aligned with business strategy. That’s why he wrote a book designed to keep businesses and their digital transformation efforts on track: “Strategic IT Governance 2.0: How CIOs Succeed at Digital Innovation.”
Weinzimer’s book explains how IT executives can take the lead and successfully drive digital transformation initiatives and associated projects. The book presents what he calls the Strategic IT Governance 2.0 model. The model is designed to help organizations stay focused on project alignment, process reinvention and leadership excellence. Weinzimer based his book on interviews with over 80 CIOs and it includes 18 in-depth case studies that detail how the model was implemented within enterprises and provides insights into how organizations have successfully executed digital transformation.
It’s not his first book. Weinzimer penned two prior books: “The Strategic CIO: Changing the Dynamics of the Business Enterprise” and “Getting It Right!: Creating Customer Value for Market Leadership.” Weinzimer also works with clients to develop business and IT strategies to achieve business outcomes with his firm, Strategere Consulting. He regularly speaks at CIO and technology events on enterprise technology strategy and how strategic CIOs and IT organizations are changing the dynamics of the business enterprise.
Digital CxO recently caught up with him for this interview about his book and to gather his thoughts about how enterprises can best succeed in digital transformation. This Q&A has been edited for brevity.
Digital CxO: Thank you for taking the time today. I’d like to jump in and discuss a little about the book and why you chose to write a book on the importance of governance and digital transformation success.
Phil Weinzimer: This book is based on interviews with 80-plus CIOs. I’ve included 18 case studies of organizations that embrace the Strategic IT Governance 2.0 model that focuses on project alignment, process reinvention and leadership excellence. I wanted to include case studies of organizations using the model to improve their success in digital transformation. The value is not in talking about the model itself, because that’s philosophy. I wanted to show that the model works by using examples of companies that have embraced and used the model. That’s where the value is for the reader.
This is my third book. My first book was “Getting It Right: Creating Customer Value for Market Leadership,” and my second book was “The Strategic CIO: Changing the Dynamics of the Business Enterprise.”
For this book, I spoke with 150 CIOs about their process of creating a strategic CIO organization. The more I spoke to CIOs, the more I thought about a model that can help CIOs leverage their IT organization to become more strategic and how they can change the dynamics of the business enterprise. That’s when I developed a four-phase model of how CIOs take the organization through getting the infrastructure in place to have business discussions.
For example, many CIOs explain how they need cooperation for digital transformation among their various business units once they get into the CIO role. My response is always to explain that they must first get their infrastructure squared away, and once it stops breaking down over time, it’s time to have a conversation.
That’s why the first phase of the four-phase model is to get your infrastructure in place (Deliver Commodity and Business Services Exceptionally Well.) The second phase is getting personnel to think like businesspeople instead of technical people (Understand the Business/Improve Business Skills of IT Personnel). The third phase is to figure out ways to improve business processes to improve margins (Implement Initiative to Improve Margin). The fourth phase is to leverage technology for strategic and competitive advantage (Leverage Technologies Strategically to Innovate Business Value).
That’s the model from a high level.
Digital CxO: What led you to want to create the Strategic IT Governance 2.0 model?
Phil Weinzimer: Companies are beginning to leverage technology innovatively and want to focus on creating customer value, improving operational processes or reengineering their business models. Think about Amazon: They went from being a book publisher to selling everything. And they focused on continuing to improve their service. Everybody likes dealing with Amazon because they can buy anything they want. The service is excellent. You can get it delivered to you, the same day, the next day or the day after. The website is easy to navigate. The overall customer experience is terrific. Every company wants to become Amazon.
And how do they do it? They have to figure out how to leverage technology. Consider what Amazon has done in creating a new business model in its supply chain. It amazes me how they’ve made this supply chain. You can easily buy any product you can think of. As a result, companies are pursuing digital transformation projects to figure out how to leverage technology to improve business value. The problem is that these projects that are part of the digital transformation program risk negatively impacting the business’s success if they have an ineffective, immature governance process.
Governance has always been one of the major issues impacting the success of digital transformation programs, as confirmed by CIOs I interviewed for my book. Organizations with tactical governance processes around these new digital transformation programs must change to align the governance process with a mature level of strategic governance. This model must proactively do three things: It must identify and reduce potential risk because risk is a big issue in enterprise projects. You must ensure that all the projects align properly in their selection and execution. Thirdly, you must ensure that all of these projects enable the business to accomplish its strategy, goals, and objectives.
We hear about misaligned projects, project management screw-ups, and project failures every year. I realized that I needed to develop an enterprise governance process. Many of the failed digital transformation initiatives result from what I call the digital divide. What I mean by that is that business units don’t work in concert with the IT organization. And when that happens, the digital transformation initiative is treated as a technology program, not a business program. It should be an enterprise program. More importantly, it needs to be an enterprise strategy. As a result, I developed this strategic IT governance 2.0 model to enable organizations to succeed more effectively at digital transformation initiatives by rethinking it not as a tactical program but as a strategic component of the business strategy.
Digital CxO: Excellent. What did you see as wrong with existing governance models?
Phil Weinzimer: Most governance models, at least initially, are very reactive. They look at historical data. They are looking in the rearview mirror. You need a more proactive governance model to anticipate project risks and ensure that projects are correctly aligned. And the project management methodology is more proactively engaged in providing the success of a project. So that’s why I call it: Strategic IT Governance 2.0 Model.
It’s more of a proactive model, because it recognizes digital transformation initiatives as a business strategy to create customer value, improve operational processes and reengineer business models.
I’ll talk a little later about Armstrong World Industries. They changed their business model from being a flooring, wall, and ceiling building materials supplier. Now they focus on walls and ceiling materials. But now, they’re also more proactively engaged with the construction industry in working their products into architectural drawings instead of waiting for the distributors to call them on the phone and ask for an order.
Digital CxO: How do organizations keep the CIO’s office and the rest of the business aligned, and how do they maintain that alignment?
Phil Weinzimer: The first thing that the CEO and the C-suite need to recognize is that to succeed in digital transformation, the business and the IT organization must embrace what they are working on. If you don’t have leadership from the top and at all the appropriate middle management levels — and ensure that projects are aligned successfully to meet the company’s goals — you won’t succeed. This gets back to walking the talk instead of talking the talk.
Let’s look at Armstrong World Industries. Their CEO, Vic Grizzle, articulates his digital strategy as having to be ground firmly into their customers’ needs and experience and creating a frictionless experience.
He set the tone strategically that digital transformation as an initiative, both from a technology perspective and an operational process perspective, needs to be done. That goes back to my earlier point that digital transformation is an enterprise effort that needs to be a business strategy. He did that. Now that you do that on top of the executive sponsorship, how do you bring it back to the rest of the organization?
Dawn Kirshner, the CIO at Armstrong World Industries, worked with the C-suite to develop four key pillars to take Grizzle’s strategy and operationalize it for the business. Their pillars are to elevate customer experience, reengineer manufacturing efficiencies, reinvent business services, and revamp the IT foundation.
What that provides is executive-level sponsorship for its digital strategy. That’s that second competency around business/IT partnership in the model for the business and IT personnel to work together collaboratively to execute the digital strategy. They handled the strategic alignment by ensuring that every project would be aligned to meet one of those four pillars. It would have to elevate customer experience, reengineer manufacturing efficiencies, reinvent business processes, and revamp the IT foundation. If it didn’t, they didn’t do the project.
I’m sure your readers know the phrase “the black hole.” This is when companies have many projects that are divisional VP ideas that may not align with the corporate strategy. By taking this approach, Armstrong World Industries eliminated that black hole risk. They report on every project or program and associated projects, how they align with one of these four pillars, and how everything is strategically aligned.
That’s how Armstrong succeeded in aligning the business with the IT organization regarding executive sponsorship, building and building an IT partnership and aligning all the projects strategically.
Digital CxO: That’s how the business side of the organization stays aligned. What about operationally?
Phil Weinzimer: On the operational and tactical side, it’s all about process excellence as the organization builds competencies around collaboration, process optimization, and best practice metrics. Business and IT personnel need to work together in a collaborative effort. You must improve the processes and develop a set of proactive practice metrics that reflect the success of the digital transformation initiatives.
There are a couple of ways Armstrong did that. From a collaboration point of view, the CIO incorporated a concept called a Gemba walk. It’s a process developed by Toyota as a way for people to learn more effectively. She got these project teams and included business and IT personnel, and they would go on a Gemba walk. Because the team is together, they would walk through the process to determine what’s going right, what’s not, and what they can do to improve it. The business and IT teams work together and learn from each other. They worked proactively to mitigate any potential risks that the projects would encounter.
Projects will always encounter risk. You must come up with ways to anticipate project risks proactively.
The second thing is that each project team follows a specific project management methodology and a set of clear roles and responsibilities that identify each member’s role and its associated responsibilities and accountability.
The third was to come up with a set of best practice metrics. When discussing metrics around a project, everybody thinks about schedules, financials, issues, and risks. Those are efficiency metrics. In the Strategic IT Governance 2.0 Model, you not only have to have those efficiency metrics to ensure that the projects are on time, on budget, meet significant milestones, etc. — you also need business metrics. A business metric measures the effectiveness of a business process.
Let’s use FedEx as an example. Their business metric is that they can deliver a package in 24 hours. If you think about that as a supply chain, it’s a package. You need a metric around it. So one metric is the logistical supply chain. A second business metric might be an order to cash. We want to improve the cycle from the date of order to cash. So that’s a business metric. A third metric might be that the company intends to reduce its inventory from X to Y days.
Those are business metrics that have nothing to do with the project schedule or financials. The point is you need to have business metrics, along with efficiency metrics, to ensure that the digital transformation program and its associated projects are meeting the business goals and strategy of the company.
Digital CxO: Why do you believe many companies have fallen short regarding successful digital transformation projects or aligning digital transformation with business objectives?
Phil Weinzimer: I want to talk about the strategic level and the operational level. Strategically, it’s the failure of companies to recognize that digital transformation is an enterprise strategy. It’s not an IT project. And as such, companies need to ensure that IT and business personnel work together collaboratively in developing, planning, and implementing this digital transformation and their associated projects. Strategically, they have to recognize that it’s an enterprise-wide strategy.
Operationally, I’ll share four significant reasons. The first one, and I think it’s the most important, is the ability to get executive buy-in from the CEO. If you don’t get buy-in from the organization’s top, the digital transformation will not work. Because if you try to collaborate with the business, the business will respond: Well, the CEO doesn’t want to do this. If he wanted to do this, he would tell us.
You must have executive buy-in.
The second point is that below the C suite and divisional management levels, you must have the business unit and IT managers and personnel jointly own the digital transformation program, both in responsibility and accountability. Remember the old days when a business unit would write a project request and then hurdle it over the wall to get it done and then wash their hands of it? They just wanted to know when it was done.
The way to overcome that is to hold the business owner and the project owner, or the business and IT, jointly accountable for the project’s success. And you have metrics to back up what success looks like.
The third one is the failure to develop a culture of having proactive instead of reactive processes to think about digital transformation programs and the associated projects in a way to anticipate project risks, as opposed to waiting for risks to occur. You’ve got to think proactively and not reactively.
The last one is that strategic alignment piece of failing to align projects to the strategic goals and objectives of the business and developing a set of business metrics and efficiency metrics to measure the success of the business strategy.
In short, it’s the failure of companies to embrace these six competencies. Because if you embrace these six competencies and build a governance culture, you will go from reactive to proactive processes. The way to know if your organization has a culture of Strategic IT Governance 2.0 is that they intuitively behave in a way that they understand that digital transformation is a business strategy. That it’s a joint effort between the business and IT, and personnel needs to work together to ensure its success.
So digital transformation, it’s not about technology. It’s an enterprise strategy that creates business value, improves margin and enhances shareholder wealth.
The way it accomplishes that is by developing the governance culture throughout the organization by embracing the six competencies. CIOs can lead the charge here. Because, when you look at the C-suite and the executives in each of those roles, there’s no other executive who knows more about the business in terms of business processes and the technology that enables those business processes than the CIO.