Are CIOs Obsolete?

by Dawn Lepore

When I was named CIO at Schwab, someone said to me, "You're not going to let them give you that title, are you?" The implication was that the CIO slot was a career death knell. The underlying assumption was that the position itself would be hell.

That person couldn't have been more wrong.

The CIO position in general has long been maligned. But I think that's because most people don't understand its true potential. Anything that isn't well understood is often rejected.

Let's face it, the misunderstanding is, to a great extent, justified. The title still means so many different things at so many different companies. Some CIOs, for example, are simply department managers who ensure that all the PCs can be turned on and that the processors work. Others are charged with managing a company's Web site development and maintenance—in relative isolation or in tandem only with the marketing department.

I am Schwab's third CIO. Here, the title has always reflected an evolving senior management role active in strategy development and respected for input on all fronts. I've always been a peer to the various business heads. Technology is critical to what this company does, and I've always had a great deal of influence on the company's strategic direction, organizational structure, and culture.

I think the way my job is defined and is expected to evolve is the way that the CIO position is headed overall. More and more businesses rely on technology in order to be competitive. The CIO is the natural person to drive that process. And so the position will become, across the board, one with broad impact. The old definitions of the CIO role—those that are limited in scope—will become obsolete.

Now, the words "broad impact" call up an image of the CEO. I don't believe that the two positions are equal, but they do share a number of characteristics. Most unit heads need to have a very focused perspective. CIOs must also be focused; additionally, they must be able to consider the business as a whole, as the CEO does. CEOs, for their part, increasingly have to be technologists. In fact, I suspect that in the future, more CEOs will have done some sort of rotation through a high-level tech job like CIO before becoming top managers. The point is, the roles should be complementary—they needn't overlap, but they should buttress each other. The CEO should take the strategic lead, and the CIO should participate in strategy issues but also handle the implementation issues on a more detailed level.

A lot of companies today are asking themselves, Do we need a CIO? But what they're really wondering is, What kind of CIO do we need? and How can the CEO position best be supported in a world in which technology is so vital to business success?

It's hard to generalize, but if I were to give companies some advice on answering those questions, I would say this: Make sure that the CIO position is broadly defined, that it is well understood throughout the company that the CIO is expected to be a strong contributor to strategy discussions as well as to marketing and financial decisions. Also make sure that the position reports to the CEO. If the CIO reports to the CFO, as I've seen happen, then it's clear the company is not serious about getting strategic impact out of their technology.

I would also advise companies to look for someone who has a background in technology but who can also take a general management perspective. Being able to assess risk, build relationships inside and outside the company, take an objective stance, and process diverse information are skills to watch for.

Essentially, I would tell CEOs that if they expect their CIO to be experts exclusively on technology infrastructure—for example, to know only how to hook up their ISDN modems for them—they're looking for the wrong person. Don't get me wrong—that kind of skill is very important. But a company whose CIO is focused on only that aspect of technology won't make the most of the position.

If I were advising CIOs—both hopeful and sitting executives alike—I would say, Do everything possible to ensure that your company embraces technology. Be certain that all senior managers use current, standard corporate technology on a daily basis. (That sounds ridiculous, I know, but a surprising number of senior executives don't even use their own e-mail accounts; some of them have never surfed the Net.)

Finally, instead of wondering whether they'll be invited to sit at the table where strategy is made, CIOs should ask themselves if they are adding the kind of value that would influence strategy discussions: Do I have a broad understanding of the business? Do I know how the different components work together? Have I built relationships with other unit heads?

If a CIO has to ask whether he'll be invited to the table, chances are he never will be. Of course, if the CIO is already adding value, he's either there or almost there.

Excerpted from the article "Are CIOs Obsolete?" in the Harvard Business Review, March-April 2000.

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Dawn Lepore is the CIO and vice chairman of Charles Schwab in San Francisco.