CIOs are no longer just good technologists. Today’s CIOs are more than just good technologists. Tomorrow’s successful CIOs are revenue generators, customer engagement gurus, and business leaders. Successful CIOs are transforming business models within their organizations; they are becoming disruptors. What does this mean?
Skipping class, chatting during movies, interrupting adult conversations – when we were growing up, “disruption” was a bad word. But today, in the world of business and technology, “disruption” is a magical word.
The term “disruptive technology” was first coined by Clayton Christensen , a Harvard Business School (HBS) alumnus and current HBS professor , in his 1997 book, “The Innovator’s Dilemma.”
In his later book, The Innovator’s Solution, Christensen replaced the term “disruptive technology” with “disruptive innovation” because he realized that few technologies are inherently disruptive or enduring in nature. Rather, it is the business models that technology enables that create the disruptive impact.
The Model T Ford, introduced in 1908, was a disruptive technology, but the combustion engine automobiles of the previous 30 years were not, because they were not mass-produced. Mass production was made possible by the assembly line business model.
Let’s meet today’s disruptors. First, there’s Uber. In 2010, Uber had 10 cars and 100 partners. Six years and 1 billion rides later, Uber has disrupted the century-old taxi industry.
Uber excels in three ways:
- You can rate the driver.
- You can request a ride on your mobile phone and it will come to pick you up within minutes.
- You can get excellent service at a low price.
Nowadays, more people use Uber than taxis, and who wouldn’t want a premium service that’s fast and cheap? They’re willing to pay for it any day!
Amazon is one such example. In 1994, Jeff Bezos, a New York financier, left his company to jump into the exponentially growing internet commerce. He had a vision of starting an online “one-stop shop,” and his first product was books. Within two months of launching, Amazon was selling books in all 50 states and 45 countries. It became clear that people wanted an easier way to buy books. The internet answered that desire, and Amazon made it possible. The company survived the dot-com bubble and is now the world’s largest online retailer.
But Amazon wasn’t resting on its laurels after the success of books, so it launched Amazon Web Services, a complete retail computing infrastructure of standardized, automated web services, including storage and virtual services that would create entirely new revenue streams.
Amazon is both a B2C and B2B disruptor, which is quite rare.
These are some examples of companies that know the secrets of the disruptors. Their founders found new imagination in existing technology. They sparked innovation, seized on outdated models, and pushed the boundaries of technology to apply better solutions. What’s their secret? Disruptors seem to share three characteristics:
- Transforming thinking with technology.
- Consumed by consumers.
- Never satisfied.
There are some industries right now that are ripe for disruption. Industries that are not very customer focused. When was the last time you contacted your bank, airline, credit card company or software provider? What was your experience?
What does this mean for today’s CIO? It’s time to throw out the old rules and rethink your business model through a new lens, asking, “How can we improve customer engagement, take market share from our competitors, and exponentially grow our business?” Driving digital transformation initiatives in your business is now your role as CIO.
So where do you start? Why is digitalization so difficult? There are two reasons. First, much of the existing technology isn’t ready for prime time, leaving CIOs to decide whether to build their own solutions or leverage vendor applications. Second, it’s a massive undertaking that typically exceeds the scope of IT budgets.
According to industry analysts , approximately 89% of the typical IT budget is spent maintaining the status quo, with only 11% dedicated to innovative initiatives that actually drive revenue, reduce costs, engage customers, and gain market share from competitors. To achieve these goals, you must take responsibility for fundamentally transforming your spending model.
Let’s take our industry as an example: enterprise software support. It’s an industry ripe for disruption. The decades-old model dominated by software vendors is no longer sufficient for most CIOs today.
We can’t afford to be stuck with outdated IT models. If we want to be disruptors, we need to allocate more of our budget to investing in innovation. Gone are the days when CIOs were strictly technologists. The best CIOs are revenue generators; they are entrepreneurs who use technology to create new business models.
Our manufacturing client is a prime example. They are a leading manufacturer of metal buildings in the commercial and industrial markets with over $1 billion in revenue. When their CIO migrated support from Oracle to Rimini Street , the company immediately saw a 75% reduction in their total annual maintenance costs. The CIO then reinvested the significant savings of $1.3 million per year into a customer-facing e-commerce portal, which now generates an additional $120 million in revenue streams per year. That’s disruption!
These examples make it clear that there’s never been a better time to be a CIO, even if you face budgetary challenges. Digital and customer-focused companies are counting on their CIOs to contribute far beyond operational IT. Success will differentiate their companies from the rest of their industry. These companies are embracing “innovation agility” strategies and choosing new paths that open up new options for their companies.
An innovation agility strategy is about freeing up resources – people, money, time – to invest in transformative business models.
For example, the Innovation Agility approach allows you to manage your on-premise applications alongside cloud applications in a hybrid IT environment, as recommended by Gartner and Forrester.
Existing big data capabilities can be leveraged to drive enterprise agility, social solutions and beyond, freeing up capital for retailers for critical “omnichannel presence” initiatives that drive revenue.
This freeing up of resources allows you to innovate across your organization, strengthen your business, and improve your ability to serve both your employees and your customers. With a simple mindset shift, the possibilities are endless. With a change of mindset, you could even start the next Uber. Thinking like a disruptor can bring vibrant change to your organization.
W. Edwards Deming once said, “No one needs to change. Survival is not compulsory.” So instead of lingering in the comfort zone and maintaining the status quo, why not become an agent of change? Ride the wave of the times and disrupt the way business is done today.
