Have you wondered why most digital transformations fail?
McKinsey research shows that 70% of transformation initiatives fail to meet the stated goals. A telltale sign of a failing digital transformation initiative is the difference in perceptions of its impact among technology and functional team members. To the IT team the impact is perceived very high directly correlating to their effort, while to the functional team not much value has been realized.
The answer to successful digital transformation lies in how these initiatives are owned between the CIO and CxOs. The IT teams who co-own digital initiative with their functional counterparts would have greater likelihood of meeting or exceeding outcome targets. According to Mandi Bishop, Distinguished VP Analyst at Gartner: “To successfully lead digital transformation initiatives, CIOs must co-own efforts with business leaders to place the design, delivery and management of digital capabilities with teams closest to the point where value is created.”
Gartner 2023 Survey categorizes 12% of CIOs as franchisers. These CIOs co-lead, co-deliver and co-govern digital initiatives with their CxO peers. Delivery responsibility is shared by IT and business staff working together in multidisciplinary fusion teams.
In a franchise model, the IT and Functional Departments share responsibility for the success of the transformation initiative.
Benefits of a CIO Franchise:
- Outcomes over Outputs: CIOs enable business outcomes, they help deliver key capabilities that allow functional teams to achieve their objectives. It is imperative for IT teams to focus on end outcomes not just software delivery. The CIO Franchise model ensures that IT teams are tightly coupled with business objectives.
- Initiative funded at the Enterprise: one of the key advantage of co-owing is that its not just CIOs budget that funds the initiative. Funding at enterprise level allows better accountability of ROIs and validated outcomes.
- Leveraging Diverse Expertise: IT teams usually gain enterprise subject matter expertise that is hard to emulate. However, the unique perspectives and expertise brought by the functional leaders enriches IT team’s understanding of the business objectives. To ensure success of a complex transformation initiatives the diversity of expertise is much needed.
- Enhancing User Adoption and Satisfaction: Transformation is always a combination of people, process and technology. While CIOs directly own the latter, the other two are usually cross-functional. The change management aspect of transformation initiative couldn’t be overlooked and a tight collaboration amongst various organizations is a requirement for successful outcomes.
In a CIO Franchise, the cross-functional ownership is the very foundation of how technology teams are structured ensuring IT and business users are engaged through out the project.
Strategies to implement a CIO Franchise:
- Democratization of Technology: Encourage citizen developers by investing in the right technologies, particularly in areas such as data platform, process automation, no-code/low-code platforms and machine learning deployment technology. Ensuring that these technologies are user-friendly and accessible to non-technical employees is essential for driving innovation efforts across the enterprise.
- Become Digital Native: Develop digital and data skills in employees beyond traditional technology roles. However, simply acquiring these capabilities is not enough; CxOs must also foster process agility and a culture of widespread experimentation. Promote citizen developers across all departments not just on the technology projects.
- Approach Incremental Change: the transition to CIO franchise won’t happen overnight, so iteratively change towards co-ownership. Start with one key initiative to prove the value and then expand across other cross-functional projects.
- Set Shared Goals and Metrics: Advocate for the establishment of shared goals and performance metrics that reflect the collective objectives of IT and functional departments.
- Create Cross-Functional Teams: Propose the formation of cross-functional teams to work on technology initiatives, ensuring representation from IT, sales, service, finance, and other relevant departments.
An HBR article on democratizing transformation describes how Novartis figured out the CIO Franchise model. For over a decade, Novartis has been investing in cutting-edge technology and recruiting top AI talent. However, business units failed to fully embrace the available data and technology. Things changed once Novartis began pairing data scientists with business employees and investing in comprehensive training programs. They started promoting a culture of collaboration and innovation across all levels and functions. This approach proved invaluable during the COVID-19 pandemic, where Novartis leveraged its digital capabilities to navigate supply chain disruptions and identify at-risk patients. Under visionary leadership of then chief digital officer Bertrand Bodson, Novartis not only transformed its technological infrastructure but also democratized access to data and technology, positioning itself as a model for digital innovation in the pharmaceutical industry. Novartis’s digital transformation journey epitomizes the CIO Franchise Model.
In an era where digital transformation initiatives can make or break an organization’s competitive edge, the concept of the CIO Franchise emerges as a beacon of success. By embracing a collaborative mindset and co-owning initiatives with their functional counterparts, CIOs and tech leaders can navigate the complexities of digital transformation with agility and precision. The CIO Franchise model offers a roadmap for sustainable innovation. It’s time for CIOs, CTOs, and tech leaders to embrace the franchise approach and lead their organizations into a future fueled by innovation and collaboration.
