Faculty Q&As

Ten Questions: Faculty report from the frontier of management

Jeanne Ross

1. Your research focuses on the management of IT for business value, and on the design and management of the enterprise IT architecture. Do most businesses place enough emphasis on the importance of these issues?
Let me just talk about IT first. There's such a wide range. We have worked with companies like UPS, ING Direct, State Street, who understand information technology and are constantly looking for the next opportunity to do something their competitors can't do. I would say they fully appreciate what IT can do for them, and fully leverage it. Then there are companies that feel like every dollar they spend on a computer is a waste but think, “Well, you've got to do it, don't you?” and they're miserable about spending that money. They feel like they've thrown it down a black hole and in all honesty they have. They feel trapped. What our research is all about is helping them understand how to get out of that trap. Everyone is going to invest in IT. The world is global. It's digital. Yes, you need to put money into computing, but you don't have to waste it, and a lot of companies are. That's why our research is important.

2. What about the enterprise IT architecture?
I actually try not to say “IT architecture.” I now try to talk just about enterprise architecture, because what enterprise architecture is all about is your organizational processes, and you design them in a way that meets the end-to-end needs of your customers, period. Because it's a digital economy, IT is a very important component of your ability to fulfill those processes efficiently and effectively. One of the struggles that organizations have — particularly those that feel like they're wasting money — is they try to have technology here and process there. They don't get that actually, you can't have a conversation about one without the other, and if you try, you end up wasting your money on IT, because nobody knows why you invested in it. You've got some IT, but what's it supposed to do? Well, it's supposed to deliver on your process vision. If you don't have a process vision, which is your enterprise architecture, there is no chance that your processes and your IT come together in a way that's valuable to the organization. The study of enterprise architecture is to help companies understand how to go from where they are today—which is basically wake up every morning, decide what you need, tell the IT guy to deliver it, and then start planning the next system—to delivering real IT-enabled capabilities. Too many companies never really think about how they're going to make sure that last investment was worth anything, and how that should feed into their next investment, as opposed to waking up every day and doing something different.

3. How do you illustrate this point for others?
We tell this story about the Sarah Winchester house in California. This woman bought a six-bedroom house in 1864 that wasn't finished. When she moved in, she fired the architect, brought the foreman in and said, “Okay, here's what I want you to do tomorrow.” She did this every day for 36 years, then hired 22 carpenters and kept them busy full time. When she was done, she had a house that, by most counts — and it's hard to count — had 160 rooms, every heating mechanism ever devised by man, stairs and doorways that led to nowhere … just nonsense all around. Basically, that's the way companies use IT. They wake up in the morning and they say, “Wow, our customer wants us to send them this information. We don't have it. IT, go do that.” Then tomorrow, it's a different thing. The thing about Sarah Winchester is this: she was the heir to the Winchester Rifle fortune, and she was trying to confound the spirits of people who had been killed by Winchester rifles and would try to do her harm through nonstop construction on her home. Companies can't explain their behavior that way. They are trying to make sense of all these systems. Instead of saying “Let's sit down and figure out how computing makes us better,” they'll wake up every morning and say “Hey, I could use a computer program to do that for me.” And IT says, “Well, okay,” and they deliver it, because IT has learned to be an order taker.

4. Where does the research lead on this front?
The research on enterprise architecture is about saying, “IT should not be an order taker. IT should be a planner and a deliverer of more value.” Business should stop thinking about “What do I need today?” and start thinking about “How do we deliver value to our customer, end to end? What processes would that entail?” What has made this so interesting and so important in this day and age is that companies are now global, so they have global customers who have said, “I know I have 54 offices, but you should treat me like I'm a single customer.” Very few companies are capable of doing that, but — if you stop and think about how you should be interacting with your customer — you could roll out your technology to enable processes that actually will meet the needs of your customers in ways that most companies are totally unable to do today.

5. How did the critical issue of enterprise architecture first come to your attention?
The very first recognition that architecture was a central issue in getting value from IT came when we were working with Johnson & Johnson in 1995. J & J is a great company, a really great company, and at that time they were 170 independent operating companies, compared to about 210 now. Everybody believed that the reason J & J was so good was because it was designed with this autonomous operating model concept, and people got promoted for doing great with their operating company. You could become a general manager, and basically, you ran your own organization. That worked for 100 years, basically, until someone said, “Listen, J & J , we don't want to deal with 170 J & J companies. We want to deal with J & J .” And J & J business executives said, “Well, IT should make it look like we're one company.” So the CIO came to us for training.

6. What was the process?
The IT people said, “Okay, help us figure out how we're going to do that.” As we were working with them, we said, “Well, first you have to stop acting like 170 companies. You can't just pretend like you're not 170 companies. You are 170 companies.” There are things, architecturally, the company has to do, and you can't just say “IT will change it.” This means you're going to create some process capabilities in this organization. J & J actually got that, but it was so contrary to the way they'd done business that they at least wanted to start with IT at the time. One of the things we've emphasized in our research is, “How do you get enough synergy and interdependence where it makes sense, and create that autonomy and the diversity where it makes sense?” IT can be an enormous aspect here, but not alone. It can only do it with appropriate governance, with good process design, with a clear understanding across the management team about how the company is going to operate. Those are the kinds of things that we can learn, particularly, by doing research and leading that organization.

7. Who would you say is on the forefront of such efforts? And what does a successful model look like?
J & J has made progress, but they will tell you they're not there yet. One good example is Campbell Soup, which, in the early 2000s, was really struggling. They brought in a new CEO, who said, “Well, my goodness. We act like we're seven different companies.” At the time I think they were a $5 billion company, including Pepperidge Farm, Godiva Chocolates, and Campbell Soup, and they said, “This is crazy. We have all these little companies, and they're all doing their own thing. We're a food company. We ought to be able to meet the needs of customers, because we have great brands.” The new CEO brought in a new CIO who said, “Well, our problem is that there is no understanding of how this company is going to operate. IT is this little thing here and this little thing there, and we are throwing away money on IT. Every little business has its own CIO, so there's no synergy. There are no economies of scale. We're just doing our thing.” The CIO brought in IBM to help her, and said “You do the stuff that a food company shouldn't do. You know, we're not experts at IT. We'll figure out the processes and make all the pieces come together.” Working with an IT expert allowed Campbell to start to scope out what really mattered.

8. What was the outcome?
Instead of just spending a lot of money on IT, and saying, “Where'd it all go?” they said, “Wait a minute. There are a few things we want to do really well. First of all, let's take all the money we're spending and stop spending some of it. With that money, let's zero in on this stuff that really matters.” That's a governance process, which they did brilliantly. When we look at Campbell Soup today, they've turned themselves around and IT has become an asset. It's a phenomenal story.

9. It sounds like leadership plays a big role in this process as well.
It does, but you need to have the right person who has the capability to see the bigger picture of what needs to happen. That's a great point, because most often, the great leadership has come from a CEO who says, “IT is really important.” It hasn't typically come from the CIO, who is our main audience, often because the CIO has risen through the technical ranks. What they're great at is technology, yet to be a great CIO, they have to become very savvy about strategy, operating vision, and that kind of thing. But some CIOS rise to the occasion. They see what needs to be done, and they do it. They can help a good CEO understand what's needed, or make a great CEO even greater. Great companies have this synergy between their CIO and their CEO that just makes things happen, but it's so rare.

10. Why is it so hard to find?
It's interesting, because a CIO has the perspective that usually nobody else in the company has. All these people have come to the CIO and said, “I need to do this. I need to do this. I need to do this.” After a while, the CIO is saying, “Wow, you know what? If I do what everyone asks it actually isn't going to work together, and it needs to.” The two people who made the requests don't have a clue. They have no idea, because their function in the organization has been specified. They go to optimize their function or their business unit, or their product line, whatever the case may be, whereas the CIO, who's getting all these requests, is saying, “My goodness. There are all kinds of synergy this company is missing.” The great CIOs step forward and say “You're missing it. You're missing the opportunities here. And we can deliver something more valuable.” That really distinguishes them because most CIOs take the orders and deliver.

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