FRAMINGHAM (04/03/2000) - CIO brings together an IT veteran and a newcomer for a help session on influencing peers and staff in a time of restructuring.
EUGENE A. RINDELS CIO Respironics Pittsburgh Gene Rindels has been the CIO at medical device manufacturer Respironics for two-and-a-half years, the first CIO position of his career. He started in IT in 1980 while serving in the Marine Corps. He earned an education degree in 1990 from National University in San Diego. He later worked at the Software Engineering Institute at Carnegie Mellon University and was IT director at Jim Manzi's Nets Inc. At Respironics, he leads a team of 54, supporting 1,600 users. The $380 million global company, founded in 1979, went through a restructuring in August 1999 that included plant closings and a 10 percent across-the-board budget cut to boost flat-earnings growth.
Richard Fishburn CIO Corning Inc. Corning, N.Y.
Richard Fishburn, who has an MBA in finance, comes from an operations background, serving in various positions at Ford and ANR Freight System, a trucking company, including vice president of finance and senior vice president of administration. In 1985 he joined Digital Equipment as vice president of finance operations, then went on to other positions focused on change management and new business models. In 1995 Fishburn was asked to be Digital's CIO, and it took three weeks to convince him to take the job. After Digital's acquisition by Compaq, Fishburn, now warmed to the CIO role, moved to the $5 billion Corning in April 1999 to head IT.
When Eugene Rindels was in the Marine Corps, it was OK to make mistakes, as long as no one got killed and learning took place. In the corporate ranks, mistakes are less tolerated. He's seen colleagues, friends and peers fall by the wayside as a company advanced or retreated. When slowing growth draws Wall Street's intolerant glare and restructuring turns the world upside down, it's hard enough for a CIO to lead his own function, pushing the information technology staff out of their fox holes and onto the mist-shrouded battlefield.
But the CIO must also lead among his peers, influencing and rallying fellow function and division heads to embrace and enable enterprisewide change-even though they are busy fighting their own local campaigns.
CIO asked veteran IT chief Richard Fishburn of Corning to advise Rindels on leading his team and uniting his peers in a strategic fighting force.
RISE ABOVE RESTRUCTURING Rindels: Last August we went through a restructuring, which is typical for companies moving through the chasms to get to the next plateaus of their growth and maturity. The IT staff consisted of 63 people prior to the restructuring; now there are 49 people. We reduced staff and at the same time demanded peak performance. Now we risk having the "fog of war," where people become dazed and overwhelmed by conditions. How can I work with these folks to help carry them through that? How far can I take the team? How hard can I push?
Fishburn: When I came into the CIO position at Digital, we were also going through a period of restructuring. The IT organization was viewed as a cost center, and the people were demoralized. You need to create a positive vision for the organization, something that answers these questions: Why does an employee want to continue in this organization? Why does a new employee want to join? Why should customers continue to do business with us when we're struggling? The way you do that is to articulate a positive, simple message or theme that you repeat. People tend to believe something when a supervisor says it repeatedly and when people close to them start saying it.
Rindels: It's a challenge to pull yourself out of the intricacies of technology and translate it into something simple and repetitive. It's an art form when what you're translating is constantly changing.
Fishburn: What many people fail to do is create a picture that gives people hope. I think that's what a leader has to do at these difficult points.
Rindels: When you're leading your IT organization, that's one dynamic and focus. Then you have your executive peer group, and it's an entirely different dynamic when you try to lead among your peers. You have to look at your peer team and say, "We have to make a difference here. We have to change the way we're doing business, influence the direction of the company and help everyone tap into the greatness that's inside of us." I believe that doing the right thing in the face of Wall Street pressure is a character-defining moment for a company. I have yet to see a ticker symbol that conveys the thousands or tens of thousands of lives that comprise the companies we as leaders are ultimately responsible for. Earnings are important, but we have to think bigger than that.
But my peers are fighting their own battles, so asking them to undertake things for the benefit of the whole corporation is tough.
Fishburn: You need to create a partnership with your peers. At Corning we have adopted a philosophy focused on the competitiveness of our business processes.
It creates a shared objective with your business operating peers. When you talk with them about achieving the goal of business-process competitiveness, that's a shared objective that is hard for people not to engage in. What we say to operating people is that it doesn't cost much more to codify a competitive business process than to codify a noncompetitive business process. But obviously the organization gets a lot more value by having a competitive business process.
When people come and say, "Here's a check. Go put some technology in," our response is, "No. I have a larger role with my peer group and the shareholders of this company to ensure that when we make an IT investment, we're getting the maximum value from it. So let's have a discussion about the competitiveness of the business process. What plans have you got in place? Do you have change programs to address people issues? Do you have the efforts lined up to be able to do that?"
Rindels: Business processes are not very exciting or sexy. How do you awaken your operations peers to the fact that different operating styles and processes affect the business?
Fishburn: Any process may have a competitive advantage attached to it in the minds of the operations managers. Of course that's not realistic. No company can afford to have every one of its business processes create competitive advantage. And it's unrealistic to believe, for example, that you can do payroll or some other things better than anybody else in the world. What we said to people was, "Let's talk about whether the process for which you have responsibility is competitive." Then at the general manager level, we talked about which processes we can do better than anybody else. And for those particular processes, we ought to be thinking about putting a differential investment into the supporting information technology.
If the business process language doesn't click, you agree on success criteria using the language with which they're comfortable. Then translate that into business process implications with which they can agree.
SHARE A COMMON PASSION Rindels: Is there a person at Corning, someone like a COO, who assumes the role of champion, the glue that binds this together? Or is it just ingrained in the culture?
Fishburn: It's a little of both. We get that from with the divisional general managers. What IS and the managers have in common is a passion for the key business processes of the division to be competitive. Together we champion that goal, and the operations managers pick up on that. But that goal must be managed at a pace at which the organization can absorb it. If you try to over-orchestrate it, then it probably starts to break down because people tend to focus on the mechanics of planning rather than on the content of the plan.
As for our culture, when one of our divisions does something well, all other divisions tend to glom on to it and follow it. So you use examples and pride in order to drive the culture of the organization.
Rindels: We don't charge IT costs back to the operating units, and we've recentralized IS spending, so internal customers are getting IT services for free. Although they understand the impact that information technology can have, it's not easy getting their support, because the ownership isn't there. I think our model has to change.
Fishburn: In some way, shape or form you need to get the IT costs assigned to the business units even if in the first year it's only an approximation. Until the unit managers begin to own the costs, they are not going to engage in a conversation around competitiveness. In our own organization we used to have all the operational-process IT spending in our business units. But the functional IT spending-financing, purchasing and things of that nature-was carried centrally. I made a proposal to senior management to change that, and it was accepted. And I can see a whole set of behavioral changes now beginning to occur because all of a sudden that stuff is no longer free; managers are held accountable for it.
Rindels: Did you hold on to core infrastructure such as the wide area networks and the carrying costs for phone systems and things like that?
Fishburn: We have a shared-service organization for most of the infrastructure.
We use service-level agreements. For those services where the operations can influence the level of spending, we hold the shared-service organization responsible for a benchmark unit cost and the operation responsible for the number of units. Where there's limited ability for the operation to influence short-term cost, you say, "The wide area network is a cost of the company.
We'll talk once a year about whether or not we're doing it efficiently." But other than that, I really don't want to have that discussion.
Companies do that in a lot of different ways. If you're going to do it, make sure it's working for you and that it's not a constant source of conflict with the operating managers.
LEARN TO LET GO Rindels: How much do you find yourself moving among your peers at Corning versus managing the IT group? Leaders tend to go to their strengths while under stress, and since I'm a technologist it's been hard for me to let go of my IT team. Yet I realize that I can't accomplish what I need by spending all the time I'd like to with them. I need to spend time with the division president or the division sales vice president. How do you create a successful balance in this area? What do you let go of?
Fishburn: There is not a single answer to that question. It's much too dependent on our individual personalities and management styles. There are people who have a high desire for control, and they're going to manage projects at a fine level of detail. I've always been of the view that when you get to this point you've got to ask yourself, "What is the value that I bring to the organization beyond the management layer that I manage?' If you can look the CEO, the vice president of administration and your operating peers in the eye and say, "This is the value that I uniquely, as the corporate CIO, bring to this organization," and that conversation is comfortable, then I think you've got the right balance.
Rindels: So you ask, "Where do you spend your time? What job are you in?' Your title doesn't matter; just see where you spend your day, and that's the job that you have.
Fishburn: Right. If the organization sees you spending 90 percent of your time on the infrastructure, then you're the infrastructure CIO. You need to articulate your value in business terms. People don't care that you put in SAP; what they care about is what business benefit you derived from putting in SAP.
Did you improve the inventory turnover? Did you improve the cost structure? Did you get the revenue going? Have you made the organization better to communicate with? What exactly did you do to help the shareholders, the customers and the employees?
Rindels: When I started here, I requested that I report to the CEO/president.
Since the restructuring, I'm reporting to the senior VP of new ventures and corporate services. The change has had minimal impact on my ability to lead through this period. But is this the best reporting structure for the organization and what we need to accomplish?
Fishburn: You need to report to somebody who understands the value of IT to the organization. There are situations where reporting to the CEO or the COO is not the right answer because they're not working in their day-to-day jobs on the things that you're working on. You get a reporting relationship, but you're not getting any help.
Clearly, working for somebody who views the IT organization as a cost, or purely as a staff function, is a death knell. And that's why people always make negative comments about reporting to CFOs. Having been there myself, I know that there are some CFOs who don't get it. Where the company lands is highly dependent upon the view it has of you and the IT organization. If the company views you as an agent of change working with operations to improve the competitiveness of its business processes, then I'm going to guess your reporting relationship will work its way out over a period of time.
You control how the organization views you. If you have an hour with senior management, you could spend 30 minutes of it talking about the cost of the IT organization, 25 minutes talking about technology and 5 minutes talking about business benefits. However, if you decide to spend 50 minutes talking about the business benefits you're working on with the operational people, it's a different conversation. People see you by how you communicate.
Rindels: I think what I'm hearing overall is that in a changing business environment like ours, you have to be in tune with your business peers and leaders who are not technologists. They are guiding the organization through restructuring, and I need to understand that and apply what I know as a technologist. Then I'll be able to have a greater impact. However, fundamentally there's got to be a mutual and shared understanding about the direction of the business.
Fishburn: That understanding will take you a long way toward optimizing the value your IT organization will bring to Respironics.
THREE WEEKS LATER Rindels: The stock's up $2 since we last talked, so we're doing a little better. I spent time with the presidents of two of our major divisions to talk about ways for IT to participate in discussions at a business level. It will happen first through our existing meeting structures. All the key people will be at or conferenced into a meeting location; it's a more dynamic way to interact with each other. As we become accustomed to this, we'll be more relaxed with each other, and I'll be accepted in their environment and their existing framework.
Fishburn: The subtle aspect of a company doing better should never be underestimated. Good news creates a halo effect, which allows good things to happen. The fact that you and others from IT are in these meetings is encouraging. You need to create face time. In these meetings, you may hear things that indicate that the success measures for the business strategy are changing. If so, the processes necessary to address those measures will need to change, and then the IT to support those processes will change. As you hear the discussions, think through that sort of thing and ask questions like, "How do we know we're successful? How do we define success?" Our IT people find that to be a good way to work their way into discussions.
Virtual Mentor is an ongoing series pairing new CIOs with veteran practitioners to discuss leadership challenges. If you'd like to participate or provide feedback on these articles, send an e-mail to Senior Executive Editor Richard Pastore at email@example.com.
MENTOR CHECKUP Four months ago, John R., director of IT at a Wall Street hedge fund company in New York City, was caught in a whirlwind of customer support demands, looming project deadlines and bosses who pulled him in every direction at once. He talked with Robert Barrett, vice president of IT at PRI Automation, about how to cut through the chaos and make time to manage his nascent IT department and lead his company. John reports that he's managed to extricate himself from much of the entanglement, ace his project deadlines (though some of his peers would argue that point) and wrangle control of a new IT budget that could put an end to the executive tug of war. Read more about his progress and his original discussion with Barrett at www.cio.com/printlinks.