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Two IT strategies that made me a successful CIO

A new way to prioritize IT activities and an epiphany about leadership made all the difference in Niel Nickolaisen's career as an IT leader. Read about these two IT strategies.

I want to let you in on two simple IT strategies I consider to be the secret to my success. These two IT strategies,...

I can say without exaggeration, have transformed my life, the life of my teams and the life of my employers. I want to share them with you with this caveat: Though simple in concept, they are difficult to implement -- they take serious work. But the outcomes can be amazing. The two IT strategies are "Purpose Alignment" and the "Trust/Ownership Model."

Purpose Alignment (pictured below) represents a way of thinking about IT. I came to the Purpose Alignment way of thinking after a few large IT projects in which we spent lots of time, money and effort to make the new systems look just like the legacy systems we were throwing away. What sense is there in spending so much to replicate something we wanted to replace? This epiphany gave me clarity about the nature of IT innovation: The reality is there are but a few incredibly important things that deserve innovation while most incredibly important things do not.

Here is the Purpose Alignment way of thinking:

Niel Nickolaisen's Purpose Alignment model
Purpose Alignment is an approach that measures IT activities in two dimensions: the extent to which the activity is differentiating or creates a competitive advantage, and the extent to which the activity is mission-critical.

As the chart shows, every organizational activity is examined in two dimensions: First, the extent to which that activity will create market differentiation or sustainable competitive advantage; second, the extent to which that activity is mission-critical or essential to our survival.

When we combine these two dimensions we get four types of Purpose Alignment.

Purpose alignment: Market differentiating/Parity activities

Let's start at the right-hand side of the chart. The things that are market differentiating and mission-critical are the things we do to win in the marketplace. Think of these activities as activities we must do better than anyone else. These are the only activities that deserve innovation and creativity. Let me say that again, "These are the only activities that deserve innovation and creativity." All of us have at least one activity in this category. But to ensure we have the proper focus, we cannot have too many. My personal rule of thumb is that no can successfully do more than three things better than anyone else.

What comes next? Activities that are mission-critical but will not create competitive advantage. I call these the parity activities. These are mission-critical and essential to our survival, but because they do not create our competitive advantage they do not deserve innovation or creativity. These parity activities need to be done as well as others do them, but not better than anyone.

The vast majority of our IT activities are in this parity category. For my company, the parity category includes our ERP, our CRM, our network design, our email structure, our client structure, our use of agile, our user authentication, our payment processing, our almost everything we do. For example, 20 years ago the IT department I helm today implemented a market-leading ERP and spent a few years and a lot of money customizing the ERP so that it matched the unconventional way we did things like accounting and inventory management. These customizations represent an over-investment in parity activities. We do not win in the marketplace by these customizations; our clients do not choose us over our competitors because of the structure of our chart of accounts or our in-transit inventory location design.

Rather than contorting our IT systems to match the way we perform our parity work, we must conform our processes to the way market-leading systems perform that work. After all, if parity means "do it as well as others," I am guessing that the standard functionality of a market-leading ERP (or CRM or whatever) is probably good enough.

Applying this IT strategy to my present organization, my teams and I decided to re-implement our core systems with zero-customization versions. What has this done for us? It has put our innovation efforts where they matter and cleaned up a massive amount of our legacy complexity. Those custom approaches to parity activities come with a very high cost and burden.

Purpose alignment: Partner/Who cares?

These first two categories are the most important. But what about the other two categories? It is rare for us to have something that creates competitive advantage but that is not mission-critical for us. When there is such an IT imperative, we form a partnership with somebody to deliver that differentiation -- but these instances are very rare. And, finally, if something is neither market differentiating nor mission-critical, who cares about it? In our IT worlds, I am confident that such things do not exist.

What does thinking in the Purpose Alignment way do for us? For me, it has been the reason for my existence (well, a portion of my existence). Imagine the power that comes when we allocate resources where they generate the most value. And, frankly, what value comes from a unique approach to accounting? Or identity management? Or case management? Just get that stuff done so that the entire organization can innovate the things that help us win in the marketplace. Let's blow the doors off the world when it comes to our differentiators and stop spending so much time, money and effort on transaction processing.

Designing the 'cultural container'

But, you might remember, I started by promising to share two secrets -- two IT strategies -- that makes for a successful CIO. The second of these IT strategies is something I call the "Trust/Ownership Model." It is an approach that has helped me define my role as an IT leader.

In the old days, I thought my IT leadership role was to make the big decisions and solve the big problems. And, to be honest, I was pretty good -- no really good -- at making big decisions and solving big problems. But then came another moment of clarity: My role as a leader is to create a culture -- in effect to design the cultural container inside of which the work gets done.

In the old days, I thought my IT leadership role was to make the big decisions and solve the big problems. And, to be honest, I was pretty good -- no really good -- at making big decisions and solving big problems. But then came another moment of clarity.

If I was the creator of culture, I needed to have a point of view on what is the best culture for my IT teams. Through a couple trials and a few errors, I found that creating a culture of trust (rather than control) is the best cultural container for the organization I was seeking: a high-performing team of individuals who take ownership of their work.

So how do I create a culture of trust at work? By getting out of the approval business. By pushing decision-making to the edges of my teams. By putting purpose over my personal agenda. By being personally trust-worthy. By over-communicating. In short, by being a leader who prefers trust over control and oversight.

How do I create a culture of ownership? By focusing all that I do on what the work is and why it matters and never again telling anyone how to do anything.

I create a culture of trust by pushing out decisions, and I create a culture of ownership by never taking back the decision-making. If someone comes to me with a problem, I do all I can to avoid providing a solution. As a trust/ownership leader my goal is not to be the decision-maker or problem-solver but to be the developer of great decision-makers and problem-solvers. Think of the organizational capacity and capability I unleash if my entire IT team achieves that goal?

Shifting my focus to Trust/Ownership has been a challenge and has created some personal vulnerability as I have had to reinvent myself and my style. As I said, it has taken serious work. But the results have been incredible, and I now take pride -- not in knowing how to do everything and not by solving every problem -- but in my teams' success.

There they are, the two IT strategies I believe have helped me more than anything else. I am not going to tell you how to implement these two IT strategies, but I will venture to tell you why they matter. They matter because they will change your life for the better. Please give them a sustained try -- and let me knows how it goes. Shoot me an email at NNick@octanner.com.

About the author:
Niel Nickolaisen is a veteran IT leader, currently serving as the CTO at O.C. Tanner Co. Niel is a frequent writer and speaker on transforming IT and on IT leadership.

Next Steps

Recent Nickolaisen columns and videos:

Finding IT agility in the OpenStack platform

Seven tenets to live by when adopting DevOps

Watch Niel's video on the importance of project prioritization

This was last published in March 2017

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What IT services or projects are you working on that help your company differentiate itself from competitors?
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Love the Purpose Alignment model. I've had something like that swilling around in my brain but couldn't finish it off into a clearly defined thought that i could get onto paper. Thanks to you as soon as I saw this i went aha! Just what i needed.
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