Trusting the Path of Your CIO: Growth Isn’t About Eliminating Risk – It’s About Choosing It

I was having a recent conversation with a mid-market firm’s President when this came out: “When we need out-of-the-box thinking, we need to get our CIO out of the room.”

I needed to push back on this leader…not because his comment didn’t have some merit when it came to how the team was working together, but because he was leaving a great deal of insight on the table by removing this voice from the discussion.

Assuming that the rest of the C team is doing a great job of creating compelling new visions for products and services (yes it’s a big assumption, but let’s save that for another day), the role of choosing where to invest to remove risks and barriers to those compelling new products and services is well served by a strategically-oriented CIO.

The people who are best at identifying and quantifying risks are frequently labeled “negative Nancy’s” and “Dr No’s” when it comes to innovation.  In my experience, these rightly-activated viewpoints are absolutely necessary and increase the probability of a positive outcome for corporate teams by double digits.

Why? Because your CIO has hard won skills in seeing clearly systematic risks associated with your firm – and can efficiently help the team identify risk areas that can lead to the development of real intellectual property.

The book “The Origin of Wealth” created a compelling visual of what is going on here.  Picture a southwestern desert with sandstone rock formations standing tall.  Existing profitable businesses are much like the plateau – hard won and established by chiseling value from the surrounding elements.  When we picture a new product or service being brought forward, we are talking about building another hard won formation.  The part of this discussion related to risks is the path from the top (and perceived safety) of the existing formation to the top of new formation.  Your CIO has traveled the path through this valley and has much to share.

The other members of the C team can help bring this out by focusing the dialogue on what could work versus what won’t work.  By working through options in a constructive, yet still objective discussion, avenues will come forward.  Every one of these pathways will have risks associated with them. But by engaging the full team, those paths with the most solvable risks will bubble up.

A 2013 article in HBR did a nice job of laying out the multitude of risks a CIO faces on every decision. By making these risks apparent and part of the conversation, the full team can evaluate them head on and choose how they get worked.

Let’s step through a few of the commonly held concerns.

1. Decision Risk – The perceived upside and downside of making or not making a call.  Each firm has its own culture here, and it’s up to the firm to decide how this is framed and what side is “safe.” For example, is it safer for my career to be bold or passive?
2. Adoption Risk – Being too early or too late creates the same feeling. (i.e., way below forecast outcomes)
3. Execution Risk – Do we have the will, resource and know how to do this?  It also includes the policies, supply chain and financial controls in addition to the normal technical risk people think of.

And so on.  It’s easy to see why a team can get bogged down here.

So what’s the path forward?  Like many of these issues, in the wild, risk seem unknowable and difficult to contemplate.

The key to using risk as a tool rather than a barrier is to build a specific set of risks that are associated with a crisply defined new product or service.

In any program, very clear choice making is needed around which risks are most directly standing on the path to releasing value.  So how do you get those exposed so you can work them?

1. Define your new product, service or process offering in complete detail.  Include all of the key elements needed (including technical, manufacturing and distribution) in one clear document
2. Test this document (or a prototype produced from it) with the specific people that you expect to be the early adopters of this net new activity
3. Use your as-is map to identify all the gaps of the new product of service.  This will likely be a long and intimidating list.
4. Capture the new, unique and different elements (anything that requires an invention) in one tabulation.  Be thorough…anything that’s needed goes on the list
5. Look at the gaps and rate them in two dimensions: criticality to function and degree of invention involved
6. Take the top three risks and develop the simplest possible set of activities to flip it from a risk to a known activity
7. When you have eliminated all the critical to function risks, release the rest of the program

CIO’s are uniquely equipped to see the enterprise in a from-to-toward framework that gives them perspective to advise and provide insight to the rest of the team.

For more on this, you may want to see a companion piece around the “STRIVE” model that I wrote about here.  Particularly how to attack the edge of the world that is bounded by the known unknowns.

If you would like help customizing your approach to this very real set of challenges, please click on this link and set up a 20 minute, “roll up your sleeves” call with me, or call my direct line at 847-651-1014.

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