Uncertainty is the only certainty in technology today

Last week was spent at the IBM InterConnect and Green Data Center conferences in Las Vegas and San Diego respectively. At each of the conferences, there were a ton of great conversations around the CIO, cloud computing, social media, big data analytics and data centers. While more details will come out in future posts, a common theme became crystal clear. We are squarely in a period of extreme disruption and no amount of Dramamine will settle the tides. The needs of the many far outweigh the needs of one, two, or three.

The power of social media

Social media plays a central role to gather our collective thoughts and banter. The conversations that ensue will further the development of innovation through the development of new ideas and critiques. However, today, we are only scratching the surface with social. Many of the ‘conversations’ happening across social media are one-way conversations usually sharing information, but with little interaction. The vast majority of tweets coming from the conferences are either a promotion or sound bite overheard during a session or conversation. In addition, there is quite a bit of ‘noise’ that contributes to the confusion. If one were to try and follow the threads, it would appear an eclectic mix of varied thoughts taken from some complex juxtaposition. A better approach is needed to improve the level of two-way engagement.

Cloud, the great equalizer

Cloud is very similar to social in terms of missed opportunities. Cloud presents the single-largest opportunity for organizations today regardless of size. At the InterConnect conference, cloud was in the forefront of many discussions. The challenge many had was how to effectively embrace and leverage cloud. Those tie back to a gap between the freeway and the on-ramps. We do not need more freeways, we need more on-ramps. Yet we continue to build new freeways.

Is it possible that cloud has gotten too far ahead of itself? One of the many discussions was that of the speed of innovation versus adoption. Is it possible we have reached a point where we are actually innovating too quickly without fully considering the ramifications? There is more to be written on this issue alone.

Understanding the customer

Ironically, much of this may go back to understanding the customer. For the vendor or provider, it is understanding who is buying (or should buy) the solution and why. It is about shifting from a transactional sale to a consultative one. That is easier said than done, as context is required to do so.

Enterprises are not immune from the confusion. According to a recent IBM survey of CEOs, 31% doubt c-suite executives understand the changes from customer and the marketplace. That is a huge number when looking across the entire c-suite. If the same question were asked of the CIO specifically, the number would most likely increase. That is not a good position considering the emphasis tech plays in the customer relationship today.

Changes in paradigms

The chasm may simply tie back to a difference in understanding evolution. The customer base is moving very quickly. For the past decade, the number of digital natives in the workplace has only increased. And they are having a strong influence on other generations. They are more familiar with technology and comfortable with rapid adoption. Yet the solutions we deliver leave them wanting.

Understanding the root of discomfort

And so the problem comes full-circle. As with any problem, it is important to understand the root of the issue. When I discuss this in detail with IT leaders and staff members the root issue comes back to uncertainty. There is a level of uncertainty with the solution, nerves, job loss and a general path forward.

Forging a path ahead

Change is hard. Change is confusing. Change is stress and burnout. And at the edge it kills. Think that is being a bit dramatic? Just read my friend John Willis’ moving post about Karojisatsu.

But change is not something we should fear. At this point, we must stick together and drive hard toward the future. Our very future depends on the success of our ability to adapt and change.

For the foreseeable future, the tech industry will continue to present confusion and uncertainty. Our ability to adapt and accept uncertainty is directly related to our ultimate success.

The CMO is not replacing the CIO and here’s why

Three years ago, Gartner predicted that by 2017, the CMO (chief marketing officer) would spend more on IT than the CIO. This one prediction spurned a number of follow-up predictions pointing toward the end of the CIO. The bottom line that everyone wants to know: Is the CIO role indeed going away? Is another c-level function replacing the CIO? And if so, who will take over the IT function?

Changes affect the entire IT ecosystem

It is not just the CIO and IT organization that are affected by a potential realignment of the IT function. Any change would have significant ramifications from people to vendors to architectures. No aspect of IT would be spared.

If IT were to go away or otherwise move to a different organization (or organizations), it would have a significant impact on how we think, operate and support the IT ecosystem. The focus would move to the immediate problem being solved for. However, the CIO and IT as a whole carry a broader responsibility that spans the entire enterprise.

The $64,000 question: What happens to the CIO & IT?

Before answering those looming questions, it is important to see the trends that drove these predictions. Looking back, there is absolutely a decline in IT demand. Specifically, demand for Traditional IT is in decline.

At the same time, the demand from marketing is stronger than ever. So, it makes sense that some of the waning demand may be transferred to marketing.

 

CIO CMO Short Term

Unfortunately, this only tells part of the story. If the story were to stop here, it would be easy to understand the logic behind the CMO taking over IT. As demand for the traditional CIO wanes, the CMO picks up and carries the function forward. The reality is this is only a very small part of the overall movement underway.

Transformational CIO on the upswing

The transformational CIO, unlike the traditional CIO, is in high-demand. In many cases, organizations do not understand what this means or what a transformational CIO looks like let along what they are capable of. A transformational CIO, unlike traditional CIO, is far more aligned with the business of the company. They are in-tune with how the company makes and spends money. They also look for opportunities around customer engagement and business growth. Transformational CIOs are more about business and data than they are about technology. In many ways, the transformational CIO is a business leader (first) that happens to have responsibility for IT.

Mapping the transformational CIO along with the traditional CIO and CMO brings the true picture into focus.

 

CIO CMO Transforming IT

One of the biggest challenges for transformation to take place requires all three components come together: The CIO, the IT organization and the rest of the company in terms of how they look at, leverage and engage IT. This evolution is referred to as the CIO’s Three-Legged Race.

One unfortunate point to make is that few traditional CIOs will have the mettle to truly transform into transformational CIOs. It can be done, but requires a level of intestinal fortitude well beyond that of many CIOs today.

Reporting structure for the CIO

Much of the change will come from the reporting structure of the CIO. Traditional IT organizations are often seen as a cost center and therefore report into the CFO. Transformational CIOs typically report directly to the CEO signaling the importance of IT (and the CIO) in leading the company. Consequently, a CIO reporting to the CMO may make sense temporarily, but not long term. The CIO’s prevue needs to be both broader and more strategic than any one function.

Every CMO I spoke with is not interested in taking on the IT responsibility. They are today, because they have, not because they want to.

The CIO is just getting started

Taking all of this into account, the role of the CIO is only starting to expand in ways it rarely has before. The same goes for IT. Sure, it may leverage a strong relationship with the CMO today. That is a very good thing! But it will evolve into a more impactful role that truly fills the qualifications for a seat at the CEO’s table.

 

CIO CMO Full Picture

How Couchsurfing became the Friendster of the sharing economy

Before there was Uber, Lyft, or Airbnb, there was Couchsurfing. For a certain sect of millennials — say, those entering college between 2005 and 2011 — Couchsurfing was transformative. Members all over the globe offered up their couches for free to these cash-strapped travelers.

It was the original sharing economy, except there was a lot more “sharing” in Couchsurfing’s version than there was “economy.” And that was the problem.

Without a way to properly support itself, the application staggered under the burden of its popularity. It nearly went out of business because of technical problems, and its community struggled to maintain its values with the flood of new users. Raising venture funding just exacerbated the problem, triggering power struggles between long time volunteers and new leadership.

Couchsurfing learned the hard way that “sharing” doesn’t scale easily. Can an organization founded on cooperation sustain itself in a capitalist world?

The collective of coders

Couchsurfing had conflict between for-profit and not for profit ambitions from its earliest days. Founded in 2004 as the brainchild of a man named Casey Fenton, it ran like a collective for almost ten years, with volunteers pitching in code and working as the ambassadors for each city. It made money here and there through donation requests but by and large it didn’t generate much cash. Fenton’s business partner, Daniel Hoffer, intended to change that from the moment he joined the company. It took a long time for that to happen.

Photo from a 2008 Couchsurfing camping trip in the south of France with 50+ local members

Photo from a 2008 Couchsurfing camping trip in the south of France with 50+ local members

The digital psyche was far different back then, so it’s shocking people took a chance on the service at all. Sharing economy companies had not yet emerged. Smartphones had not proliferated. Facebook was not a thing. When you were meeting strangers off the Internet, they really were strangers.

For many users, Couchsurfing gave them the opportunity to travel when they might not otherwise be able to afford to do so. Experiencing the world at an early age altered the course of some people’s lives. “I discovered that I had a passion for meeting people and traveling through Couchsurfing,” long-time user Jordan Urbanovich told me. He grew up in a cookie cutter American suburb, but after visiting Europe on people’s couches the hobby stuck. Seven years later he’s still using Couchsurfing — he skyped me from Nepal, where the power cut out a few times in his Internet cafe.

Couchsurfing was magical in the early days, but its honeymoon period didn’t last long. As the word started to spread among users and more and more people joined the application, its cooperative ethos backfired. Its collectively-coded website couldn’t handle heavy amounts of traffic. Bugs abounds and crashes were common.

[pullquote person=”” attribution=”” id=”905661″]The organization operated more like Wikipedia than the Encyclopedia. [/pullquote]

In one particularly bad server failure in 2006, key data and software were permanently deleted. Fenton announced he was shutting Couchsurfing down as a result. But the organization operated more like Wikipedia than the Encyclopedia – there were armies of people invested in it who had dedicated personal time to building it. They rallied together to keep it going.

From cool to creepy

The technical issues weren’t the only ones Couchsurfing faced as it scaled. Soon, more worrisome problems started to occur. Newcomers changed the energy.

“It became this weird playground for people who had social anxieties or were socially inept,” former Couchsurfing user Christa Gallo told me. “They’d show up and didn’t know how to hold a conversation.” Many of the newscomers used Couchsurfing meetups as social events, without actually hosting visitors or traveling themselves.

Christa Gallo (left) and a fellow member of the French Couchsurfing community rock company swag.

Christa Gallo (left) and a fellow member of the French Couchsurfing community rock company swag.

Gallo wasn’t the only one noticing the difference. Urbanovich also felt a change around 2011. “I was hosting in New Orleans and I got a lot of bullshit from new visitors — copy and pasted messages, people who had no desire to hang out with me and only wanted a free place to stay, or people just looking for festival accommodations.”

[pullquote person=”A Couchsurfing user” attribution=”A male Couchsurfer tells other men how to target women for sex on the site” id=”905662″]”The newer profiles are fresh to the whole thing so they haven’t developed a firm mindset on what the site is for.”[/pullquote]

The Couchsurfing community struggled to spread its ethics to newcomers. People started using the service like a dating application with predictably bad results. Rape and assault incidents garnered international attention and female couchsurfers began receiving tons of emails from other overly friendly users. Some men even published guides for how to turn couchsurfing into a “real sex pipeline.” This one has lovely little recommendations, like telling men to target newer female users because “they haven’t [yet] developed a firm mindset on what the site is for.”

One woman, writing for Narratively, detailed her chilling encounter with a host named “Raul,” who posed as a woman on the site to convince her to stay with him. By the time she realized he had lied, she was in his apartment, in a foreign country late at night, with many bags and nowhere to go.

Couchsurfing was experiencing what any company that is truly representative of a “sharing economy” would. When the pool of potential “sharers” is so diverse, unvetted, and uncontrolled, there will inevitably be some bad actors.

Meanwhile, things weren’t going well for the company financially. Couchsurfing’s request for a non-profit status was rejected because the IRS didn’t believe it was charitable in nature. It was saddled with the bills, and if it was going to survive, it needed a savior.

An illustrated history of Couchsurfing with an optimistic future. Drawn years before it received its venture funding

An illustrated history of Couchsurfing with an optimistic future. Drawn years before it received its venture funding

The saving grace

Enter Benchmark. In 2011, the venture capital firm, along with the Omidyar Network, gave $7.6 million in initial funding. A year later, both reupped in a $15 million Series B round along with some new investors, to turn the volunteer-run service into a sustainable enterprise with venture level returns.

Erik Blachford, who is currently Couchsurfing’s Executive Chairman, wasn’t advising the company at the time. But in retrospect, he thinks it was the right move. “At some point if you’re not in the situation to take donations the best path forward is to make a business out of it,” Blachford said to me.

In comparison, Airbnb — Couchsurfing’s far more successful rival in the sharing economy — was designed to make money from the get go. It didn’t go through years of trial and error with its business model, and its outsized profits and rapid growth reflect that. Despite being founded five years after Couchsurfing, it currently has a reported $13 billion valuation and had raised almost $1 billion in venture funding. It’s looking like it will be one of Silicon Valley’s biggest wins from the recent tech rebirth.

Airbnb’s success does not preclude Couchsurfing from thriving. Although they may compete in small ways, the two services are so different in experience — and cost — that they serve different markets. For all its achievements, Airbnb is ultimately a glorified hospitality service, not a cultural idea exchange. As Fred Wilson put it, it’s part of the “rental economy,” not the “sharing economy.”

As sharing grows, caring goes

Couchsurfing meetup in Amsterdam to celebrate Christmas, 2009

Couchsurfing meetup in Amsterdam to celebrate Christmas, 2009

Before and after its venture funding, Couchsurfing cycled through CEOs, acquiring and discarding them like ill-fitting t-shirts. Each one tried hammering the organization into some semblance of professionalism, efficiency, and money-making and each encountered intense push back from the community. Couchsurfing was founded on the ethos of cooperation, not capitalism, and its most involved users were intensely suspicious of the ulterior motives of the service’s overlords.

“Imagine if you’ve been contributing to Wikipedia for years and one day the founders say they are selling it for a large personal profit but you’re still free to use it. Yup, it’s like that,” one former Couchsurfing ambassador explained on Medium in 2013.

Users made meme videos poking fun at the corruption of the organization’s leaders and published cartoons to represent them. The community that had once volunteered hours to run Couchsurfing could not bring itself to trust leaders overseen by a venture capital firm.

Couchsurfing’s corporate team inflamed these problems with drastic product changes. It started making parts of its website public so Google could index them, but in doing so it published personal, sensitive member information, like phone numbers and names. It cut “city groups,” which were hubs of information for Couchsurfing communities, enraging volunteers who had dedicated time to maintaining those forums. Users fought back with online protests, but to no avail.

Couchsurfing also tamped down on free speech on the application. It deleted profiles of some long time city ambassadors who were critical of the company. Many Couchsurfing diehards started calling for defection, telling other users to join the alternative: An open source, non-profit site called BeWelcome. Long time Couchsurfers believed, perhaps rightly so, that the company had started to focus on growth at the expense of community and it was time to abandon ship.

BeWelcome delegate and author of a recent book on traveling cheaply, Anja Kühner, explained how it differs from Couchsurfing. “In terms of the amount of members, BeWelcome will maybe never reach the numbers of Couchsurfing,” Kühner told me. “But sheer quantity is not our goal. It is the quality of encounters that counts for us.”

A reset and changing of the guard

One long time Couchsurfing user said this comic is symbolic of Couchsurfing's leadership. "This company is like the villain in a slapstick cartoon, threatening the hero while holding the gun backwards."

One long time Couchsurfing user said this comic is symbolic of Couchsurfing’s leadership. “This company is like the villain in a slapstick cartoon, threatening the hero while holding the gun backwards.”

It came to a head in October 2013. The latest CEO, Tony Espinoza, stepped down after less than two years at the helm, citing a need for Couchsurfing to “crystalize and strengthen [its] core values.” Couchsurfing’s then-head of member experience, Jen Billock, replaced him. She wasted no time in wiping the slate clean.

She laid off 40 percent of the staff, a dramatic restructuring. She believes the layoffs were necessary, although hard, in order to build the foundation for the company’s future.

Couchsurfing entered a long period of hibernation. Although people could still use it and it continued to grow, the company ceased most publicity, media interviews and marketing. Billock buckled down with her remaining team, putting into place a more competitive, hard-working staff culture.

“The thing I like to play with as a leader is, ‘How can we have emotionally intelligent work place that is also a super high performance work place?’” Billock told me. “Let’s set an aggressive deadline and run towards it.”

Since the Couchsurfing application was first built in 2003 and had been amended and rejiggered over the years, the technology was a mess. It certainly wasn’t capable of adapting to the mobile era that dominates today. Eventually Billock resigned herself to the fact that the entire thing would need to be rebuilt … from scratch. The databases of customer information would need to be migrated, the design redone, and the backend code rewritten, in a more modern code language.

For the last year and a few months, that’s exactly what Couchsurfing’s staff did. Hustling away in their San Francisco office, as the likes of Airbnb and other “sharing economy” companies grew bigger and bigger and Couchsurfing’s name faded away. But not for good.

In November 2014, the company unveiled its big new relaunch and set its sights on the future. It will try to answer the question: Can the “sharing economy” survive when it focuses on the sharing and not the economy?

It’s not just a down-market Airbnb

A thank you card from some Couchsurfing vistors to their host

A thank you card from some Couchsurfing vistors to their host

Although its technical problems are behind it, Couchsurfing’s most difficult challenges are ahead. It’s been three years since it took venture funding, and before the decade is out it will need to start making money.

One problem: Couchsurfing’s free cost is, in essence, its core product. That’s what fosters connection between visitors and hosts, encouraging them to spend time together. If you were paying for the couch, well, then it would be just another place to sleep at night….like a down-market Airbnb.

“There’s lots of different services where you can find a place to stay,” investor Blachford told me. “What makes [Couchsurfing] special is you’re going to stay with someone. We want to be very careful to preserve that.”

Couchsurfing’s leaders are going to try to make money the freemium route, with features like profile verification and host-visitor gift exchanges.

That may wind up backfiring too though. The service attracts people with a certain mindset. Urbanovich, who has paid the verification donation in the past, told me if payment was required he wouldn’t bother verifying his profile. “Like anything in life it just builds resistance if someone’s telling you what to do,” Urbanovich said.

There’s a lot at stake, and not just for the company and its investors. There’s nothing else in the world quite like Couchsurfing. It opens up travel opportunities for those who might not otherwise be able to afford it and connects cultural strangers as a result. It’s the largest such network with the biggest brand awareness. For better or worse, Couchsurfing is the strangers-helping-strangers travel organization that stuck. It has survived in spite of itself.

Billock is optimistic. She said, “The market has evolved beautifully for Couchsurfing and now Couchsurfing is evolving to take its position.”

 

This post has been updated to reflect that it was Benchmark, not Greylock, that invested in Couchsurfing. It has also been updated to show that founder Casey Fenton’s business partner, Daniel Hoffer, had always had for-profit intentions for the company.

No, you really do need a CIO…and now!

For those that follow my writing, this post may have a familiar ring to it. Unfortunately, there is a reason I’m writing about this yet again as the point still eludes many.

The curious case of Acme Inc

Take a recent example for Acme Inc (company name changed). Acme is a mid-sized organization without a CIO. I spoke with the CEO and another member of the executive team that were trying to solve tactical technology and information problems on their own. In this case, Acme is experiencing solid growth of 50% CAGR. They believed they were being strategic in their technology decisions. The truth was far from it. It was painfully apparent they were way out of their wheelhouse, but didn’t realize it. In a way, they were naive that the decisions they were making were locking them into a path where, near-term, the company would not remain competitive. But they didn’t know that. They were looking to solve a technology problem to support their immediate growth trajectory without thoughtfulness of the opportunity. They were also relying too heavily on their technology providers whom they believed had the company in their best interests. Unfortunately, this is not a fictitious story of what could happen to a fictitious company. It is a real situation that occurred with a real company. And sadly it is one of many.

Trust is incredibly important in business today. There is no question. But as one mentor once taught me many years ago: Trust, but verify. In the immortal words of Deming “In God we trust, all others bring data.”

What is a CIO?

What is a CIO and do I need one? This is a question that many chief executives ask as their business evolves. I addressed a similar question about the CDO in ‘Rise of the CDO…do you need one?’ last year.

For small to mid-size enterprises, the conversation is not taking place soon enough. Many are still contemplating how to task the IT manager or director with more responsibility. Or worse yet, the responsibilities are being shared across the executive team. In one example outlined below, the results can be catastrophic.

So, when do you get your first CIO? And if you have a CIO, do you still need one? Isn’t the CIO’s role simply about managing the computers? In a word, no.

Do I need a CIO?

The short answer to this is yes. From small to large enterprises, the need for a CIO is greater today than ever before. Many will see a CIO and their organization as a cost center that eats into the bottom line. If so, that is a very short-sided view. Today’s CIO is very strategic in nature.

More than ever, business relies heavily on technology. But more than the technology itself, it is how it is applied and leveraged that makes the difference. The how relies heavily on context around business value and applicability. It requires someone, the CIO, to make the connection between business value across multiple disciplines and the technology itself.

Can other executives provide this capability? No. They can provide a different caliber of tactical implementation, but not the cross-functional strategic perspective that a CIO brings to the table. And it is this cross-functional strategic perspective that brings significant value to differentiate companies.

Information is the currency of business. It is what drives business decisions that will affect the success and failures across a myriad of dimensions. The CIO is the best position to understand, drive and expose value from information. The value of the information

What does CIO stand for?

This seems like a perennial subject. What does the ‘I’ in CIO stand for? Information? Innovation? Inspiration? Integration? The bottom line is that the I stands for the same thing is has always stood for; Information. Today’s business is driven by information. Technology is simply an enabler to leverage information. Integration, innovation, etc are all functional means to drive the value of information to a company.

If information is gold, what is technology? Technology is similar to the mining and refining equipment to extract and process the gold. Without it, the gold may be discovered, but in small quantities using ineffective means. A major factor in today’s business is speed. Access to information quickly is paramount.

The evolving role of the CIO

The CIO’s role (past and present) is far more complicated that many appreciate. A CIO is really a business leader that happens to have responsibility for IT. In addition, a CIO is really a CEO with a technology focus. A CIO is strategically focused and able to traverse the entire organization at the C-level. That last attribute requires a level of experience very different from the traditional CIO.

In the case of Acme, a CIO would be a great asset moving forward.

The shadow CIO

Most sizable enterprises are experiencing the phenomenon of shadow IT, whereby non-IT departments are taking advantage of Software-as-a-Service (SaaS) offerings to bring in new applications more cheaply and more cost effectively than traditional IT has been willing to accommodate them.

Increasingly, this impulse is reaching the CEO and board level, as well, with organizations looking for a ‘shadow CIO’ to provide strategic leadership on how the company can and should transform itself in light of the cloud, mobile, big data and social technologies that are likely transforming their industry.

The trendy title for this shadow CIO is ‘Chief Digital Officer’ (CDO), and Cio.com recently offered an update on the proliferation of the position.

Searching for a leader

In designating the head IT as the organization’s Chief Information Officer (CIO), enterprises were looking to locate a poobah in charge of everything involved in applying IT to their business.

Most enterprises, however, get the CIOs they deserve. If they don’t hire, promote, evaluate and incentivize their CIOs to be strategic business executives at the table for discussions on business vision and strategy, then the head of their IT portfolio will not be that kind of strategic business executive.

Many enterprises haven’t; and many CIOs aren’t.

Because the current generation of disruptive technologies is truly transformative, organizations are looking for a genuine leader to communicate a comprehensive vision for their company’s sustaining role in a transformed industry and how the company can get there.

Not surprisingly, instead of turning to a CIO whose frequent contribution to technology-related discussions has been, “No. Not that fast. Not that cheaply. Not now,” a number of organizations are looking for someone else to fill the void.  

Just as shadow IT first took firmest hold in marketing with new applications for social monitoring and analysis (listening platforms), the shadow CIO—AKA CDO— often has digital marketing expertise and is given a social media and digital marketing portfolio as part of his or her charge.

Whither the traditional CIO

As with shadow IT, the shadow CIO serves a real purpose and can deliver a real business advantage. But like shadow IT, the shadow CIO can

  • shine a light on the limitations of current IT management;
  • confound and complicate presumably duplicative responsibilities and functions in the IT department, and
  • lead to the diminishment of the IT department role and responsibilities.

CDOs and CIOs can potentially have a direct reporting relationship, whether up or down, or be organizational peers. But make no mistake about it: Unless the CIO is the CDO or has the CDO reporting to him or her, the addition of a CDO is a subtraction from the official CIO function.

Many Chief Whatever Officers (CWOs)

Europeans have long chuckled at the American penchant to name dozens, if not hundreds or thousands, of ‘vice presidents’ within the rank and file of a company’s mid-, lower-, and non-management staffs.

CWOs of course are now all the rage, and all that’s required now is for a proliferation of whatever portfolios for the Chiefs to manage, followed by the pushing down and multiplication of CWO title holders. E.g., an increasing number of large firms now have multiple, division-level, CIOs.

Chief Innovation Officers (more CIOs!) or Chief Knowledge Officers (CKOs) have sometimes been named aside or under the traditional CIO function. Traditional CIOs may also have a Chief Technology Officer (CTO), Chief Data Officer (CDO), Chief Infrastructure Officer (still more CIOs!) and more on staff.

What really matters with the shadow CIO/CDO is whether the right strategic vision and plan for leveraging transformative technology is being communicated and effectuated to the CEO and board levels of the company.

If the traditional CIO doesn’t have the capability and support to fulfill that role, someone else needs to. If the organization already has too many chiefs, Chairman of Technology (CoT) or ‘shadow chairman’ has something of a nice ring to it.

Customer service only comes from the top

Customer expectations are rising, but companies are failing to meet them. That’s what the folks at Zendesk are reporting with their latest global customer survey, The omnichannel customer service gap.

In short, customers want a speedy and seamless service experience whether they contact a company by phone, social media, email, chat, or in store. Only 7% are extremely satisfied that brands are providing consistent and integrated service, however; and only half rate the speed of response or resolution as good or excellent. A clear majority of customers in all countries surveyed believe that brands pay more attention to generating sales across channels than to providing integrated customer service.

More than a cost center

Zendesk VP of marketing J.D. Peterson sees this difference as reflective of the traditional business culture that favors sales as a profit center, while customer service is only considered a cost center. But he also sees that changing, with more viewing service as an opportunity to deepen customer relationships and increase sales, and he believes the rise of social media is contributing to that change.

Providing a fully integrated experience for customers across channels—where customer interaction is consistently fast, friendly, and satisfactory, and previous interactions are immediately recognized—is still the exception rather than the rule. Zendesk provides a multichannel service platform that theoretically enables such consistent ‘omnichannel’ support.

Technology ahead of the corporate culture

J.D. still sees only a minority of businesses with online and brick-and-mortar stores fully integrating their multichannel capabilities with their in-store service, although that practice is clearly rising. Likewise, first-tier social media service support is still often handled by the marketing department, where listening platforms were first brought into organizations, rather than by the service department. Just under a quarter of Zendesk customers have enabled the firm’s direct/native Facebook/Twitter integrations, although some have accomplished the same by integrating third-party tools (e.g., Hootsuite, SproutSocial) through Zendesk’s applications platform.

Only from the top

J.D. says that when he sees a high level of integrated customer service, without exception, the CEO or another C-level executive is driving the firm to a customer-focused culture. A good first step toward meeting customer’s rising expectations is the implementation of a multichannel service capability. But to approach the level of integration and consistency that customers are coming to expect, a firm needs to be organized around the customer experience. That vision and commitment must come from the top.

Related Gigaom research:

Sector RoadMap: Social customer service in 2013

Millennials in the enterprise, part 1: strategies for supporting the new digital workforce

Millenials in the enterprise, part 2: benchmarking IT’s readiness for the new digital workforce

Where does the buck stop on technology risk?

According to two Deloitte directors writing in USA Today, the 48% of enterprise boards of directors that have a risk committee may not be sufficient to meet the threat. Depending on the firm and the industry, more boards may be due to establish such a committee. More risk committees may need to recruit a cyber security expert. And more boards may need to establish a separate committee to deal with Internet and other technology threats. All boards may benefit from the engagement of more external experts to inform them on the risks to the firm of cyber crime and technology failure.

From critical infrastructure to intellectual property, regulatory compliance, and technological competitiveness, the risks of a technology-related failure to the assets and performance of the firm are ever growing. Many corporate management structures are inadequate for assuring risk mitigation, and it is the responsibility of the board to assure that management is aligned with corporate needs.

The authors of the piece don’t identify the responsibility of corporate managements to alert their boards to the risks for the company. For management to take such a message to the board, certainly without recommended action steps, may seem counter-intuitive to maintaining favor with the board. It is the responsibility of management, from CTO and CIO to CEO levels, to see that such a dialogue is successfully engaged. Brutally honest communication on the stakes involved may be the best opportunity management has to align the organization with its vital technology requirements.

The cultural bias against creatives as leaders

A 2010 study of 1,500 CEOs by IBM yielded a few large insights. One was that over 60% believed that creativity is the most critical competency for CEOs today.

ibm creativity diagram

Creative leaders — they believe — are comfortable with disruptive innovation, both as a stressor impacting the company but also as a tool for competitive advantage. They are willing to refactor operations to produce better outcomes, inventing new ways of delivering value. They tolerate ambiguity well, and are courageous and visionary.

The disconnect is that, in general, people who demonstrate these sorts of capabilities — creatives — are often passed over for management jobs. In particular, we seem to have a cultural bias against creatives. They don’t line up with the typical leadership profile, and the nature of creatives is to introduce ambiguity, which unsettles people looking for certainty. Recent research by  Jennifer S. Mueller (University of Pennsylvania), Jack Goncalo (Cornell University), and Dishan Kamdar (Indian School of Business), as reported in Recognizing Creative Leadership: Can Creative Idea Expression Negatively Relate to Perceptions of Leadership Potential?, shows this to be the case:

The most prototypical kind of leader is expected to organize and coordinate groups to diminish uncertainty and promote order by emphasizing shared goals (Philips & Lord, 1981). The prototypical leader is also expected to conform to group norms and goals in order to symbolically support the group identity (van Knippenberg, van Knippenberg, De Cremer, & Hogg, 2004) and to promote collective action (Lord, Foti, & de Vader, 1984). Targets who behave in ways that convey these characteristics to others are readily categorized as fitting the leadership prototype.

Research on prototypes of the creative individual underscores that social perceivers most often diagnose creative potential based on targets’ expression of creative ideas in social contexts (Elsbach & Kramer, 2003). However, far from matching fundamental leadership expectations associated with exuding control and promoting clear goals, the expression of creative solutions may actually introduce ambiguity or uncertainty, in part, because by definition, novel ideas involve deviations from the status quo and are not yet proven (Amabile, 1996; Staw, 1995). Prototype theory confirms this view that the expression of creative ideas is often associated with uncertainty, nonconformity, unorthodoxy, and unconventionality (Elsbach & Kramer, 2003; Sternberg, 1985) – traits which run contrary to deeply rooted expectations that prototypical leaders diminish uncertainty and provide normative order (Phillips & Lord, 1981).

So, despite what CEO polls indicate, there are major barriers for creatives being perceived as leaders. But what about obvious visionaries, like Steve Jobs, or Richard Branson, widely hailed as creative visionaries that led enormously successful companies. It turns out that tempering the mindset of being creative with the cultural notion of charismatic leadership changes everything.

This is not to say, however, that creative idea expression and leadership will always be at odds in the minds of social perceivers. Indeed, categorization theory suggests the leadership prototype is multi-faceted and may include less central components that shape perceptions of leadership only when they are made salient (Lord et al, 1984). Charismatic leadership in particular represents one category of leadership that includes second order characteristics like uniqueness and individualism which may be more compatible with prototypes of creative people (Den Hartog, House, Hanges, Ruiz-Quintanilla, & Dorfman, 1999). Indeed, the prototype of creativity actually includes “charisma” (Elsbach & Kramer, 2003; Goncalo, Flynn & Kim, 2010). Hence, when the charismatic prototype is activated in the minds of evaluators, the expression of creative solutions may actually send a clear signal of leadership potential.

The researchers tested this in a series of studies, that does in fact suggest that when the idea of charismatic leadership is openly discussed while creative individuals are evaluated for leadership potential. Absent that, though, it seems that creatives are largely ruled out as unsuitable leaders.

How does that gibe with the IBM results? The researchers explictly refer to the IBM surveys results, and comment in this way:

Our findings also suggest that organizations may face a bias against selecting the most creative individuals as leaders in favor of selecting leaders who would preserve the status quo by sticking with feasible but relatively unoriginal solutions. This may explain why in their analysis of scores of leaders, IBM’s Institute for Business Value found that many leaders expressed doubt or lack of confidence in their own ability to lead through times of complexity (Kern, 2010). Our results suggest that if the dominant prototype of leadership favors useful, non-creative responses, that the senior leaders in the IBM study may have been promoted based on this prototypical perception of leadership and now find themselves in a world that has vastly changed, one that requires much more creative responses and thinking. Indeed, this bias in favor of selecting less creative leaders may partially explain why so many leaders fail (Hogan & Hogan, 2001), and why so many groups resist change (Argyris, 1997), as the leaders selected may simply lack the openness to recognize solutions that depart from what is already known.

For years, I have quoted Eric Bonabeau’s line, ‘Management will continue to use techniques that don’t work instead of those that they can’t understand’. It seems that we now may have a corollary  Leaders will continue to be drawn from the non-creatives, indicated by their bias toward preserving the status quo, instead of drawing from the creatives, those who have the capacity in invent new approaches to meeting today’s challenges.

(There’s a parable in there about the larger world, as well. Like divided government, the Austerity crisis in Europe, and the inability of our society to deal with existential threats like climate change, but this is not the forum for those concerns.)

My last observation on this sobering analysis is that the trend line around the Chief Digital Office might be an echo of the CEO’s perception of a corporate creativity gap. CEOs may view the opportunity to hire some genius mutant as CDO, someone formerly working as a creative director at a digital agency or as a McKinsey consultant, or a successful entrepreneur. Someone without the cobwebs holding back lifelong CIOs and other fossils in the C suite. We’ll have to see how that will play out, though, considering this bias against the creatives won’t be changed in a year: it might take a generation.

Following the money: What Carl Icahn sees in Netflix

Carl Icahn is clearly betting he can force Netflix into a sale that will produce a windfall for his stake. But if that doesn’t work he will almost certainly go after the cash Reed Hastings is now spending in Latin America and Europe.